Table of Contents
(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019.
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .
Commission file number: 001-38527
For the transition period from to
OR
Uxin Limited
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
2-5/F, Tower E, LSHM Center,
No. 8 Guangshun South Avenue,
Chaoyang District,
Beijing, 100102
People’s Republic of China
(Address of principal executive offices)
Zhen Zeng, Chief Financial Officer
Telephone: +86 10 5631-2700
Email: ir@xin.com
2-5/F, Tower E, LSHM Center,
No. 8 Guangshun South Avenue,
Chaoyang District,
Beijing, 100102
People’s Republic of China
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
American depositary shares (one American depositary share representing
three Class A ordinary shares, par value US$0.0001 per share)
Class A ordinary shares, par value
US$0.0001 per share*
Trading Symbol
UXIN
Name of each exchange on which registered
The Nasdaq Stock Market LLC
(The Nasdaq Global Select Market)
The Nasdaq Stock Market LLC (The Nasdaq
Global Select Market)
* Not for trading, but only in connection with the listing on The Nasdaq Global Select Market of American depositary shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
None
(Title of Class)
Indicate the number of issued and outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
846,771,473 Class A ordinary shares (excluding the 16,599,045 Class A ordinary shares issued to the
depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of
awards granted under the Share Incentive Plan) and 40,809,861 Class B ordinary shares, par value
US$0.0001 per share, as of December 31, 2019.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o Yes x No
o Yes x No
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit such files).
x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-
Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Emerging growth company x
Non-accelerated filer o
Accelerated filer x
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP x
International Financial Reporting Standards as issued
by the International Accounting Standards Board o
Other o
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No
o Item 17 o Item 18
o Yes x No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
o Yes o No
Table of Contents
INTRODUCTION
FORWARD-LOOKING INFORMATION
PART I
TABLE OF CONTENTS
Item 1.
Item 2.
Item 3.
Item 4.
Item 4A.
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16A.
Item 16B.
Item 16C.
Item 16D.
Item 16E.
Item 16F.
Item 16G.
Item 16H.
Item 17.
Item 18.
Item 19.
PART II
PART III
SIGNATURES
Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
Key Information
Information on the Company
Unresolved Staff Comments
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Additional Information
Quantitative and Qualitative Disclosures about Market Risk
Description of Securities Other than Equity Securities
Defaults, Dividend Arrearages and Delinquencies
Material Modifications to the Rights of Security Holders and Use of Proceeds
Controls and Procedures
Audit Committee Financial Expert
Code of Ethics
Principal Accountant Fees and Services
Exemptions from the Listing Standards for Audit Committees
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Change in Registrant’s Certifying Accountant
Corporate Governance
Mine Safety Disclosure
Financial Statements
Financial Statements
Exhibits
2
3
3
5
5
5
5
52
80
80
101
113
116
118
118
130
131
132
132
132
133
134
134
135
135
135
135
135
136
136
136
136
136
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Unless otherwise indicated or the context otherwise requires, references in this annual report to:
INTRODUCTION
· “ADSs” are to the American depositary shares, each of which represents three Class A ordinary shares, par value US$0.0001 each;
· “agents” are to our third-party local partners who undertake sales function and provide in-person car-buying services to consumers by
operating Uxin service centers across China.
· “Check Auto” are to our proprietary car inspection system;
· “China” or “PRC” are to the People’s Republic of China, excluding, for the purpose of this annual report only, Taiwan, Hong Kong, and
Macau;
· “GMV” are to gross merchandise value of used cars as measured by gross selling price of used cars, excluding service fees and interests (if
any) charged;
· “RMB” and “Renminbi” are to the legal currency of China, which is our reporting currency;
· “shares” or “ordinary shares” are to our Class A and Class B ordinary shares, par value US$0.0001 per share;
· “US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States;
· “Uxin” or “our platform” are to our platform primarily for buying and selling used cars, which primarily consisted of two businesses in 2019,
2C business — Uxin Used Car and 2B business — Uxin Auction. We divested Uxin Auction pursuant to definitive agreements we entered
into in March 2020. See “Item 4. Information on the Company—A. History and Development of the Company— Divestitures of Our Loan
Facilitation, Salvage Car and 2B Businesses”;
· “Uxin Used Car” are to our 2C business;
· “Our WFOEs” are to our wholly-owned subsidiaries in China;
· “Our VIEs” are to our variable interest entities, which are Youxin Internet (Beijing) Information Technology Co., Ltd. or Youxin Hulian, and
Youxin Yishouche (Beijing) Information Technology Co., Ltd., or Yishouche; and
· “we,” “us,” “our company” and “our” are to Uxin Limited, our Cayman Islands holding company, and its subsidiaries, and its consolidated
affiliated entities in the PRC.
Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate
of RMB6.9618 to US$1.00, the exchange rate on as of the end of December 2019 set forth in the H.10 statistical release of the Board of Governors of the
Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or
Renminbi, as the case may be, at any particular rate, or at all.
FORWARD-LOOKING INFORMATION
This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These
statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-
looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,”
“potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections
about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.
These forward-looking statements include statements relating to, among other things:
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· our goals and strategies;
· our ability to retain and increase the number of customers on our platform and for our services, and expand our service offerings;
· our ability to provide quality services and compete effectively;
· our ability to effectively manage risks, including credit risks and fraud risks;
· our future business development, financial condition and results of operations;
· expected changes in our revenues, costs, expenses or expenditures;
· the expected growth of, and trends in, the market for our services;
· our expectations regarding demand for and market acceptance of our services;
· competition in our industry;
· relevant government policies and regulations relating to our industry;
· public health crisis, such as the COVID-19 pandemic, MERS, SARS, H1N1 flu, H7N9 flu, and avian flu; and
· general economic and business conditions in China and globally.
We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunction
with the risk factors disclosed in “Item 3. Key Information—D. Risk Factors.” Those risks are not exhaustive. We operate in an evolving environment. New
risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our
business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking
statement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law. You should read
this annual report and the documents that we reference in this annual report completely and with the understanding that our actual future results may be
materially different from what we expect.
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Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
PART I
Not applicable.
Item 3. Key Information
A. Selected Financial Data
The selected consolidated statements of comprehensive loss data for the years ended December 31, 2017, 2018 and 2019, selected consolidated
balance sheets data as of December 31, 2018 and 2019 and selected consolidated cash flow data for the years ended December 31, 2017, 2018 and 2019
have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. The selected
consolidated statements of comprehensive loss data and selected consolidated cash flow data for the years ended December 31, 2016, and selected
consolidated balance sheets data as of December 31, 2016 and 2017 have been derived from our audited consolidated financial statements for the year
ended December 31, 2016 and 2017, which are not included in this annual report. Our consolidated financial statements are prepared and presented in
accordance with U.S. GAAP. Our historical results do not necessarily indicate results expected for any future periods. You should read this Selected
Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included elsewhere in this annual report.
In July 2019 and September 2019, we entered into a binding term sheet and definitive agreements, respectively, with Golden Pacer, a limited
liability company incorporated and existing under the laws of the Cayman Islands that operates a leading financial technology platform in China, to divest
our loan facilitation related business. In April 2020, we entered into supplemental agreements with Golden Pacer to modify and supplement certain terms
and conditions in connection with the divestiture (these agreements are collectively referred to as “Loan facilitation transaction agreements”). Pursuant to
the Loan facilitation transaction agreements, we divested our entire 2C intra-regional business and ceased to provide loan facilitation related guarantee
services in connection with our 2C cross-regional business (which became the sole component of our 2C business following the divestiture and is currently
referred to as “2C online transaction business”) since November 2019. In addition, we have divested the assets and liabilities in relation to our historically-
facilitated loans for XW Bank to Golden Pacer as one of the pre-conditions for the transaction. As a result, assets and liabilities related to the historically-
facilitated loans for XW Bank were reclassified on a net basis as net assets transferred on our consolidated balance sheet as of December 31, 2019, and
results of operations related to the divested business were reported as loss from discontinued operations in the consolidated statements of comprehensive
loss. The transactions contemplated under the Loan facilitation transaction agreements closed upon the signing of the supplemental agreements in
April 2020.
In addition, we entered into definitive agreements with Beijing Hengtai Boche Auction Co. Ltd., or Boche, in January 2020 to divest our salvage
car related business. Assets and liabilities associated with the divestiture of the salvage car related business were reclassified as assets and liabilities held
for sale on our consolidated balance sheet as of December 31, 2019. Due to the insignificance of the salvage car business to our overall business, the
divested business did not meet the criteria of discontinued operations and the results of operations were not presented as discontinued operations. The
transaction with Boche closed in January 2020.
In March 2020, we entered into definitive agreements with 58.com to divest our B2B online used car auction business (which constituted the core
of our 2B business). Assets and liabilities associated with the divestiture were reclassified as assets and liabilities held for sale on our consolidated balance
sheet as of December 31, 2019, and results of operations related to the divested 2B business were reported as loss from discontinued operations in the
consolidated statements of comprehensive loss. The transaction with 58.com closed in April 2020.
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Unless indicated otherwise, the discussion of our financial data in this annual report relates to continuing operations only. The following table
presents our selected consolidated statements of comprehensive loss data for the years ended December 31, 2016, 2017, 2018 and 2019:
2016
RMB
For the Year Ended December 31,
(in thousands, except for share data)
2018
RMB
2017
RMB
2019
RMB
US$
Selected Consolidated Statements of Comprehensive
Loss Data:
(1)
Revenues:
To consumers (“2C”)
—Commission revenue
—Value-added service revenue
Others
Total Revenues
(1)
Cost of revenues
Gross profit
Operating expenses:
(1)
Sales and marketing
Research and development
(1)
General and administrative
Gains/(losses) from guarantee liabilities
Provision for credit losses
Total operating expenses
Other operating income
Loss from continuing operations
Interest income
Interest expenses
Other income
Other expenses
Foreign exchange gains/(losses)
Fair value change of derivative liabilities
Gain from disposal of investment, net
Impairment of long-term investment
Loss from continuing operations before income tax
expense
Income tax (expense)/credit
Equity in (losses)/income of affiliates
Net loss from continuing operations, net of tax
Less: net loss attributable to non-controlling interests
shareholders
Net loss from continuing operations, attributable to
UXIN LIMITED
Discontinued operations
—
—
135,298
135,298
(57,972)
77,326
(149,489)
—
(569,845)
1,983
(3,012)
(720,363)
—
(643,037)
1,482
(66)
2,643
(4,544)
769
(116,056)
—
—
(758,809)
(64)
(9,637)
(768,510)
—
—
309,133
309,133
(92,735)
216,398
(179,328)
—
(389,072)
1,840
(38,075)
(604,635)
—
(388,237)
2,234
(199)
4,248
(3,808)
(627)
(885,821)
—
—
(1,272,210)
(211)
3,597
(1,268,824)
203,158
166,482
289,450
659,090
(418,852)
240,238
(1,488,699)
(124,513)
(1,070,419)
(4,414)
(40,626)
(2,728,671)
—
(2,488,433)
24,554
(63,880)
23,721
(25,568)
(8,232)
1,185,090
—
—
(1,352,748)
(1,644)
2,631
(1,351,761)
711,362
636,046
240,623
1,588,031
(689,292)
898,739
(1,184,997)
(140,006)
(402,040)
(194,385)
(271,372)
(2,192,800)
1,925
(1,292,136)
14,958
(112,587)
71,142
(36,569)
4,247
—
28,257
(37,775)
(1,360,463)
2,554
30,231
(1,327,678)
102,181
91,362
34,563
228,106
(99,011)
129,096
(170,214)
(20,111)
(57,749)
(27,922)
(38,980)
(314,976)
277
(185,604)
2,149
(16,172)
10,219
(5,253)
610
—
4,059
(5,426)
(195,418)
367
4,342
(190,709)
(35,181)
(25,202)
(15,771)
(1,452)
(209)
(733,329)
(1,243,622)
(1,335,990)
(1,326,226)
(190,500)
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Loss from discontinued operations before income tax
Income tax expense
Net loss from discontinued operations, net of tax
Net loss from discontinued operations, attributable to
UXIN LIMITED
Net loss
Less: net loss attributable to non-controlling interests
shareholders
Net loss attributable to UXIN LIMITED
Accretion on redeemable preferred shares
Deemed contribution from preferred shareholders
Deemed dividend to preferred shareholders
Deemed dividend from preferred shareholders
Net loss attributable to ordinary shareholders
Net loss
Foreign currency translation
Total comprehensive loss
Less: total comprehensive loss attributable to non-
controlling interests shareholders
Total comprehensive loss attributable to UXIN
LIMITED
Net loss attributable to ordinary shareholders
Weighted average number of ordinary shares used in
computing net loss per share, basic and diluted
Loss per share for ordinary shareholders, basic
—Continuing operations
—Discontinued operations
Loss per share for ordinary shareholders, diluted
—Continuing operations
—Discontinued operations
2016
RMB
(622,675)
(1,741)
(624,416)
(624,416)
(1,392,926)
(35,181)
(1,357,745)
(421,346)
3,428
—
—
(1,775,663)
(1,392,926)
(3,252)
(1,396,178)
For the Year Ended December 31,
(in thousands, except for share data)
2018
RMB
(173,583)
(12,941)
(186,524)
2017
RMB
(1,478,615)
(359)
(1,478,974)
(1,478,974)
(2,747,798)
(25,202)
(2,722,596)
(555,824)
—
(587,564)
92,779
(3,773,205)
(2,747,798)
43,406
(2,704,392)
(186,524)
(1,538,285)
(15,771)
(1,522,514)
(318,951)
—
(544,773)
—
(2,386,238)
(1,538,285)
4,818
(1,533,467)
2019
RMB
(659,458)
(2,992)
(662,450)
(662,450)
(1,990,128)
(1,452)
(1,988,676)
—
—
—
—
(1,988,676)
(1,990,128)
(17,976)
(2,008,104)
US$
(94,725)
(430)
(95,155)
(95,155)
(285,864)
(209)
(285,655)
—
—
—
—
(285,655)
(285,864)
(2,582)
(288,446)
(31,438)
(27,861)
(22,359)
(1,558)
(224)
(1,364,740)
(1,775,663)
(2,676,531)
(3,773,205)
(1,511,108)
(2,386,238)
(2,006,546)
(1,988,676)
(288,222)
(285,655)
49,174,850
49,318,860
477,848,763
886,613,598
886,613,598
(23.41)
(12.70)
(23.41)
(12.70)
7
(46.52)
(29.99)
(46.52)
(29.99)
(4.60)
(0.39)
(4.60)
(0.39)
(1.50)
(0.75)
(1.50)
(0.75)
(0.21)
(0.11)
(0.21)
(0.11)
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(1) Share-based compensation in the amount of RMB226.4 million, RMB165.9 million, RMB1,052.0 million and RMB100.3 million (US$ 14.4 million)
in 2016, 2017, 2018 and 2019, respectively, was charged to cost of revenues, sales and marketing expenses, research and development expenses, and
general and administrative expenses.
The following table presents our selected consolidated balance sheets data as of December 31, 2016, 2017, 2018 and 2019:
Selected Consolidated Balance Sheets Data:
Cash and cash equivalents
Restricted cash
Advance to sellers
Financial lease receivables, net
Total assets
Convertible notes, current
Short-term borrowings
Total liabilities
Total Mezzanine equity
Total shareholders’ (deficit)/equity
Capital Stock
Number of outstanding ordinary shares
2016
RMB
2017
RMB
As of December 31,
2018
RMB
2019
RMB
US$
(in thousands, except for share data)
332,259
705,854
45,774
413,462
2,317,979
—
204,068
1,986,194
291,973
1,617,230
246,287
438,693
5,298,913
—
426,783
5,059,894
800,997
1,011,705
692,714
294,511
7,349,390
1,188,192
624,588
4,977,747
478,200
706,988
288,550
121,820
5,383,096
324,644
263,425
4,917,976
68,689
101,552
41,448
17,498
773,233
46,632
37,839
706,423
4,775,637
(4,443,852)
30
49,318,860
8,420,644
(8,181,625)
30
49,318,860
—
2,371,643
575
880,659,899
—
465,120
581
887,617,391
—
66,810
83
887,617,391
The following table presents our selected consolidated statements of cash flow data for the years ended December 31, 2016, 2017, 2018 and 2019:
Selected Consolidated Statements of Cash Flow
Data:
Net cash used in operating activities
Net cash generated from / (used in) investing activities
Net cash (used in) / generated from financing activities
Effect of exchange rate changes on cash, cash
equivalents and restricted cash
Net (decrease)/increase in cash, cash equivalents and
2016
RMB
2017
RMB
For the Year Ended December 31,
2018
RMB
(in thousands)
2019
RMB
US$
(661,210)
576,083
(133,001)
(1,834,243)
(586,843)
3,288,842
(2,281,333)
(1,078,617)
4,274,052
(1,194,101)
(484,254)
73,630
(171,522)
(69,559)
10,576
6,464
3,334
(9,278)
960
138
restricted cash
(211,664)
871,090
904,824
(1,603,765)
(230,366)
Cash, cash equivalents and restricted cash at beginning
of the year
1,249,777
1,038,113
1,730,001
1,812,702
260,378
Cash, cash equivalents and restricted cash at end of the
year
1.038,113
1,730,001
1,812,702
1,185,188
170,242
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B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Risks Related to Our Business and Industry
If we fail to provide a differentiated and superior customer experience, the size of our customer base and the number of transactions on our
platform could decline, and our business would be materially and adversely affected.
Providing a differentiated and superior online used car transaction experience for our customers, including both consumers and businesses, is
critical to our business. Our ability to provide a high-quality customer experience depends on a number of factors, including:
· our ability to improve our existing service offerings and upgrade our platform;
· our ability to meet the diverse needs of our customers with ongoing innovation and new service offerings;
· our ability to maintain and improve operating efficiency, customer experience of online transactions and service quality of our offline
networks and personnel;
· our ability to leverage technology and data to improve our services;
· our ability to adequately train and manage our employees; and
· our ability to effectively ensure the quality of services provided by our third-party agents and service providers on our platform.
We cannot guarantee that we can provide a differentiated and superior experience to our customers as our business continues to evolve. Our failure
to do so would materially and adversely affect our business, financial condition and results of operations.
Failure to maintain or enhance customer trust in us could damage our reputation, reduce or slow the growth of our customer base, which could
harm our business, financial condition and results of operations.
Our reputation as a trusted transaction platform is critical to our success. If we fail to maintain a high level of customer trust in our services, our
business, financial condition and results of operations could be materially and adversely affected.
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We work with third parties to provide many services through our platform, such as car delivery, title transfer and warranty services, which are the
key to earn customer trust. If we fail to maintain a high level of customer satisfaction or fail to properly manage these services, our business, financial
condition and results of the operations would be adversely affected. Starting from December 2018, we have also worked with third-party agents to enlarge
our sales force in the effort to effectively expand our service network across China. We currently have more than 1,100 service centers operated by our
agents in more than 230 cities at prefecture level or above. We provide trainings to our agents and require them to operate the service centers in line with
our operating and customer servicing standards. However, if these service centers fail to maintain a high level of performance consistent with our
requirements, the level of customer satisfaction and trust we enjoy may be harmed, and our business, financial condition and results of the operations may
be adversely affected.
We have received in the past, and we may continue to receive in the future, communications or complaints alleging that cars listed on or sold
through our platform are defective, inconsistent with car information provided on our platform, or the services provided by our third-party service providers
are unsatisfactory to our customers. The information we include in our car listings is collected and maintained by us, which may not be accurate or
complete due to human error, technological issues or willful misconduct. Moreover, if dealers experience difficulties in meeting our requirements or
standards or provide inaccurate or unreliable information to us, we may be subject to legal liabilities for the actions or services of these dealers and we may
fail to maintain customer trust in our platform, which may adversely affect our business, financial condition and results of the operations.
Our business, operating results and financial condition have been and may continue to be adversely affected by the COVID-19 pandemic.
Since the beginning of 2020, the COVID-19 pandemic have resulted in the temporary closure of many corporate offices, retail stores, and
manufacturing facilities across China and globally. In early 2020, in response to intensifying efforts to contain the spread of COVID-19, the Chinese
government took a number of actions, which included extending the Chinese New Year holiday, quarantining individuals infected with or suspected of
having COVID-19, prohibiting residents from free travel, encouraging employees of enterprises to work remotely from home and cancelling public
activities, among others. In addition, as the pandemic continues to threaten global economies, it may continue to cause significant market volatility and
declines in general economic activities.
We have taken a series of measures in response to the pandemic to protect our employees, including, among others, temporary closure of some
offices, remote working arrangements for our employees and travel restrictions or suspension. These measures have negatively affected the capacity and
efficiency of our operations, which in turn could negatively affect our results of operations. The extent to which COVID-19 impacts our results of
operations will depend on the future developments of the pandemic, including new information concerning the global severity of and actions taken to
contain the pandemic, which are highly uncertain and unpredictable. In addition, our results of operations could be adversely affected to the extent that the
pandemic harms the Chinese and global economies in general.
The COVID-19 pandemic has severely affected the used car industry with disruptions impacting the industry’s infrastructure and supply chains
since January 2020. Throughout February and early March 2020, the majority of local used car markets and dealerships in China were closed and unable to
resume operations. Logistics and delivery of used cars were also impacted by the closure of roads and highways in many regions across China. Title
transfers were also hindered as local vehicle registration and management bureaus either remained closed or yet to resume full operations. All of these
factors created considerable barriers to used car purchase and fulfillment, which has severely disrupted our business operations during the first quarter of
2020 and may continue to weigh on our results for the rest of 2020. In addition, borrowers’ ability or willingness to repay their auto loans may also be
negatively affected by general economic downturns. As the impact of the pandemic are being fully considered in the credit loss assessment under the new
accounting standard effective on January 1, 2020, a significant provision for credit losses and losses from guarantee liabilities will be provided for the first
quarter of 2020 associated with our historically-facilitated loans that were not transferred to Golden Pacer as part of the divestiture of our loan facilitation
related business.
The extent of the impact on our results due to COVID-19 will depend on, to a large extent, future developments and new information that may
emerge regarding the duration and severity of COVID-19 and the actions taken by government authorities and other entities to contain COVID-19 or treat
the infection, almost all of which are beyond our control. While many of the restrictions on movement within China have been relaxed as of the date of this
annual report, there is great uncertainty as to the future progress of the disease. Currently, there is no vaccine or specific anti-viral treatment for COVID-19.
Relaxation of restrictions on economic and social life may lead to new cases which may lead to the re-imposition of restrictions. Since late March 2020, the
used car industry has been gradually recovering as businesses restart operations, but we expect that it will still take some time before overall operations
recover to normal levels.
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We face intense competition, which may lead to loss of market share, reduced service fees and revenue, increased expenses, departures of qualified
employees, and disputes with competitors.
We face intense competition in the used car industry both online and offline. Our competitors may have significantly more resources than we do,
including financial, technological, marketing and others and may be able to devote greater resources to the development and promotion of their platforms
and services. As a result, they may have deeper relationships with dealers, auto financing partners and other third-party service providers than we do. This
could allow them to develop new services, adapt more quickly to changes in technology and to undertake more extensive marketing campaigns, which may
render our platform less attractive to consumers and businesses and cause us to lose market share. Moreover, intense competition in the markets we operate
in may reduce our service fees and revenue, increase our operating expenses and capital expenditures, and lead to departures of our qualified employees.
We may also be harmed by negative publicity instigated by our competitors, regardless of its validity. We are currently subject to an ongoing unfair
competition claim, and we have encountered and may in the future continue to encounter other disputes with our competitors, including lawsuits involving
claims asserted under intellectual property laws, unfair competition laws and defamation which may adversely affect our business and reputation. Failure to
compete with current and potential competitors could materially harm our business, financial condition and our results of operations.
We are exposed to credit risk in connection with some of auto loans we facilitated in the past. Our risk management system may not be able to
accurately assess and mitigate all the risks to which we are exposed, including credit risk.
Prior to the divestiture of our loan facilitation related business to Golden Pacer as first announced in July 2019, we provided guarantees to our
third-party financing partners for all consumer auto loans facilitated through our 2C business. See “Item 4. Information on the Company— A. History and
Development of the Company— Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses.” While we have ceased to provide loan facilitation
related guarantee services in connection with our 2C business since November 2019 as a result of the divestiture, we remain subject to certain guarantee
liabilities in connection with certain loans we historically facilitated. In addition, as we work with third-party financing partners under Easy Loan program
to facilitate short-term inventory financing for qualified dealers, we remain exposed to certain credit risk with respect to this program. Dealers may default
on their loans for a number of reasons including those outside of their or our control. We cannot assure you that our risk management system will
accurately assess and mitigate all risks, including credit risk, that we are exposed to, and any failure to accurately assess or mitigate such risks could
materially harm our business, financial condition and results of operations.
We are not profitable and have negative cash flows from operations, which may continue in the future.
We have not been profitable since our inception in 2011. We incurred net losses from continuing operations of RMB1,268.8 million, RMB1,351.8
million and RMB1,327.7 million (US$190.7 million) in 2017, 2018 and 2019, respectively. In addition, we had negative cash flow from operating activities
of RMB1,834.2 million, RMB2,281.3 million and RMB1,194.1 million (US$171.5 million) in 2017, 2018 and 2019, respectively. We may continue to
make significant investments including in sales and marketing, to further develop and expand our business and these investments may not result in an
increase in revenue or positive cash flow on a timely basis, or at all.
We may incur substantial losses and negative cash flow in the future for a number of reasons, including decreasing demand or slower than
expected increase in demand for used cars and our services, increasing competition, weakness in the automotive retail industry in general, as well as other
risks discussed herein, and we may incur unforeseen expenses, or encounter difficulties, complications and delays in generating revenue or achieving
profitability. If our revenues decrease, we may not be able to reduce our costs and expenses proportionally in a timely manner because many of our costs
and expenses are fixed. In addition, if we reduce our costs and expenses, we may limit our ability to acquire customers and grow our revenues.
Accordingly, we may not be able to achieve profitability and we may continue to incur significant losses in the future.
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If we are unable to effectively manage our growth or implement our business strategies, our business, results of operations and financial condition
may be materially and adversely affected.
Our business and prospects depend in part on our ability to effectively manage our growth or implement our growth strategies. As part of our
business strategies, we intend to increase our penetration in existing markets and expand into new geographic markets. Our experience in the markets in
which we currently operate may not be applicable to other parts of China. We may not be able to leverage our experience to expand into new geographic
markets in China. As a result, our expansion and monetization strategies, including sales and marketing efforts designed to attract more consumers and
businesses to use our services, may not be successful. Furthermore, expanding into new geographical markets will require us to hire additional employees
to cover these markets. We will incur additional compensation and benefit costs, office rental expenses and other costs, as well as experience additional
strain on our managerial resources. If we are unable to successfully expand and generate sufficient revenues to cover our increased costs and expenses, our
business, financial condition and results of operations may be materially and adversely affected.
Moreover, our rapid expansion may lead to new challenges and risks. To manage the further expansion of our business, we need to continuously
expand and enhance our infrastructure and technology, and improve our operational and financial systems, procedures and internal controls. We also need
to train, manage and motivate the growing number of our employees. In addition, we need to maintain and expand our relationships with our customers,
third-party service providers and other third parties. We cannot assure you that our personnel, infrastructure, systems, procedures and controls will be
adequate to support our operations. Effectively managing our growth is dependent on a number of other factors, including our ability to:
· effectively expand into new geographic markets;
· continue to improve our existing services;
· launch new services and develop cross-selling opportunities;
· stabilize our costs and expenses and enhance our efficiency;
· recruit and retain skilled and experienced employees;
· strengthen relationships with our business partners;
· enhance our risk management and internal control;
· charge service fees from customers;
· upgrade our technology and continue to innovate; and
· maintain and enhance the network effects of our platform.
If we fail to effectively manage our growth or implement our business strategies, our business, results of operations and financial condition may be
materially and adversely affected.
Our business is dependent upon dealers’ willingness to provide inventory to our platform. A reduction in the number of dealers on our platform
would have a material adverse effect on our business, financial condition and results of operations.
Dealers serve as providers of the virtual inventory for our 2C business. Failure to attract and retain a large number of dealers to our platform,
whether because of competition, vehicle supply shortage, or other factors, would adversely affect our business, financial condition and results of
operations. Maintaining a large number of dealers on our platform depends on a number of factors, including our ability to:
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· reach a large number of potential used car buyers on our platform;
· maintain and expand relationships with existing dealers;
· develop new business relationships with potential dealers;
· offer services to meet the needs of dealers; and
· enhance our service offerings by leveraging our technological capabilities.
There is no guarantee that we will be able to maintain and grow the number of dealers on our platform, and if we fail to do so, the number of
quality listings and transactions on our platform would decline, and our business, results of operations and financial condition would be materially and
adversely affected.
We work with third-party service providers and business partners. Actions of third parties are outside of our control and could materially and
adversely affect our reputation, business, financial condition and results of operations.
We work with third parties in providing many of the services offered on our platform, such as auto financing, logistics and delivery, title transfers,
car repair and certain data services. We also work with third-party agents and currently have more than 1,100 service centers operated by our agents in
more than 230 cities at prefecture level or above. We carefully select our third-party agents, service providers and business partners, but we are not able to
fully control their actions. If these third parties fail to perform as we expect, experience difficulty meeting our requirements or standards, fail to conduct
their business ethically, fail to provide satisfactory services to our customers, receive negative press coverage, violate applicable laws or regulations, breach
the agreements with us, or if the agreements we have entered into with the third parties are terminated or not renewed, it could damage our business and
reputation. In addition, if such third-party service providers cease operations, temporarily or permanently, face financial distress or other business
disruptions, increase their fees, or if our relationships with them deteriorate, we would suffer from increased costs, be involved in legal or administrative
proceedings with or against our third-party service providers and experience delays in providing customers with similar services until we find or develop a
suitable alternative. In addition, if we are unsuccessful in identifying high-quality partners, or establishing cost-effective relationships with them, or
effectively managing these relationships, our business and results of operations would be materially and adversely affected.
In addition, we work with third-party service providers for collection of loans in connection with our historical loan facilitation services. We aim
to ensure the collection efforts carried out by our third-party service providers comply with the relevant laws and regulations in the PRC and have
employed contractual measures to further ensure such compliance. However, we do not have complete control over third-party service providers, and if our
collection methods are viewed by the borrowers or regulatory authorities as harassments, threats or other illegal means, we may be subject to risks relating
to third-party debt collection services providers, including lawsuits initiated by the borrowers or prohibition from using certain collection methods by the
regulatory authorities. The current regulatory regime for debt collection in the PRC also remains unclear and are subject to changes. Any perception that
our collection practices are aggressive and not compliant with the relevant laws and regulations in the PRC may adversely affect our reputation or result in
fines and penalties imposed by the relevant regulatory authorities, any of which may have a material adverse effect on our business, financial condition and
results of operations.
We rely, in part, on our marketing efforts for customer acquisition and achieving higher level of brand recognition. If we fail to conduct our
marketing activities effectively and efficiently, our business would be harmed.
We may continue to invest substantial financial and other resources in marketing initiatives to grow our customer base. We currently carry out our
marketing activities mainly by acquiring traffic through a combination of online channels with the goal of attracting more visitors to our platform. We also
used to engage brand ambassador and launch advertising campaigns to build brand awareness in 2019. We face intense competition from our competitors
who may have greater marketing resources than we do. If we fail to conduct our marketing activities effectively and efficiently, or if our traffic acquisition
efforts and marketing campaigns are not successful, our growth, results of operations and financial condition would be materially and adversely affected.
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Negative media coverage related to our business, regardless of its validity, could adversely affect our business, financial position and results of
operations.
Negative news or media coverage of our business, our employees, our third-party service providers and business partners, our brand ambassador,
our directors and management or our shareholders, including, without limitation, alleged failure to comply with applicable laws and regulations, alleged
fraudulent car listings, alleged misrepresentation by our sales consultants or third-party agents, breach of data security, failure to protect user privacy,
inappropriate business practices, disclosure of inaccurate operating data, negative information on blogs and social media websites, regardless of their
validity, could damage our reputation. If we fail to correct or mitigate misinformation or negative information about us, including information spread
through social media or traditional media channels, customer trust in us may be undermined, which would have a material adverse effect on our business,
results of operations and financial condition.
Our limited operating history in certain of our services and the rapid evolution of our business model make it difficult for investors to evaluate our
business and prospects.
We began operating our 2C business in 2015. Our limited operating history in our services and the rapid evolution of our business model mean
that our historical growth is not necessarily indicative of our future performance. We cannot assure you that our new product and service offerings will
achieve the expected results or we will be able to achieve similar results or grow at the same rate as we did in the past. As our business and China’s used
car industry continue to develop, we may adjust our product and service offerings or modify our business model. For example, starting from early 2018, we
have started to fulfill online used car transactions for consumers, which we previously referred to as “2C cross-regional business”. With our online used-
car-buying product and service offerings, we enable consumers to buy used cars online without the need to go to offline dealerships or see the actual car
when making the purchase. In addition, we entered into a binding term sheet, definitive agreements and supplemental agreements, in July 2019,
September 2019 and April 2020, respectively, with Golden Pacer to divest our loan facilitation related business. Pursuant to the series of agreements, we
divested our entire 2C intra-regional business in which we facilitated offline used car transactions between consumers and dealers in local used car
marketplaces, and ceased to provide loan facilitation related guarantee services in connection with our 2C online transaction business since
November 2019. We also divested our salvage car related business to Boche in January 2020 as well as our 2B business to 58.com pursuant to definitive
agreements we entered into in March 2020. The transaction with Golden Pacer closed upon the signing of the supplemental agreements in April 2020, and
the transactions with Boche and 58.com closed in January 2020 and April 2020, respectively. Such developments or adjustments may not achieve expected
results and may have a material and adverse impact on our financial condition and results of operations.
The fees we charge from transactions on our platform may fluctuate or decline in the future and any material decrease in such service fees would
harm our business, financial condition and results of operations.
Most of our revenues are derived from the fees we charge from transactions on our platform, such as commission fee and value-added service fee
from our 2C business. Prior to the divestiture of our 2B business, we also generated transaction facilitation service fee from the 2B business. Maintaining
and growing our revenues depends on a number of factors, including:
· our ability to deliver satisfactory online used car transaction experience to our customers;
· our ability to attract consumers and dealers to our platform;
· the average unit price of used cars sold on our platform, which may decrease if we adjust down the price range of used cars available on our
platform or enter into lower-tier city markets, or as a result of declining selling prices of new cars;
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· the average commission rate and corresponding fee as well as the average value-added service take rate and corresponding fee that we charge
per transaction, which is subject to market condition and competition;
· our ability to foster relationships with third-party service providers to provide services through our platform at attractive terms and prices to us
and our customers; and
· fluctuation in other macro-economic changes.
Any failure to adequately and promptly address any of these risks and uncertainties would materially and adversely affect our business and results
of operations. For example, as we further expand our 2C business by entering into lower-tier city markets, we have and may continue to experience
decreases in average commission and value-added service fees that we charge per transaction, as the average unit price of used cars sold in those markets
may be lower than that of cars sold in tier-one and tier-two cities.
Failure to obtain certain filings, approvals, licenses, permits and certificates required for our business operations may materially and adversely
affect our business, financial condition and results of operations.
Pursuant to relevant laws and regulations, as some of our PRC subsidiaries and VIEs used to provide vehicle maintenance services and were
regarded as motor vehicle maintenance operators, these entities were required to file for motor vehicle maintenance operation with the road transport
administration. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Motor Vehicle Maintenance.” As of the
date of this annual report these entities have not obtained all the requisite licenses, but we no longer provide motor vehicle maintenance services. Failure to
obtain these licenses shall be ordered to make rectification, and, in case of refusing to rectify, be subject to a fine of RMB5,000 to RMB20,000. Although
we do not provide motor vehicle maintenance services any more, we cannot assure you that our prior operation will not be regarded by the governmental
authorities as historical non-compliance, and imposition of any enforcement action would adversely affect our reputation and business, financial condition
and results of operations.
Certain of our PRC subsidiaries and VIEs used to engage in business activities that are not within their registered business scope. As of the date of
this annual report, we are not aware of any action, claim, or investigation being conducted or threatened by the State Administration for Market Regulation
(formerly known as the State Administration for Industry and Commerce), or the SAMR or its local branches with respect to such business activities. While
we have ceased conducting such business activities, we cannot rule out the possibility that our past practice could be interpreted by the SAMR as “doing
business beyond the business scope” and subject us to enforcement actions such as confiscation of any illegal gains, or imposition of fines.
In addition, pursuant to relevant laws and regulations, as some of our PRC subsidiaries and VIEs are regarded as operators of used car
marketplaces and used car related business, these entities are required to complete filing with the Ministry of Commerce of the PRC, or the MOFCOM, at
provincial level. Although we are in the process of preparing the filings, we may not be able to complete such filings in certain locations since the relevant
authorities in those areas do not accept such filing application in practice due to the lack of local implementation rules and policies in such respects. We
plan to submit our application as soon as the relevant governmental authorities are ready to accept our filing application. However, there is no assurance we
will be able to complete the filing in a timely manner, or at all. Failure to comply with the filing requirements may subject our business to restriction, which
would have an adverse impact on our business and results of operations.
In addition, it is required by PRC laws and regulations for companies responsible for the construction projects to prepare environmental impact
report, environmental impact statement, or environmental impact registration form based on the different level of potential environmental impact of the
projects. The environmental impact reports (required if potentially serious environmental impact) and the environmental impact statements (required if
potentially mild environmental impact) are subject to review and approval by the governmental authority and failure to satisfy such requirements may
subject one to discontinuation of the construction projects, fines of 1% to 5% of the total investment in the projects or an order of restoration. The
environmental impact registration forms (required if very little environmental impact where environmental impact assessment is not necessary) are required
to be filed with competent authority and failure to satisfy such requirement may subject one to fines up to RMB50,000 (US$7,182). We do not regularly
conduct construction projects in the ordinary course of our business. However, some of our projects, including the building and overall decoration of our
transaction centers from time to time, could be recognized as construction projects where a timely filing or submission for approval is required and failure
to do so may subject us to fines and other enforcement actions as mentioned above.
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Considerable uncertainty exists regarding the interpretation and implementation of existing and future laws and regulations governing our business
activities. Historically, some of our PRC subsidiaries have been fined due to late tax filings, although the amount of the fine was not significant. If we fail
to complete, obtain, maintain or renew any of the required licenses or approvals or make the necessary filings, we may be subject to various penalties, such
as confiscation of the illegal gains, imposition of fines and discontinuation or restriction of our operations. Any such penalties may disrupt our business
operations and materially and adversely affect our business, financial condition and results of operations.
Our historical loan facilitation services may subject us to regulatory risks, which may have a material adverse effect on our business, results of
operations and financial condition.
Prior to the divestiture of our loan facilitation related business to Golden Pacer (“Loan Facilitation Divestiture”), we historically provided loan
facilitation services in partnership with financial institutions who finance our customers’ car purchases. As a result of the divestiture, we ceased to provide
loan facilitation services since November 2019. We also currently work with third-party financing partners to provide inventory financing to dealers.
According to the Financing Guarantee Circular 37 which was issued and became effective on October 9, 2019, entities shall be prohibited from
providing financing guarantee services unless obtaining the approval from the relevant regulatory authorities and establishing financing guarantee
companies. Those who have been engaged in financing guarantee services shall properly settle its existing business. The authorities shall intensify the
crackdowns on the financing guarantee companies with illegal operation or those who committed serious infringement of consumer’s (and guaranteed
person’s) rights and shall timely report such cases to the banks so as to work together to protect the legitimate rights and interests of the consumers. The
Financing Guarantee Circular 37 also stipulates that, without prior approval, any institution which provides customer promotion, credit evaluation and
other services for any lending institution shall be prohibited from providing financing guarantee services or doing so in a disguised form. Any entity
operating the financing guarantee business without a financing guarantee business license shall be banned by the regulatory authorities. See “Item 4.
Information on the Company—B. Business Overview—Regulation—Regulations on Financing Guarantee.” While we no longer provide any additional
loan facilitation related guarantee services since November 2019 and have divested the guarantee liabilities in relation to our historically-facilitated loans
for XW Bank, which accounted for more than half of the total loans we historically facilitated, to Golden Pacer as a result of the Loan Facilitation
Divestiture, we remain subject to certain guarantee liabilities for the rest of the consumer auto loans we historically facilitated through our 2C business. As
of the date of this annual report, we have not obtained relevant approvals from regulatory authorities. It is required by the Financing Guarantee Circular 37
for us to properly settle our existing business and we plan to settle and gradually relieve our guarantee obligations from these historically facilitated loans
along with the maturity of those remaining outstanding loans. However, we cannot assure you that our guarantee services in connection with such
historical auto loans will be regarded as our “proper settlement” of our existing auto loan guarantee business by the relevant authority, or that our past
practices in connection with our loan facilitation services would not be regarded as historical non-compliance. The imposition of any enforcement action
would adversely affect our reputation and business, financial condition and results of operations.
In addition, while we have ceased to provide loan facilitation related guarantee services in connection with our 2C business since November 2019
as a result of the divestiture to Golden Pacer, we remain subject to a portion of guarantee liabilities in connection with certain loans we historically
facilitated. The Office of the Leading Group for Specific Rectification against Online Finance Risks and the Office of the Leading Group for Specific
Rectification against P2P Online Lending Risks jointly issued the Circular on Regulating and Rectifying Cash Loan Business, or Circular 141, in
December 2017 to regulate “cash loans” related business. The Circular 141 specifies the features of “cash loans” as follows: loans are extended without
relying on any consumption scenario in connection with sales of goods; the terms of the loans do not specify the use of loan proceeds; there is no
qualification requirement on the part of customers; and the loans are unsecured Circular 141 prohibits a financial institution from participating in the “cash
loan” business from accepting credit enhancement services from a third party which has not obtained any license or approval to provide guarantees,
including credit enhancement service in the form of a commitment to assume default risks, and requires a financial institution to ensure its service providers
in “cash loan” business will not charge any interest or fees from borrowers. Given that the loans we historically facilitated are based on real consumption
scenarios with specified use and the majority of the loans are secured with the car collateral, we believe they should not be deemed as “cash loans” under
Circular 141, and thus our remaining guarantee liabilities in connection with such loans are not subject to the regulation of Circular 141. However, as the
Circular 141 has been issued recently and the laws and regulations governing the online consumer finance industry in China are evolving rapidly, there are
substantial uncertainties regarding the interpretation and application of the regulations, we cannot rule out the possibility that the PRC regulatory
authorities may take a view that is contrary to ours and view the consumer auto loans historically facilitated through our platform as “cash loans” and the
guarantees for such consumer auto loans as credit enhancement service. In such events, we may have to further modify our practice, which might materially
and adversely affect our results of operations and financial condition.
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Furthermore, PRC laws and regulations concerning financial services, including internet financial services, are evolving and the PRC government
authorities may promulgate further laws and regulations in the future. We cannot assure you that our past or current practices would not be regarded as non-
compliance, and imposition of any enforcement action would adversely affect our reputation and business, financial condition and results of operations. For
example, under current regulations, the risk assets of a PRC entity that conducts finance leasing business must not exceed 10 times its total net assets. In
addition, PRC regulations stipulate that the amount of auto loans should be capped at 80% of the purchase price for a self-use conventionally-powered new
car, 85% for a self-use new energy vehicle, and 70% for a used car. Our financing partners were responsible for designing the financing products that we
offered through our historical loan facilitation services and are responsible for the financing products we currently refer to consumers on our platform. The
financing products provided by our financing partners on our platform may be deemed to exceed the stipulated cap on the loan amount relative to the car
purchase price, in which case we may be required to make adjustments to our cooperation arrangements or cease to cooperate with these financing partners.
We may be deemed to operate financing guarantee business by the PRC regulatory authorities.
In August, 2017 the State Council promulgated the Regulations on the Administration of Financing Guarantee Companies, or the Financing
Guarantee Rules which became effective on October 1, 2017. Pursuant to the Financing Guarantee Rules, “financing guarantee” refers to the activities in
which guarantors provide guarantee to the guaranteed parties as to loans, bonds or other types of debt financing, and “financing guarantee companies” refer
to companies legally established and operating financing guarantee business. According to the Financing Guarantee Rules, the establishment of financing
guarantee companies are subject to the approval by the relevant governmental authority, and unless otherwise stipulated, no entity may operate financing
guarantee business without such approval. If any entity violates these regulations and operates financing guarantee business without approval, the entity
may be subject to penalties including ban or suspension of business, fines of RMB500,000 (US$71,821) to RMB1,000,000 (US$143,641), confiscation of
illegal gains if any, and criminal liability if the violation constitutes a criminal offense.
Prior to divesting our loan facilitation business to Golden Pacer as first announced in July 2019, we provided guarantees to our financing partners
in connection with the historical consumer auto loans. While we have ceased to provide loan facilitation related guarantee services since November 2019 as
a result of the divestiture, we remain subject to guarantee obligations in relation to a part of our historically-facilitated loans. We do not believe that the
Financing Guarantee Rules apply to such guarantee obligations as the guarantees were not provided independently from our principal business. However,
due to the lack of further interpretations, the exact definition and scope of “operating financing guarantee business” under the Financing Guarantee Rules is
unclear. It is uncertain whether we would be deemed to operate financing guarantee business in violation of relevant PRC laws or regulations because of
historical arrangements with certain financial institutions. If the relevant regulatory authorities determine that we were and/or are operating financing
guarantee business, we may be required to obtain approval or license for financing guarantee business. In such cases, our business, results of operations and
financial conditions could be adversely affected.
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We may be held liable for information or content displayed on or linked to our platform, which may materially and adversely affect our business
and operating results.
We may be held liable for inaccurate or incomplete information, including car listings, that is available through or linked to our platform. The data
we collect and use for the car listings may be inaccurate or incomplete due to errors or on the part of our employees or third-party information providers, or
frauds. We received a penalty decision and a fine issued by the governmental authority in March 2018 for providing inconsistent car information on our
platform. Our failure to ensure the accuracy and integrity of our data, regardless of its source, could undermine customer trust, result in further
administrative penalties and adversely affect our business, financial position and results of operations.
We depend on our proprietary technology for critical functions of our business. Failure to properly maintain or promptly upgrade our technology
may result in disruptions to or lower quality of our services and our business, results of operations and financial condition may be materially and
adversely affected.
We rely on our proprietary technology, including websites and mobile apps, car inspection system, AI algorithms and VR technology for critical
functions of our businesses. See “Item 4. Information on the Company—B. Business Overview—Technology.” Maintaining and upgrading our technology
carry certain risks, including the risk of disruptions caused by significant design or deployment errors, delays or deficiencies, which has made and may
continue to make our platform and services unavailable. We may also implement additional or enhanced technology in the future to accommodate our
growth and to provide additional capabilities and functionalities. The implementation of new or enhanced technologies may be disruptive to our business
and can be time-consuming and expensive, and may increase management responsibilities and divert management attention. Additionally, our proprietary
AI algorithms are based on data-driven analytics. If we do not have a large amount of data or the quality of data available to us for analysis is
unsatisfactory, or if our algorithms have deficiencies, our proprietary AI algorithms may fail to perform effectively. If we fail to properly maintain or
promptly upgrade our technology, our services may be disrupted or become of lower quality or unprofitable, and our results of operations and financial
condition may be materially and adversely affected.
Our business is subject to risks related to China’s online used car transaction industry, including industry-wide and macroeconomic risks.
We operate as a national online used car dealer in China’s used car market. We cannot assure you that this market will continue to grow rapidly in
the future. Furthermore, the growth of China’s used car industry could be affected by many factors, including:
· general economic conditions in China and around the world;
· outbreaks of COVID-19 or any other serious contagious diseases;
· the growth of disposable household income and the availability and cost of credit available to finance used car purchases;
· the growth of China’s automobile industry;
· the growth of China’s auto financing industry;
· consumer acceptance of used cars and willingness to purchase used cars online;
· consumer acceptance of financing car purchases;
· taxes and other incentives or disincentives related to used car purchases and ownership;
· environmental concerns and measures taken to address these concerns;
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· the cost of energy, including gasoline prices, and the cost of car license plates in various cities with license plate lottery or auction systems;
· the improvement of highway system and availability of parking facilities;
· other government policies relating to used cars and auto financing in China;
· fluctuations in the sales and price of new and used cars;
· ride sharing, transportation networks, and other fundamental changes in transportation pattern; and
· other industry-wide issues, including supply and demand for used cars, age distribution of cars, and supply chain challenges.
Any adverse change to these factors could reduce demand for used cars and hence demand for our services, and our results of operations and
financial condition could be materially and adversely affected.
We collect, process, store, share, disclose and use personal information and other data, and any actual or perceived failure to protect such
information and data could damage our reputation and brand and harm our business and results of operations.
We collect, process, store, share, disclose and use personal information and other data provided by consumers and our business partners. Although
we have spent significant resources to protect our user and transaction data against security breaches, our internal control mechanism may not be sufficient
and our security measures may be compromised. Any failure or perceived failure to maintain the security of personal and other data that are provided to or
collected by us could harm our reputation and brand and may expose us to legal proceedings and potential liabilities, any of which could adversely affect
our business and results of operations.
There are numerous laws and regulations regarding privacy and the collection, processing, storing, sharing, disclosing, using and protecting of
personal information and other data. Specifically, personally identifiable and other confidential information is increasingly subject to legislation and
regulations in numerous domestic and international jurisdictions. The regulatory framework for privacy protection in China and worldwide is currently
evolving and is likely to remain uncertain for the foreseeable future. We could be adversely affected if legislation or regulations in China are expanded to
require changes in business practices or privacy policies, or if the PRC governmental authorities interpret or implement their legislation or regulations in
ways that negatively affect our business, financial condition and results of operations. In November 2016, the Standing Committee of the NPC released the
Internet Security Law, which took effect in June 2017. The Internet Security Law requires network operators to perform certain functions related to internet
security protection and the strengthening of network information management. For instance, under the Internet Security Law, network operators of key
information infrastructure generally shall, during their operations in the PRC, store the personal information and important data collected and produced
within the territory of the PRC. We are in the process of evaluating the potential impacts of the Internet Security Law on our current business practices. We
strive to comply with applicable laws, regulations, policies, and legal obligations relating to privacy and data protection, to the extent possible. However, it
is possible that these obligations may be interpreted and applied in new or inconsistent ways and may conflict with other rules or our practices, or that new
regulations may be enacted. Any failure or perceived failure by us to comply with our privacy policies, privacy-related obligations to consumers or other
third parties or other privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive
information, such as personally identifiable information or other customer data, may result in governmental enforcement actions, litigation or public
statements against us by consumer advocacy groups or others and could cause consumers and our business partners to lose trust in us, which could have an
adverse effect on our business. Additionally, if third parties that we work with violate applicable laws or our policies, such violations may also put our
customers’ information at risk and could in turn harm our reputation, business and results of operations.
In addition to laws, regulations and other applicable rules regarding privacy and privacy advocacy, industry associations or other private parties
may propose new and different privacy standards. Because the interpretation and application of privacy and data protection laws and privacy standards are
still uncertain, it is possible that these laws or privacy standards may be interpreted and applied in a manner that is inconsistent with our practices. Any
inability to adequately address privacy concerns, even if unfounded, or to comply with applicable privacy or data protection laws, regulations and privacy
standards, could result in additional cost and liability to us, damage our reputation, inhibit the use of our platform and harm our business.
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Any breaches to our security measures, including unauthorized access, computer viruses and “hacking” may adversely affect our database and
reduce use of our services and damage our reputation and brand names.
The massive data that we have processed and stored makes us or third-party service providers who host our servers a target and potentially
vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins, or similar disruptions. Breaches to our security measures, including
computer viruses and hacking, may result in significant damage to our hardware and software systems and database, disruptions to our business activities,
inadvertent disclosure of confidential or sensitive information, interruptions in access to our platform, and other material adverse effects on our operations,
during transfer of data or at any time, and result in persons obtaining unauthorized access to our systems and data. Our systems may be subject to
infiltration as a result of third-party action, employee error, malfeasance or otherwise. While we have taken steps to protect the confidential information
that we have access to, techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they
are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any accidental or willful
security breaches or other unauthorized access to our platform could cause confidential customer and investor information to be stolen and used for
criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the
information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of any third-party action, employee
error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with customers and
investors could be severely damaged, we could incur significant liability and our business and operations could be adversely affected.
We depend heavily on our management team and other key personnel to manage our business. If we fail to retain their services or to attract talents,
our ability to run and grow our business could be severely impaired.
Our future success is highly dependent on the ongoing efforts of our senior management and key personnel. We rely on our management team for
their extensive knowledge of and experience in China’s automobile and internet industries as well as their deep understanding of the Chinese automobile
market, business environment and regulatory regime. The loss of the services of one or more of our senior executives or key personnel may have a material
adverse effect on our business, financial condition and results of operations. Competition for senior management and key personnel is intense, and the pool
of suitable candidates is very limited, and we may not be able to retain the services of our senior executives or key personnel, or attract and retain senior
executives or key personnel in the future. If we fail to retain our senior management, our business and results of operations could be materially and
adversely affected. In addition, if any members of our senior management or any of our key personnel join a competitor or form a competing company, we
may not be able to replace them easily and we may lose customers, business partners and key staff members.
Our business is susceptible to employee misconduct, improper business practices and other fraudulent conduct by or between our employees and
third parties.
We rely on our employees to carry out our operating objectives. We are exposed to many types of operational risks, including the risk of
misconduct and errors by our employees. Our business depends on our employees to interact with potential customers, conduct car inspection, process large
numbers of transactions and provide support for other key aspects of our business, all of which involve the use and disclosure of personal information and
are susceptible to human errors and mistakes on the part of our employees.
We could be materially adversely affected if transactions were redirected, misappropriated or otherwise improperly executed, if personal
information was disclosed to unintended recipients or if an operational breakdown or failure in the processing of transactions occurred, whether as a result
of human error, purposeful sabotage or fraudulent manipulation of our operations or systems. In addition, the manner in which we store and use certain
personal information and interact with customers and other third parties through our marketplace is governed by various PRC laws.
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Although we provide periodic trainings to all our employees, it is not always possible to identify and deter misconduct or errors by employees, and
the precautions we take to detect and prevent potential misconducts and human errors may not be effective in controlling risks or losses. If any of our
employees take, convert or misuse funds, documents or data or fail to follow protocol when interacting with customers and among themselves, we could be
liable for damages and subject to regulatory actions and penalties. We could also be perceived to have facilitated or participated in the illegal
misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability. Our employees may
also engage in improper business practices and other fraudulent conduct with third parties. As a result of these potential damaging activities, we could incur
significant losses, which could have a material adverse effect on our results of operations and financial condition.
Failure to adequately protect our intellectual property and proprietary information could materially harm our business and operating results.
We believe our patents, trademarks, software copyrights, trade secrets, our brand and other intellectual property rights and proprietary information
are critical to our success. Any unauthorized use of intellectual property rights and proprietary information could harm our business, reputation and
competitive advantages. We rely on a combination of patent, trademark, trade secret and copyright law, our internal control mechanism, and contractual
arrangements to protect our intellectual property.
Legal protection may not always be effective. Infringement of intellectual property rights continues to pose a serious risk in doing business in
China. Monitoring and preventing unauthorized use is difficult. Furthermore, the application of laws governing intellectual property rights in China is
uncertain and evolving, and could involve substantial risks to us. The practice of intellectual property rights enforcement action by Chinese regulatory
authorities is in its early stage of development. In the event that we have to resort to litigation and other legal proceedings to enforce our intellectual
property rights, such action, litigation or other legal proceedings could result in substantial costs and diversion of our management’s attention and resources
and could disrupt our business. There is no assurance that we will be able to enforce our intellectual property rights effectively or otherwise prevent others
from the unauthorized use of our intellectual property.
We try, to the extent possible, to protect our intellectual property, technology, and confidential information by requiring our employees, third-party
service providers, and consultants to enter into confidentiality and assignment of inventions agreements. Due to potential willful or unintentional conduct
of personnel who have access to our confidential and proprietary information, these agreements and control measures may not effectively prevent
unauthorized use or disclosure of our confidential information, intellectual property, or technology and may not provide an adequate remedy in the event of
unauthorized use or disclosure of our confidential information, intellectual property, or technology. The enforceability of confidentiality agreements may
vary from jurisdiction to jurisdiction. Failure to obtain or maintain trade secrets and/or confidential know-how protection could adversely affect our
competitive position.
Competitors may adopt service names or trademarks similar to ours, thereby harming our ability to build brand identity and possibly leading to
user confusion. Our competitors may independently develop substantially equivalent proprietary information and may even apply for patent protection. If
successful in obtaining such patent protection, our competitors could limit our use of our trade secrets and confidential know-how, and our financial
position and operating results would be adversely affected.
We have been and may continue to be subject to intellectual property infringement claims or other allegations by third parties, which may
materially and adversely affect our business, results of operations and prospects.
We depend to a large extent on our ability to develop and maintain the intellectual property rights relating to our technology and online businesses.
We have devoted considerable resources to the development and improvement of our car inspection technology, big data and AI capabilities, VR
technology, mobile applications, mobile sites and websites and information technology systems. We cannot be certain that third parties will not claim that
our business infringes upon or otherwise violates patents, trademarks, copyrights or other intellectual property rights that they hold. Companies operating
online businesses and provide technology-based services are frequently involved in litigation related to allegations of infringement of intellectual property
rights. The validity, enforceability and scope of protection of intellectual property rights, particularly in China, are still evolving. We are currently subject to
several ongoing trademark claims, and may in the future continue to be subject to intellectual property infringement claims from time to time. As we face
increasing competition and as litigation becomes a more common method for resolving commercial disputes in China, we face a higher risk of being the
subject of intellectual property infringement claims.
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Defending against intellectual property claims is costly and can impose a significant burden on our management and resources, and favorable final
outcomes may not be obtained in all cases. Such claims, even if they do not result in liability, may harm our reputation. Any resulting liability or expenses,
or changes required to our services to reduce the risk of future liability, may have a material adverse effect on our business, results of operations and
prospects.
We have been named as a defendant in two putative shareholder class action lawsuits that could have a material adverse impact on our business,
financial condition, results of operation, cash flows and reputation.
We will have to defend against the putative shareholder class action lawsuits described in “Item 8, Financial Information—A. Consolidated
Statements and Other Financial Information—Legal Proceedings,” including any appeals of such lawsuits should our initial defense be unsuccessful. We
are currently unable to estimate the possible outcome or loss or possible range of loss, if any, associated with the resolution of these lawsuits. In the event
that our initial defense of these lawsuits is unsuccessful, there can be no assurance that we will prevail in any appeal. Any adverse outcome of these cases,
including any plaintiff’s appeal of a judgment in these lawsuits, could have a material adverse effect on our business, financial condition, results of
operation, cash flows and reputation. In addition, there can be no assurance that our insurance carriers will cover all or part of the defense costs, or any
liabilities that may arise from these matters. The litigation process may utilize a significant portion of our resources and divert management’s attention from
the day-to-day operations of our company, all of which could harm our business. We also may be subject to claims for indemnification related to these
matters, and we cannot predict the impact that indemnification claims may have on our business or financial results.
We may be subject to legal proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse to us, it could have
a material adverse effect on our business, results of operations and financial condition.
We may be subject to legal proceedings from time to time in the ordinary course of our business, which could have a material adverse effect on
our business, results of operations and financial condition. Claims arising out of actual or alleged violations of law could be asserted against us by
consumers and businesses that utilize our services, by competitors, or by governmental entities in civil or criminal investigations and proceedings or by
other entities. These claims could be asserted under a variety of laws, including but not limited to consumer finance laws, product liability laws, consumer
protection laws, intellectual property laws, unfair competition laws, privacy laws, labor and employment laws, securities laws, real estate laws, tort laws,
contract laws, property laws and employee benefit laws. We may also be subject to lawsuits due to actions by our third-party financing partners, or third-
party providers of various services, including logistics and delivery service, title transfer service, car repair, car inspection equipment, loan servicing, car
collateral repossession, and certain data services.
For example, we are subject to ongoing trademark, unfair competition, contractual disputes and other proceedings in the PRC. These cases are still
ongoing, but we believe the claims are without merit and we will defend ourselves accordingly. We are unable, however, to predict the outcome of these
cases, or reasonably estimate a range of possible loss, if any, given the current status of the proceedings. We have not recorded any accrual for expected
loss payments with respect to these cases as of December 31, 2019 and do not believe that any of the intellectual property infringement claims is material to
our overall business operations. There is no guarantee that we will be successful in defending ourselves in legal and administrative actions or in asserting
our rights under various laws. Even if we are successful in our attempt to defend ourselves in legal and administrative actions or to assert our rights under
various laws, enforcing our rights against the various parties involved may be expensive, time-consuming and ultimately futile. These actions could expose
us to negative publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including
but not limited to suspension or revocation of licenses to conduct business. See “Item 8. Financial Information—A. Consolidated Statements and Other
Financial Information—Legal Proceedings.”
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Acquisitions, strategic alliances and investments could be costly, difficult to integrate, disrupt our business and adversely affect our results of
operations and the value of your investment.
As we continue to expand our operations, we have and may in the future enter into strategic alliances or to acquire substantial asset or equities
from a pool of candidates that fit our criteria. We are not certain that we will be able to consummate any such transactions in the future or identify those
candidates that would result in the most successful combinations, or that future acquisitions will be able to be consummated at reasonable prices and terms.
In addition, increased competition for acquisition candidates could result in fewer acquisition opportunities for us and higher acquisition prices. Strategic
investments or acquisitions will involve risks commonly encountered in business relationships, including:
· lack of suitable acquisition candidates;
· intense competition with other auction groups or new industry consolidators for suitable acquisitions;
· deterioration of our financial capabilities;
· difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired
business;
· inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other
benefits;
· difficulties in retaining, training, motivating and integrating key personnel;
· diversion of management’s time and resources from our normal daily operations;
· difficulties in successfully incorporating licensed or acquired technology and rights into our platform and service offerings;
· difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations;
· difficulties in retaining relationships with customers, employees and third-party service providers of the acquired business;
· risks of entering markets in which we have limited or no prior experience;
· regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing
approvals, as well as being subject to new regulators with oversight over an acquired business;
· assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights
or increase our risk for liability;
· failure to successfully further develop the acquired technology or maintain acquired facilities;
· liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws,
commercial disputes, tax liabilities and other known and unknown liabilities;
· potential disruptions to our ongoing businesses; and
· unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
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We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business
strategy, may not generate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we
cannot assure you that any future investment in or acquisition of new businesses or technology will lead to the successful development of new or enhanced
service offerings and that any new or enhanced technology or services, if developed or offered, will achieve market acceptance or prove to be profitable.
We may need additional capital to achieve our business targets and respond to market opportunities. If we could not obtain sufficient capital
through either debt or equity financing, our business, operating results and financial condition could be materially harmed.
Since we launched our business, we have raised substantial financing to support the growth of our business. We may require additional capital to
pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to improve our brand awareness,
build and maintain our offline network, develop new products or services or further improve existing products and services, and acquire complementary
businesses and technologies. In addition, we issued convertible notes in the total principal amount of US$280 million in 2019, of which US$45.1 million in
principal amount will become due and payable in the second half of 2020, and we may require additional capital to repay these debt obligations. However,
additional funds may not be available when we need them on reasonable terms, or at all.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant
dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Our ability
to retain our existing financial resources and obtain additional financing on acceptable terms is subject to a variety of uncertainties, including but not
limited to:
· economic, political and other conditions in China;
· PRC governmental policies relating to bank loans and other credit facilities;
· PRC governmental regulations of foreign investment and the automobile industry in China;
· conditions of capital markets in which we may seek to raise funds; and
· our future results of operations, financial condition and cash flows.
If we are unable to obtain adequate financing or financing on satisfactory terms, our ability to continue to pursue our business objectives and to
respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, results of operations, financial
condition and prospects could be adversely affected.
If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our
financial results or prevent fraud.
Prior to our initial public offering in June 2018, we were a private company with limited accounting personnel and other resources with which to
address our internal control over financial reporting. In connection with the audits of our consolidated financial statements as of and for the years ended
December 31, 2017, 2018 and 2019, we and our independent registered public accounting firm identified two material weaknesses in our internal control
over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a
deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified related to (i) our lack of adequate number of accounting staff and management resources with appropriate
knowledge of U.S. GAAP and SEC reporting and compliance requirements and (ii) insufficient documented financial closing policies and procedures,
specifically those related to period end expenses cut-off and accruals. We are in the process of implementing a number of measures to remedy these control
deficiencies. See “Item 15. Controls and Procedures—Internal Control Over Financial Reporting.” However, the implementation of these measures may not
fully address these deficiencies in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to
correct these control deficiencies or our failure to discover and address any other control deficiencies could result in inaccuracies in our financial statements
and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective
internal control over financial reporting could significantly hinder our ability to prevent fraud.
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Since our initial public offering, we have become subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or
Section 404, requires that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report on
Form 20-F beginning with our annual report for the fiscal year ending December 31, 2019. In addition, once we cease to be an “emerging growth
company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our
internal control over financial reporting. Our management has concluded that our internal control over financial reporting was not effective for the year
ended December 31, 2019. Moreover, even if our management concludes that our internal control over financial reporting is effective in the future, our
independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our
internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently
from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and
financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.
During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify
other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control
over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis
that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal
control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely
cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of
operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffective internal control over financial reporting could expose us to
increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory
investigations and civil or criminal sanctions. We may also be required to restate our financial statements for prior periods.
A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.
COVID-19 had a severe and negative impact on the Chinese and the global economy in the first quarter of 2020. Whether this will lead to a
prolonged downturn in the economy is still unknown. Even before the COVID-19 pandemic, the global macroeconomic environment was facing numerous
challenges. The growth rate of the Chinese economy had already been slowing since 2010. There is considerable uncertainty over the long-term effects of
the expansionary monetary and fiscal policies which had been adopted by the central banks and financial authorities of some of the world’s leading
economies, including the United States and China, even before 2020. Unrest, terrorist threats and the potential for war in the Middle East and elsewhere
may increase market volatility across the globe. There have also been concerns about the relationship between China and other countries, including the
surrounding Asian countries, which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship
between the United States and China with respect to trade policies, treaties, government regulations and tariffs. Economic conditions in China are sensitive
to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate
in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and
financial condition. See “—We may need additional capital to achieve our business targets and respond to market opportunities. If we could not obtain
sufficient capital through either debt or equity, our business, operating results and financial condition could be materially harmed.”
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The trade war between the U.S. and China may dampen economic growth in China and adversely affect our business, financial condition and
results of operations.
In 2018 and 2019, the U.S. government imposed additional tariffs on specified products imported from China. In response, China has also
imposed additional tariffs on specified products imported from the U.S. The U.S. and the Chinese governments are continuing to conduct negotiations on
trade matters. We cannot assure you that the negotiations will result in an agreement between the two countries, or that the proposed tariffs will not be
imposed even if an agreement will be reached.
Although we are not currently subject to any of these tariff measures, the proposed tariffs may adversely affect the economic growth in China and
the financial condition of our customers. With the potential decrease in the spending powers of our target customers, we cannot guarantee that there will be
no negative impact on our operations. In addition, the current and future actions or escalations by either the U.S. or China that affect trade relations may
result in global economic turmoil, which may adversely affect our business, financial condition and results of operations.
Allegations or lawsuits against us or our management and related negative publicity may harm our reputation and have a material and adverse
impact on our business operations and the trading price of our ADSs.
We have been, and may become, subject to allegations or lawsuits brought by our competitors, customers, business partners, short sellers,
investment research firms or other individuals or entities. For example, a report was published on April 16, 2019 making various allegations about us, and
we responded publicly stating the allegations are unfounded. Any such allegation or lawsuit, with or without merit, or any perceived unfair, unethical,
fraudulent or inappropriate business practice by us or perceived malfeasance by our management, or failure or perceived failure to comply with legal and
regulatory requirements, alleged accounting or financial reporting irregularities, could harm our reputation and distract our management from our daily
operations. Allegations or lawsuits against us or our management may also generate negative publicity that significantly harms our reputation, which may
materially and adversely affect our ability to attract customers, third-party service providers and business partners and hence our business operations, and
cause the trading price of our ADSs to decline and fluctuate significantly.
We may continue to be the target of adverse publicity and detrimental conduct against us, including complaints, anonymous or otherwise, to
regulatory agencies regarding our operations, accounting, and regulatory compliance. We may be subject to government or regulatory investigation or
inquiries, or shareholder lawsuits, as a result of such third-party conduct and may be required to incur significant time and substantial costs to defend
ourselves, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time or at all. Our
reputation may also be negatively affected as a result of the public dissemination of allegations or malicious statements about us, which in turn may
materially and adversely affect the trading price of our ADSs.
Any failure by us or our third-party service providers to comply with applicable anti-money laundering laws and regulations could damage our
reputation.
Our financing partners and payment companies are subject to anti-money laundering obligations under applicable anti-money laundering laws and
regulations and are regulated in that respect by the People’s Bank of China, or PBOC. If any of our third-party service provides fail to comply with
applicable anti-money laundering laws and regulations, our reputation could suffer and we could become subject to regulatory intervention, which could
have a material adverse effect on our business, financial condition and results of operations. Any negative perception of the industry, such as that arises
from any failure of other loan facilitation services providers, consumer finance marketplaces or online transaction platforms to detect or prevent money
laundering activities, even if factually incorrect or based on isolated incidents, could compromise our image or undermine the trust and credibility we have
established.
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We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both
our costs and the risk of non-compliance.
We are subject to rules and regulations by various governing bodies, including, for example, the Securities and Exchange Commission, which is
charged with the protection of investors and the oversight of companies whose securities are publicly traded, and the various regulatory authorities in China
and the Cayman Islands, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and
regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance activities.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time
as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by
ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may
be subject to penalty and our business may be harmed.
We have limited business, disruption or litigation insurance coverage.
The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products
and are, to our knowledge, not well-developed in the field of business liability insurance. While business disruption insurance is available to a limited
extent in China, we have determined that the risks of disruption, cost of such insurance and the difficulties associated with acquiring such insurance on
commercially reasonable terms make it impractical for us to have such insurance. As a result, except for limited property insurance coverage, we do not
maintain general business liability, disruption or litigation insurance coverage for our operations in China. We consider our insurance coverage to be
reasonable in light of the nature of our business, but we cannot assure you that our insurance coverage is sufficient to prevent us from any loss or that we
will be able to successfully claim our losses under our current insurance policies on a timely basis, or at all.
We have granted, and may continue to grant, options and other types of awards under our share incentive plan, which may result in increased
share-based compensation expenses.
We adopted an amended and restated share incentive plan in February 2018, which was further amended in August 2018 and November 2018 and
which we refer to as the 2018 Second Amended and Restated Share Incentive Plan, or the Amended and Restated Plan, in this annual report, for the
purpose of granting share-based compensation awards to employees, directors and consultants to incentivize their performance and align their interests with
ours. We recognize expenses in our consolidated statement of comprehensive loss in accordance with U.S. GAAP. The maximum aggregate number of
ordinary shares which may be issued pursuant to all awards under the Amended and Restated Plan is 102,040,053 ordinary shares. For example, in
May 2018, we granted 17,742,890 restricted shares to Mr. Kun Dai, which became vested immediately upon completion of our initial public offering in
June 2018, and we recorded share-based compensation expense of US$93.8 million (equivalent to RMB653.0 million) in general and administrative
expenses.
On September 22, 2019, our board of directors approved a reduction in the exercise price for outstanding options previously granted by our
company with an exercise price higher than $1.03 per ordinary share to $1.03 per share, provided that any participating option holder agrees to amendment
in the number of shares subject to his or her option as determined by the plan administrator. We accounted for this reduction as a share option modification
which required the remeasurement of these share options at the time of the modification. The total incremental cost as a result of the modification was
US$4.1 million. The incremental cost related to vested options amounted to US$2.1 million and was recorded in the consolidated statements of
comprehensive loss during the year ended December 31, 2019. The incremental cost related to unvested options amounted to US$2.0 million and will be
recorded over the remaining service period.
For the years ended December 31, 2017, 2018 and 2019, we recorded an aggregate of RMB165.9 million, RMB1,052.0 million and RMB100.3
million (US$14.4 million), respectively, in share-based compensation expenses. As of December 31, 2019, the fair value of vested and nonvested options
granted to employees and management amounted to RMB104.0 million (US$14.9 million) and RMB34.2 million (US$4.9 million), respectively. We
believe the granting of share-based compensation is of significant importance to our ability to attract and retain key personnel and employees, and we will
continue to grant share-based compensation to employees in the future. As a result, our expenses associated with share-based compensation may increase,
which may have an adverse effect on our results of operations. In addition, the issuance of additional equity upon the exercise of options or other types of
awards would result in further dilution to our shareholders.
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Our business is dependent on the performance of the internet and mobile internet infrastructure and telecommunications networks in China,
which may not be able to support the demands associated with our growth.
Our internet businesses are heavily dependent on the performance and reliability of China’s internet infrastructure, the continual accessibility of
bandwidth and servers to our service providers’ networks, and the continuing performance, reliability and availability of our technology platform. We use
the internet to deliver services to our customers, who access our websites and mobile apps on the internet.
We rely on major Chinese telecommunication companies to provide us with bandwidth for our services, and we may not have any access to
comparable alternative networks or services in the event of disruptions, failures or other problems. Internet access may not be available in certain areas due
to national disasters, such as earthquakes, or local government decisions. Surges in internet traffic on our platform, regardless of the cause, may seriously
disrupt services we provide through our platform and in-store or cause our technology systems and our platform to shut down. If we experience technical
problems in delivering our services over the internet either at national or regional level or system shut downs, we could experience reduced demand for our
services, lower revenues and increased costs. Consequently, our business, results of operations and financial condition would be adversely affected.
We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations and adversely
affect our business, financial condition or results of operation.
In addition to the impact of COVID-19, our business could be adversely affected by the effects of Ebola virus disease, H1N1 flu, H7N9 flu, avian
flu, Severe Acute Respiratory Syndrome, or SARS, or other epidemics. Our business operations could be disrupted if any of our employees is suspected of
having Ebola virus disease, H1N1 flu, H7N9 flu, avian flu, SARS, or other epidemics, since it could require our employees to be quarantined and/or our
offices to be disinfected. In addition, our results of operations could be adversely affected to the extent that any of these epidemics harms the Chinese and
global economy in general.
We are also vulnerable to natural disasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures,
break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or
internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide
products and services on our platform.
In addition, our results of operations could be adversely affected to the extent that any health epidemic, natural disaster or other calamities harms
the Chinese and global economies in general. Our headquarters are located in Beijing, where most of our management and employees currently reside.
Most of our system hardware and back-up systems are hosted in facilities located in Beijing. Consequently, if any natural disasters, health epidemics or
other public safety concerns were to affect Beijing, our operation may experience material disruptions, which may materially and adversely affect our
business, financial condition and results of operations.
Our business is subject to quarterly fluctuations and unexpected interruptions.
We have experienced, and expect to continue to experience, quarterly fluctuations in our revenues and results of operations. Our revenue trends
are a reflection of consumers’ car purchase patterns. The holiday period following the Chinese New Year is usually in the first quarter, which may
contribute to lower activity levels in that quarter of each year. As a result, our revenues may vary from quarter to quarter and our quarterly results may not
be comparable to the corresponding periods of prior years. Our actual results may differ significantly from our targets or estimated quarterly results. The
quarterly fluctuations in our revenues and results of operations could result in volatility and cause the price of our shares to fall. As our revenues grow,
these quarterly fluctuations may become more pronounced.
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Risks Related to Our Corporate Structure
If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with
PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we
could be subject to penalties or be forced to relinquish our interests in those operations.
We are a Cayman Islands exempted company and our PRC subsidiaries are currently considered foreign-invested enterprises. Currently, our main
websites are operated and our main business are run by our wholly-foreign-owned enterprises, or WFOEs, while our VIEs hold the title of a number of
intellectual properties, operate certain of our websites and conduct certain of our business. Our WFOEs have entered into a series of contractual
arrangements with our VIEs and their respective shareholders, respectively, which enable us to (i) exercise effective control over our VIEs, (ii) receive
substantially all of the economic benefits of our VIEs, and (iii) have an exclusive option to purchase all or part of the equity interests and assets in our VIEs
when and to the extent permitted by PRC law. As a result of these contractual arrangements, we have control over and are the primary beneficiary of our
VIEs and hence consolidate their financial results under U.S. GAAP. See “Item 4. Information on the Company—C. Organizational Structure” for further
details.
In the opinion of JunHe LLP, our PRC legal counsel, (i) the ownership structures of our VIEs in China and our WFOEs that have entered into
contractual arrangements with the VIEs, comply with all existing PRC laws and regulations; and (ii) the contractual arrangements between our WFOEs, the
VIEs and their respective shareholders governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or
regulations currently in effect. However, our PRC legal counsel has also advised us that there is substantial uncertainty regarding the interpretation and
application of current and future PRC laws, regulations and rules; accordingly, the PRC regulatory authorities may take a view that is contrary to the
opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or
if adopted, what they would provide. If we or any of our VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to
obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing
with such violations or failures, including:
· revoking the business licenses and other licenses and permits of our VIEs;
· discontinuing or placing restrictions or onerous conditions on our operation through any transactions between our WFOEs and our VIEs;
· imposing fines, confiscating the income from our WFOEs or our VIEs, or imposing other requirements with which we or our VIEs may not be
able to comply;
· requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and
deregistering the equity pledges of our VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert
effective control over our VIEs;
· restricting or prohibiting our use of the proceeds of our initial public offering and the concurrent private placement of convertible notes to
finance our business and operations in China; or
· taking other regulatory or enforcement actions that could be harmful to our business.
The imposition of any of these penalties would result in adverse effect on our ability to conduct certain part of our business. In addition, it is
unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of our VIEs in our consolidated
financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violation of PRC laws and
regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities of our VIEs or our right to receive
substantially all the economic benefits and residual returns from our VIEs and we are not able to restructure our ownership structure and operations in a
satisfactory manner, we would no longer be able to consolidate the financial results of our VIEs in our consolidated financial statements. Either of these
results, or any other significant penalties that might be imposed on us in this event, would have an adverse effect on our financial condition and results of
operations.
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We have entered into contractual arrangements with our VIEs and their shareholders for a portion of our business operations, which may not be
as effective as direct ownership in providing operational control.
We have entered into contractual arrangements with our VIEs and their shareholders to conduct certain aspects of our businesses. These
contractual arrangements may not be as effective as direct ownership in providing us with control over our VIEs. For example, our VIEs and their
shareholders could breach their contractual arrangements with us by, among other things, failing to conduct its operations in an acceptable manner or taking
other actions that are detrimental to our interests.
If we had direct ownership of our VIEs, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of our
VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the
current contractual arrangements, we rely on the performance by our VIEs and their respective shareholders of their obligations under the contracts to
exercise control over our VIEs. However, the shareholders of our consolidated VIEs may not act in the best interests of our company or may not perform
their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the
contractual arrangements with our VIEs. If any disputes relating to these contracts remain unresolved, we will have to enforce our rights under these
contracts through the operations of PRC law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC
legal system. See “—Any failure by our VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a
material and adverse effect on our business.” Therefore, our contractual arrangements with our VIEs may not be as effective in ensuring our control over
the relevant portion of our business operations as direct ownership would be.
Our business may be significantly affected by the draft Foreign Investment Law and the newly adopted Foreign Investment Law.
In January 2015, MOFCOM published a draft Foreign Investment Law, the 2015 Draft FIL, for soliciting public comments. At the same time,
MOFCOM published an accompanying explanatory note of the 2015 Draft FIL, illustrating legislative philosophy and principles of the 2015 Draft FIL.
One of the core concepts of the 2015 Draft FIL is “de facto control,” which emphasizes substance over form in determining whether an entity is “Chinese”
or foreign controlled. This determination requires consideration of the nature of the investors that exercise control over the entity. “Chinese investors” are
individuals who are PRC nationals, PRC government agencies and any domestic enterprise controlled by PRC nationals or government agencies. “Foreign
investors” are foreign citizens, foreign governments, international organizations and entities controlled by foreign citizens and entities. Under the 2015
Draft FIL, variable interest entities that are controlled via contractual arrangement would also be deemed as foreign-invested enterprises if they are
ultimately “controlled” by foreign investors. The 2015 Draft FIL proposes significant changes to the PRC foreign investment legal regime and, when
implemented, may have a significant impact on businesses in China controlled by foreign invested enterprises primarily through contractual arrangements,
such as our business.
MOFCOM solicited comments on the 2015 Draft FIL, but no new draft has been published since then. There is substantial uncertainty with
respect to the final content, interpretation, adoption timeline and effective date of the 2015 Draft FIL. The draft Foreign Investment Law, if enacted as
proposed, may materially impact the viability of our current corporate structure, corporate governance and business operations in many aspects.
Subsequently, in December 2018, the Standing Committee of the National People’s Congress published a draft Foreign Investment Law and the
National People’s Congress adopted the Foreign Investment Law, or the 2018 FIL on March 15, 2019. The 2018 FIL came into effect on January 1, 2020.
The 2018 FIL does not comment on contractual arrangement with variable interest entity, however, it has a catch-all provision under definition of “foreign
investment” to include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods
prescribed by the State Council. In addition, the concept of “de facto control” and related provisions as proposed in the 2015 Draft FIL are not included in
the 2018 FIL. However, it is not explicit whether the 2018 FIL supersedes the 2015 Draft FIL in its entirety. On December 26, 2019, the Supreme People’s
Court published the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of the Foreign Investment Law of the
People’s Republic of China, which became effective on January, 1, 2020, pursuant to which the court shall rule in favor of the party claiming the invalidity
of the investment agreement with respect to foreign investment in the “restricted” industry under the “negative list” or foreign investment in the “restricted”
industry under the “negative list” that fails to comply with the requirements unless necessary mitigating measures are taken before the ruling.
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Both the 2015 Draft FIL and the 2018 FIL grant national treatment to foreign invested entities, except for those foreign invested entities that
operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.” Both the 2015 Draft FIL and the 2018 FIL provide that only
foreign invested entities operating in foreign restricted or prohibited industries will require entry clearance and other approvals that are not required by PRC
domestic entities or foreign invested entities operating in other industries.
Since the 2018 FIL is relatively new, uncertainties exist in relation to its implementation and interpretation and there can be no assurance that
variable interest entities controlled via contractual arrangements would not be interpreted as foreign investment activities in future practice or legislation.
There can be no assurance as to when and whether the 2015 Draft FIL will be officially promulgated, or assurance as to whether our current corporate
structure will be considered “Chinese-controlled” under the scheme of the 2015 Draft FIL. In the event that our variable interest entity contractual
arrangements under which we operate our business are treated as foreign investment in the “restricted” or “prohibited” industry in the “negative list”, such
variable interest entity contractual arrangements may be deemed as invalid and illegal, and we may be required to unwind the variable interest entity
contractual arrangements and/or dispose of such business.
Any failure by our VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material
and adverse effect on our business.
We refer to the shareholders of each of our VIEs as its nominee shareholders because although they remain the holders of equity interests on
record in each of our VIEs, pursuant to the terms of the relevant power of attorney, each such shareholder has irrevocably authorized our WFOEs to
exercise his, her or its rights as a shareholder of the relevant VIE.
If our VIEs or their shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur additional
costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific
performance or injunctive relief, and claiming damages, which we cannot assure will be effective under PRC law. For example, if the shareholders of our
VIEs refuse to transfer their equity interest in our VIEs to us or our designee if we exercise the purchase option pursuant to these contractual arrangements,
or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.
All of these contractual arrangements are governed by and interpreted in accordance with PRC law, and disputes arising from these contractual
arrangements between us and our variable interest entity will be resolved through arbitration in China. These disputes do not include claims arising under
the United States federal securities law and thus the arbitration provisions do not prevent our shareholders from pursuing claims under the United Sates
federal securities law. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in
the PRC legal system could limit our ability to enforce these contractual arrangements. See “—Risks Related to Doing Business in China—Uncertainties in
the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.” Meanwhile, there are very few
precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC law. There
remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law,
rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a
prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings,
which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delays
or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our VIEs, and our ability to
conduct our business may be negatively affected.
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Contractual arrangements in relation to our VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or our
PRC VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.
Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC
tax authorities. We could face adverse tax consequences if the PRC tax authorities determine that the VIE contractual arrangements were not entered into
on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the
income of our VIEs in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense
deductions recorded by our VIEs for PRC tax purposes, which could in turn (i) increase its tax liabilities without reducing our WFOEs’ tax expenses and
(ii) limit the ability of our PRC companies to continue to enjoy preferential tax treatment and other financial incentives. In addition, the PRC tax authorities
may impose late payment fees and other penalties on our VIEs for the adjusted but unpaid taxes according to the applicable regulations. Although our VIEs
generate only a limited portion of our total income and incur limited costs and expenses among our PRC companies, our financial position could be
adversely affected if our VIEs’ tax liabilities increase or if it is required to pay late payment fees and other penalties.
In addition, if for any reason we need to cause the transfer of any of the nominee shareholders’ equity interest in any of our VIEs, we might be
required to withhold and pay individual income tax on behalf of the transferring shareholder who is an individual, on any capital gain deemed to have been
realized by such shareholder on such transfer.
The shareholders of our VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and
financial condition.
Conflicts of interest may arise out of the dual roles of the individual who is an officer of our company and a shareholder and director of our VIEs,
as well as the entity who is both an affiliate of a shareholder of our company and shareholder of our VIEs. These shareholders may breach, or cause our
VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and our VIEs, which would have a material and adverse effect
on our ability to effectively control our VIEs and receive economic benefits from them. For example, the shareholders may be able to cause our agreements
with our VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on
a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or
such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between these
shareholders and our company. If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would have to rely on legal
proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.
We may lose the ability to use and enjoy assets held by our VIEs that are material to the operation of certain portion of our business if the entity
goes bankrupt or becomes subject to a dissolution or liquidation proceeding.
As part of our contractual arrangements with our VIEs, our VIEs and their subsidiaries hold certain assets including intellectual property, license,
permits and premise. If our VIEs go bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to
continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations.
Under the contractual arrangements, our VIEs may not, in any manner, sell, transfer, mortgage or dispose of their assets or legal or beneficial interests in
the business without our prior consent. If our VIEs undergo a voluntary or involuntary liquidation proceeding, the independent third-party creditors may
claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business,
financial condition and results of operations.
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Risks Related to Doing Business in China
Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and
operations.
Substantially all of our operations are located in China. Accordingly, our business prospects, financial condition and results of operations may be
influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.
The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government
involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has
implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the
establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China are still owned by the
government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies.
The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign
currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among
various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of
resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. The growth rate of the
Chinese economy has gradually slowed since 2010, and the impact of COVID-19 on the Chinese economy in 2020 is likely to be severe. Any prolonged
slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of
operations.
Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.
The PRC legal system is based on written statutes and prior court decisions have limited value as precedents. Since these laws and regulations are
relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always consistent and
enforcement of these laws, regulations and rules involves uncertainties.
In particular, PRC laws and regulations concerning the used car e-commerce industry are developing and evolving. Although we have taken
measures to comply with the laws and regulations that are applicable to our business operations and avoid conducting any activities that may be deemed as
illegal under the current applicable laws and regulations, the PRC government authority may promulgate new laws and regulations regulating our industry
and amend the existing laws and regulations in the future. See “—Risks Related to Our Business and Industry—Failure to obtain certain filings, approvals,
licenses, permits and certificates for our business operations may materially and adversely affect our business, financial condition and results of
operations.” We cannot assure you that our practices would not be deemed to violate any PRC laws or regulations. Moreover, developments in the used car
service industry and online used car transaction industry may lead to changes in PRC laws, regulations and policies or in the interpretation and application
of existing laws, regulations and policies that may limit or restrict online used car transaction platforms like us, which could materially and adversely affect
our business and results of operations.
In addition, our PRC subsidiaries are subject to laws and regulations applicable to foreign investment in China. Any changes in PRC laws and
regulations related to foreign investment in China could affect the business environment and our ability to operate our business in China. For example,
MOFCOM published a discussion draft of the proposed Foreign Investment Law on January 19, 2015, aiming to, upon its enactment, replace the trio of
existing laws regulating foreign investment in China, together with their implementation rules and ancillary regulations. Among other things, the draft
Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company is
considered a foreign-invested enterprise. “Control” is broadly defined in the draft Foreign Investment Law to cover the following summarized categories:
(i) holding directly or indirectly 50% or more of the equity interest, assets, voting rights, or similar equity interest of the subject entity; (ii) holding directly
or indirectly less than 50% of the equity interest, assets, voting rights or similar equity interest of the subject entity, but having the power to secure at least
50% of the seats on the board of directors or other equivalent decision-making bodies, or having the voting power to exert material influence over the board
of directors, at the shareholders’ meeting or over other equivalent decision-making bodies; or (iii) having the power to exert decisive influence, via
contractual or trust arrangements, over the subject entity’s operations, financial, staffing and technology matters, or other key aspects of business
operations. The draft Foreign Investment Law specifically provides that entities established in China, but ultimately “controlled” by foreign investors, will
be treated as foreign-invested enterprises. If a foreign-invested enterprise proposes to conduct business in an industry subject to foreign investment
restrictions, the foreign-invested enterprise must go through market entry clearance by MOFCOM before being established. According to the draft Foreign
Investment Law, variable interest entities would also be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors, and
accordingly would be subject to restrictions on foreign investments. However, the draft Foreign Investment Law does not address what actions will be
taken with respect to the existing companies with a VIE structure. The draft Foreign Investment Law embodies an expected PRC regulatory trend to
rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal
requirements for both foreign and domestic investments. Substantial uncertainty exists with respect to its enactment timetable, interpretation and
implementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the viability of our current corporate structure, corporate
governance and business operations in many aspects.
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From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the
outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC
legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have
retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties,
including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, could materially and
adversely affect our business and impede our ability to continue our operations.
Our business is susceptible to changes in government policies, including policies on automobile purchases, ownership, taxation, vehicle title
transfers, and used car transactions across regions and provinces. Failure to adequately respond to such changes could adversely affect our
business.
Government policies on automobile purchases and ownership may have a material impact on our business due to their influence on consumer
behaviors. Since 2009, the PRC government has changed the vehicle purchase tax on automobiles with 1.6 liter or smaller engines several times. In
addition, in August 2014, several PRC governmental authorities jointly announced that from September 2014 to December 2017, purchases of new energy
automobiles designated on certain catalogs will be exempted from vehicle purchase taxes. In April 2015, several PRC governmental authorities also jointly
announced that from 2016 to 2020, purchasers of new energy automobiles designated on certain catalogs will enjoy subsidies. In December 2016, relevant
PRC governmental authorities further adjusted the subsidy policy for new energy automobiles. We cannot predict whether government subsidies will
remain in the future or whether similar incentives will be introduced, and if they are, their impact on automobile retail transactions in China. It is possible
that automobile retail transactions may decline significantly upon expiration of the existing government subsidies if consumers have become used to such
incentives and postpone purchase decisions in the absence of new incentives. If automobile retail transactions indeed decline, our revenues and results of
operations may be materially and adversely affected.
Some local governmental authorities issued regulations and implementation rules in order to control urban traffic and the number of automobiles
within particular urban areas. For example, Beijing municipal authorities adopted regulations and implementing rules in December 2010 to limit the total
number of license plates issued to new automobile purchases in Beijing each year. Guangzhou municipal authorities also announced similar regulations,
which came into effect in July 2013. There are similar policies that restrict the issuance of new automobile license plates in Shanghai, Tianjin, Hangzhou,
Guiyang and Shenzhen. In September 2013, the State Council released a plan for the prevention and remediation of air pollution, which requires large
cities, such as Beijing, Shanghai and Guangzhou, to further restrict the number of motor vehicles. In October 2013, the Beijing government issued an
additional regulation to limit the total number of vehicles in Beijing to no more than six million by the end of 2017. In addition to the quantity control of
automobiles, some local governmental authorities have also adopted environmental protection policies and regulations in recent years, pursuant to which an
automobile, failing to meet certain environmental protection requirements or standards, will not be able to obtain the license plate issued by relevant local
governmental authorities.
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As some used cars cannot meet the environmental protection standards required in some regions, the above policies and regulations may restrict or
adversely impact the transactions of such used cars. Such regulatory developments, as well as other uncertainties, may adversely affect the growth
prospects of China’s automobile industry, which in turn may have a material adverse impact on our business.
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our
management named in the annual report based on foreign laws.
We are an exempted company incorporated under the laws of the Cayman Islands, we conduct substantially all of our operations in China and
substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and
most are PRC residents. As a result, it may be difficult for you to effect service of process upon us or those persons inside mainland China. It may also be
difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against
us and our officers and directors, none of whom currently reside in the United States and whose assets are located outside the United States. In addition,
there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such
persons predicated upon the civil liability provisions of the securities laws of the United States or any state.
The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and
enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country
where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of reciprocity with the
United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law,
the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of
PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment
rendered by a court in the United States.
Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue
as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for
shareholder investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with
the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the
securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. According to
Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation
or evidence collection activities within the territory of the PRC and no entities or individuals may provide documents or materials in connection with its
securities activities to the overseas without proper authorization. While detailed interpretation of or implementation rules under Article 177 of the PRC
Securities Law have yet to be available, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities
within China may further increase difficulties faced by investors in protecting your interests. See also “—Risks Relating to the ADSs and this Offering—
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are
incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.
Regulation and censorship of information disseminated over the internet in China may adversely affect our business, and we may be liable for
information displayed on, retrieved from or linked to our websites and mobile apps.
China has enacted laws and regulations governing internet access and the distribution of information through the internet. The PRC government
prohibits information that, among other things, violates PRC laws and regulations, impairs the national dignity of China or the public interest, contains
terrorism or extremism content, or is reactionary, obscene, superstitious, fraudulent or defamatory, from being distributed through the internet. PRC laws
also prohibit the use of the internet in ways which, among other things, result in a leakage of state secrets or the distribution of socially destabilizing
content. Failure to comply with these laws and regulations may result in sanctions or penalties such as revocation of licenses to provide internet content and
other licenses, the shut-down of the concerned websites or mobile apps, and reputational harm. A website or mobile apps operator may also be held liable
for censored information displayed on or linked to its website or mobile apps. We may be subject to potential liability for certain unlawful actions of users
of our platform or for content we distribute that is deemed inappropriate. We may be required to delete content that violates PRC laws and report content
that we suspect may violate PRC laws, which may reduce our consumer base. It may be difficult to determine the type of content that may result in liability
for us, and if we are found to be liable, we may be prevented from operating our business or offering other services in China.
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PRC regulations relating to offshore investment activities by PRC residents and enterprises may increase our administrative burden and restrict
our overseas and cross-border investment activities. If our PRC resident and enterprise shareholders fail to make any applications and filings
required under these regulations, we may be unable to distribute profits to such shareholders and may become subject to liability under PRC law.
In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore
Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the previous SAFE Circular 75,
which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC
corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is
applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future.
Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments
in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches. In addition, any PRC resident who
is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE with respect to that SPV, to reflect any
material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local
branch of SAFE to reflect any material change. If any PRC resident shareholder of such SPV fails to make the required registration or update the
registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or
liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiaries in China. In February 2015,
SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including
those required under SAFE Circular 37, must be filed with qualified banks instead of SAFE. Qualified banks should examine the applications and accept
registrations under the supervision of SAFE.
In August 2014, MOFCOM promulgated the Measures for the Administration of Overseas Investment, and the National Development Reform
Committee, or the NDRC, promulgated the Administrative Measures for the Approval and Filing of Overseas Investment Projects. In December 2017, the
NDRC further promulgated the Administrative Measures of Overseas Investment of Enterprises, which became effective in March 2018. Pursuant to these
regulations, any outbound investment of PRC enterprises in the area and industry that is not sensitive is required to be filed with MOFCOM and the NDRC
or their local branch.
Mr. Kun Dai, who indirectly holds our shares through SPVs and who is known to us as a PRC resident, has completed the applicable foreign
exchange registrations to the extent acceptable by SAFE in accordance with SAFE Circular 75 and SAFE Circular 37. We cannot assure you, however, that
Mr. Kun Dai will continue to make required filings or updates in a timely manner, or at all. Moreover, we can provide no assurance that we are or will in
the future continue to be informed of the identities of all PRC residents and PRC enterprises holding direct or indirect interest in our company, and even if
we are aware of such shareholders or beneficial owners who are PRC residents or PRC enterprises, we may not be able to compel them to comply with
SAFE Circular 37 and outbound investment related regulations, and we may not even have any means to know whether they comply with these
requirements. Any failure or inability by such individuals or enterprises to comply with SAFE and outbound investment related regulations may subject
such individuals or the responsible officers of such enterprises to fines or legal sanctions, and may result in adverse impact on us, such as restrictions on our
ability to distribute or pay dividends.
Furthermore, as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and
implementation have been constantly evolving, it is uncertain how these regulations, and any future regulations concerning offshore or cross-border
investments and transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a
more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-
denominated borrowings, which may adversely affect our financial condition and results of operations. Due to the complexity and constantly changing
nature of the foreign exchange and outbound investment related regulations as well as the uncertainties involved, we cannot assure you that we have
complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations. In addition, if we decide to acquire a
PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or
complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition
strategy and could adversely affect our business and prospects.
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Governmental control of currency conversion may affect the value of your investment.
The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding
company primarily relies on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC
foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign
exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically,
under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used
to pay dividends to our company. However, approval from or registration with appropriate government authorities is required where Renminbi is to be
converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a
result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiaries and VIEs to pay off their respective debt in a
currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than
Renminbi. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign
exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay
dividends in foreign currencies to our shareholders, including holders of our ADSs.
Fluctuations in exchange rates of the Renminbi could materially affect our reported results of operations.
The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has
fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the U.S. dollar and other currencies is affected by
changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. We cannot assure you that Renminbi
will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S.
government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.
Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and
the value of, and any dividends payable on, our ADSs in U.S. dollars. To the extent that we need to convert U.S. dollars into Renminbi for our operations,
appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion.
Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Class A ordinary shares or
ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available
to us.
Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. As of the date of this annual report, we
have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into
hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our
exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert
Renminbi into foreign currency or to convert foreign currency into Renminbi.
PRC rules on mergers and acquisitions may make it more difficult for us to pursue growth through acquisitions.
The Anti-Monopoly Law, or the AML, promulgated by the Standing Committee of the National People’s Congress, which became effective in
2008, requires that when a concentration of undertakings occurs and reaches statutory thresholds, the undertakings concerned shall file a prior notification
with MOFCOM. Without the clearance from MOFCOM, no concentration of undertakings shall be implemented and effected. Mergers, acquisitions or
contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in
advance to MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, revised in 2008, is
triggered. If such prior notification is not obtained, MOFCOM may order the concentration to cease its operations, dispose of shares or assets, transfer the
business of the concentration within a time limit, take any other necessary measures to restore the situation as it was before the concentration, and may
impose administrative fines.
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Also, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC
regulatory agencies in 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by
foreign investors more time-consuming and complex. Such regulation requires, among other things, that MOFCOM be notified in advance of any change-
of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise, if (i) it is concerned with certain industries, (ii) such
transaction involves factors that have an impact on the national economic security, or (iii) such transaction may lead to a change in control of a domestic
enterprise that holds a famous trademark or PRC time-honored brand. The approval from MOFCOM shall be obtained in circumstances where overseas
companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies.
In addition, PRC national security review rules, i.e. Provisions of Ministry of Commerce on Implementation of Security Review System for
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which became effective in September 2011 and Notice of the General Office of
State Council on Establishment of Security Review System Pertaining to Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which
became effective in March 2011, require acquisitions by foreign investors of PRC companies engaged in military related or certain other industries that are
crucial to national security be subject to security review before consummation of any such acquisition. We believe that our business is not in an industry
related to national security. However, we cannot preclude the possibility that MOFCOM or other government agencies may publish interpretations contrary
to our understanding or broaden the scope of the security review in the future.
Moreover, the Administrative Measures for Enterprises’ Overseas Investment, or the Overseas Investment Rules, adopted by the NDRC on
December 26, 2017 and will become effective on March 1, 2018, stipulates that for local enterprises (enterprises that are not managed by the state
government), if the amount of investment made by the Chinese investors is less than US$300 million and the target project is non-sensitive, then the
overseas investment project will require filing, instead of approval, with the local branch of the CSRC where the enterprise itself is registered. Although the
NDRC has deregulated on overseas investment to certain extent, we are still subject to the procedures required by the NDRC before any of our PRC
subsidiaries can conduct any overseas investment activities. See “Item 4. Information on the Company—B. Business Overview—Regulation—M&A
Rules and Overseas Listings.”
PRC regulations on loans and direct investments by offshore holding companies to PRC entities may delay or prevent us from making loans or
additional capital contributions to our PRC entities.
As an offshore holding company of our PRC subsidiaries, we may make loans to our PRC subsidiaries and our VIEs, or we may make additional
capital contributions to our PRC subsidiaries. Such loans to our PRC subsidiaries or our VIEs in China and capital contributions are subject to PRC
regulations and approvals or filing. For example, loans by us to our PRC subsidiaries cannot exceed statutory limits and must be registered with SAFE or
its local branch. Besides SAFE registration, loans to our VIEs may also need to be filed with the NDRC or its local branches. Information about capital
contributions to our PRC subsidiaries must be filed with the PRC Ministry of Commerce or its local counterpart. In addition, the PRC government also
restricts the convertibility of foreign currencies into Renminbi and use of the proceeds. On March 30, 2015, SAFE promulgated Circular 19, which took
effect and replaced certain previous SAFE regulations from June 1, 2015. SAFE further promulgated Circular 16, effective on June 9, 2016, which, among
other things, amend certain provisions of Circular 19. According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the Renminbi capital
converted from foreign currency denominated registered capital of a foreign-invested company is regulated such that Renminbi capital may not be used for
business beyond its business scope or to provide loans to persons other than affiliates unless otherwise permitted under its business scope. On October 23,
2019, SAFE promulgated Circular 28, which stipulates that non-investment foreign-funded enterprises are allowed to make domestic equity investment
with their capital funds on the premise that the Negative List is not violated and the projects invested thereby in China are true and compliant. Violations of
the applicable circulars and rules may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration
Regulations. If our variable interest entity requires financial support from us or our wholly owned subsidiaries in the future and we find it necessary to use
foreign currency-denominated capital to provide such financial support, our ability to fund our variable interest entity’s operations will be subject to
statutory limits and restrictions, including those described above.
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The applicable foreign exchange circulars and rules may significantly limit our ability to convert, transfer and use the net proceeds from our initial
public offering and the concurrent private placement of convertible notes or any offering of additional equity securities in China, which may adversely
affect our business, financial condition and results of operations. As the foreign exchange related regulatory regime and practice are complex and still
evolving and involve many uncertainties, we cannot assure you that we have complied or will be able to comply with all applicable foreign exchange
circulars and rules, or that we will be able to complete the necessary government registrations or filings on a timely basis, if at all, with respect to future
loans by us to our PRC subsidiaries or with respect to future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or
filings, our ability to contribute additional capital to fund our PRC operations may be negatively affected, which could adversely and materially affect our
liquidity and our ability to fund and expand our business.
Increases in labor costs and enforcement of stricter labor laws and regulations in the PRC may adversely affect our business and our profitability.
China’s overall economy and the average wage in China have increased in recent years and are expected to continue to grow. The average wage
level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase.
Unless we are able to pass on these increased labor costs to those who pay for our services, our profitability and results of operations may be materially and
adversely affected.
In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying
various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and
maternity insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law and its implementation
rules, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of
employees’ probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our
employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or
cost-effective manner, which could adversely affect our business and results of operations.
In October 2010, the Standing Committee of the National People’s Congress promulgated the PRC Social Insurance Law, effective on July 1, 2011
and amended on December 29, 2018. On April 3, 1999, the State Council promulgated the Regulations on the Administration of Housing Funds, which was
amended on March 24, 2019. Companies registered and operating in China are required under the Social Insurance Law and the Regulations on the
Administration of Housing Funds to, apply for social insurance registration and housing fund deposit registration within 30 days of their establishment and,
to pay for their employees different social insurance including pension insurance, medical insurance, work-related injury insurance, unemployment
insurance and maternity insurance to the extent required by law. However, certain of our PRC subsidiaries and VIEs that do not hire any employees and are
not a party to any employment agreement, have not applied for and obtained such registration, and instead of paying the social insurance payment on their
own for their employees, certain of our PRC subsidiaries and VIEs use third-party agencies to pay in the name of such agency. We could be subject to
orders by the competent labor authorities for rectification and failure to comply with the orders may further subject us to administrative fines.
As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment
practices do not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We
cannot assure you that we have complied or will be able to comply with all labor-related law and regulations regarding including those relating to
obligations to make social insurance payments and contribute to the housing provident funds. If we are deemed to have violated relevant labor laws and
regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations will
be adversely affected.
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Failure to comply with PRC regulations regarding the registration requirements for employee share ownership plans or share option plans may
subject the PRC plan participants or us to fines and other legal or administrative sanctions.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals
Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in 2007. Pursuant to these rules, PRC
citizens and non-PRC citizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an
overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a qualified PRC agent, which could be the PRC
subsidiaries of such overseas-listed company, and complete certain other procedures. The PRC agent shall amend the SAFE registration within three
months in the event that there is any material changes to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material
changes.
In addition, an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the
purchase or sale of shares and interests. We and our executive officers and other employees who are PRC citizens or who reside in the PRC for a
continuous period of not less than one year and who have been granted options are subject to these regulations. However, we cannot assure you that the
SAFE registrations for the grantees of our stock options could be completed and updated in a timely manner. Failure to complete SAFE registrations or to
amend such registrations in time may subject us to fines of up to RMB300,000 (US$43,092) for entities and up to RMB50,000 (US$7,182) for individuals,
and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries and limit our PRC subsidiaries’ ability to
distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive
officers and employees under PRC law. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Stock Incentive
Plans.”
Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax, which could materially and adversely affect
the amount of dividends, if any, we may pay our shareholders.
The PRC Enterprise Income Tax Law, or the EIT Law, classifies enterprises as resident enterprises and non-resident enterprises. The EIT Law
provides that an income tax rate of 20% may be applicable to dividends payable to non-resident investors, which (i) do not have an establishment or place
of business in the PRC or (ii) have an establishment or place of business in the PRC but the relevant income is not effectively connected with the
establishment or place of business, to the extent such dividends are derived from sources within the PRC. The State Council of the PRC reduced such rate
to 10% through the implementation regulations of the EIT Law. Further, pursuant to the Double Tax Avoidance Arrangement between Hong Kong and
Mainland China and the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued in February 2009 by the
State Administration of Taxation (“SAT”), if a Hong Kong resident enterprise owns more than 25% of the equity interest in a company in China at all times
during the 12-month period immediately prior to obtaining a dividend from such company, the 10% withholding tax on dividends is reduced to 5%
provided certain other conditions and requirements under the Double Tax Avoidance Arrangement between Hong Kong and Mainland China and other
applicable PRC laws are satisfied at the discretion of relevant PRC tax authority.
We are a Cayman Islands holding company and we have 3 Cayman Islands subsidiaries, 3 British Virgin Islands subsidiaries, and 6 Hong Kong
subsidiaries which in turn hold controlling equity interest of 34 PRC subsidiaries. If we and our Cayman Islands and Hong Kong subsidiaries are
considered as non-resident enterprises and each of our Hong Kong subsidiaries is considered as a Hong Kong resident enterprise under the Double Tax
Avoidance Arrangement and is determined by the competent PRC tax authority to have satisfied relevant conditions and requirements, then the dividends
paid to our Hong Kong subsidiaries by its PRC subsidiaries may be subject to the reduced income tax rate of 5% under the Double Tax Avoidance
Arrangement. However, based on the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, if the relevant PRC
tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily
tax-driven, such PRC tax authorities may adjust the preferential tax treatment; and based on the Notice on the Comprehension and Recognition of
Beneficial Owner in Tax Treaties issued in October 2009 by the SAT, conduit companies, which are established for the purpose of evading or reducing tax,
transferring or accumulating profits, shall not be recognized as beneficial owner and thus are not entitled to the abovementioned reduced income tax rate of
5% under the Double Tax Avoidance Arrangement. If we are required under the EIT Law to pay income tax for any dividends we receive from our
subsidiaries in China, or if any of our Hong Kong subsidiaries is determined by PRC government authority as receiving benefits from reduced income tax
rate due to a structure or arrangement that is primarily tax-driven, it would materially and adversely affect the amount of dividends, if any, we may pay to
our shareholders.
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Under the EIT Law, we may be classified as a “resident enterprise” of China; such classification could result in unfavorable tax consequences to
us and our non-PRC shareholders and materially and adversely affect our results of operations and financial condition.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with “de facto management
body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The
implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the
business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known
as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is
incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise
groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de
facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore
incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto
management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the
primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters
are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company
seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives
habitually reside in the PRC.
We believe that Uxin Limited is not a PRC resident enterprise for PRC tax purposes. See “Item 4. Information on the Company—B. Business
Overview—Regulation—Regulations Relating to Tax—Enterprise Income Tax.” However, the tax resident status of an enterprise is subject to
determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC
tax authorities determine that Uxin Limited is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% tax
from dividends we pay to our shareholders that are non-resident enterprises, including the holders of the ADSs. In addition, non-resident enterprise
shareholders (including our ADS holders) may be subject to PRC tax at a rate of 10% on gains realized on the sale or other disposition of ADSs or ordinary
shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC
individual shareholders (including our ADS holders) and any gain realized on the transfer of ADSs or ordinary shares by such shareholders may be subject
to PRC tax at a rate of 20% which in the case of dividends may be withheld at source. Any PRC tax liability may be reduced by an applicable tax treaty.
However, it is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax
residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ADSs
or ordinary shares.
In addition to the uncertainty as to the application of the “resident enterprise” classification, we cannot assure you that the PRC Government will
not amend or revise the taxation laws, rules, and regulations to impose stricter tax requirements, higher tax rates, or retroactively apply the EIT Law. If such
changes occur or if such changes are applied retroactively, such changes could materially and adversely affect our results of operations and financial
conditions.
We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC shareholders.
In February 2015, the SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax
Resident Enterprises, or SAT Public Notice 7. SAT Public Notice 7 extends its tax jurisdiction to transactions involving transfer of other taxable assets
through offshore transfer of a foreign intermediate holding company. In addition, SAT Public Notice 7 provides clear criteria for assessment of reasonable
commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities
market. SAT Public Notice 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of
taxable assets. In October 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-
resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017 and was amended on June 15, 2018. The
Bulletin 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax. Where a non-resident enterprise transfers
taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as
either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using
a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial
purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer other than
transfer of Shares of ADSs acquired and sold on public markets may be subject to PRC enterprise income tax, and the transferee or other person who is
obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident
enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the
transferor fails to pay the taxes.
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We face uncertainties as to the reporting and other implications of certain past and future transactions that involve PRC taxable assets, such as
offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or taxed if our
company is transferor in such transactions, and may be subject to withholding obligations if our company is transferee in such transactions, under SAT
Public Notice 7 or Bulletin 37, or both. We have not filed certain filings under SAT Notice 7 filings for some of our historical share transfers and
restructurings. For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in
the filing under SAT Public Notice 7 and Bulletin 37. As a result, we may be required to expend valuable resources to comply with SAT Public Notice 7
and Bulletin 37, or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our
company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board
and, as such, you are deprived of the benefits of such inspection.
Our independent registered public accounting firm that issues the audit reports included in our annual report filed with the SEC as auditors of
companies that are traded publicly in the United States and a firm registered with the PCAOB is required by the laws of the United States to undergo
regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditors are located
in the Peoples’ Republic of China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Chinese
authorities, our auditors are not currently inspected by the PCAOB. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting
continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in
China. On April 21, 2020, the SEC and the PCAOB issued another joint statement reiterating the greater risk that disclosures will be insufficient in many
emerging markets, including China, compared to those made by U.S. domestic companies. In discussing the specific issues related to the greater risk, the
statement again highlights the PCAOB’s inability to inspect audit work paper and practices of accounting firms in China, with respect to their audit work of
U.S. reporting companies. These statements reflect a heightened interest in an issue that has vexed U.S. regulators in recent years. However, it remains
unclear what further actions the SEC and PCAOB will take to address the problem.
Inspections of other firms that the PCAOB has conducted outside China have identified deficiencies in those firms’ audit procedures and quality
control procedures, which may be addressed as part of the inspection process to improve future audit quality. This lack of PCAOB inspections in China
prevents the PCAOB from regularly evaluating our auditor’s audits and its quality control procedures. As a result, investors may be deprived of the benefits
of PCAOB inspections.
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The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s audit
procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in
our reported financial information and procedures and the quality of our financial statements.
As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in
particular China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress, which if passed, would require the
SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate an auditor report issued by a foreign public accounting firm. The
proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (EQUITABLE) Act prescribes increased disclosure
requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges such as the Nasdaq of issuers included on the
SEC’s list for three consecutive years. Enactment of this legislation or other efforts to increase U.S. regulatory access to audit information could cause
investor uncertainty for affected issuers, including us, and the market price of the ADSs could be adversely affected. It is unclear if this proposed legislation
would be enacted. Furthermore, there has been recent media reports on deliberations within the U.S. government regarding potentially limiting or
restricting China-based companies from accessing U.S. capital markets. If any such deliberations were to materialize, the resulting legislation may have
material and adverse impact on the stock performance of China-based issuers listed in the United States.
Proceedings instituted by the SEC against Chinese affiliates of the “big four” accounting firms, including our independent registered public
accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act.
Starting in 2011 the Chinese affiliates of the “big four” accounting firms, including our independent registered public accounting firm, were
affected by a conflict between U.S. and Chinese law. Specifically, for certain U.S.-listed companies operating and audited in mainland China, the SEC and
the PCAOB sought to obtain from the Chinese firms access to their audit work papers and related documents. The firms were, however, advised and
directed that under Chinese law, they could not respond directly to the U.S. regulators on those requests, and that requests by foreign regulators for access
to such papers in China had to be channeled through the CSRC.
In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the
Sarbanes-Oxley Act of 2002 against the PRC accounting firms, including our independent registered public accounting firm. A first instance trial of the
proceedings in July 2013 in the SEC’s internal administrative court resulted in an adverse judgment against the firms. The administrative law judge
proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take
effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioner had taken place, the firms reached a
settlement with the SEC. Under the settlement, the SEC accepted that future requests by the SEC for the production of documents will normally be made to
the CSRC. The firms were to receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests,
which in substance require them to facilitate production via the CSRC. If they failed to meet specified criteria, during a period of four years starting from
the settlement date, the SEC retained authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure.
Under the terms of the settlement, the underlying proceeding against the four China-based accounting firms was deemed dismissed with prejudice four
years after entry of the settlement. The four-year mark occurred on February 6, 2019. While we cannot predict if the SEC will further challenge the four
China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a
challenge would result in the SEC imposing penalties such as suspensions. If additional remedial measures are imposed on the Chinese affiliates of the “big
four” accounting firms, including our independent registered public accounting firm, we could be unable to timely file future financial statements in
compliance with the requirements of the Exchange Act.
In the event the Chinese affiliates of the “big four” become subject to additional legal challenges by the SEC or PCAOB, depending upon the final
outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations
in the PRC, which could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including
possible delisting. Moreover, any negative news about any such future proceedings against these audit firms may cause investor uncertainty regarding
China-based, U.S.-listed companies and the market price of our common stock may be adversely affected.
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If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and we were unable to
timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be
determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of the ADSs
from Nasdaq Global Select Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of the
ADSs in the United States.
The enforcement of stricter advertisement laws and regulations in the PRC may adversely affect our business and our profitability.
In April 2015, the Standing Committee of the National People’s Congress promulgated the PRC Advertising Law, effective on September 1, 2015
and amended on October 26, 2018. According to the Advertising Law, advertisements shall not have any false or misleading content, or defraud or mislead
consumers. Furthermore, an advertisement will be deemed as a “false advertisement” if any of the following situations exist: (i) the advertised product or
service does not exist; (ii) there is any inconsistency that has a material impact on the decision to purchase in what is included in the advertisement with the
actual circumstances with respect to the product’s performance, functions, place of production, uses, quality, specification, ingredient, price, producer, term
of validity, sales condition, and honors received, among others, or the service’s contents, provider, form, quality, price, sales condition, and honors received,
among others, or any commitments, among others, made on the product or service; (iii) fabricated, forged or unverifiable scientific research results,
statistical data, investigation results, excerpts, quotations, or other information have been used as supporting material; (iv) effect or results of using the
good or receiving the service are fabricated; or (v) other circumstances where consumers are defrauded or misled by any false or misleading content. See
“Item 4. Information on the Company—B. Business Overview—Regulation—Regulations On Advertisement” for further details.
Our current marketing relies on advertising, via both online and offline channels. The laws and regulations of advertising are relatively new and
evolving and there is substantial uncertainty as to the interpretation of “false advertisement” by the SAMR. If any of the advertisements that we publish is
deemed to be a “false advertisement” by the SAMR or its local branch, we could be subject to various penalties, such as discontinuation of publishing the
target advertisement, imposition of fines and obligations to eliminate any adverse effects incurred by such false advertisement. Some of our outdoor
advertisements has historically been deemed as giving misstatement, resulting in fines by the local SAMR. The amount of the fine was not significant. We
cannot assure you that the advertisement we publish in the future will not be subject to further penalties. And any such penalties may disrupt our business
and our competition with competitors, which could affect our results of operations and financial conditions.
Certain of our leased property interests may be defective and we may be forced to relocate operations affected by such defects, which could cause a
significant disruption to our business.
As to most of our leased properties, we are not provided with sufficient property title certificates or other supporting documents to prove the
legitimate possession of the leased properties by the lessors. Our lease agreements therefore may not be enforceable, our rights as the lessee could be
challenged by third parties and we may be forced to relocate if the lessors do not have legitimate rights upon the properties. We cannot assure you that such
defects could be cured in time, or at all, and our business may be significantly disrupted with additional costs and expenses if we have to relocate.
Some of our leases have expired or will expire soon. We may not be able to successfully extend or renew such leases upon expiration of the
current term on commercially reasonable terms or at all, and may therefore be forced to relocate our affected operations. This could disrupt our operations
and result in significant relocation expenses, which could adversely affect our business, financial condition and results of operations. Moreover, we
compete with other businesses for premises at certain locations or of desirable sizes. As a result, even though we could extend or renew our leases, rental
payments may significantly increase as a result of the high demand for the leased properties. In addition, we may not be able to locate desirable alternative
sites for our facilities as our business continues to grow and failure in relocating our affected operations could adversely affect our business and operations.
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Most of our lease agreements have not been registered with relevant governmental authorities. Failure to register the lease agreement will not
affect its effectiveness between the lessor and the lessee, but such defectiveness may subject us to administrative fines, which will have a negative impact
upon our financial results.
Although the planned purpose of certain of our leased properties is for residence only, we lease from our lessors for purpose of business. Pursuant
to relevant laws and regulations, if our lessors have not obtained the consent of the owners of other properties in the same building in advance, the other
owners may request our lessors to remove the impairment and compensate for their damages. Under such circumstances, our lessors may force us to
relocate and our business will be interrupted.
We have been and may in the future be involved in legal and administration proceedings initiated by government authorities, property owners or
any other third parties regarding our leasehold interests in or use of such properties. We cannot assure you that we can successfully defend ourselves
against those claims or that our use of such leased properties will not be challenged in the future. In the event that our use of properties is successfully
challenged, we may be subject to fines and forced to relocate the affected operations. In addition, we may become involved in disputes with the property
owners or third parties who otherwise have rights to or interests in our leased properties. We can provide no assurance that we will be able to find suitable
replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not be subject to material liability resulting from third parties’
challenges on our use of such properties. As a result, our business, financial condition and results of operations may be materially and adversely affected.
We may be required to register our business premises outside of our registered residence addresses as branch offices under PRC law.
Under PRC law, a company doing business at a fixed venue outside its registered residence address is required to register with the local branch of
the SAMR where the business premise is located to set it up as branch office and obtain business license. We have not been able to complete the
registration or establish branch offices for each of business premise operated by ourselves, and some of our service centers have been fined for such
violation by the governmental authority as a result. The amounts of the fines were not significant. We have been making continual efforts to register and set
up branch offices nationwide for our newly opened business premise and we cannot assure you that all required registration can be completed in a timely
manner, due to the rapid growth of our business across the country and complex procedural requirements of governmental authority. If the PRC regulatory
authorities determine that we are in violation of the relevant laws and regulations, we may be subject to penalties, including fines, confiscation of income
and suspension of operation and our business, results of operations and financial condition could thus be adversely affected.
Risks Related to Our ADSs
The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
Since our ADSs became listed on Nasdaq on June 27, 2018, the trading price of our ADSs has ranged from US$1.41 to US$5.86 per ADS in 2019.
The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad
market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in
China that have listed their securities in the United States. In addition to market and industry factors, the price and trading volume for the ADSs may be
highly volatile for factors specific to our own operations, including the following:
· variations in our revenues, earnings and cash flow;
· actual or anticipated fluctuations in our quarterly results of operations;
· announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
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· announcements of new service offerings, solutions and expansions by us or our competitors;
· changes in financial estimates by securities analysts;
· conditions in China’s used car market and used car consumer financing market;
· changes in the operating performance or market evaluations of other online used car transaction platforms;
· detrimental adverse publicity about us, our services or our industry;
· additions or departures of key personnel;
· release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;
· short seller reports that make allegations against us or our affiliates, even if unfounded;
· potential litigation or regulatory investigations; and
· general economic or political conditions in China or elsewhere in the world.
Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade.
We have been named as a defendant in two class action lawsuits, which could divert a significant amount of our management’s attention and other
resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any
such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is
successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and
results of operations. See “—Risks Related to Our Business and Industry—We have been named as a defendant in six putative shareholder class action
lawsuits that could have a material adverse impact on our business, financial condition, results of operation, cash flows and reputation.” and “Item 8,
Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.”
In addition, the stock market in general, and the market prices for internet-related companies and companies with operations in China in particular,
have experienced volatility that often has been unrelated to the operating performance of such companies. The securities of some China-based companies
that have listed their securities in the United States have experienced significant volatility since their initial public offerings in recent years, including, in
some cases, substantial declines in the trading prices of their securities. The trading performances of these companies’ securities after their offerings may
affect the attitudes of investors towards Chinese companies listed in the United States in general, which consequently may impact the trading performance
of our ADSs, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance
practices or fraudulent accounting, corporate structure or other matters of other Chinese companies may also negatively affect the attitudes of investors
towards Chinese companies in general, including us, regardless of whether we have engaged in any inappropriate activities. In particular, the global
financial crisis, the ensuing economic recessions and deterioration in the credit market in many countries have contributed and may continue to contribute
to extreme volatility in the global stock markets. These broad market and industry fluctuations may adversely affect the market price of our ADSs.
Volatility or a lack of positive performance in our ADS price may also adversely affect our ability to retain key employees, most of whom have been
granted options or other equity incentives.
Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from
pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
We have a dual-class share structure such that our ordinary shares consists of Class A ordinary shares and Class B ordinary shares with disparate
voting powers. In respect of matters requiring the votes of shareholders, holders of Class A ordinary shares will be entitled to one vote per share, while
holders of Class B ordinary shares will be entitled to ten votes per share based on our dual-class share structure. Each Class B ordinary share is convertible
into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any
circumstances. Upon (i) any direct or indirect sale, transfer, assignment or disposition of Class B ordinary shares by a holder thereof or direct or indirect
transfer or assignment of the voting power attached to such number of Class B ordinary shares through voting proxy or otherwise to any person or any
entity which is not an affiliate of such holder, or (ii) the direct or indirect sale, transfer, assignment or disposition of a majority of the issued and
outstanding voting securities of, or the direct or indirect transfer or assignment of the voting power attached to such voting securities through voting proxy
or otherwise, or the direct or indirect sale, transfer, assignment or disposition of all or substantially all of the assets of, a holder of Class B ordinary shares
to any person that is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the same number of
Class A ordinary shares, or (iii) of Mr. Kun Dai ceases to be the ultimate beneficial owner of any outstanding Class B ordinary shares.
As of February 29, 2020, Mr. Kun Dai, the beneficially owner of all our issued Class B ordinary shares, beneficially owned 39.9% of the
aggregate voting power of our company. As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares
will have considerable influence over matters such as decisions regarding mergers and consolidations, election of directors and other significant corporate
actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage,
delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a
premium for their shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control will limit your ability to
influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of
Class A ordinary shares and ADSs may view as beneficial.
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The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs.
S&P Dow Jones and FTSE Russell have recently announced changes to their eligibility criteria for inclusion of shares of public companies on
certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than
5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of
multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of our ADSs representing Class A ordinary
shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise
seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our ADSs. Any actions or
publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our
ADSs.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations
regarding the ADSs, the market price for the ADSs and trading volume could decline.
The trading market for the ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or
more analysts who cover us downgrade our ADSs, the market price for the ADSs would likely decline. If one or more of these analysts cease to cover us or
fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for the
ADSs to decline.
The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price.
Sales of substantial amounts of the ADSs in the public market, or the perception that these sales could occur, could adversely affect the market
price of the ADSs and materially impair our ability to raise capital through offerings of equity or equity linked securities in the future. As of February 29,
2020, we had 887,617,391 ordinary shares outstanding, comprising of (i) 846,807,530 Class A ordinary shares (excluding the 16,562,988 Class A ordinary
shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our
Share Incentive Plan), and (ii) 40,809,861 Class B ordinary shares. Among these shares, 435,420,642 Class A ordinary shares are in the form of ADSs,
which are freely transferable without restriction or additional registration under the Securities Act. The remaining Class A ordinary shares outstanding and
the Class B ordinary shares will be available for sale, subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities
Act. To our knowledge, certain of our shareholders, including those affiliated with Mr. Kun Dai, our chairman and chief executive officer, had pledged a
total of 93,170,300 Class A ordinary shares that represent approximately 10.5% of our share capital as of February 29, 2020 in favor of third-party lenders
in connection with certain loans in an aggregate principal amount of approximately US$163.1 million, most proceeds of which were used to fund the
purchase of shares in our company in the latest rounds of pre-IPO equity financings. The loans became due in June, November and December 2019,
respectively, and the borrowers are currently in discussion with the lenders to seek extensions of the loans. See “Item 6. Directors, Senior Management and
Employees—E. Share Ownership footnote (1).” Subsequent to our initial public filing, the loan agreements with the third-party lenders were amended to
add margin call provisions and top-up requirements regarding our shares. If any lender enforces its security interests in such pledged shares upon an event
of default, triggering of the margin call and top-up requirements or other circumstances, or any borrower needs to use the pledged shares to repay the loan,
the pledged shares may be sold on the public market. For example, in connection with a loan in the principal amount of US$100.0 million under a facility
agreement entered into between Kingkey New Era Auto Industry Limited as borrower and Cathay Rong IV Limited as lender, Cathay Rong IV Limited
enforced its security interests in shares pledged by Kingkey New Era Auto Industry Limited and as a result, 57,045,450 Class A ordinary shares were
transferred to Cathay Rong IV Limited. Cathay Rong IV Limited may hold or dispose of these securities at its discretion, including on the public market, as
repayment of the outstanding loan and satisfaction of other obligations under the facility agreement. See “Item 6. Directors, Senior Management and
Employees—E. Share Ownership footnotes (8) and (10).” We cannot predict what effect, if any, market sales of securities held by our significant
shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs.
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Because we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of the ADSs for return on your
investment.
We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business.
As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source
for any future dividend income.
Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In
addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under
Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may
a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of
directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and
cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition,
contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in the ADSs will likely
depend entirely upon any future price appreciation of the ADSs. There is no guarantee that the ADSs will appreciate in value or even maintain the price at
which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs.
Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of
our Class A ordinary shares and the ADSs.
Our memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to
engage in change-of-control transactions, including a dual-class voting structure that gives disproportionate voting power to the Class B ordinary shares
held by Xin Gao Group Limited, of which our founder, chairman and chief executive officer, Mr. Kun Dai, is the sole shareholder and sole director.
Through Xin Gao Group Limited, and other entities affiliated with Mr. Dai which hold Class A ordinary shares, Mr. Dai beneficially owned an aggregate of
39.9% of the total voting power of our company as of February 29, 2020. These provisions could have the effect of depriving our shareholders of an
opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a
tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or
more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications,
limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which
may be greater than the rights associated with our Class A ordinary shares, in the form of the ADS or otherwise. Preferred shares could be issued quickly
with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors
decides to issue preferred shares, the price of the ADSs may fall and the voting and other rights of the holders of our Class A ordinary shares and the ADSs
may be materially and adversely affected.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are
incorporated under Cayman Islands law.
We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and
articles of association, the Companies Law (2020 Revision) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders
to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a
large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited
judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not
binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as
clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a
less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted
bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action
in a federal court of the United States.
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Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to
obtain copies of lists of shareholders of these companies.
Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may
be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the
information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy
contest.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by
management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the
United States. For a discussion of significant differences between the provisions of the Companies Law of the Cayman Islands and the laws applicable to
companies incorporated in the United States and their shareholders.
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. Substantially all of our
current operations are conducted in China. In addition, most of our current directors and officers are nationals and residents of countries other than the
United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to
bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S.
federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render
you unable to enforce a judgment against our assets or the assets of our directors and officers.
The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct the
voting of the Class A ordinary shares represented by your ADS.
Holders of ADSs do not have the same rights as our registered shareholders. As a holder of the ADSs, you will not have any direct right to attend
general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise the voting rights which are attached to the
underlying Class A ordinary shares represented by your ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions
of the deposit agreement. Under the deposit agreement, you may vote only by giving voting instructions to the depositary, as the holder of the underlying
Class A ordinary shares represented by your ADSs. Upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the
underlying Class A ordinary shares represented by your ADSs in accordance with your instructions. Where any matter is to be put to a vote at a general
meeting, then upon receipt of your voting instructions, the depositary will try to vote the underlying Class A ordinary shares in accordance with these
instructions. You will not be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares unless you withdraw the
shares, and become the registered holder of such shares prior to the record date for the general meeting. When a general meeting is convened, you may not
receive sufficient advance notice of the meeting to withdraw the underlying shares represented by your ADSs and become the registered holder of such
shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at
the general meeting. In addition, under our memorandum and articles of association, for the purposes of determining those shareholders who are entitled to
attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such
closure of our register of members or the setting of such a record date may prevent you from withdrawing the underlying Class A ordinary shares
represented by your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general
meeting or to vote directly. Where any matter is to be put to a vote at a general meeting, the depositary will notify you of the upcoming vote and will
arrange to deliver our voting materials to you. Under our memorandum and articles of association, the minimum notice period required to be given by our
company to our registered shareholders for convening a general meeting is seven days. Nevertheless, we cannot assure you that you will receive the voting
materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs. In addition, the
depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This
means that you may not be able to exercise your right to direct how the underlying shares represented by your ADSs are voted and you may have no legal
remedy if the underlying shares represented by your ADSs are not voted as you requested.
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You may experience dilution of your holdings due to the inability to participate in rights offerings.
We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary
will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from
registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may,
but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an
exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or
underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our
rights offerings and may experience dilution of their holdings as a result.
You may be subject to limitations on the transfer of your ADSs.
Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it
deems it expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons,
including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS
holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary
may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if
we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision
of the deposit agreement, or for any other reason.
We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.
We are an “emerging growth company” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements
applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. In addition, the JOBS
Act provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a
private company is otherwise required to comply with such new and revised accounting standards. Although we have adopted all the new accounting
standards that have become effective so far, we intend to take advantage of the extended transition period for complying with new or revised accounting
standards in the future. If we elect not to comply with such auditor attestation requirements or take advantage of other exemptions permitted under the
JOBS Act, our investors may not have access to certain information they may deem important and our financial statements may not be comparable to
companies that comply with public company effective dates for new and revised accounting standards.
We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”
As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley
Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq Global Select Market, impose various requirements on the corporate
governance practices of public companies. As a company with less than US$1.07 billion in revenues for our last fiscal year, we qualify as an “emerging
growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that
are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of
the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS
Act also permits an emerging growth company to delay adopting new or revised accounting standards until such time as those standards apply to private
companies. However, we do not plan to “opt out” of such exemptions afforded to an emerging growth company.
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After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward
ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example,
as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and
disclosure controls and procedures. Operating as a public company also makes it more difficult and more expensive for us to obtain director and officer
liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar
coverage. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find
qualified persons to serve on our board of directors or as executive officers.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
applicable to U.S. domestic public companies.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and
regulations in the United States that are applicable to U.S. domestic issuers, including:
· the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;
· the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the
Exchange Act;
· the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders
who profit from trades made in a short period of time; and
· the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our
results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and
material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less
extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same
protections or information that would be made available to you were you investing in a U.S. domestic issuer.
As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance
matters that differ significantly from the Nasdaq corporate governance listing standards; these practices may afford less protection to shareholders
than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.
As a Cayman Islands exempted company listed on the Nasdaq, we are subject to the Nasdaq corporate governance listing standards. However,
Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance
practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. Currently, we
rely on home country exemption for the requirement under Nasdaq Rule 5605(b)(1) that majority of the board of directors must be comprised of
independent directors as defined under Nasdaq Rule 5605(a)(2). We also relied on home country practice in adopting our 2018 Second Amended and
Restated Share Incentive Plan in November 2018 without seeking shareholder approval and not holding an annual shareholders meeting for the fiscal year
of 2019. If we continue to rely on these and other exemptions available to foreign private issuers in the future, our shareholders may be afforded less
protection than they would otherwise enjoy under the Nasdaq governance listing standards applicable to U.S. domestic issuers.
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We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended
December 31, 2019 as a result of the volatility of the market price of our ADSs, which could subject United States holders of our ADSs or Class A
ordinary shares to significant adverse United States income tax consequences.
A non-U.S. corporation, such as our company, will be classified as a passive foreign investment company (a “PFIC”) for U.S. federal income tax
purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income, or (ii) 50% or more
of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive
income or are held for the production of passive income (the “asset test”). A separate determination must be made after the close of each taxable year as to
whether a non-U.S. corporation is a PFIC for that year. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the
sale or exchange of property producing such income and net foreign currency gains. For this purpose, cash and assets readily convertible into cash are
categorized as passive assets and our goodwill associated with active business activity is taken into account as a non-passive asset.
In addition, a non-U.S. corporation will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of
any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock. Although the law in this regard is unclear, we treat our
VIEs as being beneficially owned by us for U.S. federal income tax purposes because we control their management decisions, we are entitled to
substantially all of the economic benefits associated with these entities, and, as a result, we consolidate their results of operations in our U.S. GAAP
financial statements.
Based on the market price of our ADSs and the composition of our assets (in particular the substantial amount of cash and other cash-like assets),
we believe that we were a PFIC for United States federal income tax purposes for the taxable year ended December 31, 2019 because the volatility of the
market price of our ADSs caused us to narrowly exceed the asset test percentage threshold. Further, we believe that we will likely be classified as a PFIC
for our current taxable year ending December 31, 2020 unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and
other passive assets we hold in assets that produce or are held for the production of non-passive income.
If we are classified as a PFIC for any taxable year during which a U.S. Holder (defined below) held an ADS or an ordinary share, certain adverse
U.S. federal income tax consequences could apply to the U.S. Holder. See “Item 10. Additional Information—E. Taxation—United States Federal Income
Taxation—Passive Foreign Investment Company Rules.”
Item 4. Information on the Company
A. History and Development of the Company
We commenced operations in August 2011 through Youxin Internet (Beijing) Information Technology Co., Ltd., or Youxin Hulian, to conduct
used car auctions and other transaction related services.
In December 2011, we incorporated Uxin Limited in the Cayman Islands as our offshore holding company to facilitate financing and offshore
listing. Shortly following its incorporation, Uxin Limited established a wholly-owned subsidiary in Hong Kong, Uxin Hong Kong Limited. In June 2012, in
connection with our Series A financing, Uxin Hong Kong Limited established a wholly-owned subsidiary in China, Youxinpai (Beijing) Information
Technology Co., Ltd., referred to as Youxinpai or one of our WFOEs. Since its incorporation, Youxinpai has established and acquired several wholly-
owned subsidiaries, among which are Youhan (Shanghai) Information Technology Co., Ltd., or Youhan, and Baogu Automobile Technology Services
(Beijing) Co., Ltd.
In November 2014, we established UcarShow Holding Limited, a wholly-owned subsidiary of Uxin Limited. UcarShow Holding Limited
established UcarShow HK Limited in Hong Kong. In January 2015, we established Uxin Used Car Limited, and in February 2015, UcarShow Holding
Limited transferred all the interests it held in UcarShow HK Limited to Uxin Used Car Limited. In March 2015, UcarShow HK Limited established a
wholly-owned subsidiary, Yougu (Shanghai) Information Technology Co., Ltd, or Yougu. Yougu acquired Youzhen (Beijing) Business Consulting Co., Ltd.
from Youxinpai in September 2016.
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In November 2014, we established UcarEase Holding Limited, a wholly-owned subsidiary of Uxin Limited. UcarEase Holding Limited acquired
GloryFin International Group Holding Company Limited, or GloryFin, which was incorporated in Hong Kong, and its three wholly-owned subsidiaries,
Kai Feng Finance Lease (Hangzhou) Co., Ltd., or Kaifeng, Youqin (Shanxi) Finance Lease Co., Ltd., and Boyu Finance Lease (Tianjin) Co., Ltd.
In November 2014, we established UcarBuy Holding Limited, a wholly-owned subsidiary of Uxin Limited. UcarBuy Holding Limited established
UcarBuy HK Limited, which established a wholly-owned subsidiary, Youxin (Shanghai) Used Car Business Co., Ltd., which we refer to as Youxin
Shanghai. In July 2019, Youxin Shanghai became a wholly-owned subsidiary of GloryFin.
Youxinpai and Yougu entered into a series of contractual arrangements with Youxin Hulian and Youxin Yishouche (Beijing) Information
Technology Co., Ltd., or Yishouche, respectively, and their respective shareholders. Youxin Hulian and Yishouche are collectively referred to as our VIEs.
We have been conducting our 2C business through Yougu and Yishouche. Yougu operates the website www.xin.com and mobile apps for our 2C
business and has obtained approval from Shanghai Communications Administration to conduct value-added telecommunications services in the scope of
online data processing and transaction processing (operating e-commerce).
On June 27, 2018, our ADSs commenced trading on Nasdaq under the symbol “UXIN.” We raised from our initial public offering US$204.8
million in net proceeds after deducting underwriting commissions and the offering expenses payable by us.
On April 26, 2020, our board of directors approved the change in our fiscal year end from December 31 to March 31. We will file a transition
report on Form 20-F to cover the transition period from January 1, 2020 to March 31, 2020.
Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses
Since early 2018, when we began to fulfill online used car transactions for consumers, we have gradually shifted our strategic focus to our 2C
online transaction business, which was previously referred to as “2C cross-regional business.” Through our 2C online transaction business, we help
consumers buy the car of their choice online by providing them with a nationwide selection of used cars, a wide range of car-related value-added products
and services as well as a full suite of supporting services to fulfill these online used car transactions. With our innovative online used car product and
service offerings, we have created an innovative and unique used car buying experience for consumers centered around four key values — more selection,
better prices, premium service and convenience. As a result, in order to better devote all our attention and resources towards developing and scaling up our
2C online transaction business, we have recently divested to our strategic partners our loan facilitation, salvage car and 2B related businesses, which are
collectively referred to as the Divested Businesses.
Divestiture of loan facilitation business
In July 2019 and September 2019, we entered into a bind term sheet and definitive agreements respectively, with Golden Pacer to divest our loan
facilitation related business, which we refer to as the Loan Facilitation Divestiture. In April 2020, we entered into supplemental agreements with Golden
Pacer to modify and supplement certain terms and conditions in connection with the Loan Facilitation Divestiture, pursuant to which we divested our entire
2C intra-regional business and ceased to provide loan facilitation related guarantee services in connection with our 2C online transaction business. In
addition, we have divested the assets and liabilities in relation to our historically-facilitated loans for XW Bank to Golden Pacer as one of the pre-
conditions for the transaction. As a result, assets and liabilities related to the historically-facilitated loans for XW Bank were reclassified on a net basis as
net assets transferred on our consolidated balance sheet as of December 31, 2019, and results of operations related to the divested business were reported as
loss from discontinued operations in the consolidated statements of comprehensive loss. Prior to the Loan Facilitation Divestiture, we facilitated consumer
auto loans for both new and used car transactions through our 2C business by entering into a series of arrangements with our customers and third-party
financing partners who primarily funded the auto loans to our customers. After the Loan Facilitation Divestiture and through our business cooperation with
Golden Pacer, Golden Pacer becomes our financing solution provider who directly works with third-party financing partners to facilitate auto loans, and we
no longer provide loan facilitation related guarantee services in connection with our 2C online used car transactions. By referring the used car financing
options provided by our financing solution providers to our customers, we continue to enable our consumers to conveniently access various auto financing
products on our platform. The transaction closed upon the signing of the supplemental agreements in April 2020.
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Divestiture of salvage car business
In January 2020, we divested our salvage car related business to Boche, which we refer to as the Boche Divestiture. Assets and liabilities
associated with the Boche Divestiture were reclassified as assets and liabilities held for sale on our consolidated balance sheet as of December 31, 2019.
The divested business was not presented as discontinued operations due to its insignificance to our overall business. The transaction closed in
January 2020.
Divestiture of 2B business
In March 2020, we entered into definitive agreements to divest our 2B business to 58.com, which we refer to as the 2B Divestiture. Assets and
liabilities associated with the 2B Divestiture were reclassified as assets and liabilities held for sale on our consolidated balance sheet as of December 31,
2019, and results of operations related to the 2B Divestiture were reported as loss from discontinued operations in the consolidated statements of
comprehensive loss. The transaction closed in April 2020. As part of the transaction, we also entered into a business cooperation agreement with 58.com,
pursuant to which we will provide 58.com with information related to used cars for sale by individuals.
B. Business Overview
We are a leading national online used car dealer in China. As the online destination in China for consumers to buy used cars, we make it possible
for consumers to choose from our nationwide selection of used cars and buy the car directly online from our platform through our 2C business. Prior to
Mach 2020, we also operated 2B business where we primarily facilitated used car transactions between business customers via online auction. We have
divested our 2B business pursuant to definitive agreements we entered into in March 2020. See “Item 4. Information on the Company—A. History and
Development of the Company— Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses.”
Our mission is to enable people to buy the car of their choice. Consumers in China have been facing significant challenges when buying used cars
via traditional supply chains, such as limited access to a wide selection of used cars, inconvenience in buying used cars from other cities and regions, lack
of transparent and reliable information about car condition and complex transaction processes. Operated under the brand Uxin Used Car (优信二手车), our
platform addresses these issues by providing consumers with a reliable and one-stop online car buying experience and enabling consumers to select from
our nationwide selection of Uxin Certified used cars and access various car-related value-added products and services online throughout China.
We have transformed the used car buying experience in China through our innovative integrated online platform and offline service and fulfilment
networks, which takes care of each step of the transaction process and covers the entire value chain. Our online platform ensures that consumers have
access not only to an extensive nationwide selection of used cars, but also to a wide range of value-added products and services. Our offline infrastructure
and networks allow us to effectively serve consumers and fulfill the transactions made online, such as car inspection, in-person car-buying consulting, car
delivery, title transfers and other after-sales services. In particular, our inspection capabilities allow us to collect proprietary data, images and videos of used
cars and generate accurate car condition reports, which allows for convenient car comparison and is crucial to consumers’ decision-making process of
buying used cars online. With a significant amount of data aggregated on our platform, we are able to continue to innovate and improve our products and
services to meet consumers’ varied needs. Together, our products and services provide consumers with the superior experience and peace of mind that our
brand embodies. In fact, our name, Uxin (优信), translates to quality and trust in Chinese.
Our comprehensive products and services are supported by a number of critical foundations, including proprietary technology and data analytics
capabilities, an extensive service network and unique online used car transaction fulfillment capabilities.
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· Data and Technology: Our patented and industry-leading car inspection system, Check Auto (查客), provides a comprehensive overview of a
used car’s condition. Our AI- and big data-driven Manhattan pricing engine provides consumers and dealers with pricing insights based on
each used car’s condition, as well as serving as an algorithmic foundation for determining the ranking of used cars listed on our platform
according to each car’s price and performance data. In addition, based on a wealth of data we have on user behavior and used car inventory,
our AI-enabled Lingxi (灵犀) intelligent recommendation system provides personalized car recommendations to consumers by analyzing their
preferences, which makes it easier for them to find the car of their choice; and our AI-powered Edison intelligent user profiling system helps
our customer service personnel and sales consultants better understand consumer profiles by analyzing their preferences in real time and
predicting which used cars they are likely to buy, which enables us to create more effective sales strategies. Additionally, we provide 360-
degree online car viewing functionality enabled by VR technology for some of the best-selling makes and models tagged as “super value
cars” on our platform.
· Service Network: We leverage our service network to provide consumers with services and assistance at each step of the transaction process.
We provide them with car-buying services through our sales and service network which covers more than 260 cities at prefecture level or
above across China. To enhance customer experience, our sales consultants visit consumers at their convenience, such as coffee shop or their
workplace, to provide professional car-buying consulting service and assist them in buying the car of their choice. In addition, we continue to
upgrade and transform the entire buying process and transition online each step in the sales process. We are now offering online sales
consulting and assistance services without the need to assign our sales consultant offline to assist in a purchase once the consumer
demonstrates intention to purchase on our platform. Starting from December 2018, we have worked with third-party agents to enlarge our
sales force in the effort to effectively expand our service outreach across China. Our agents provide in-person car-buying services primarily in
local service centers. In addition, we have our customer service team process consumers’ pre-sales inquiries and after-sales matters through
online chat and hotlines.
· Online Transaction Fulfillment Capabilities: Our unique transaction fulfillment capabilities are empowered by our nationwide logistics and
delivery network, nationwide title transfer and vehicle registration service and industry-leading warranty programs. Our nationwide logistics
and delivery network ensure timely delivery of used cars to consumers. Our title transfer and vehicle registration service efficiently handles a
potentially time-consuming and complex process for consumers. Our warranty programs provide consumers with comprehensive post-sale
protection.
We also collaborate with various third-party partners to provide a wide range of value-added products and services on our platform, such as auto
financing options and insurance products, as well as after-sales services. For example, Golden Pacer, as our financing solution provider, assesses car
buyers’ credit and connects those who apply for used car loans with financial institutions who subsequently fund the loans, which streamlines the car-
buying process on our platform.
In May 2019, we entered into a strategic partnership with 58.com, China’s largest online market place for classifieds. Under the partnership, we
are collaborating with 58.com to optimize and strengthen traffic and inventory acquisition, used car inspection, big data analytics and SaaS development.
We further deepened our strategic partnership with 58.com through the divestiture of our 2B business to 58.com and the entry into a business cooperation
agreement pursuant to which we will provide 58.com with information related to used cars for sale by individuals. See “Item 4. Information on the
Company—A. History and Development of the Company— Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses.”
Since we launched our online used-car-buying product and service offerings in early 2018, we have been shifting our strategic focus to 2C online
used car transactions. Our established relationships with approximately 25,000 dealers have enabled us to provide a nationwide selection of used cars on
our platform, which attracts an increasing number of consumers to select and buy used cars from us. The growing recognition from consumers in turn
attracts more dealers to join our network. Our dealer partners are typically small- or medium-sized retail dealers. This network effect will help us form a
vibrant ecosystem among ourselves, our customers and our deal partners. Since we started to provide 2C online used car transaction services in 2018, we
have witnessed significant growth in our business. The total number of online used cars transactions completed through our 2C platform has increased from
38,264 in 2018 to 97,100 in 2019, representing a 153.8% increase. The total 2C GMV of online used car transactions has grown from RMB4.4 billion in
2018 to RMB11.3 billion (US$1.6 billion) in 2019, representing a 155.3% increase.
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Our Platform and Services
As a leading national online used car dealer in China, we enable consumers to buy used cars online through an innovative integrated online
platform and offline service and fulfilment networks through our 2C business. We mainly generate revenues from the fees we charge for fulfilling 2C
online used car transactions and providing relevant value-added services. Before the divestiture of our 2B business, we also generated revenue from the fee
we charge for facilitating 2B used car transactions on our 2B auction platform.
Our 2C business
Uxin Used Car (优信二手车), our 2C business, caters to consumers and primarily provides them with a nationwide selection of used cars, various
car-related value-added products and services, and a full suite of supporting services to fulfill these online used car transactions. We historically provided
services to consumers attracted to our platform by accompanying them to visit offline dealerships in local used car markets and assisting them in buying
used cars from the dealers, which services we previously referred to as our “2C intra-regional business.” Starting in early 2018, we shifted our focus to
enabling consumers to purchase used cars entirely online from our platform without the need to visit offline dealerships or see the actual car when making
the purchase, which services we previously referred to as our “2C cross-regional business.” In July 2019, September 2019 and April 2020, we entered into
a binding term sheet, definitive agreements and supplemental agreements, respectively, with Golden Pacer to divest our loan facilitation related business
(the “Loan Facilitation Divestiture”), pursuant to which we divested our entire 2C intra-regional business to Golden Pacer. Before the Loan Facilitation
Divestiture, our 2C business generated revenues from the fees we charged for transaction facilitation and loan facilitation services. We no longer provide
any loan facilitation services since November 2019 as a result of the Loan Facilitation Divestiture, and our 2C business currently generates revenues from
commission and value-added service fees. Our commission rate, as defined by the used car commission revenue divided by the GMV of our 2C business,
increased from 4.6% in 2018 to 6.3% in 2019. Our value-added service take rate, as measured by the used car value-added service revenue divided by the
GMV of our 2C business, increased from 3.8% in 2018 to 5.6% in 2019.
Since the launch of our online used car transaction services in early 2018, Uxin Used Car has achieved significant scale and growth. We had a
real-time listing of over 110,000 used cars in the fourth quarter of 2019. In 2018 and 2019, our 2C business facilitated 38,264 and 97,100 online used car
transactions, respectively, resulting in GMV of approximately RMB4.4 billion and RMB11.3 billion (US$1.6 billion), respectively.
User journey in our 2C business
For a typical Uxin Used Car consumer, the consumer’s buying journey is as follows:
· Online search: We provide an intuitive user interface to help the consumer navigate through a vast selection of used cars. The consumer can
search by brand, price and other features. Built upon our technology capabilities in user categorizing and deep learning, our platform also
personalizes and prioritizes the display of high-quality listings according to the consumer’s specific needs and requirements, which can make
the decision-making process much more efficient.
· Evaluation of car condition: To improve transparency of the transaction process and strengthen consumer trust, each car listing on our
platform includes an in-depth car condition report generated by our Check Auto system, including photos and videos of the interior and
exterior of the car, records of prior accidents, repair and maintenance history, among others. Moreover, our Manhattan pricing engine also
makes assessments on the fair value of listed cars by analyzing the car’s selling price and its condition as well as comparing it with the price
estimate output from our Manhattan pricing engine. Our system marks the used cars of particularly good value as “super value cars.” We also
provide VR-enabled 360-degree online car viewing functionality for some of the best-selling makes and models tagged as “super value cars.”
Based on our comprehensive inventory database, our system also accommodates easy comparison of different cars across a multitude of
features, including price, car condition and residual value. All this enables the consumer to make an informed buying decision.
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· Products and services: When searching for used cars, the consumer can also view and choose from various value-added products and
services, such as used car financing options and auto insurance products, offered by third-party providers on our platform. Once the consumer
buys a car, we provide a full suite of supporting services to fulfill the online car purchase, such as nationwide logistics and delivery service,
nationwide title transfer service, and assistance with vehicle registration for license plate. All of these products and services significantly
lower the barrier to buy used cars online from our platform.
· Customer support: At any step of the transaction process, the consumer can contact our pre-sales and after-sales customer service personnel
through online chat or hotlines. Our online customer service center primarily handles pre-sales car-buying enquiries, such as preliminary
questions on car price, car condition and used car financing options. Our sales consultants visit the consumer in person and provide
professional car-buying consulting and assistance services. For example, our sales consultant assists the consumer in person in reading
through the car condition report generated by Check Auto, recommends customized used car financing options and answers any car-buying-
related questions. In addition, we continue to upgrade and transform the entire buying process and transition online each step in the sales
process. We are now offering online sales consulting and assistance services without the need to assign our sales consultant offline to assist in
a purchase once the consumer demonstrates intention to purchase on our platform. Our AI-enabled sales consultant assistance system, which
integrates Lingxi intelligent recommendation system, Edison intelligent user profiling system and communication records generated from our
online customer service center, empowers our sales consultants to provide more personalized and professional services by enabling them to
understand the consumer’s specific needs and requirements in greater detail and automatically generating car comparison and
recommendations accordingly. Our fulfillment management center primarily handles after-sales enquiries, such as questions on auto loan
repayment, insurance claim and car repair covered by our warranty programs, as well as resolves customer complaints.
· Signing and delivery: Once the consumer decides to buy the car, our service personnel will have him sign a purchase agreement after the
consumer makes an earnest payment if the purchase is made with cash or down payment if the consumer chooses a financing option. Our
nationwide logistics and delivery service ensures the car to be shipped in a timely manner to our fulfillment center, where our fulfillment
service consultant will carry out a pre-fulfillment check on the car’s condition when the car arrives. Once confirmed the car is in good
condition, we will register the car at local vehicle bureau and complete title transfers on behalf of our customer. We will invite the consumer
to our fulfillment center to pick up the car when all procedures are completed. The consumer will make the rest of the payment at the
fulfillment center if the consumer buys the car with cash in the first place.
· Post-transaction warranty: We provided two categories of certification, “Gold” and “Silver”, under our Uxin Certified (优信认证) program in
2019. Every Uxin Certified used car carries a 30-day return policy covering certain major damages caused by severe accidents provided that
such damages exist as of the date of sale. In addition, we also provide a 3-day no-questions-asked return policy for some of the super value
cars. The total return rate for 2019 was approximately 3%. For the used cars certified as “Gold”, we provide a one-year or 20,000-kilometer
warranty covering repair of 15 major structural components; for those certified as “Silver”, we provide a half-year or 10,000-kilometer
warranty covering repair of 5 major structural components. To further strengthen consumer trust in our platform, we have recently further
upgraded and integrated our certification program. Every certified used car currently carries a one-year return policy covering certain major
damages caused by severe accidents that occurred prior to the sale but were not originally identified through Uxin’s certificate program, as
well as a one-year or 20,000-kilometer warranty covering repair of 15 major structural components. We provide these warranty programs to
the consumer for no extra charge over our commission fee.
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For a typical Uxin Used Car dealer, the dealer’s journey is as follows:
· Inventory sorting: Our offline employees who act as our “inventory shoppers” visit local used car markets on a daily basis and sort out the
dealer’s used car inventory by employing a systematic approach which includes using scanning technology and image recognition software to
ensure that the car is authentic and its condition is accurately reflected before it is listed, as well as to make sure that all the listings are up-to-
date. Once the dealer has a new inventory, our inventory shopper will pre-negotiate the car price with him. If the dealer’s asking price is
excessively high compared to the fair value estimate output from our Manhattan pricing engine, we will notify the dealer and propose a price
adjustment before the car is inspected and listed on our platform to make sure our listing price is competitive.
· Inspection: We assign our inspection professionals to a standard and comprehensive inspection by using our Check Auto inspection system if
the dealer’s asking price is within reasonable range.
· Listing: Once inspected and qualified, the car will be listed on our platform for sale. Each car listing is accompanied by a Check Auto car
condition report in the form of both picture and video. Additionally, our daily inventory sorting tour in local used car markets ensures any cars
already sold are removed from our platform in a timely fashion. If the car has been listed on our platform for a certain period of time without
being sold, we will contact the dealer and propose downward price adjustment to reflect the car’s latest fair value or make the price more
competitive.
· Signing and delivery: Once the car is sold on our platform, we will arrange for a pre-shipment check on the car’s condition before it is shipped
to make sure the car is authentic and its condition is consistent with what our car inspection report describes. At the same time, our local
inventory shopper verifies the car’s documentation. We will have the dealer sign a sales agreement if the car’s condition and documentations
are both valid. Our inventory shopper also assists the dealer with logistics arrangement. When the car is shipped via our logistics and delivery
network and arrives at our fulfillment center, we will contact the consumer for the rest of the fulfillment procedures.
We are dedicated to optimizing the selection of used cars listed on our platform. In addition to taking a more systematic approach to select and
manage our online virtual inventory, we have established our dealer management system to ensure competitive inventory quality and prices as well as
strengthen our relationships with the dealers.
Our 2B business
Launched in 2011, our 2B business, Uxin Auction (优信拍) catered to business buyers and sellers with a comprehensive suite of transaction
solutions through our auction service, connecting businesses with one another across China, helping them source used cars and optimize their turnover as
well as facilitating transactions among our business customers of different sizes across China. Business sellers included used car dealers, 4S dealerships
which are authorized to sell the products of a single brand of automobiles and provide key automobile-related services, car rental companies, auto
manufacturers and large corporations that may need to dispose of large fleets of used cars. Used cars were sold on Uxin Auction through online auction. In
2019, approximately 370,000 used cars were listed on our platform for auction. In 2017, 2018 and 2019, our 2B business achieved GMV of RMB17.4
billion, RMB15.3 billion and RMB6.8 billion (US$976.8 million), respectively. Our 2B business mainly generated revenues from the fee we charge for
transaction facilitation services in 2019.
In March 2020, we entered into definitive agreements with 58.com to divest the entire 2B business. See “Item 4. Information on the Company—A.
History and Development of the Company— Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses.”
Others
In 2019, we also generated revenues from other businesses including salvage car business and dealer inventory financing business.
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Salvage car business
Prior to the divestiture of our salvage car related business to Boche in January 2020, we facilitated salvage car transactions through our historical
subsidiaries, Fairlubo Auction Company Limited and Zhejiang Dongwang. The sellers were primarily insurance companies and the buyers were primarily
business buyers of salvage cars, such as car repair shops and used car dealers. See “Item 4. Information on the Company—A. History and Development of
the Company— Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses.”
Dealer inventory financing (Easy Loan program)
We provide short-term inventory financing to retail dealers for up to two months through our Easy Loan program. We collect information from the
dealer to assess the dealer’s credit profile and make credit decisions. If the dealer’s application is approved, we will work with third-party financing
partners to provide funding to the dealer.
Our Service and Transaction Fulfillment Capabilities
Our nationwide service and transaction fulfillment capabilities comprise the follow components that provide crucial support to our online used car
transaction business:
· Nationwide sales and service network. We provide consumers with car-buying services through our sales and service network which covers
more than 250 cities at prefecture level or above across China. To enhance customer experience, our sales consultants visit consumers at their
convenience, such as coffee shop or their workplace, to provide professional car-buying consulting service and assist them in buying the car
of their choice. For example, our sales consultant may recommend a personalized used car or financing option according to the consumer’s
specific needs and requirements, help him learn about the car’s condition by interpreting Check Auto video inspection report for him, and
arrange for signing and delivery once he buys the car. As of December 31, 2019, we had a total of approximately 1,400 sales consultants
across the country. We are currently upgrading and transforming the entire buying process and transitioning online each step in the sales
process. We are now offering online sales consulting and assistance services without the need to assign our sales consultant offline to assist in
a purchase once the consumer demonstrates intention to purchase on our platform. Starting from December 2018, we have also worked with
third-party agents to enlarge our sales force in the effort to effectively expand our service network across China. Our agents provide in-person
car-buying services primarily in local service centers. We follow a disciplined and systematic expansion process with respect to new service
center openings. Once our agents select potential locations for the service centers, we will help them assess the feasibility based on various
factors, including existing market competition, the size of potential customer base, population, car PARC, foot and vehicle traffic, local
regulations on title transfers and license plate registration, and economic condition. As of December 31, 2019, we had over 1,100 service
centers operated by third-party agents across China.
· Warranty and repair services. We provided two categories of certification, “Gold” and “Silver”, under our Uxin Certified (优信认证)
program in 2019. Every Uxin Certified used car carries a 30-day return policy covering certain major damages caused by severe accidents
provided that such damages exist as of the date of sale. In addition, we also provide a 3-day no-questions-asked return policy for some of the
super value cars. To further strengthen consumer trust in our platform, we have recently further upgraded and integrated our certification
program. Every certified used car currently carries a one-year return policy covering certain major damages caused by severe accidents that
existed prior to the sale, as well as a one-year or 20,000-kilometer warranty covering repair of 15 major structural components. We provide
these warranty programs to the consumer for no extra charge over our commission fee.
· Value-added products and services. In addition to providing a nationwide selection of used cars for consumers to choose from, we also have a
wide range of car-related value-added products and services available on our platform to make consumers’ car buying process a one-stop
experience. We cooperate with used car financing solution providers and recommend personalized used car financing options to our
customers according to their needs and profiles. We also cooperate with insurance solution providers to meet consumers’ need for auto
insurance products. As of December 31, 2019, we partnered with 6 insurance companies and referred their auto insurance solutions to our
customers through our platform.
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· Customer service. Our customer service team processes consumers’ pre-sales inquiries and after-sales matters through online chat and
hotlines. Our online customer service center is primarily responsible for pre-sales car-buying enquiries, such as preliminary questions on car
price, car condition and used car financing options. Our fulfillment management center mainly handles after-sales enquiries, such as questions
on auto loan repayment, insurance claim and car repair covered by our warranty programs, as well as resolves customer complaints.
· Nationwide logistics and delivery network. We believe we are the first company in China which has built a nationwide logistics and delivery
network for used cars. We currently collaborate with approximately 100 third-party logistics providers to ship used cars to our customers
across China. All the logistics planning and delivery solutions are automated and output from our integrated intelligent logistics and routing
system, which ensures a timely delivery and standard delivery fee. Through our order management system (OMS), transportation
management system (TMS) and warehouse management system (WMS), we operate and manage our logistics and delivery network in a
centralized and transparent fashion, which allows us to take a systematic approach to assigning shipment orders to logistics providers,
coordinating the loading and unloading of used cars at each warehouse as well as monitoring and managing delivery progress. In addition, our
fast-growing transaction volume brings better economy of scale to our platform, which in turn enables us to increase overall resource
utilization and delivery efficiency by optimizing route planning and coordinating used car shipments among warehouses. As a result of the
above, we have significantly improved our capabilities in operating used car logistics and delivery across China. For the purpose of
monitoring each shipment, we temporarily install GPS device to track the car’s location in real time. A used car sold through our platform can
be delivered to our customers typically within three to four business days via our logistics and delivery network. In 2019, our average delivery
distance reached approximately 1,000 kilometers.
· Nationwide title transfers and vehicle registration. Title transfers for used cars in China typically involve de-registering a car with one owner
and registering the car with another owner. As of December 31, 2019, we partnered with over 200 title transfer service providers to handle the
entire title transfer process for our customers, which significantly simplifies their car buying process on our platform. In addition, we also
provide flexible vehicle registration solutions to assist our customers in applying for license plates.
Technology
We leverage sophisticated technology to provide a differentiated user experience and improve our operations.
Check Auto inspection system
Our proprietary Check Auto system is an integrated, interactive vehicle inspection system that enables our inspection professionals to conduct a
comprehensive examination of used cars listed on our platform. A significant portion of the inspection process is automated by our proprietary, state-of-the-
art technology, including wearable digital glasses to record the inspection process, automatic diagnostics of car condition from video footage and image
recognition technology that can automatically identify certain car condition. As a result, Check Auto improves both inspection accuracy and efficiency.
A mobile device serves as the hardware management and data collection terminal during each car inspection. Equipped with touch screen and
voice command features, the mobile device is a highly interactive platform powered by our Check Auto inspection software. The mobile device is also
connected to multiple inspection hardware devices, including wearable digital glasses, the vehicle on-board diagnostics system and a coating thickness
gauge. Our inspection professionals follow the instructions prompted by the mobile device and interact with the software system through the touch screen
and voice commands during the inspection process.
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An inspection by Check Auto involves a standard procedure that covers more than 300 documented check points. The inspection process may be
adjusted depending on different makes and models.
After each inspection, our system automatically generates a comprehensive, standardized Check Auto report. Each condition report includes
extensive information on the exterior and interior of the car, structure and engine condition, among many other characteristics. Key inspection points are
indexed and marked in the comprehensive inspection video, and consumers can easily navigate through the video by selecting the inspection points that
they are most interested in.
In addition to data collected through our systems, we cooperate with a number of third-party data providers for supplemental data included in our
Check Auto condition report, such as details on each car’s accident and repair history, insurance claims and ownership records.
As of December 31, 2019, we had obtained 16 patents in relation to vehicle inspection. Check Auto is also recognized and trusted by both
consumers and businesses. For example, we have licensed the system to several top car manufacturers for their own car inspection needs.
Manhattan pricing engine
Our AI- and data-driven Manhattan pricing engine provides significant pricing insights based on specific car condition. We leverage our
Manhattan pricing engine to evaluate the residual values of used cars, which lays a solid foundation for many of our core services. In addition, we also
continue to optimize the accuracy of residual value estimates based on the latest used car transaction data gathered on our platform as well as external data,
such as the latest selling price of related new cars. In our 2C business, we also rely on the output from the Manhattan pricing engine to help consumers
assess whether the listing price is in line with its fair market value, in order to enable consumers to make informed buying decisions.
Our platform has aggregated a wealth of data on user behavior, car condition and information as well as related transactions, which empowers and
continually improves the Manhattan pricing engine. In addition, our Manhattan pricing engine maintains high accuracy by updating its algorithms on a real-
time basis with the transaction data collected in the latest week. Since 2018, our platform has completed over 135,000 online used cars transactions through
our 2C business, which has contributed valuable transaction-related data to our database. We have also cumulatively listed and collected proprietary data on
over 4 million used cars for sale on our 2C platform.
Lingxi intelligent recommendation system
Based on a plethora of data we have on user behavior and used car inventory, our AI-enabled Lingxi (灵犀) intelligent recommendation system
makes personalized car recommendations to consumers on our platform by analyzing their preferences, making it easier for them to find the car of their
choice. Lingxi can also adjust its recommendations in real time according to the change of user preferences as it receives user behavior data on a real-time
basis. In addition, Lingxi is also embedded with the module of user categorization which reveals user preference on every feature for a car and allows
Lingxi to predict user preference for certain features. Our Lingxi intelligent recommendation system serves as a significant foundation for our business
operations.
Edison intelligent user profiling system
Our AI-powered Edison intelligent system helps our sales consultants and customer service personnel to better understand potential buyers and
provide effective services to them. Edison effectively studies and predicts user preferences for specific car features, such as certain make and model, car
color, engine and gearbox, and constantly adjusts its prediction by monitoring user behavior data on a real-time basis. In addition, Edison can provide our
sales consultants with insights on which used car the consumer is likely to buy through a process of matching car features with the consumer’s profile.
Virtual reality-enabled car viewing system
To further enhance user experience, we introduced a virtual reality-enabled car view system in the second half of 2018, which comprises of VR
filming studio, automatic shooting system and back-end system. The VR viewing system enables us to capture consistent and high-resolution panorama car
images and display these images on our mobile app and website. Our virtual reality-enabled car viewing system enables consumers to inspect every detail
of the car, such as small scratches and wheel parts, in high-resolution images and enables a smooth viewing experience.
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Marketing and Brand Promotion
We focused our marketing efforts mainly on user acquisition in 2019. We have promoted our Uxin Used Car mobile app in various mobile
application stores, such as Apple App Store and Xiaomi App Store. Our mobile apps are constantly ranked among the top in mobile app stores in online
used car transaction category. We have also partnered with major search engines, auto vertical websites and apps as well as news feed apps to attract traffic
to our platform. For example, we have entered into a strategic partnership with 58.com in May 2019, under which we have agreed to collaborate in the
areas of traffic and inventory acquisition, used car inspection, big data analysis and SaaS development. As an established used car brand in China, Uxin has
enjoyed high brand awareness among Chinese consumers. In May 2019, we were named as the only used car e-commerce brand in BrandZ’s 2019 Top 100
Most Valuable Chinese Brands and the 71 most valuable Chinese brand on the list. As we continue to optimize our traffic acquisition channels, starting
from 2020, we have also been working on enhancing NPS (Net Promoter Score) among our customers by continuously improving our service quality and
customer satisfaction to further increase our brand awareness as well as the likelihood of existing customers to recommend or refer our products and
services to other potential customers.
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Competition
We operate in a highly competitive online used car market in every aspect of our business. We face intense competition from other used car
transaction platforms and may also face competition from online used car listing services. Competition with other used car transaction platforms is
primarily centered on the quality of service and customer acquisition. We may also face competition in attracting used car inventory.
Seasonality and Cyclicality
Seasonal fluctuations and industry cyclicality have affected, and are likely to continue to affect, our business. We generally generate less revenue
during Lunar New Year holidays in the first quarter of each year. The market for used cars is also affected by the release of new cars. In addition, spending
on automobiles in China has historically been cyclical, reflecting overall economic conditions as well as the budgeting and buying patterns of our
consumers and businesses. Our rapid growth has lessened the impact of the seasonal fluctuations and cyclicality. However, we expect that the seasonal
fluctuations and cyclicality will cause our quarterly and annual operating results to fluctuate.
Facilities
Our corporate headquarters are located in Beijing with office space of approximately 8,000 square meters as of December 31, 2019. We also have
an office space of approximately 5,000 square meters in Xi’an mainly for our online customer service personnel and some of our product and technology
personnel. We also have a total space of approximately 7,500 square meters in 32 cities for VR filming. In addition, we have local offices with an aggregate
gross area of over 17,000 square meters for our 2C business in 102 cities. In 2019, we also had 7 regional transaction centers with an aggregate gross area
of approximately 350,000 square meters for our 2B business across China. We lease all the facilities to conduct our business.
Intellectual Properties
Our intellectual property contributes to our competitive advantages among online used car transaction platforms in China. To protect our brand
and other intellectual property, we rely on a combination of patent, trademark, trade secret and copyright laws in China as well as imposing procedural and
contractual confidentiality and invention assignment obligations on our employees, contractors and others. As of December 31, 2019, we had obtained 84
patents (of which 16 patents have been transferred and 16 patents have been non-exclusively licensed to an affiliate of 58.com in 2020 as part of the 2B
Divestiture), and two patents have been exclusively licensed in 2020 as part of the Loan Facilitation Divestiture), 940 trademarks (of which 11 trademarks
have been transferred, 10 trademarks have been non-exclusively licensed and 79 trademarks have been exclusively licensed to an affiliate of 58.com in
2020 as part of the 2B Divestiture), 232 software copyrights (of which 25 software copyrights have been transferred and 16 software copyrights have been
non-exclusively licensed to an affiliate of 58.com in 2020 as part of the 2B Divestiture, and 4 have been exclusively licensed in 2020 as part of the Loan
Facilitation Divestiture), and 14 works copyrights (of which one works copyright has been transferred in whole, one has been transferred in part, and one
has been non-exclusively licensed to an affiliate of 58.com in 2020 as part of the 2B Divestiture), 168 domain names (of which www.youxinpai.com has
been transferred and www.chake.net has been non-exclusively licensed to an affiliate of 58.com in 2020 as part of the 2B Divestiture) and have entered into
confidentiality and proprietary rights agreement with employees, consultants, contractors, and other business partners.
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Regulation
This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.
Regulations on Company Establishment and Foreign Investment
The establishment, operation and management of companies in China is governed by the PRC Company Law, as amended in 2005, 2013 and
2018. According to the PRC Company Law, companies established in the PRC are either limited liability companies or joint stock limited liability
companies. The PRC Company Law applies to both PRC domestic companies and foreign-invested companies, unless otherwise provided in the relevant
foreign investment laws and regulations. Additionally, the registration for a PRC Company’s establishment, modification, and termination shall comply
with the provision of Regulation of the People’s Republic of China on the Administration of Company Registration which was amended by the State
Council on February 6, 2016, and information about investment activities of foreign investors shall be filed in accordance with the Measures of Information
Reporting of Foreign Investment promulgated by the MOFCOM and the SAMR on December 30, 2019 and went into effect on January 1, 2020.
Foreign Investment Law
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law and on December 26, 2019, the State Council
published the Implementation Rules of the Foreign Investment Law, both of which went into effect on January 1, 2020 and replaced three existing laws on
foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly Foreign-owned
Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expected PRC regulatory
trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate
legal requirements for both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes the basic framework for the access
to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.
According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more
natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the
“investment activities” include the following situations: (i) a foreign investor, individually or collectively with other investors, establishes a foreign-
invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an
enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (iv) investments
in other means as provided by laws, administrative regulations, or the State Council.
According to the Foreign Investment Law, the State Council shall publish or approve to publish a negative list stipulating the special management
measures for the access of foreign investment in certain industries, or the “negative list.” The Foreign Investment Law grants national treatment to foreign-
invested entities, except for those foreign-invested entities that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.”
The Foreign Investment Law provides that foreign investors shall not invest in the “prohibited” industries, and shall meet certain conditions stipulated
under the “negative list” for making investment in “restricted” industries. The currently effective “negative list” is the Special Management Measures
(Negative List) for the Access of Foreign Investment (2019 version), or the 2019 Negative List, jointly published by NDRC and the Ministry of Commerce
on June 20, 2019 and went into effect on July 30, 2019. On December 26, 2019, the Supreme People’s Court published the Interpretation of the Supreme
People’s Court on Several Issues concerning the Application of the Foreign Investment Law of the People’s Republic of China, which went into effect on
January, 1, 2020, pursuant to which the court shall rule in favor of the party claim the invalidity of the investment agreement with respect to foreign
investment in the “restricted” industry under the “negative list” or foreign investment in the “restricted” industry under the “negative list” that fails to
comply with the requirements unless necessary mitigating measures are taken before the ruling.
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Furthermore, the Foreign Investment Law provides that foreign-invested enterprises established according to the Sino-Foreign Equity Joint
Venture Enterprise Law of the PRC, the Wholly Foreign-Owned Enterprise Law of the PRC or the Sino-Foreign Cooperative Joint Venture Enterprise Law
of the PRC may maintain their current structure and corporate governance within five years after the implementing of the Foreign Investment Law.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the
PRC, including, among others, that local governments shall abide by their commitments to the foreign investors; foreign-invested enterprises are allowed to
issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable
compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; mandatory technology
transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing fees of intellectual property rights,
indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors within China, may be freely remitted inward and
outward in RMB or a foreign currency. Also, foreign investors or the foreign investment enterprise should be imposed legal liabilities for failing to report
investment information in accordance with the requirements.
Regulations on Value-Added Telecommunications Services
China’s telecommunication related businesses (including internet business) are still at an early stage of development, the laws and regulations of
which still remain subject to many uncertainties. On September 25, 2000, the Telecommunications Regulations of the People’s Republic of China, or the
Telecom Regulation, was issued by the PRC State Council, which was amended and became effective on February 6, 2016, as the primary governing law
on telecommunication services by PRC companies. The Telecom Regulation draws a distinction between “basic telecommunication services” and “value-
added telecommunication services.” The Catalog of Telecommunications Business, or the Telecommunication Catalog, was issued as an appendix to the
Telecom Regulations to categorize telecommunications services as basic or value-added, and information services via public communication networks such
as fixed networks, mobile networks and Internet are classified as value-added telecommunications services. According to the Telecommunication Catalog,
value-added telecommunication services include online data processing and transaction processing business (operating e-commerce business), internet
information services business and other value-added telecommunication services.
On March 5, 2009, the Ministry of Industry and Information Technology, or the MIIT, issued the Administrative Measures for
Telecommunications Business Operating Permit, or the Telecom Permit Measures, which took effect on April 10, 2009. The Telecom Permit Measures
were later amended on July 3, 2017 and the amendment took effect on September 1, 2017. The Telecom Permit Measures confirm that there are two types
of telecom operating licenses for operators in China, namely, licenses for basic telecommunications services and licenses for value-added
telecommunications services, or the VATS License. The license granted will set out the operation scope of the enterprise which details the permitted
activities of such enterprise. An approved telecommunication services operator shall conduct its business in accordance with the specifications listed in its
VATS License. In addition, a VATS License holder is required to obtain approval from the original permit-issuing authority in respect of any change to its
shareholders.
Regulation Relating to Internet Information Services
On September 25, 2000, the State Council promulgated the Administrative Measures on Internet Information Services, or the Internet Measures,
which were later amended in January 8, 2011. Under the Internet Measures, a VATS License shall be obtained before conducting profitable internet
information services in the PRC, and a filing requirement shall be satisfied before conducting non-profitable internet information service. The provision of
information services through mobile apps is subject to the PRC laws and regulations governing Internet information services.
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In addition, on June 28, 2016, the State Internet Information Office promulgated the Administrative Provisions on Mobile Internet Application
Information Services, or the Mobile Application Administrative Provisions, to strengthen the regulation of the mobile apps information services. Pursuant
to the Mobile Application Administrative Provisions, an internet application program provider must verify each user’s mobile phone number and other
identity information under the principle of mandatory real name registration at the back-office end and voluntary real name display at the front-office end.
An internet application program provider must not enable functions that can collect a user’s geographical location information, access user’s contact list,
activate the camera or recorder of the user’s mobile smart device or other functions irrelevant to its services, nor is it allowed to conduct bundle
installations of irrelevant application programs, unless it has clearly indicated to the user and obtained the user’s consent on such functions and application
programs. Furthermore, in December 16, 2016, the MIIT promulgated the Interim Measures on the Administration of Pre-Installation and Distribution of
Applications for Mobile Smart Terminals, or the Mobile Application Interim Measures, which took effect on July 1, 2017. The Mobile Application Interim
Measures require, among others, that internet information service providers must ensure that a mobile apps, as well as its ancillary resource files,
configuration files and user data can be uninstalled by a user easily, unless it is a basic function software, which refers to a software that supports the
normal functioning of hardware and operating system of a mobile smart device.
The content of the internet information is highly regulated in China and pursuant to the Internet Measures, the PRC government may shut down
the websites of internet information providers and revoke their VATS Licenses (for profitable Internet information services) if they produce, reproduce,
disseminate or broadcast internet content that contains content that is prohibited by law or administrative regulations. Internet information services
operators are also required to monitor their websites. They may not post or disseminate any content that falls within the prohibited categories, and must
remove any such content from their websites, save the relevant records and make a report to the relevant governmental authorities. Additionally, as the
internet information service providers, under the PRC Tort Liability Law, which became effective in July 2010, they shall bear tortious liabilities in the
event they infringe upon other person’s rights and interests due to providing wrong or inaccurate content through the internet. Where an internet service
provider conducts tortious acts through internet services, the infringed person has the right to request the internet service provider take necessary actions
such as deleting contents, screening and de-linking. Failing to take necessary actions after being informed, the internet service provider will be subject to its
liabilities with regard to the additional damages incurred. Where an internet service provider knows that an internet user is infringing upon other persons’
rights and interests through its internet service but fails to take necessary actions, it is jointly and severally liable with the internet user.
Regulation Relating to E-Commerce
Online data processing and transaction processing business (operating e-commerce business) is a value-added telecommunication service, and e-
commerce operation shall be required to obtain VATS License.
On January 26, 2014, the SAMR, promulgated the Administrative Measures for Online Trading, which strengthen the protection of consumers and
impose stringent requirements and obligations on online business operators and third-party online marketplace operators. Online business operators and
third-party online marketplace operators are prohibited from collecting any information on consumers and business operators, or disclosing, selling or
providing any such information to any third party, or sending commercial electronic messages to consumers without their consent. Fictitious transactions,
deletion of adverse comments and technical attacks on competitors’ websites are prohibited as well. In addition, third-party online marketplace operators
are required to examine and verify the identifications of the online business operators and set up and retain relevant records for at least two years.
Moreover, any third-party online marketplace operator that simultaneously engages in online trading for products and services should clearly distinguish
itself from other online business operators on its marketplace platform.
On August 31, 2018, the Standing Committee of the National People’s Congress promulgated the PRC E-Commerce Law, or the E-Commerce
Law, which became effective on January 1, 2019. The E-Commerce Law establishes the regulatory framework for the e-commerce sector in the PRC for
the first time by laying out certain requirements on e-commerce operators, including e-commerce platform operators like us. Pursuant to the E-Commerce
Law, e-commerce platform operators are required to (i) take necessary actions or report to relevant competent government authorities when such operators
notice any illegal production or services provided by merchants on the e-commerce platforms; (ii) verify the identity of the business operators on the
platforms;(iii) provide identity and tax related information of merchants to local branches of State Administration for Market Regulation and relevant tax
authorities; or (iv) record and preserve goods and service information and transaction information on the e-commerce platform. The E-Commerce Law also
specifically stipulates that e-commerce platform operators shall not impose unreasonable restrictions or conditions on the transactions of their business
operators on the platforms. According to the E-Commerce Law, failures to comply with these requirements may subject the e-commerce platform operators
to administrative penalties, fines and/or suspension of business. In addition, for goods and services provided via e-commerce platforms and pertinent to the
life and health of consumers, e-commerce platform operators shall bear relevant responsibilities, which may give rise to civil or criminal liabilities if the
consumers suffered damages due to the e-commerce platform operators’ failure to duly verify the qualifications or the licenses of the business operators on
the platforms or to duly perform their safety protection obligations as required by the E-Commerce Law.
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Regulation Relating to Foreign Investment Restriction on Value-Added Telecommunications Services
Pursuant to the Provisions on Administration of Foreign Invested Telecommunications Enterprises, or the FITE Regulation, promulgated by the
State Council on December 11, 2001 and amended on September 10, 2008 and February 6, 2016, except as otherwise provided by MIIT, the ultimate
foreign equity ownership in a value-added telecommunications services provider shall not exceed 50%. Pursuant to the Circular of Ministry of Industry and
Information Technology concerning Lifting Restrictions on the Proportion of Foreign Equity in Online Data Processing and Transaction Processing
Business (Operating E-commerce Business) promulgated by the MIIT on June 19, 2015, the online data processing and transaction processing businesses
(operating e-commerce business) could be 100% owned by foreign investors. Moreover, for a foreign investor to acquire any equity interest in a value-
added telecommunications business in China, it must satisfy a number of stringent performance and operational experience requirements, including
demonstrating good track records and experience in operating value-added telecommunications business overseas. Foreign investors that meet these
requirements must obtain approvals from the MIIT and MOFCOM or their authorized local counterparts, which retain considerable discretion in granting
approvals. Pursuant to publicly available information, the PRC government has issued telecommunications business operating licenses to Sino-foreign joint
ventures in very limited circumstances.
The 2019 Negative List also imposes the 50% restrictions on foreign ownership in value-added telecommunications business except for operating
e-commerce, domestic multi-party communications services, store and forward services, and call center services business. In addition, the services for
releasing information by the public through internet are listed as businesses that are prohibited for foreign investors under 2019 Negative List.
On July 13, 2006, the MIIT issued the Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added
Telecommunications Business, or the MIIT Circular, which requires foreign investors to set up a value-added telecommunications business foreign-
invested enterprise and obtain a VATS License to conduct relevant value-added telecommunications business in China. Under the MIIT Circular, a
domestic company that holds a VATS License is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from
providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business
illegally in China. Furthermore, the relevant trademarks and domain names that are used in the value-added telecommunications business must be owned
by the local VATS License holder or its shareholder. The MIIT Circular further requires each VATS License holder to have the necessary facilities for its
approved business operations and to maintain such facilities in the regions covered by its license and all value-added telecommunications services
providers shall improve network and information security, enact relevant information safety administration regulations and set up emergency plans to
ensure network and information safety.
Regulations on Information Security and Privacy Protection
Internet content in China is regulated and restricted from a state security standpoint. On December 28, 2000, the Standing Committee of the PRC
National People’s Congress enacted the Decisions on Maintaining Internet Security, later amended on August 27, 2009, which subject violators to criminal
punishment in China for any effort to: (i) use the internet to market fake and substandard products or carry out false publicity for any commodity or service;
(ii) use the internet for the purpose of damaging the commercial goodwill and product reputation of any other person; (iii) use the internet for the purpose
of infringing on the intellectual property of any person; (iv) use the internet for the purpose of fabricating and spreading false information that affects the
trading of securities and futures or otherwise jeopardizes the financial order; or (v) create any pornographic website or webpage on the internet, provide
links to pornographic websites, or disseminate pornographic books and magazines, movies, audiovisual products, or images. The Ministry of Public
Security has promulgated measures that prohibit use of the Internet in ways which, among other things, would result in a leakage of state secrets or a spread
of socially destabilizing content, and require internet service providers to take proper measures including anti-virus, data back-up and other related
measures, to keep records of certain information about its users (including user registration information, log-in and log-out time, IP address, content and
time of posts by users) for at least 60 days, and to detect illegal information, stop transmission of such information, and keep relevant records. If an internet
information service provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and
shut down its websites.
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PRC governmental authorities have enacted laws and regulations on internet use to protect personal information from any unauthorized disclosure.
In December 28, 2012, the Standing Committee of the PRC National People’s Congress promulgated the Decision on Strengthening Network Information
Protection to enhance the legal protection of information security and privacy on the internet. In July 2013, the MIIT promulgated the Provisions on
Protection of Personal Information of Telecommunication and Internet Users to regulate the collection and use of users’ personal information in the
provision of telecommunication services and internet information services in China. Telecommunication business operators and internet service providers
are required to establish its own rules for collecting and use of users’ information and cannot collect or use users’ information without users’ consent.
Telecommunication business operators and internet service providers are prohibited from disclosing, tampering with, damaging, selling or illegally
providing others with, collected personal information.
On November 7, 2016, Standing Committee of the PRC National People’s Congress published the Cyber Security Law of the PRC, which took
effect on June 1, 2017 and requires network operators to perform certain functions related to cyber security protection and the strengthening of network
information management. For instance, under the Cyber Security Law, network operators of key information infrastructure shall store within the territory of
the PRC all the personal information and important data collected and produced within the territory of PRC and their purchase of network products and
services that may affect national securities shall be subject to national cybersecurity review. On May 2, 2017, the Cyberspace Administration of China
issued a trial version of the Measures for the Security Review of Network Products and Services (Trial), which took effect on June 1, 2017, to provide for
more detailed rules regarding cybersecurity review requirements.
Regulations on Auction Business
On April 24, 2015, Auction Law of the People’s Republic of China was promulgated by the Standing Committee of the National People’s
Congress for the purpose of regulating and administrating the business operation of auction. Pursuant to the Auction Law, “auction” refers to a way of
selling particular goods or property rights to the bidder who offers the highest price in the form of public bidding. According to the Measures for the
Administration of the Circulation of Used Cars promulgated by the Ministry of Commerce and three other ministries on August 29, 2005 and amended on
September 14, 2017, “used car auction” refers to the business activities whereby a used car auction enterprise transfers a used car to a bidder that offers the
highest price through public bidding. According to The Specifications for Used Cars Transaction promulgated by the Ministry of Commerce on March 24,
2006, where an auction is conducted through the internet, the color photo of the car and information of auctioned car shall be published on internet. The
publication period shall not be less than seven days. An enterprise engaging in activities of auction should undergo the review and approval procedure with
relevant government authority and obtain the license for auction business. Any entity engaging in the auction business without the license may be subject to
enforcement action, including orders issued by the relevant regulatory authorities to cease the auction business, confiscation of any illegal gains, or
imposition of fines.
Regulations on the Circulation of Used Cars
On August 29, 2005, the Measures for the Administration of the Circulation of Used Cars, or the Used Cars Measures, were promulgated by the
Ministry of Commerce, or the MOFCOM, the Ministry of Public Security, the SAMR, and the State Administration of Tax, or the SAT, for the purpose of
intensifying the administration of the circulation of used cars, regulating the business operations of used cars, guaranteeing the legitimate interests and
rights of both parties to transactions of used cars and promoting the sound development of the circulation of used cars. The Used Cars Measures stipulate
that an archival filing system for the operators of used car markets and operators of used cars shall be established. The operators of used car markets and
operators of used cars that have handled the registration in the administrative department of industry and commerce according to law and obtained the
business license shall go to the administrative department of commerce at the provincial level for archival filing within 2 months as of obtaining their
business license. The administrative department of commerce at the provincial level shall report the information on the archival filing of the operators of
used car markets as well as operational subjects of used cars to the administrative department of commerce of the State Council on a periodic base. The
Used Cars Measures further stipulate that (i) a business operator of a used car market, a retail enterprise and brokerage entity of used cars shall possess the
qualification of an enterprise legal-person and shall complete the registration procedures with the administrative department of industry and commerce, and
(ii) the establishment of an auction enterprise of used cars (including a foreign-funded auction enterprise of used cars) shall comply with the relevant
provisions of the Auction Law of the People’s Republic of China and the Measures for the Administration of Auction, and shall be handled according to the
procedures as prescribed by the Measures for the Administration of Auction, which means that an auction enterprise of used cars shall obtain an Approval
License for Operation of Auction before it engages in auction of used cars. On March 24, 2006, the MOFCOM promulgated the Specifications for Used
Car Trade, or the Specifications, which set forth detailed criteria and requirements for the purchase, sale, dealing, auction, evaluation, trading and post-sale
services in respect of used car.
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Regulations on Financing Lease
In September 18, 2013, MOFCOM issued the Administration Measures of Supervision on Financing Lease Enterprises, or the Leasing Measures,
to regulate and administer the business operations of financing lease enterprises. According to the Leasing Measures, financing lease enterprises are
allowed to carry out financing lease business in such forms as direct lease, sublease, sale-and-lease-back, leveraged lease, entrusted lease and joint lease in
accordance with the provisions of relevant laws, regulations and rules. However, the Leasing Measures prohibit financing lease enterprises from engaging
in financial business such as accepting deposits, providing loans or entrusted loans. Without the approval from relevant authorities, financing lease
enterprises shall not engage in inter-bank borrowing and other businesses. In addition, financing lease enterprises are prohibited from carrying out illegal
fund-raising activities in the name of financing lease. The Leasing Measures require financing lease enterprises to establish and improve their financial and
internal risk control systems, and a financing lease enterprise’s risk assets shall not exceed ten times of its total net assets. Risk assets generally refer to the
adjusted total assets of a financing lease enterprise excluding cash, bank deposits, sovereign bonds and entrusted leasing assets.
The main regulation governing foreign investment in the PRC financing lease industry included the Administrative Measures on Foreign-Invested
Lease Industry, as amended on October 28, 2015. However, it has recently been repealed by MOFCOM on February 22, 2018. The above measures require
that foreign investors investing directly in the PRC financing lease industry must have total assets of no less than US$5 million. MOFCOM is the
competent administrative authority in charge of the foreign-invested lease industry and is also responsible for the examination and approval of such
business. A foreign-invested financing lease enterprise may undertake the following business: (i) the financing lease business; (ii) the lease business;
(iii) the purchase of leased properties from onshore and offshore; (iv) the disposal of scrap value of and maintenance of leased properties; (v) the
consultancy and guaranty business relating to lease transactions; and (vi) other business approved by the examination and approval department. In addition,
a foreign-invested financing lease enterprise shall meet the following requirements: (i) have corresponding professionals, with its senior management
personnel having relevant professional qualifications and experience of at least three years, (ii) the operating period of a foreign-invested financing lease
enterprise established in the form of limited liability company shall not exceed thirty years. The risk assets of a foreign-invested financing lease enterprise
shall not exceed ten times of its total net assets.
Regulations on Financing Guarantee
On August 2, 2017, the State Council promulgated the Regulations on the Administration of Financing Guarantee Companies, or the Financing
Guarantee Regulations, which became effective on October 1, 2017. Pursuant to the Financing Guarantee Regulations, “financing guarantee” refers to the
activities in which guarantors provide guarantee to the guaranteed parties as to loans, bonds or other types of debt financing, and “financing guarantee
companies” refer to companies legally established and operating financing guarantee business. According to the Financing Guarantee Regulations, the
establishment of financing guarantee companies shall be subject to the approval by the competent government authority, and, among other things, shall
meet the following requirements: (i) its shareholders shall have good credit standing and have no record of major illegal or improper act within the latest
three years, (ii) the registered capital shall not be less than RMB20 million, and shall be the paid-in monetary capital. The competent government
authorities of provinces, autonomous regions and municipalities directly under the Central Government may raise the required minimum registered capital.
The Financing Guarantee Regulations further stipulated that balance amount of guarantee liability of a financing guarantee company shall not exceed 10
times of the amount of its net assets. The percentage of the balance amount of guarantee liability of a financing guarantee company for the same debtor to
the net assets of the financing guarantee company shall not exceed 10%, and the balance amount of guarantee liability of a financing guarantee company
for the same debtor and its related parties to the net assets of the financing guarantee company shall not exceed 15%. Moreover, a financing guarantee
company shall not provide financing guarantee for its controlling shareholder and actual controlling party, and the conditions for provision of financing
guarantee for related parties shall not be more favorable than that of the same type of guarantee for non-related parties.
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On October 9, 2019, the China Banking and Insurance Regulatory Commission, or the CBIRC, together with several other governmental
authorities, jointly issued the Circular on Issuing the Supplementary Provisions on the Supervision and Administration of Financing Guarantee Companies,
or the Financing Guarantee Circular 37. According to the Financing Guarantee Circular 37, automobile dealers and automobile sales service providers shall
be prohibited from operating the automobile consumer loan guarantee business unless approved by the relevant regulatory authorities and shall established
financing guarantee company in accordance with the Financing Guarantee Regulations if such business is needed. All existing auto loan guarantee business
shall be properly settled by the service provider or dealt with by the authorities. The authorities shall intensify the crackdowns on the financing guarantee
companies with illegal operation or those who committed serious infringement of consumer’s (and guaranteed person’s) rights and shall timely report such
cases to the banks so as to work together to protect the legitimate rights and interests of the consumers. The Financing Guarantee Circular 37 also stipulates
that, without prior approval, any institution which provides customer promotion, credit evaluation and other services for any lending institution shall be
prohibited from providing financing guarantee services or doing so in a disguised form. Any entity operating the financing guarantee business without a
financing guarantee business license shall be banned by the regulatory authorities.
Regulations on Motor Vehicle Maintenance
On June 24, 2005, the MOT promulgated the Administration of Motor Vehicle Maintenance, which was amended on August 8, 2015, April 19,
2016 and June 21, 2019, pursuant to which, a motor vehicle maintenance operator shall file with the local road transport administration for record after
completing registration with the local SAMR in accordance with the law and shall operate business in accordance with the registered business scope.
“Motor vehicle maintenance” refers to business activities of maintenance, repair and maintenance aids as carried out with maintaining or recovering the
technical state and normal functions of motor vehicles, and extending the serving term thereof as operational tasks. The operational business of automobile
maintenance is classified into operational business of Grades I, II and III in light of their operational items and serving capabilities. A maintenance operator
of automobiles of Grade I and Grade II may undertake entire automobile repair, assembly repair, entire automobile maintenance, minor repair, maintenance
aids, specific repair and the examination work after the completion of maintenance of corresponding vehicle types. A maintenance operator of automobiles
of Grade III may undertake general minor repair and special repair, such as repair and maintenance of engines, vehicle bodies and electric systems. Anyone
failing to carry out the filing for motor vehicle maintenance in accordance with the Motor Vehicles Maintenance or unlawfully engaging in the motor
vehicle maintenance business shall be ordered to make rectification, and, in case of refusing to rectify, be subject to a fine of RMB5,000 to RMB20,000.
Regulations on Advertisement
The PRC government regulates advertising principally through the SAMR. The PRC Advertising Law, or the Advertising Law, as amended in
April 2015 and on October 26, 2018, outlines the regulatory framework for the advertising industry. The Advertising Law stipulates that advertisements
shall not contain any false or misleading content or defraud or mislead consumers. Any advertisement that defrauds or misleads consumers with any false
or misleading content is considered a false advertisement. An advertiser shall be responsible for the veracity of contents of advertisement. Violation of
these regulations may result in penalties calculated on the basis of advertising expenses.
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Regulations on Online Consumer Finance and Debt Collection
The regulation on online consumer finance industry in China is still under development. In December 2017, the Internet Financial Risks
Rectification Office and the P2P Online Lending Risks Rectification Office jointly issued the Circular 141, outlining general requirements on the “cash
loan” business conducted by network microcredit companies, banking financial institutions and online lending information intermediaries. The Circular
141 specifies the features of “cash loans” as not relying on consumption scenarios, with no specified use of loan proceeds, no qualification requirement on
customers and unsecured etc. The Circular 141 further requires that financial institutions that participate in the “cash loan” business not to accept any credit
enhancement services or other similar services from third parties without qualification to provide guarantee, and third party cash loan facilitators are
prohibited from directly charging fees from borrowers. However, there is no clear definition of “cash loan” set forth in the Circular 141.
In addition, according to the Circular 141, institutions or the engaged third party institutions shall not collect loan debts by methods of violence,
intimidation, insult, defamation, or harassment. In case of violation, the regulatory authorities may, depending on the seriousness of the case, urge such
institution to rectify by taking measures such as suspending its business, ordering it to make correction, circulating a notice of criticism, rejecting its filing
or revoking its business qualification. In case where malicious fraud or violent debt collection or other serious illegal conducts were suspected, such cases
shall be promptly transferred to the Ministry of Public Security and may subject to criminal liability.
Regulations on Intellectual Property
Copyright and Software Products
The National People’s Congress adopted the Copyright Law on September 7, 1990 and amended it on October 27, 2001 and February 26, 2010,
respectively. The amended Copyright Law extends copyright protection to internet activities, products disseminated over the internet and software
products. In addition, there is a voluntary registration system administered by the China Copyright Protection Center.
In order to further implement the Computer Software Protection Regulations promulgated by the State Council on December 20, 2001 and
amended on January 30, 2013, the State Copyright Bureau issued the Computer Software Copyright Registration Procedures on February 20, 2002, which
apply to software copyright registration, license contract registration and transfer contract registration.
According to the Copyright Law, an infringer will be subject to various civil liabilities, which include cessation of the infringement and
apologizing to and compensating the actual loss suffered by the copyright owner. If the actual loss of the copyright owner is difficult to calculate, the
income received by the infringer as a result of the infringement will be deemed as the actual loss or if such illegal income is also difficult to calculate, the
court can decide the amount of the actual loss up to RMB500,000 (US$71,821).
Trademarks
Trademarks are protected by the PRC Trademark Law adopted in August 23, 1982 and subsequently amended in February 22, 1993, October 27,
2001, August 30, 2013 and November 1, 2019 as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council in
August 3, 2002 and amended on April 29, 2014. The Trademark Office under the SAMR handles trademark registrations and grants a term of ten years to
registered trademarks and another ten years if requested upon expiry of the first or any renewed ten-year term. Trademark license agreements must be filed
with the Trademark Office for record. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a
trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a
preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark
may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person
register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s
use. After receiving an application, the PRC Trademark Office will make a public announcement if the relevant trademark passes the preliminary
examination. During the three months after this public announcement, any person entitled to prior rights and any interested party may file an objection
against the trademark. The PRC Trademark Office’s decisions on rejection, objection or cancellation of an application may be appealed to the PRC
Trademark Review and Adjudication Board, whose decision may be further appealed through judicial proceedings. If no objection is filed within three
months after the public announcement or if the objection has been overruled, the PRC Trademark Office will approve the registration and issue a
registration certificate, at which point the trademark is deemed to be registered and will be effective for a renewable ten-year period, unless otherwise
revoked. Trademark license agreements should be filed with the Trademark Office or its regional offices.
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Domain Names
Internet domain name registration and related matters are primarily regulated by the Measures on Administration of Domain Names for the
Chinese Internet , issued by MIIT on November 5, 2004 and effective as of December 20, 2004 which was replaced by the Measures on Administration of
Internet Domain Names issued by MIIT as of November 1, 2017, and the Implementing Rules on Registration of Domain Names issued by China Internet
Network Information Center on May 28, 2012, which became effective on May 29, 2012. Domain name registrations are handled through domain name
service agencies established under the relevant regulations, and the applicants become domain name holders upon successful registration.
Patent
On March 12, 1984, the Standing Committee of the National People’s Congress promulgated the Patent Law, which was amended in September 4,
1992, August 25, 2000 and December 27, 2008. On June 15, 2001, the State Council promulgated the Implementation Regulation for the Patent Law, which
was amended in January 9, 2010. According to these laws and regulations, the State Intellectual Property Office is responsible for administering patents in
the PRC. The Chinese patent system adopts a “first to file” principle, which means that where more than one person files a patent application for the same
invention, a patent will be granted to the person who filed the application first. To be patentable, invention or utility models must meet three conditions:
novelty, inventiveness and practical applicability. A patent is valid for 20 years in the case of an invention and 10 years in the case of utility models and
designs. A third-party user must obtain consent or a proper license from the patent owner to use the patent. Otherwise, third-party use constitutes an
infringement of patent rights. As of December 31, 2019, we had been issued 84 patents in the PRC.
Regulations Relating to Foreign Exchange
Regulations on Foreign Currency Exchange
Pursuant to the Foreign Exchange Administration Regulations, as amended on August 5, 2008, Renminbi is freely convertible for current account
items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items,
such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless prior approval is obtained from State
Administration of Foreign Exchange, or the SAFE, and prior registration with SAFE is made.
On March 30, 2015, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign
Exchange Settlement of Capital of Foreign invested Enterprises, or the SAFE Circular 19, in replacement of the Circular on the Relevant Operating Issues
Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE
Circular 142. SAFE further promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign
Exchange Settlement Management Policy of Capital Account, or the SAFE Circular 16, effective on June 9, 2016, which, among other things, amend
certain provisions of Circular 19. According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the Renminbi capital converted from foreign
currency denominated registered capital of a foreign-invested company is regulated such that Renminbi capital may not be used for purposes beyond its
business scope or to provide loans to persons other than affiliates unless otherwise permitted under its business scope. Violations of SAFE Circular 19 or
SAFE Circular 16 could result in administrative penalties.
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From 2012, SAFE has promulgated several circulars to substantially amend and simplify the current foreign exchange procedure. Pursuant to
these circulars, the opening of various special purpose foreign exchange accounts, the reinvestment of RMB proceeds by foreign investors in the PRC and
remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or
verification of SAFE. In addition, domestic companies are allowed to provide cross-border loans not only to their offshore subsidiaries, but also to their
offshore parents and affiliates. SAFE also promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over
Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, as amended on October 10, 2018 and December 30, 2019,
which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of
registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided
by SAFE and its branches. In February 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Foreign Exchange Management
Policies for Direct Investment, or the SAFE Circular 13, which took effect on June 1, 2015 and amended on December 30, 2019. SAFE Circular 13
delegates the power to enforce the foreign exchange registration in connection with inbound and outbound direct investments under relevant SAFE
rules from local branches of SAFE to banks, thereby further simplifying the foreign exchange registration procedures for inbound and outbound direct
investments.
On January 26, 2017, SAFE issued the Notice on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange
Control, or the SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities
to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original
version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before
remitting the profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization
arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound
investment.
Regulations on Dividend Distribution
The principal regulations governing distribution of dividends of foreign-invested enterprises include the PRC Company Law and the Foreign
Investment Law. Under these laws and regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated after-tax
profits, if any, determined in accordance with China accounting standards and regulations. In addition, wholly foreign-owned enterprises in China are
required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached
50% of the registered capital of the enterprises. Wholly foreign-owned companies may, at their discretion, allocate a portion of their after-tax profits based
on China accounting standards to staff welfare and bonus funds. These reserves are not distributable as cash dividends.
Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents
SAFE promulgated the Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through
Special Purpose Vehicles, or the SAFE Circular 37, in July 2014 that requires PRC residents or entities to register with SAFE or its local branch in
connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such PRC
residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of
basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases in investment amount, transfers or
exchanges of shares, or mergers or divisions.
SAFE Circular 37 was issued to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging
in Financing and Roundtrip Investments via Overseas Special Purpose Vehicles issued by SAFE in October 2005. SAFE further enacted SAFE Circular 13,
which allows PRC residents or entities to register with qualified banks in connection with their establishment or control of an offshore entity established for
the purpose of overseas investment or financing. However, remedial registration applications made by PRC residents that previously failed to comply with
the SAFE Circular 37 continue to fall under the jurisdiction of the relevant local branch of SAFE. In the event that a PRC shareholder holding interests in a
special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from
distributing profits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be
restricted in its ability to contribute additional capital into its PRC subsidiary. Moreover, failure to comply with the various SAFE registration requirements
described above could result in liability under PRC law for evasion of foreign exchange controls.
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Regulations on Stock Incentive Plans
In February 2012, SAFE promulgated the Notice on Foreign Exchange Administration of PRC Residents Participating in Share Incentive Plans of
Offshore Listed Companies, or the Stock Option Rules, replacing the previous rules issued by SAFE in March 2007. Under the Stock Option Rules and
other relevant rules and regulations, domestic individuals, which means the PRC residents and non-PRC citizens residing in China for a continuous period
of not less than one year, subject to a few exceptions, who participate in a stock incentive plan in an overseas publicly-listed company are required to
register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a
qualified PRC agent, which could be a PRC subsidiary of the overseas publicly-listed company or another qualified institution selected by the PRC
subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. The participants
must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of
corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock
incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. The
PRC agents must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an
annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange
proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed
companies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution to such PRC residents. In addition, SAFE
Circular 37 provides that PRC residents who participate in a share incentive plan of an overseas unlisted special purpose company may register with SAFE
or its local branches before exercising rights.
Regulations Relating to Tax
Enterprise Income Tax
Under the Enterprise Income Tax Law of the PRC, or the EIT Law, which became effective on January 1, 2008 and was subsequently amended on
February 24, 2017 and December 29, 2018, and its implementing rules, enterprises are classified as resident enterprises and non-resident enterprises. PRC
resident enterprises typically pay an enterprise income tax at the rate of 25% while non-PRC resident enterprises without any branches in the PRC should
pay an enterprise income tax in connection with their income from the PRC at the tax rate of 10%. An enterprise established outside of the PRC with its “de
facto management bodies” located within the PRC is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a PRC
domestic enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define a de facto management body as a managing body
that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the
enterprise. Enterprises qualified as “High and New Technology Enterprises” are entitled to a 15% enterprise income tax rate rather than the 25% uniform
statutory tax rate. The preferential tax treatment continues as long as an enterprise can retain its “High and New Technology Enterprise” status.
The EIT Law and the implementation rules provide that an income tax rate of 10% should normally be applicable to dividends payable to
investors that are “non-resident enterprises,” and gains derived by such investors, which (a) do not have an establishment or place of business in the PRC or
(b) have an establishment or place of business in the PRC, but the relevant income is not effectively connected with the establishment or place of business
to the extent such dividends and gains are derived from sources within the PRC. Such income tax on the dividends may be reduced pursuant to a tax treaty
between China and other jurisdictions. Pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for
the Avoidance of Double Taxation on Income, or the Double Tax Avoidance Arrangement, and other applicable PRC laws, if a Hong Kong resident
enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance
Arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident
enterprise may be reduced to 5% upon receiving approval from in-charge tax authority. However, based on the Notice on Certain Issues with Respect to the
Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, in their
discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax
authorities may adjust the preferential tax treatment; and based on the Announcement on Relevant Issues Concerning the “Beneficial Owners” in Tax
Treaties issued on February 3, 2018 by the SAT and effective from April 1, 2018, which replaces the Notice on the Interpretation and Recognition of
Beneficial Owners in Tax Treaties and the Announcement on the Recognition of Beneficial Owners in Tax Treaties by the SAT, comprehensive analysis
based on the stipulated factor therein and actual circumstances shall be adopted when recognizing the “beneficial owner” and agents and designated wire
beneficiaries are specifically excluded from being recognized as “beneficial owners.”
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Value-added Tax
Pursuant to applicable PRC regulations promulgated by the Ministry of Finance and the SAT, any entity or individual conducting business in the
service industry is required to pay a valued-added tax, or VAT, with respect to revenues derived from the provision of services. A taxpayer is allowed to
offset the qualified input VAT paid on taxable purchases against the output VAT chargeable on the revenue from services provided.
M&A Rules and Overseas Listings
On August 8, 2006, six PRC regulatory agencies, including the China Securities Regulatory Commission, or the CSRC, adopted the Regulations
on Mergers of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22,
2009. Foreign investors shall comply with the M&A Rules when they purchase equity interests of a domestic company or subscribe the increased capital of
a domestic company, and thus changing the nature of the domestic company into a foreign-invested enterprise; or when the foreign investors establish a
foreign-invested enterprise in the PRC, purchase the assets of a domestic company and operate the assets; or when the foreign investors purchase the asset
of a domestic company, establish a foreign-invested enterprise by injecting such assets and operate the assets. The M&A Rules purport, among other things,
to require offshore special purpose vehicles formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC
companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.
On December 26, 2017, the NDRC adopted the Administrative Measures for Enterprises’ Overseas Investment, or the Overseas Investment Rules,
which will become effective on March 1, 2018. The New M&A Rules provides that, for local enterprises (enterprises that are not managed by the state
government), if the amount of investment made by the Chinese investors is less than US$300 million, and the target project is non-sensitive, then the
overseas investment project will require online filing with the local branch of the NDRC where the enterprise itself is registered. And “overseas
investment” shall mean activities where an PRC enterprise, directly or through an overseas enterprise controlled by it, acquires overseas any ownership,
right of control, right of business management, or other relevant rights and interests, by contributing assets or rights and interests, providing financing
and/or guarantee, or any other means.
Employment Laws
Pursuant to the PRC Labor Law, the PRC Labor Contract Law and the Implementing Regulations of the Employment Contracts Law, labor
relationships between employers and employees must be executed in written form. Wages may not be lower than the local minimum wage. Employers must
establish a system for labor safety and sanitation, strictly abide by state standards and provide relevant education to its employees. Employees are also
required to work in safe and sanitary conditions.
Under PRC laws, rules and regulations, including the Social Insurance Law, the Interim Regulations on the Collection and Payment of Social
Security Funds and the Regulations on the Administration of Housing Accumulation Funds, employers are required to contribute, on behalf of their
employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance,
occupational injury insurance, maternity leave insurance and housing accumulation funds. These payments are made to local administrative authorities and
any employer who fails to contribute may be fined and ordered to pay the deficit amount.
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Regulations on Leasing
Pursuant to the Law on Administration of Urban Real Estate which took effect in January 1995 with the latest amendment in August 2019, lessors
and lessees are required to enter into a written lease contract, containing such provisions as the term of the lease, the use of the premises, liability for rent
and repair, and other rights and obligations of both parties. Both lessor and lessee are also required to register the lease with the real estate administration
authorities. Pursuant to implementing rules stipulated by certain provinces or cities, such as Tianjin, if the lessor and lessee fail to go through the
registration procedures, both lessor and lessee may be subject to fines.
According to the PRC Contract Law which took effect in October 1999, the lessee may sublease the leased premises to a third party, subject to the
consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remains valid. The lessor is entitled to
terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition, if the lessor transfers the premises, the lease
contract between the lessee and the lessor should still remain valid. Pursuant to the PRC Property Law which took effect in October 2007, if a mortgagor
leases the mortgaged property before the mortgage contract is executed, the previously established leasehold interest should not be affected by the
subsequent mortgage, but where a mortgagor leases the mortgaged property after the creation and registration of the mortgage interest, the leasehold
interest should be subordinated to the registered mortgage.
In addition, the Supreme People’s Court issued the Interpretation on Several Issues with respect to the Specific Application of Law in the Trial of
Disputes over Partitioned Ownership of Buildings, pursuant to which, if the landlord uses his property, which is designated for residential use, for business
purposes without prior consents of other owners whose interests are involved, the other owners may request for removing impairment, eliminating danger,
reinstatement or compensation for losses.
Regulations on Unfair Competition
On April 23, 2019, the Standing Committee of the National People’s Congress promulgated the amended Anti-Unfair Competition Law of the
People’s Republic of China, or the Anti-Unfair Competition Law, which became effective on April 23, 2019.
Pursuant to the Anti-Unfair Competition Law, a business operator shall not conduct any false or misleading commercial publicity in respect of the
performance, functions, quality, sales, user reviews, and honors received of its commodities, in order to defraud or mislead consumers. A business operator
publishing any false advertisements in violation of this provision shall be punished in accordance with the Advertising Law of the People’s Republic of
China.
The Anti-Unfair Competition Law also stipulated that a business operator engaging in production or distribution activities online shall abide by the
provisions of the Anti-Unfair Competition Law. No business operator may, by technical means to affect users’ options, among others, commit the acts of
interfering with or sabotaging the normal operation of online products or services legally provided by another business operator.
In addition, according to the Anti-Unfair Competition Law, a business operator is prohibited from any of the following unfair activities: i)
committing act of confusion to mislead a person into believing that a commodity is one of another person or has a particular connection with another
person; ii) seeking transaction opportunities or competitive edges by bribing relevant entities or individuals with property or by any other means; iii)
infringing trade secrets; iv) premium campaign violating the provision of the Anti-Unfair Competition Law; and v) fabricating or disseminating false or
misleading information to damage the goodwill or product reputation of a competitor.
C. Organizational Structure
The following diagram illustrates our corporate structure, including our principal subsidiaries and consolidated variable interest entities as of the
date of this annual report on Form 20-F:
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(1) Youhan operated the website and mobile app for our 2B business prior to the divestiture of 2B business to 58.com and held various licenses for our
subsidiaries.
(2) Shareholders of Youxin Hulian are Mr. Kun Dai, our CEO and Beijing Min Si Lian Hua Investment Management Co., Ltd., an affiliate of our
shareholder, Redrock Holding Investments Limited. Mr. Kun Dai holds 99.9923% and Beijing Min Si Lian Hua Investment Management Co., Ltd.
holds 0.0077% of the equity interest in Youxin Hulian.
(3) Shareholders of Yishouche are Mr. Kun Dai, our CEO and Beijing Min Si Lian Hua Investment Management Co., Ltd., an affiliate of our shareholder,
Redrock Holding Investments Limited. Mr. Kun Dai holds 99.9999% and Beijing Min Si Lian Hua Investment Management Co., Ltd. holds 0.0001%
of the equity interest in Yishouche. We have been conducting our 2C business through our VIE Yishouche and our WFOE Yougu.
Contractual Agreements with the VIEs and Their Respective Shareholders
In order to comply with PRC regulatory requirements restricting foreign ownership of internet information services, value-added
telecommunications, and certain other businesses in China, in the past we primarily conducted our business through our VIE, Youxin Hulian. In
January 2015, Ministry of Industry & Information Technology announced the Notice of the Ministry of Industry and Information Technology on Removing
the Restrictions on Foreign-owned Shareholding Percentage in Online Data Processing and Transaction Processing (operating e-commerce) Business in
China (Shanghai) Pilot Free Trade Zone, or SHFTZ Notice. Pursuant to SHFTZ Notice, there are no restrictions on foreign investors maximum
shareholding percentage in an enterprise established in Shanghai Pilot Free Trade Zone that conducts value-added telecommunications services in the scope
of online data processing and transaction processing (Operating E-commerce). Therefore, our eligible PRC subsidiaries Yougu and Youhan, have applied
for and obtained approval from Shanghai Communications Administration to conduct e-commerce, and since then they have been operating our main
online businesses instead of our VIEs, Youxin Hulian and Yishouche. Currently, Youxin Hulian and Yishouche hold valid ICP licenses.
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We have entered into a series of contractual arrangements, including exclusive option agreements, equity pledge agreements and exclusive
business cooperation agreements, with our VIEs and their respective shareholders.
These contractual arrangements allow our WFOEs to:
· exercise effective control over our VIEs and their subsidiaries;
· receive substantially all of the economic benefits of our VIEs; and
· have exclusive options to purchase all or part of the equity interests in our VIEs when and to the extent permitted by PRC law.
As a result of our direct ownership in our WFOEs and the contractual arrangements relating to our VIEs, we are regarded as the primary
beneficiary of our VIEs, and we treat them and their subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the
financial results of our VIEs and their respective subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.
The following is a summary of the currently effective contractual arrangements (i) by and among Youxinpai (one of our WFOEs), Youxin Hulian
(one of our VIEs) and Youxin Hulian’s shareholders and (ii) by and among Yougu (one of our WFOEs), Yishouche (one of our VIEs) and Yishouche’s
shareholders.
Contractual Arrangements relating to Youxin Hulian
The following is a summary of the currently effective contractual arrangements by and among Youxinpai, Youxin Hulian and the shareholders of
Youxin Hulian.
Agreements that Provide Us with Effective Control over Youxin Hulian
Equity Interest Pledge Agreements. Pursuant to the equity interest pledge agreements, each shareholder of Youxin Hulian has pledged all of his or
her equity interests in Youxin Hulian to guarantee the shareholder’s and Youxin Hulian’s performance of their obligations under the amended and restated
exclusive business cooperation agreement, loan agreement entered into between Mr. Kun Dai and Youxinpai, exclusive option agreement and power of
attorney. If Youxin Hulian or its shareholders breach their contractual obligations under these agreements, Youxinpai, as pledgee, will be entitled to certain
rights regarding the pledged equity interests, including receiving proceeds from the auction or sale of all or part of the pledged equity interests of Youxin
Hulian in accordance with the law. Each shareholder of Youxin Hulian agrees that, during the term of the equity interest pledge agreements, he or she will
not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of
Youxinpai. The equity interest pledge agreements remain effective until Youxin Hulian and its shareholders discharge all their obligations under the
contractual arrangements. We have registered the equity pledge with the local branches of the Administration for Industry and Commerce in accordance
with the PRC Property Rights Law.
Powers of Attorney. Pursuant to the powers of attorney, each shareholder of Youxin Hulian has irrevocably appointed Youxinpai to act as such
shareholder’s exclusive attorney-in-fact to exercise all shareholder rights, including, but not limited to, voting on all matters of Youxin Hulian requiring
shareholder approval, disposing of all or part of the shareholder’s equity interests in Youxin Hulian, and appointing directors and executive officers.
Youxinpai is entitled to designate any person to act as such shareholder’s exclusive attorney-in-fact without notifying or the approval of such shareholder,
and if required by PRC law, Youxinpai shall designate a PRC citizen to exercise such right. Each power of attorney will remain in force for so long as the
shareholder remains a shareholder of Youxin Hulian. Each shareholder of Youxin Hulian, has waived all the rights which have been authorized to
Youxinpai and will not exercise such rights.
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Agreement that Allows us to Receive Economic Benefits from Youxin Hulian
Exclusive Business Cooperation Agreement. Under the amended and restated exclusive business cooperation agreement between Youxinpai and
Youxin Hulian, Youxinpai has the exclusive right to provide Youxin Hulian with technical support, consulting services and other services. Without
Youxinpai’s prior written consent, Youxin Hulian agrees not to accept the same or any similar services provided by any third party. Youxinpai may
designate other parties to provide services to Youxin Hulian. Youxin Hulian agrees to pay service fees on a quarterly basis and at an amount determined by
Youxinpai after taking into account multiple factors, such as the complexity and difficulty of the services provided, the time consumed, the content and
commercial value of services provided, the market price of comparable services and the operation conditions. Youxinpai owns the intellectual property
rights arising out of the performance of this agreement. In addition, Youxin Hulian has granted Youxinpai an irrevocable and exclusive option to purchase
any or all of the assets and businesses of Youxin Hulian at the lowest price permitted under PRC law. Unless otherwise agreed by the parties or terminated
by Youxinpai unilaterally, this agreement will remain effective permanently.
Agreements that Provide Us with the Option to Purchase the Equity Interest in Youxin Hulian
Exclusive Option Agreement. Pursuant to the exclusive option agreements, each shareholder of Youxin Hulian has irrevocably granted Youxinpai
an exclusive option to purchase, or have its designated person or persons to purchase, at its discretion, to the extent permitted under PRC law, all or part of
the shareholder’s equity interests in Youxin Hulian. The purchase price shall be RMB10 (US$1.4) or the minimum price required by PRC law. If Youxinpai
exercises the option to purchase part of the equity interest held by a shareholder, the purchase price shall be calculated proportionally. Without Youxinpai’s
prior written consent, Youxin Hulian shall not amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of its
assets or beneficial interest, create or allow any encumbrance on its assets or other beneficial interests, provide any loans to any third parties, enter into any
material contract with a value of more than RMB500,000 (US$71,821) (except those contracts entered into in the ordinary course of business), merge with
or acquire any other persons or make any investments, or distribute dividends to the shareholders. Each shareholder of Youxin Hulian has agreed that,
without Youxinpai’s prior written consent, he or she will not dispose of his or her equity interests in Youxin Hulian or create or allow any encumbrance on
their equity interests. Moreover, without Youxinpai’s prior written consent, no dividend will be distributed to Youxin Hulian’s shareholders, and if any of
the shareholders receives any profit, interest, dividend or proceeds of share transfer or liquidation, the shareholder must give such profit, interest, dividend
and proceeds to Youxinpai or its designated person(s). These agreements will remain effective until all equity interests of Youxin Hulian held by its
shareholder and all of the assets of Youxin Hulian have been transferred or assigned to Youxinpai or its designated person(s).
Loan Agreement. Pursuant to the loan agreement between Youxinpai and Mr. Kun Dai shareholder of Youxin Hulian, dated November 23, 2016,
Youxinpai made loans in an aggregate amount of RMB96.0 million (US$13.8 million) to Mr. Kun Dai solely for the capitalization of Youxin Hulian.
Pursuant to the loan agreement, Youxinpai may at its sole discretion request the borrower to repay the loan by the sale of all his equity interest in Youxin
Hulian to Youxinpai or its designated person(s) pursuant to the exclusive option agreement. Mr. Kun Dai must pay all of the proceeds from sale of such
equity interests to Youxinpai. In the event the borrower sells his equity interests to Youxinpai or its designated person(s) with a price equivalent to or less
than the amount of the principal, the loans will be interest free. If the price is higher than the amount of the principal, the excess amount will be paid to
Youxinpai as the loan interest. The loan must be repaid immediately under certain circumstances, including, among others, if a foreign investor is permitted
to hold majority or 100% equity interest in Youxin Hulian and Youxinpai elects to exercise its exclusive equity purchase option. The term of the loans is ten
years and can be extended upon mutual written consent of the parties.
Contractual Arrangements relating to Yishouche
The following is a summary of the currently effective contractual arrangements by and among Yougu, Yishouche and the shareholders of
Yishouche.
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Agreements that Provide Us with Effective Control over Yishouche
Equity Interest Pledge Agreements. Pursuant to the equity interest pledge agreements, each shareholder of Yishouche has pledged all of his or
her equity interests in Yishouche to guarantee the shareholder’s and Yishouche’s performance of their obligations under the exclusive business cooperation
agreement, exclusive option agreement and power of attorney. If Yishouche or any of its shareholders breaches their contractual obligations under these
agreements, Yougu, as pledgee, will be entitled to certain rights regarding the pledged equity interests, including receiving proceeds from the auction or
sale of all or part of the pledged equity interests of Yishouche in accordance with the law. Each of the shareholders of Yishouche agrees that, during the
term of the equity interest pledge agreements, he or she will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged
equity interests without the prior written consent of Yougu. The equity interest pledge agreements remain effective until Yishouche and its shareholders
discharge all their obligations under the contractual arrangements. We have registered the equity pledge with the local branches of the Administration for
Industry and Commerce in accordance with the PRC Property Rights Law.
Powers of Attorney. Pursuant to the powers of attorney, each shareholder of Yishouche has irrevocably appointed Yougu to act as such
shareholder’s exclusive attorney-in-fact to exercise all shareholder rights, including, but not limited to, voting on all matters of Yishouche requiring
shareholder approval, disposing of all or part of the shareholder’s equity interests in Yishouche, and appointing directors and executive officers. Yougu is
entitled to designate any person to act as such shareholder’s exclusive attorney-in-fact without notifying or the approval of such shareholder, and if required
by PRC law, Yougu shall designate a PRC citizen to exercise such right. Each power of attorney will remain in force for so long as the shareholder remains
a shareholder of Yishouche. Each shareholder has waived all the rights which have been authorized to Yougu and will not exercise such rights.
Agreement that Allows us to Receive Economic Benefits from Yishouche
Exclusive Business Cooperation Agreement. Under the exclusive business cooperation agreement between Yougu and Yishouche, Yougu has the
exclusive right to provide Yishouche with technical support, consulting services and other services. Without Yougu’s prior written consent, Yishouche
agrees not to accept the same or any similar services provided by any third party. Yougu may designate other parties to provide services to Yishouche.
Yishouche agrees to pay service fees on a monthly basis and at an amount determined by Yougu and Yishouche after taking into account multiple factors,
such as the complexity and difficulty of the services provided, the time consumed, the content and commercial value of services provided and the market
price of comparable services and the operation conditions. Yougu owns the intellectual property rights arising out of the performance of this agreement. In
addition, Yishouche has granted Yougu an irrevocable and exclusive option to purchase any or all of the assets and businesses of Yishouche at the lowest
price permitted under PRC law. Unless otherwise agreed by the parties or terminated by Yougu unilaterally, this agreement will remain effective
permanently.
Agreements that Provide Us with the Option to Purchase the Equity Interest in Yishouche
Exclusive Option Agreements. Pursuant to the exclusive option agreements, each shareholder of Yishouche has irrevocably granted Yougu an
exclusive option to purchase, or have its designated person or persons to purchase, at its discretion, to the extent permitted under PRC law, all or part of the
shareholder’s equity interests in Yishouche. The purchase price shall be RMB10 (US$1.4) or the minimum price required by PRC law. Without Yougu’s
prior written consent, Yishouche shall not amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of, or create
or allow any encumbrance on its assets or beneficial interest with a value of more than RMB500,000 (US$71,821), provide any loans to any third parties,
enter into any material contract with a value of more than RMB500,000 (US$71,821) (except those contracts entered into in the ordinary course of
business), merge with or acquire any other persons or make any investments, or distribute dividends to the shareholders. The shareholders of Yishouche
have agreed that, without Yougu’s prior written consent, they will not dispose of their equity interests in Yishouche or create or allow any encumbrance on
their equity interests. Moreover, without Yougu’s prior written consent, no dividend will be distributed to Yishouche’s shareholders, and if any of the
shareholders receives any profit, interest, dividend or proceeds of share transfer or liquidation, the shareholder must give such profit, interest, dividend and
proceeds to Yougu or its designated person(s). These agreements will remain effective until all equity interests of Yishouche held by its shareholders and all
of the assets of Yishouche have been transferred or assigned to Yougu or its designated person(s).
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In the opinion of JunHe LLP, our PRC counsel:
· the ownership structures of our VIEs in China and our WFOEs that have entered into contractual arrangements with the VIEs will not result in
any violation of PRC laws or regulations currently in effect; and
· the contractual arrangements among Youxinpai, Youxin Hulian and the shareholders of Youxin Hulian and the contractual arrangements
among Yougu, Yishouche and the shareholders of Yishouche governed by PRC law are valid, binding and enforceable, and do not and will
not result in any violation of PRC laws or regulations currently in effect.
However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. The
PRC regulatory authorities may in the future take a view that is contrary to the above opinion of our PRC counsel. If the PRC government finds that the
agreements that establish the structure for operating our online businesses do not comply with PRC government restrictions on foreign investment in value-
added telecommunications services businesses, such as internet content provision services and online data processing and transaction processing businesses
(operating e-commerce business), we could be subject to penalties, including being prohibited from continuing operations. See “Item 3. Key Information—
D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating
some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of
existing regulations change in the future, we could be subject to penalties or be forced to relinquish our interests in those operations,” “Item 3. Key
Information— D. Risk Factors—Risks Related to Doing Business in China—Failure to obtain certain filings, approvals, licenses, permits and certificates
required for our business operations may materially and adversely affect our business, financial condition and results of operations”, “Item 3. Key
Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of Chinese laws and
regulations could limit the legal protections available to us” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—
Our business may be significantly affected by the draft Foreign Investment Law and the newly adopted Foreign Investment Law.”
D. Property, Plant and Equipment
Our corporate headquarters are located in Beijing with office space of approximately 8,000 square meters as of December 31, 2019. We also have
an office space of approximately 5,000 square meters in Xi’an mainly for our online customer service personnel and some of our product and technology
personnel. We also have a total space of approximately 7,500 square meters in 32 cities for VR filming. In addition, we have local offices with an aggregate
gross area of over 17,000 square meters for our 2C business in 102 cities. In 2019, we also had 7 regional transaction centers with an aggregate gross area
of approximately 350,000 square meters for our 2B business across China. We lease all the facilities to conduct our business.
Item 4A. Unresolved Staff Comments
None.
Item 5. Operating and Financial Review and Prospects
The following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our audited
consolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See
“Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key
Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial
risks and uncertainties.
In July 2019, September 2019 and April 2020, we entered into a binding term sheet, definitive agreements and supplemental agreements (the
“Loan facilitation transaction agreements”), respectively, with Golden Pacer, a limited liability company incorporated and existing under the laws of the
Cayman Islands that operates a leading financial technology platform in China, to divest our loan facilitation related business. Pursuant to the Loan
facilitation transaction agreements, we have divested our entire 2C intra-regional business and ceased to provide loan facilitation related guarantee services
in connection with our 2C business since November 2019. In addition, we have divested the assets and liabilities in relation to our historically-facilitated
loans for XW Bank to Golden Pacer as one of the pre-conditions for the divestiture. As a result, net assets related to the historically-facilitated loans for
XW Bank were reclassified as net assets transferred on our consolidated balance sheet as of December 31, 2019, and results of operations related to the
divested business were reported as loss from discontinued operations in the consolidated statements of comprehensive loss. The transactions contemplated
under the Loan facilitation transaction agreements were closed upon the signing of the supplemental agreements in April 2019.
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In addition, we have entered into definitive agreements with Boche in January 2020 to divest our salvage car related business. Assets and
liabilities associated with the divestiture of salvage car related business were reclassified as assets and liabilities held for sale on our consolidated balance
sheet as of December 31, 2019, while results of operations related to the divested business were not presented as discontinued operations due to its
insignificance to our overall business. The transaction with Boche closed in January 2020.
In March 2020, we entered into definitive agreements with 58.com to divest our 2B business. Assets and liabilities associated with the divestiture
of 2B business were reclassified as assets and liabilities held for sale on our consolidated balance sheet as of December 31, 2019, and results of operations
related to the divested business were reported as loss from discontinued operations in the consolidated statements of comprehensive loss. The transaction
with 58.com closed in April 2020.
Unless indicated otherwise, the discussion of our financial data in this Item 5 and throughout this annual report relates to continuing operations
only.
A. Operating Results
Overview
We are a leading national online used car dealer in China. Through our 2C business — Uxin Used Car, we provide consumers with a one-stop
online used-car-buying experience, including access to a nationwide selection of used cars and various car-related value-added products and services, as
well as a full suite of supporting services to fulfill these online used car transactions. Historically, we also operated 2B business — Uxin Auction, where we
primarily facilitated used car transactions between business customers via online auction, which has been divested to 58.com pursuant to definitive
agreements we entered into in March 2020. See “Item 4. Information on the Company—A. History and Development of the Company— Divestitures of
Our Loan Facilitation, Salvage Car and 2B Businesses.”
Our 2C business currently generates revenues from (i) commission fee in relation to assisting consumers buying our inspected and certified used
cars directly online and providing relevant fulfillment services, such as logistics and delivery, title transfers and vehicle registration, which equals to a
certain percentage of final car sales price and (ii) value-added service fee in relation to the additional services provided to consumers, for example, we help
consumers select and apply for customized auto financing options that are provided by our financing partners, assist them purchasing suitable insurance
policies that are provided by insurance companies, and provide well-rounded warranty programs. Prior to the divestiture of our loan facilitation related
business to Golden Pacer as first announced in July 2019, our 2C business generated revenues from the transaction facilitation and loan facilitation services
we provided to car buyers. See “Item 4. Information on the Company—A. History and Development of the Company— Divestitures of Our Loan
Facilitation, Salvage Car and 2B Businesses.” In addition, prior to the divestiture of our 2B business, we generated revenues from transaction facilitation
service fee charged in relation to connecting business buyers with used car sellers and facilitating car sales through our auction service, as well as the title
transfer service we provide.
Since we shifted our focus to 2C online used car transactions, we have witnessed a significant growth of our business. After taking into
consideration the effect of the divestiture of loan facilitation related business described above, in 2019, we facilitated 97,100 online used car transactions
for our 2C business, representing a 153.8% increse from 2018, and the total GMV for our 2C business reached RMB11.3 billion (US$1.6 billion) in 2019,
representing 155.3% increase from 2018. Our total revenues increased significantly by 140.9% from RMB659.1 million in 2018 to RMB1,588.0 million
(US$228.1 million) in 2019. Our net loss from continuing operations was RMB1,327.7 million (US$190.7 million) in 2019, compared to a net loss of
RMB1,351.8 million in 2018.
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Major Factors Affecting Our Results of Operations
General Factors Affecting Our Results of Operations
Our business and operating results are affected by general factors affecting China’s online used car transaction industry, which include:
· China’s overall economic growth and level of per capita disposable income;
· outbreaks of COVID-19 or any other serious contagious diseases;
· changes in the supply and demand for used cars, and changes in geographic distribution of cars;
· consumers and dealers’ acceptance of the online used car transaction model; and
· regulations and policies affecting the used car industry and consumer auto finance industry.
Unfavorable changes in any of these general industry conditions could negatively affect demand for our services and materially and adversely
affect our results of operations.
While the duration of the current COVID-19 pandemic and its disruption to our business and related financial impacts cannot be accurately
estimated at this time, we expect that our financial condition, results of operations, and cash flows for the first half of 2020 will be materially and adversely
affected with potential continuing impacts on subsequent periods. In particular, our business operations during the first quarter of 2020 have been
materially and adversely affected as a result of the closure of used car markets and dealerships, the significant disruptions to the logistics and delivery of
used cars, and barriers to title transfers, among others. In addition, borrowers’ ability or willingness to repay their auto loans has also been negatively
affected by general economic downturns. As the impact of the pandemic will be fully considered in the credit loss assessment under the new accounting
standards effective on January 1, 2020, we will provide a significant provision for credit losses and losses from guarantee liabilities for the first quarter of
2020 associated with our historically-facilitated loans that were not transferred to Golden Pacer.
We will continue to monitor and evaluate the impact of the COVID-19 pandemic on our financial condition, results of operations, and cash flows
for the first half of 2020 and subsequent periods. The global spread of COVID-19 pandemic in a significant number of countries around the world has
resulted in, and may intensify, global economic distress, and the extent to which it may affect our financial condition, results of operations, and cash flows
will depend on future developments, which are highly uncertain and cannot be predicted. See “Item 3.D. Key Information—Risk Factors—Risks Relating
to Our Business and Industry— The COVID-19 pandemic could have a material adverse impact on our business, operating results and financial condition.”
Specific Factors Affecting Our Results of Operations
While our business is influenced by general factors affecting China’s online used car transaction industry, we believe our results of operations are
more directly affected by company specific factors, including the following:
Ability to increase transaction volume on our platform
We operate our business as a leading national online used car dealer in China, which is supported by a nationwide service network and our online
used car transaction fulfillment capabilities. Our ability to continue to increase our transaction volume and GMV affects the growth of our business and our
revenues. As we continued to shift our focus to 2C online used car transactions since we launched this business in early 2018, the total number of online
used car transactions completed through our 2C business increased by 153.8% from 38,264 in 2018 to 97,100 in 2019, and our total 2C GMV grew by
155.3% from RMB4.4 billion in 2018 to RMB11.3 billion (US$1.6 billion) in 2019. We anticipate that our future revenue growth will continue to depend
largely on the increase of transaction volume on our platform. Our ability to increase transaction volume depends on, among other things, our ability to
continually improve the service and user experience that we offer, increase brand awareness, expand our service network and enhance our online used car
transaction fulfillment and technology capabilities.
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Ability to capture more service opportunities and increase take rate
Our comprehensive coverage of a customer’s entire buying journey positions us well to provide a variety of services to customers. Through our
2C business, in addition to enabling consumers buy used cars online from our platform, we also provide a comprehensive suite of other services to our
customers that include various car-related value-added products and services, such as referrals of auto financing options and insurance products, as well as
a full suite of supporting services to fulfill these online used car transactions. By offering these services, we generate more revenues and increase our
overall take rate from the transactions. We will continue to strengthen our services and provide more value-added products and services from time to time
to capture additional opportunities.
By providing a variety of services, we were able to achieve an average total 2C take rate of 8.4% in 2018 and 12.0% in 2019, as measured by the
total revenue from 2C business divided by our total 2C GMV. Our ability to maintain or increase fees charged for our services and provide more services
affects our take rate and financial performance.
Ability to enhance operational efficiency
Our results of operations are directly affected by our scale and operational efficiency. In addition to our own sales team, we have also worked with
third-party agents to enlarge our sales force efficiently across China. We currently have a nationwide service network of over 1,100 service centers operated
by our local agents. As our business grows, we expect to achieve greater operating leverage, improve the efficiency and utilization of our personnel, and
obtain more favorable terms from our business partners.
Marketing is critical to our business. Given the relatively low online penetration rate for the used car market in China, we need to educate the
market about the benefits of buying used cars online and to raise our brand awareness. We also need to invest to acquire user traffic from different online
channels. As a result, sales and marketing expenses have historically represented a substantial majority of our total operating expenses, amounting to
225.9% and 74.6% of our total revenues in 2018 and 2019, respectively. Our ability to lower our sales and marketing expenses as a percentage of total
revenues depends on our ability to improve sales and marketing efficiency, including through increasing sales productivity, optimizing our traffic
acquisition channels and improving traffic-to-sales conversion, as well as leveraging our brand value and word-of-mouth referrals. We may also continue to
increase our sales and marketing expenses in absolute amounts in order to further expand our business across China as well as acquire customers and raise
our brand awareness.
Selected Statements of Operations Items
Revenues
We derive our revenues from our 2C and other businesses. Prior to the divesture of our 2B business in April 2020, we also generated revenues
from 2B business, which was presented as discontinued operations. The following table presents our revenues by category, in terms of absolute amounts
and as percentages of our total revenues for the periods presented.
Revenues:
To consumers (“2C”)
- Commission revenue
- Value-added service revenue
Others
Total revenues
2017
Years Ended December 31,
2018
RMB
%
RMB
%
(in thousands)
RMB
2019
US$
%
—
—
—
309,133
309,133
—
—
—
100.0
100.0
369,640
203,158
166,482
289,450
659,090
56.1
30.8
25.3
43.9
100.0
1,347,408
711,362
636,046
240,623
1,588,031
193,543
102,181
91,362
34,563
228,106
84.8
44.8
40.0
15.2
100.0
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2C business
Our 2C business currently generates revenues from commission and value-added services. For each used car sold through our 2C business, we
charge a commission fee equivalent to a certain percentage of final car sales price. The commission fee is for services provided through our platform in
enabling consumers to buy the car of choice online from our nationwide selection of inspected and certified used cars, and fulfilling these online
transactions, such as car delivery, title transfers and vehicle registration. We generate value-added service revenue from value-added service fee, which is
charged for the additional services provided to consumers for their online used car purchase, for example, we help consumers select and apply for
customized auto financing options, assist them purchasing suitable insurance policies, and provide well-rounded warranty programs.
Prior to the Loan Facilitation Divestiture, we also generated loan facilitation revenue from the consumer auto loans facilitated on our platform. As
a result of the divestiture, we are relieved of the guarantee obligations in relation to the historically-facilitated loans associated with XW Bank. Immediately
prior to the divestiture, the remaining outstanding balance of the historically-facilitated loans for XW Bank was RMB17.0 billion (US$2.4 billion). In
accordance with the applicable accounting standards, net assets of RMB827.7 million (US$118.9 million) related to the historically-facilitated loans for
XW Bank were reclassified as net assets transferred on our consolidated balance sheet as of December 31, 2019 as the divestiture of such assets and
liabilities was a pre-condition of the transaction. Results of operations related to the divested business were reported as loss from discontinued operations in
the consolidated statements of comprehensive loss.
Prior to the Loan Facilitation Divestiture, for each used car sold through our intra-regional 2C business with financing solutions and each used car
sold through our cross-regional 2C business with or without financing solutions, we charged a transaction facilitation service fee to the consumer that
equaled to the higher of a certain percentage of the price of the car and a minimum fee. Prior to the second half of 2018, we used to charge transaction
facilitation service fees to car dealers for each used car sold through our intra-regional 2C business without financing solutions. Starting in the second half
of 2018, to further facilitate our market expansion, we gradually discontinued charging car dealers transaction facilitation service fees in intra-regional
transactions without financing solutions. The transaction facilitation service fee was for services provided through our platform in connecting consumers
with used car sellers, facilitating car sales to consumers and providing after-sale warranty. We recognized transaction facilitation revenue when the service
was rendered, except that the revenue relating to warranty services was deferred and recognized over the warranty period, which was typically one year. In
2019, we discontinued charging transaction facilitation service fees for intra-regional transactions without financing solutions. Thus, service fees have not
been charged to the car dealers at all since then.
Others
Our other revenues mainly include commission from salvage cars sales and interest income from financial leases. Prior to the divestiture of our
salvage car business in January 2020, we generated revenue from our salvage car business primarily by charging the buyers a commission.
Cost of Revenues
Cost of revenues primarily consists of salaries and benefits for personnel involved in car inspection, quality control, customer service and after-
sales service, fulfillment costs related to logistics and delivery as well as title transfers and vehicle registration, cost of GPS tracking devices, and cost of
warranty services. We expect that our cost of revenues will increase in absolute dollar amounts as we continue to expand our business.
Operating Expenses
Our operating expenses primarily consist of (i) sales and marketing expenses, (ii) research and development expenses, and (iii) general and
administrative expenses.
Sales and marketing expenses
Sales and marketing expenses primarily consist of salaries and benefits for our sales and marketing personnel, customer acquisition expenses and
branding expenses. Customer acquisition expenses primarily include online traffic acquisition costs. Branding expenses primarily include brand advertising
costs. We expect that our sales and marketing expenses will increase in absolute dollar amounts in the foreseeable future as we plan to engage in effective
sales and marketing activities to further attract new customers and grow our businesses.
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Research and development expenses
Research and development expenses primarily consist of salaries and benefits for our research and development personnel and IT infrastructure
services-related expenses. We expect our research and development expenses will increase in absolute dollar amounts in the foreseeable future as we
continue to invest in technology to attract customers and enhance customer experience.
General and administrative expenses
General and administrative expenses primarily consist of salaries and benefits as well as share-based compensation for our management and
administration employees involved in general corporate functions, office rental expenses, and professional service fees. We expect that our general and
administrative expenses will increase as we incur additional expenses relating to improving our internal controls, complying with Section 404 of the
Sarbanes-Oxley Act and maintaining investor relations as a public company.
Fair value change of derivative liabilities
The fair value change of derivative liabilities is primarily related to bifurcated conversion features of our preferred shares, and to a lesser extent,
related to the bifurcated share swap feature and redemption feature of our redeemable non-controlling interests. Upon the completion of our initial public
offering, all of our preferred shares were converted into Class A ordinary shares on a one-for-one basis, and as such the derivative liabilities related to the
bifurcated conversion features of our preferred shares became shareholders’ equity.
Discontinued operations
Discontinued operations relate to our historical loan facilitation related business which was divested to Golden Pacer, and 2B business which was
divested to 58.com. Our salvage car related business divested to Boche was not presented as discontinued operations as it did not meet the criteria for
discontinued operation under ASC205-20. See “Item 4. Information on the Company— A. History and Development of the Company— Divestitures of
Our Loan Facilitation, Salvage Car and 2B Businesses.”
Taxation
Cayman Islands
Under the current laws of the Cayman Islands, our company and its subsidiaries incorporated in the Cayman Islands are not subject to tax on
income or capital gain. In addition, payments of dividends and capital in respect of our ordinary shares (and any consequential payments to the holders of
our ADSs) will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of dividends or capital to any holder
of our ordinary shares or ADSs, nor will gains derived from the disposal of our ordinary shares or ADSs be subject to Cayman Islands income or
corporation tax. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax.
British Virgin Islands
Some of our subsidiaries are companies incorporated in the British Virgin Islands. Under the current law of the British Virgin Islands, we are not
subject to income, corporation or capital gains tax in the British Virgin Islands. In addition, payment of dividends by the British Virgin Islands subsidiaries
to their respective shareholders who are not resident in the British Virgin Islands, if any, is not subject to withholding tax in the British Virgin Islands.
Hong Kong
Our subsidiaries in Hong Kong are subject to the uniform tax rate of 16.5%. Under Hong Kong tax law, our subsidiaries in Hong Kong are
exempted from income tax on their foreign-derived income and there is no withholding tax in Hong Kong on remittance of dividends. No provision for
Hong Kong profits tax was made as we had no estimated assessable profit that was subject to Hong Kong profits tax in 2017, 2018 and 2019.
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PRC
Generally, our PRC subsidiaries, our VIEs and their subsidiaries are subject to enterprise income tax on their taxable income in the PRC at a rate
of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
Youxinpai (Beijing) Information Technology Co., Ltd. obtained High and New Technology Enterprises, or HNTE, status in December 2016, and is eligible
to enjoy a preferential tax rate of 15% from 2016 to 2019. Youxin Internet (Beijing) Information Technology Co., Ltd. has been qualified as “Software
Enterprises” eligible for preferential tax treatments, and thus was exempted from corporate income tax in PRC in 2016 and 2017 and will be allowed a 50%
tax reduction at a statutory rate of 25% in 2018, 2019 and 2020.
Our PRC subsidiaries, our VIEs and their subsidiaries are subject to VAT at a rate of 6% on the services provided and related surcharges, and 17%
before April 30, 2018 and 16% since May 1, 2018 for the new cars sold.
Under the EIT Law and its Implementation Rules, subject to any applicable tax treaty or similar arrangement between the PRC and the jurisdiction
where the shareholders of our PRC subsidiaries reside that provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is
normally applicable to dividends from PRC sources payable to the shareholders that are non-PRC resident enterprises, which do not have an establishment
or place of business in the PRC, or which have such establishment or place of business if the relevant income is not effectively connected with the
establishment or place of business. Under the PRC Individual Income Tax Law and its implementation rules, dividends from sources within the PRC paid
to foreign individual shareholders who are not PRC residents are generally subject to a PRC withholding tax at a rate of 20%, subject to any reduction or
exemption set forth in applicable tax treaties and PRC laws. Although substantially all of our business operations are based in the PRC, it is unclear
whether dividends we pay with respect to our Class A ordinary shares or ADSs would be treated as income derived from sources within the PRC and as a
result be subject to PRC income tax if we were considered a PRC resident enterprise, as described below. See “Item 3. Key Information— D. Risk Factors
—Risks Related to Doing Business in China—Under the EIT Law, we may be classified as a “resident enterprise” of China; such classification could result
in unfavorable tax consequences to us and our non-PRC shareholders and materially and adversely affect our results of operations and financial condition.”
Results of Operations
The following table summarizes our consolidated results of operations, both in absolute amounts and as percentages of our total revenues, for the
periods presented.
2017
RMB
%
RMB
(in thousands)
For the Year Ended
December 31
2018
%
RMB
2019
US$
%
(!)
(1)
(1)
Revenues:
To consumers (“2C”)
- Commission revenue
- Value-added service revenue
Others
Total revenues
Cost of revenues
Gross Profit
Operating expenses:
(1)
Sales and marketing
Research and development
General and administrative
Gains/(losses) from guarantee liabilities
Provision for credit losses
Total operating expenses
Other operating income
Loss from continuing operations
Interest income
Interest expense
Other income
Other expenses
Foreign exchange (losses)/gains
Fair value change of derivative liabilities
Gain from disposal of investment, net
Impairment of long-term investment
Loss from continuing operations before
(2)
income tax expense
Income (tax expense)/credit
Equity in income of affiliates
Net loss from continuing operations, net
of tax
—
—
309,133
309,133
(92,735)
216,398
(179,328)
—
(389,072)
1,840
(38,075)
(604,635)
—
(388,237)
2,234
(199)
4,248
(3,808)
(627)
(885,821)
—
—
(1,272,210)
(211)
3,597
(1,268,824)
—
—
100.0
100.0
(30.0)
70.0
(58.0)
—
(125.9)
0.6
(12.3)
(195.6)
—
(125.6)
0.7
(0.1)
1.4
(1.2)
(0.2)
(286.6)
—
—
(411.5)
(0.1)
1.2
(410.4)
203,158
166,482
289,450
659,090
(418,852)
240,238
(1,488,699)
(124,513)
(1,070,419)
(4,414)
(40,626)
(2,728,671)
—
(2,488,433)
24,554
(63,880)
23,721
(25,568)
(8,232)
1,185,090
—
—
(1,352,748)
(1,644)
2,631
(1,351,761)
86
30.8
25.3
43.9
100.0
(63.6)
36.4
(225.9)
(18.9)
(162.4)
(0.7)
(6.2)
(414.0)
—
(377.6)
3.7
(9.7)
3.6
(3.9)
(1.2)
179.8
—
—
(205.2)
(0.2)
0.4
(205.1)
711,362
636,046
240,623
1,588,031
(689,292)
898,739
(1,184,997)
(140,006)
(402,040)
(194,385)
(271,372)
(2,192,800)
1,925
(1,292,136)
14,958
(112,587)
71,142
(36,569)
4,247
—
28,257
(37,775)
(1,360,463)
2,554
30,231
(1,327,678)
102,181
91,362
34,563
228,106
(99,011)
129,096
(170,214)
(20,111)
(57,749)
(27,922)
(38,980)
(314,976)
277
(185,604)
2,149
(16,172)
10,219
(5,253)
610
—
4,059
(5,426)
(195,418)
367
4,342
(190,709)
44.8
40.0
15.2
100.0
(43.4)
56.6
(74.6)
(8.8)
(25.3)
(12.2)
(17.1)
(138.1)
0.1
(81.4)
0.9
(7.1)
4.5
(2.3)
0.3
—
1.8
(2.4)
(85.7)
0.2
1.9
(83.6)
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(1) Share-based compensation in the amount of RMB165.9 million, RMB1,052.0 million and RMB100.3 million (US$14.4 million) in 2017, 2018 and
2019, respectively, was charged to cost of revenues, sales and marketing expenses, research and development expenses, and general and administrative
expenses.
(2) The following table sets forth the notional balance of our guarantee obligation by loan-to-value categories as of December 31, 2019:
Outstanding loan balance as of December 31, 2019 (RMB in
thousands)
90%
80%
70%
50%
Loan-to-value ratio
3,138,931
202,362
11,387,397
799,431
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Revenues
Our revenues increased by 140.9% from RMB659.1 million in 2018 to RMB1,588.0 million (US$228.1 million) in 2019.
2C business. Revenues of our 2C business increased significantly by 264.5% from RMB369.6 million in 2018 to RMB1,347.4 million (US$193.5
million) in 2019 , which was primarily attributable to increases in 2C transaction volume, GMV and the take rate of our 2C business. The take rate of our
2C business, as measured by the revenue of our 2C business divided by the GMV of our 2C business, was 8.4% and 12.0% in 2018 and 2019, respectively.
· Commission revenue. The commission revenue increased significantly by 250.2% from RMB203.2 million in 2018 to RMB711.4 million
(US$102.2 million) in 2019, primarily due to increases in transaction volume, GMV and commission rate. The number of 2C online used cars
transactions increased by 153.8% from 38,264 units in 2018 to 97,100 units in 2019, and the corresponding GMV increased by 155.3% from
RMB4.4 billion to RMB11.3 billion (US$1.6 billion) during the same period. Our unique value proposition to consumers along with an
improved user experience and higher pricing power contributed to the increase in our commission rate from 4.6% in 2018 to 6.3% in 2019.
· Value-added service revenue. Our value-added service revenue increased significantly by 282.1% from RMB166.5 million in 2018 to
RMB636.0 million (US$91.4 million) in 2019, primarily driven by increases in transaction volume, GMV and VAS take rate. Our VAS take
rate increased to 5.6% in 2019 from 3.8% in 2018, primarily driven by higher pricing power as a result of our increasingly optimized and
diversified services.
Others. Our other revenues was RMB240.6 million (US$34.6 million) in 2019, compared to RMB289.5 million in 2018.
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Cost of revenues
Our cost of revenues increased by 64.6% from RMB418.9 million in 2018 to RMB689.3 million (US$99.0 million) in 2019, primarily as a result
of an increase from RMB71.0 million in 2018 to RMB207.8 million (US$29.8 million) in 2019 in salaries and benefits of employees engaged in car
inspection, quality control, customer service and after-sales service, as well as an increase in fulfilment cost driven by an increase in the transaction
volume.
Gross profit
As a result of the foregoing, our total gross profit increased by 274.1% from RMB240.2 million in 2018 to RM898.7 million (US$129.1 million)
in 2019. Our gross profit margin increased from 36.4% in 2018 to 56.6% in 2019.
Sales and marketing expenses
Our sales and marketing expenses decreased by 20.4% from RMB1,488.7 million in 2018 to RMB1,185.0 million (US$170.2 million) in 2019 as a
result of our continuous efforts in enhancing operating efficiency.
Research and development expenses
Our research and development expenses increased by 12.4% from RMB124.5 million in 2018 to RMB140.0 million (US$20.1 million) in 2019,
primarily attributable to an increase from RMB78.6 million in 2018 to RMB105.8 million (US$15.2 million) in 2019 in salaries and benefits for employees
engaged in research and development as a result of our continued efforts to strengthen our AI and other technological capabilities.
General and administrative expenses
Our general and administrative expenses decreased by 62.4% from RMB1,070.4 million in 2018 to RMB402.0 million (US$57.7 million) in 2019,
primarily attributable to a decrease in share-based compensation expenses.
Losses from guarantee liabilities
Our losses from guarantee liabilities increased from RMB4.4 million in 2018 to RMB194.4 million (US$27.9 million) in 2019, which resulted
from the guarantee obligations associated with the remaining portion of our historically-facilitated loans that were not transferred to Golden Pacer, as well
as the adversely-affected performance of the aforementioned loans which was impacted by a series of lending and debt collection-related regulations
promulgated in the fourth quarter of 2019.
Provision for credit losses
Our provision for credit losses increased from RMB40.6 million in 2018 to RMB271.4 million (US$39.0 million) in 2019 as a result of the
adversely-affected performance of our financial assets and impact from a series of lending and debt collection-related regulations promulgated in the fourth
quarter of 2019, mainly including loans recognized as result of payment under the guarantee and financial lease receivables.
Interest income
We had interest income of RMB24.6 million in 2018 and RMB15.0 million (US$2.1 million) in 2019.
Interest expenses
We had interest expense of RMB63.9 million in 2018 and RMB112.6 million (US$16.2 million) in 2019. The increase in interest expense was
mainly attributable to an increase in our borrowings and convertible notes. Since we recognize the deposits of interest at present value, the gap between
actual amount of disbursement and book value of deposits of interests is recognized as interest expense.
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Other income
Other income increased from RMB23.7 million in 2018 to RMB71.1 million (US$10.2 million) in 2019.
Other expenses
Other expenses increased from RMB25.6 million in 2018 to RMB36.6 million (US$5.3 million) in 2019.
Foreign exchange gains/(losses)
We had foreign exchange gains of RMB4.2 million (US$0.6 million) in 2019, compared to foreign exchange losses of RMB8.2 million in 2018.
Fair value change of derivative liabilities
Our fair value change of derivative liabilities was nil in 2019, compared to a gain of RMB1,185.1 million in 2018. The impact of derivative
liabilities is no longer exist as the preferred shares were converted into ordinary shares at the time of IPO.
Gain from disposal of investment, net
Our gain from disposal of investment was RMB28.3 million (US$4.1 million) in 2019, compared to nil in 2018. Gain from disposal of investment
in 2019 was primarily attributable to our disposal of our equity investments in a technology company focusing on pilotless automobile systems.
Impairment of long-term investment
Impairment of long-term investment was RMB37.8 million (US$5.4 million) in 2019, compared to nil in 2018. The increase in impairment of
long-term investment was primarily attributable to our equity investment in a technology company which incurred continuous losses starting from 2019
and began to liquidate its business in June 2019.
Income tax credit/expense
We had income tax credit of RMB2.6 million (US$0.4 million) in 2019, compared to a tax expense of RMB1.6 million in 2018.
Equity in income of affiliates
Equity in income of affiliates increased from RMB2.6 million in 2018 to RMB30.2 million (US$4.3 million), primarily attributable to an equity
pick-up income from one of our invested companies.
Net loss from continuing operations, net of tax
As a result of the foregoing, our net loss from continuing operations decreased from RMB1,351.8 million in 2018 to RMB1,327.7 million
(US$190.7 million) in 2019.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
To facilitate the comparison of our operating results in 2017 and 2018, the financial results of our Divested Businesses in 2017 and 2018 are
presented on the same basis as in 2019.
Revenues
Our revenues increased by 113.2% from RMB309.1 million in 2017 to RMB659.1 million in 2018.
2C business. Revenues of our 2C business increased from nil in 2017 to RMB369.6 million in 2018. We launched our 2C online used car
transaction business in early 2018, which was previously referred to as “2C cross-regional business” and is currently the sole component of our 2C
business.
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· Commission revenue. The commission revenue increased from nil in 2017 to RMB203.2 million in 2018.
· Value-added service revenue. Our value-added service revenue increased from nil in 2017 to RMB166.5 million in 2018.
Others. Our other revenues decreased by 6.4% from RMB309.1 million in 2017 to RMB289.5 million in 2018.
Cost of revenues
Our cost of revenues increased by 351.7% from RMB92.7 million in 2017 to RMB418.9 million in 2018, primarily as a result of an increase in
salaries and benefits of employees engaged in car inspection, quality control, customer service and after-sales service, an increase in fulfilment cost driven
by an increase in the transaction volume.
Gross profit
As a result of the foregoing, our total gross profit increased by 11.0% from RMB216.4 million in 2017 to RMB240.2 million in 2018.
Sales and marketing expenses
Our sales and marketing expenses increased by 730.2% from RMB179.3 million in 2017 to RMB1,488.7 million in 2018.
Research and development expenses
Our research and development expenses increased from nil in 2017 to RMB124.5 million in 2018.
General and administrative expenses
Our general and administrative expenses increased by 175.1% from RMB389.1 million in 2017 to RMB1,070.4 million in 2018.
Losses/gains from guarantee liabilities
We recorded losses from guarantee liabilities of RMB4.4 million in 2018, compared to gains from guarantee liabilities of RMB1.8 million in 2017.
The change was primarily due to the increased delinquency rate.
Interest income
We had interest income of RMB2.2 million in 2017 and RMB24.6 million in 2018.
Interest expense
We had interest expense of RMB0.2 million in 2017 and RMB63.9 million in 2018, attributable to an increase in our borrowings and convertible
notes. Since we recognize the deposits of interest at present value, the gap between actual amount of disbursement and book value of deposits of interests is
recognized as interest expense.
Other income
Other income increased from RMB4.2 million in 2017 to RMB23.7 million in 2018.
Other expenses
Other expenses increased from RMB3.8 million in 2017 to RMB25.6 million in 2018.
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Foreign exchange losses
We had foreign exchange losses of RMB0.6 million and RMB8.2 million in 2017 and 2018, respectively. The change was primarily attributable to
the appreciation of U.S. dollars against RMB in 2018.
Fair value change of derivative liabilities
Our fair value change of derivative liabilities was a gain of RMB1,185.1 million in 2018, compared to a loss of RMB885.8 million in 2017. The
increase in value between 2017 and 2018 was primarily due to a decrease in the value of our company.
Income tax expense
We had income tax expense of RMB0.2 million and RMB1.6 million in 2017 and 2018, respectively, primarily resulting from the net taxable
income position of certain operating entities in the PRC.
Equity in income of affiliates
Equity in income of affiliates decreased from RMB3.6 million in 2017 to RMB2.6 million in 2018. The balance in 2017 was primarily attributable
to the investment income recognized from revaluation of the previously held equity interest in Chefang and Baogu upon our acquisitions of the two entities
in 2017.
Net loss from continuing operations, net of tax
As a result of the foregoing, we had net losses from continuing operations of RMB1,268.8 million and RMB1,351.8 million in 2017 and 2018,
respectively.
Critical Accounting Policies
Critical Accounting Policies, Judgments and Estimates
We prepare our financial statements in accordance with U.S. GAAP, which requires our management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of
revenues and expenses during the reporting periods. We continually evaluate these judgments and estimates based on our own historical experience,
knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and assumptions
that we believe to be reasonable, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since
the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting
policies require a higher degree of judgment than others in their application.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of
reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financial statements. We believe the
following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. You should read the
following description of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other
disclosures included in this annual report.
Consolidation of variable interest entity (VIE)
We account for entities qualifying as VIEs in accordance with Financial Accounting Standards Boards, or FASB, Accounting Standards
Codification Topic 810, Consolidation, or ASC 810. In order to comply with PRC regulatory requirements restricting foreign ownership of internet
information services, value-added telecommunications, and certain other businesses in China, we have been conducting our online auction platforms
through VIEs. In 2015, the restrictions on foreign-owned shareholding percentage in online data processing and transaction processing (operating E-
commerce) business in China was partially removed. Therefore, certain of our eligible WFOEs have applied for and obtained approval from Shanghai
Communications Administration to conduct value-added telecommunications services in the scope of online data processing and transaction processing
(operating E-commerce). As a result, certain of our WFOEs have been operating our main online platforms instead of our VIEs since then. Our VIEs
mainly conduct other online platforms to provide internet information services and they are holding some of our intellectual properties as well. Revenues
from VIEs accounted for approximately 12.5%, 10.2% and 4.6% of our total revenues in the years ended December 31, 2017, 2018 and 2019.
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We have entered into a series of contractual arrangements, including exclusive option agreement, equity pledge agreements and exclusive business
cooperation agreements, with our VIEs and their respective shareholders. As a result of our direct ownership in our WFOEs and the contractual
arrangements relating to our VIEs, we are regarded as the primary beneficiary of our VIEs In accordance with ASC 810, and we treat them and their
subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of our VIEs and their respective
subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.
Any changes in PRC laws and regulations that affect our ability to control our VIEs might preclude us from consolidating the entities in the future.
We will continually evaluate whether we are the primary beneficiary of our VIEs as facts and circumstances change.
Revenue recognition
We primarily engage in used car business as a leading national online used car dealer through our mobile app — Uxin Used Car and website —
www.xin.com, providing consumers with a nationwide selection of used and various car-related value-added products and services. Prior to the divestiture
of our 2B business, we also operated the mobile app — Uxin Auction and website — www.youxinpai.com to facilitate transactions between business
customers via online auction service. Revenue principally represents 2C commission revenue and value-added service revenue as well as other revenue. 2B
transaction facilitation revenue is currently recognized as discontinued.
We adopted ASC Topic 606, “Revenue from Contracts with Customers” for all periods presented. Consistent with the criteria of Topic 606, we
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to receive in exchange for those goods or services.
To achieve that core principle, an entity should apply five steps defined under Topic 606. We assess our revenue arrangements against specific
criteria in order to determine if we are acting as principal or agent. Revenue arrangements with multiple performance obligations are divided into separate
units of accounting. We considered appropriate method to allocate the transaction price to each performance obligation based on the relative standalone
selling prices of the services being provided. In estimating the standalone selling price for the services that are not directly observable, we considered the
suitable methods included in ASC 606-10-21-34, and determined the adjusted market assessment approach is the most appropriate method. When
estimating the relative standalone selling prices, we consider selling prices of similar services. Revenue is recognized upon transfer of control of promised
goods or services to a customer.
From time to time, we provide incentives to consumers. These incentives are given in the form of discount coupon to consumers, and are applied
to the same transaction. As these incentives were provided without any distinct good or service in return, these incentives have been recorded as reduction
of revenue, pursuant to the guidance under ASC 606.
Revenue is recorded net off cash incentives and value-added-tax collected from customers.
Online used car transaction services (2C Business)
Our online platform and offline infrastructure enable consumers to buy used cars online via our online used car transaction services. Our online
used car transaction services help individual consumers complete their purchases of cars without having to physically inspect the cars on-site, in particular
when the consumers are located in different cities from where the cars are. Our offline infrastructure provides consumers with vehicle inspection, payment
and settlement, fulfilment services (including logistics and delivery, title transfers and vehicle registration), and warranty services. We have identified two
types of services — commission-related services and value-added services. We recognize commission revenue and value-added service revenue upon the
closing of car sales, except that the revenue relating to warranty services is deferred and recognized over the warranty period as we stand ready to perform
the service during that period, which is typically 6 months or one year.
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Others
Other revenue mainly comprises of revenues from commission from salvage car sales and interest income from financial leases, etc.
We continue to provide loans through our Easy Loan program to selected dealers in the form of financial lease agreements to help finance their
inventory. In the third quarter of 2018, we started to provide funds in the form of financial lease agreements to selected borrowers in addition to facilitating
loans for the purchase of cars. In these arrangements, we are considered the loan originator and hold such loans on our balance sheet. We generate interest
income from these arrangements. Interest income is recognized over the financial lease period, taking into account of the principal outstanding and the
effective interest rate over the period to maturity.
Remaining performance obligations
Revenue allocated to remaining performance obligations represent deferred revenue that has not yet been recognized. As of December 31, 2019,
the aggregate amount of the transaction price allocated to remaining performance obligations was RMB31.3 million (US$4.5 million). We expect to
recognize approximately 100% of this revenue over the next 12 months.
Financial lease receivables
Financial lease receivables include dealer inventory financing receivables and receivables generated from finance lease arrangements.
We provide short-term inventory financing to certain selected car dealers. Those car dealers can apply and obtain loans through the Easy Loan
program. We provide funding to the dealer and may in turn obtain financing from one of our financing partners to fund the Easy Loan program. In order to
fund the Easy Loan program, we and a third-party financing partner enter into a financing business cooperation agreement, which establishes that loans
provided to dealers are made in direct connection to the financial lease contracts entered into between us and the dealers for the underlying cars.
Accordingly, we are considered as the primary obligor in the lending relationship and therefore record the liabilities to the third-party financing partner on
our consolidated balance sheets. Consequently, we consider that the financial lease receivables generated from financial lease contracts with car dealers are
not settled or extinguished. Therefore, we continue to account for the financial lease receivables on our consolidated balance sheets.
We started to cooperate with third-party financing partners in September 2015. Before September 2015, we entered into finance lease
arrangements with consumers who needed financing in the car purchases. In the third quarter of 2018, we started to provide funds in the form of financial
lease agreements to selected borrowers in addition to facilitating loans for the purchase of cars.
Financial lease receivables are measured at amortized cost and reported on our consolidated balance sheets at outstanding principal adjusted for
the allowance for credit losses. Allowance for financial lease receivables is provided when we have determined the balance is impaired.
Goodwill
In accordance with ASC 805 Business Combination, goodwill represents the excess of the purchase consideration over the fair value of assets and
liabilities of businesses acquired.
Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually, or more frequently if events or changes in
circumstances indicate that it might be impaired based on the requirements of ASC 350-20. In accordance with the FASB guidance on “Testing of Goodwill
for Impairment,” we have elected to perform a qualitative assessment to determine whether the two-step impairment testing of goodwill is necessary. In this
assessment, we consider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific
information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than
the carrying amount, the quantitative impairment test is performed. Otherwise, no further testing is required. Recoverability of goodwill is evaluated using
a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unit exceeds the
carrying value of the net assets assigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carrying value of
the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, the second step of the impairment test is performed in order to
determine the implied fair value of a reporting unit’s goodwill. Determining the implied fair value of goodwill requires valuation of a reporting unit’s
tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of a
reporting unit’s goodwill exceeds its implied fair value, goodwill is deemed impaired and is written down to the extent of the difference. We estimate the
total fair value of the reporting unit using discounted cash flow analysis, and make assumptions regarding future revenue, gross margins, working capital
levels, tax and cash flows of the reporting unit. As of December 31, 2019, there was no event or any circumstance that we identified, which indicates that
the fair value of our reporting unit was substantially lower than the respective carrying value.
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In 2017, we acquired Chefang and Baogu and have consolidated their financial results in our consolidated financial statements since the respective
dates of acquisitions. As of December 31, 2019, we recorded goodwill in the amount of RMB4.1 million (US$0.6 million) and RMB4.2 million (US$0.6
million) for Chefang and Baogu, respectively. As there were no identifiable intangible assets from the acquisitions of Chefang and Baogu, the goodwill is
not amortized but is tested for impairment in accordance with ASC350. In 2018, RMB3.7 million of goodwill impairment loss was recorded for Chefang.
In 2018, we acquired Zhejiang Dongwang Internet Technology Co., Ltd., or Dongwang, and have consolidated its financial results in our
consolidated financial statements since the date of acquisition. As of December 31, 2019, we recorded goodwill in the amount of RMB38.2 million
(US$5.5 million) and reclassified as held-for-sale assets due to the divestiture of our salvage car business. There were identifiable intangible assets from the
acquisition of Dongwang. Those intangible assets were recognized and measured at fair value upon acquisition and amortized over five years. Goodwill is
not amortized but is tested for impairment in accordance with ASC350.
Share-based compensation
We follow ASC 718 to determine whether a share option or a restricted share unit should be classified and accounted for as a liability award or
equity award. All grants of share-based awards to employees and directors classified as equity awards are recognized in the financial statements based on
their grant-date fair values which are calculated using an option pricing model. We classify the share-based awards granted to employees as equity awards,
and have elected to recognize compensation expense relating to the share-based awards with service condition on a graded vesting basis over the requisite
service period, which is generally the vesting period.
Under ASC 718, we apply the Binomial option pricing model in determining the fair value of options granted. ASC 718 requires forfeiture rates to
be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation
expense is recorded net of estimated forfeitures such that expense is recorded only for those share-based awards that are expected to vest.
In February 2018, we adopted the Amended and Restated Plan, which was later amended and renamed as the 2018 Second Amended and Restated
Share Incentive Plan (the “Amended and Restated Plan”). Under the Amended and Restated Plan, the maximum aggregate number of Class A ordinary
shares that may be issued pursuant to all awards granted under the Amended and Restated Plan is 102,040,053.
On September 22, 2019, our board of directors approved a reduction in the exercise price for outstanding options previously granted by our
company with an exercise price higher than $1.03 per ordinary share, up to US$3.00 per ordinary share, to $1.03 per share, provided that any participating
option holder agrees to amendment in the number of shares subject to his or her option as determined by the plan administrator. We accounted for this
reduction as a share option modification which required the remeasurement of these share options at the time of the modification. The total incremental cost
as a result of the modification was US$4.1 million. The incremental cost related to vested options amounted to US$2.1 million and was recorded in the
consolidated statements of comprehensive loss during the year ended December 31, 2019. The incremental cost related to unvested options amounted to
US$2.0 million and will be recorded over the remaining service period.
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Options
We granted 12,819,330, 25,224,000 and 4,247,500 options to our employees, with a weighted average exercise price of US$2.13, US$2.90 and
US$1.36, for the years ended December 31, 2017, 2018 and 2019. No options granted to employees were exercisable as of December 31 2017, whereas
18,659,232 and 19,698,819 options were exercisable as of December 31, 2018 and 2019, respectively. 9,800,000, 7,300,000 and 10,570,575 options
granted to key management became exercisable as of December 31, 2017, 2018 and 2019, respectively.
Under the Amended and Restated Plan, employees are generally subject to a four-year service schedule, under which an employee earns an
entitlement to vest in 25% of his or her option grants at the end of each year of completed service.
As of December 31, 2019, the fair value of vested and nonvested options granted to employees and management amounted to RMB104.0 million
(US$14.9 million) and RMB34.2 million (US$4.9 million), respectively, and a share-based compensation expense of RMB100.3 million (US$14.4 million)
was recognized for the vested options.
Other share-based awards
For the year ended December 31, 2016, we recorded share-based compensation expense of RMB226.4 million for issuance and grant of
19,985,520 ordinary shares to our management in April 2016.
In September 2017, one of our preferred shareholders transferred 6,686,020 series A preferred shares and 10,590,390 series B preferred shares
with a consideration of US$41.2 million to Gao Li Group, which is controlled by Mr. Kun Dai, the chairman of our board of directors and chief executive
officer. The difference between the transfer price and the fair value of preferred shares transferred was RMB137.7 million and was recognized as
compensation expense to Mr. Kun Dai in September 2017.
In June 2018, we recorded share-based compensation expense of RMB620.4 million for the issuance of 17,742,890 restricted shares to Mr. Kun
Dai, which were vested immediately upon consummation of a successful initial public offering.
On May 25, 2018, one of our executive officers exercised his vested options to acquire 3,333,330 ordinary shares. In addition, we also offered
vesting acceleration to that executive officer’s 1,666,670 unvested options on May 25, 2018 and the executive officer also exercised such options to acquire
1,666,670 ordinary shares. Therefore, in May 2018, we recorded all remaining unrecognized compensation costs which were accelerated in the amount of
RMB31.8 million.
On June 27, 2018, RMB5.2 million share-based compensation was recorded as the redesignation of our ordinary shares and super voting power
was granted to the beneficial owner of our Class B ordinary shares, Mr. Kun Dai.
Recent Accounting Pronouncements
See Item 17 of Part III, “Financial Statements—Note 2—Summary of significant accounting policies—Recent accounting pronouncements.”
B. Liquidity and Capital Resources
Cash flows and working capital
In addition to experiencing net losses during the periods presented, we had net cash used in operating activities of RMB1,834.2 million,
RMB2,281.3 million and RMB1,194.1 million (US$171.5 million) in 2017, 2018 and 2019, respectively. Discussions of our cash flows and working capital
in this Item 5.B. relate to both discontinued and continuing operations. Our principal sources of liquidity have been proceeds from issuances of equity and
equity-linked securities.
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· In January 2018, we raised an aggregate of US$250.0 million by issuing additional preferred shares to certain investors in a private placement.
· In June 2018, we completed our initial public offering in which we issued and sold an aggregate of 25,000,000 ADSs, representing 75,000,000
Class A ordinary shares, resulting in net proceeds to us of US$204.8 million. Concurrently with our initial public offering, we sold convertible
notes to CNCB (Hong Kong) Investment Limited (“the CNCB Note”) and Golden Fortune Company Limited (“the GF Note”), resulting in
net proceeds to us of US$100 million and US$75 million, respectively. The CNCB Note and the GF Note each beared an interest rate of 6%
and 6.5% per annum. The convertible notes became due and were paid in June 2019.
· In June 2019, we sold convertible notes in an aggregate principal amount of US$230 million to Redrock Holding Investments Limited, TPG
Growth III SF Pte. Ltd., 58.com Holdings Inc., Zhuhai Guangkong Zhongying Industrial Investment Fund (Limited Partnership), Magic
Carpet International Limited and ClearVue UXin Holdings, Ltd. (the “Notes”). The Notes will become due and payable on June 11 and
June 12, 2024 unless converted earlier. The purchasers of the convertible notes have the right to convert the convertible notes into Class A
ordinary shares of our company during the period from and including the 181st day after the issuance date to and including the maturity date.
The conversion price per Class A ordinary share of the Notes equals US$1.03 and may be adjusted. The Notes each bears an interest rate of
3.75% per annum, payable until the outstanding principal amount is fully paid; provided that if any portion of the convertible notes are duly
converted into Class A ordinary shares pursuant to the terms of the convertible notes, no interest accrued on the principal amount being
converted shall be payable.
· Between July and November 2019, we sold convertible notes in an aggregate principle amount of US$50 million to affiliates of Pacific Bridge
Asset Management (the “PB Notes”). Among the PB Notes, notes of US$20.05 million in principal amount bears an interest rate of 10% per
annum (the “10% Notes”), and notes of US$29.95 million in principal amount bears an interest rate of 11% per annum (the “11% Notes”).
The 10% Notes will become due and payable 12 months after the issuance date, and the 11% Notes will become due and payable 15 months
after the issuance date, unless converted earlier. The purchasers of the convertible notes have the right to convert the convertible notes into
Class A ordinary shares of our company during the period from and including the 181st day after the issuance date to and including the
maturity date, which right may be exercised twice only. The conversion prices per Class A ordinary share of the PB Notes are US$1.663,
US$1.683 and US$1.7, as applicable, and may be adjusted. The interests are payable until the outstanding principal amount is fully paid;
provided that if any portion of the convertible notes are duly converted into Class A ordinary shares pursuant to the terms of the convertible
notes, no interest accrued on the principal amount being converted shall be payable.
· As of December 31, 2019, we had an outstanding balance of short-term borrowings of RMB263.4 million (US$37.8 million) due within 12
months, with a fixed annual interest rate of between 5.9% and 9.8%.
As of December 31, 2019, we had RMB478.2 million (US$68.7 million) in cash and cash equivalents. Our cash and cash equivalents primarily
consist of cash on hand and deposits placed with financial institutions that can be added to or withdrawn without limitation. As of December 31, 2019, we
had RMB707.0 million (US$101.6 million) in restricted cash, which consisted primarily of security deposits for the guarantees we provided to our
remaining third-party financing partners for the repayment of consumer auto loan historically facilitated through our 2C business before the fourth quarter
of 2019.
We expect that the COVID-19 pandemic will have material and adverse impacts on our cash flow for the first quarter of 2020 with potential
continuing impacts on subsequent periods. However, based on our liquidity assessment, we expect that our cash and cash equivalents, and cash
considerations received from our recent Divested Businesses would be sufficient to fund our operating expenses, capital requirements and other contractual
obligations for at least the next 12 months from the date these financial statements are issued. We are entitled to receive a total cash consideration of
RMB330 million and US$105 million from the divestiture of our salvage car and 2B businesses, respectively, of which RMB165 million was received in
January 2020 and US$75 million was received in April 2020, and the remaining considerations will be received before the end of the first half of 2020. In
addition, as we no longer provide any loan facilitation related guarantee services as a result of the divestiture of our loan facilitation related business, we
are no longer obligated to incur any additional guarantee liabilities that would require any cash outflows going forward. We will also not incur cash
outflows in connection with guarantee liabilities related to the loans we historically facilitated for XW Bank as we have transferred XW Bank-related loans
to Golden Pacer as a result of the divestiture of our loan facilitation related business. In addition, we will be entitled to receive 85% of net cash inflow
generated by the divested and transferred assets and liabilities from Golden Pacer in relation to the historically-facilitated loans for XW Bank. For the
historically-facilitated loans that were not transferred to Golden Pacer, we believe that the future cash outflows in connection with the guarantee liabilities
related to historical loans facilitated for WeBank under existing arrangements should be limited. We will also generate future cash inflows from the
historically defaulted loans that we have bought back when we are able to collect the repayments. We may, however, need additional capital in the future to
fund our continuing operations. See “Item 3.D. Key Information—Risk Factors—Risks Relating to Our Business and Industry— The COVID-19 pandemic
could have a material adverse impact on our business, operating results and financial condition.” The issuance and sale of additional equity would result in
further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that
would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
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As of December 31, 2019, 18.0% of our cash and cash equivalents were denominated in Renminbi and held in China, and the remaining cash and
cash equivalents, denominated in U.S. dollars or Hong Kong dollars, were held outside China. As of the same date, 5.2% of our cash and cash equivalents
were held by our VIEs and their subsidiaries.
Although we consolidate the results of our VIEs and their subsidiaries, we only have access to the assets or earnings of our VIEs and their
subsidiaries through our contractual arrangements with our VIEs and their shareholders. See “Item 4. Information on the Company—C. Organizational
Structure—Contractual Agreements with the VIEs and Their Respective Shareholders.” For restrictions and limitations on liquidity and capital resources as
a result of our corporate structure, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding Company
Structure.”
In utilizing the proceeds we expect to receive from our initial public offering, we may make additional capital contributions to our PRC
subsidiaries, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, make loans to our PRC subsidiaries or VIEs, or
acquire offshore entities with business operations in China in offshore transactions. However, most of these uses are subject to PRC regulations and
approvals. For example:
· capital contributions to our PRC subsidiaries must be approved by the Ministry of Commerce or its local counterparts; and
· loans by us to our PRC subsidiaries and VIEs to finance their activities cannot exceed statutory limits and must be registered with SAFE or its
local branches.
See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations Relating to Foreign Exchange” and “Item 4.
Information on the Company—D. Risk Factors—Risks Related to Doing Business in China—PRC regulations on loans and direct investments by offshore
holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC entities.”
A majority of our revenues have been, and we expect they are likely to continue to be, in the form of Renminbi. Under existing PRC foreign
exchange regulations, Renminbi may be converted into foreign exchange for current account items, including profit distributions, interest payments and
trade-and service related foreign exchange transactions. Our PRC subsidiaries may convert Renminbi amounts that they generate in their own business
activities, including technical consulting and related service fees pursuant to their contracts with the VIEs, as well as dividends they receive from their own
subsidiaries, into foreign exchange and pay them to their non-PRC parent companies in the form of dividends. However, current PRC regulations permit
our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with China accounting standards and
regulations. Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses
each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as
cash dividends. Due to restrictions on the distribution of share capital from our PRC subsidiaries and also as a result of these entities’ unreserved
accumulated losses, total restrictions placed on the distribution of our PRC subsidiaries’ net assets was RMB825.2 million (US$118.5 million),
representing 177.4% of our total consolidated net assets as of December 31, 2019. Furthermore, capital account transactions, which include loans, must be
approved by and/or registered with SAFE and its local branches. We can provide funding to our PRC subsidiaries and our VIEs and the subsidiaries of the
VIEs through loans as long as the loan amount does not exceed the statutory limit, which is twice the amount of the relevant entities’ respective net assets
calculated in accordance with China accounting standards.
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The following table sets forth a summary of our cash flows for the periods indicated.
Summary Consolidated Statements of Cash Flow Data:
Net cash used in operating activities
Net cash used in investing activities
Net cash generated from financing activities
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
Net increase/(decrease) in cash, cash equivalents and restricted
cash
Cash, cash equivalents and restricted cash at beginning of the
year
Cash, cash equivalents and restricted cash at end of the year
Operating Activities
2017
RMB
(1,834,243)
(586,843)
3,288,842
3,334
871,090
1,038,113
1,730,001
For the Year Ended December 31,
2018
RMB
2019
RMB
US$
(in thousands)
(2,281,333)
(1,078,617)
4,274,052
(1,194,101)
(484,254)
73,630
(171,522)
(69,559)
10,576
(9,278)
960
138
904,824
(1,603,765)
(230,366)
1,730,001
1,812,702
1,812,702
1,185,188
260,378
170,242
Net cash used in operating activities was RMB1,194.1 million (US$171.5 million) for the year ended December 31, 2019. In 2019, the difference
between our net cash used in operating activities and our net loss RMB1,990.1 million (US$285.9 million) mainly resulted from certain non-cash expenses,
including losses from guarantee liabilities of RMB362.6 million (US$52.1 million), provision for credit losses of RMB271.4 million (US$39.0 million),
share-based compensation of RMB100.3 million (US$14.4 million), and changes in certain working capital accounts. Changes in the working capital
accounts mainly included an increase in loan recognized as a result of payment under the guarantee of RMB1,533.3 million (US$220.2 million) and a
decrease in deposit of interests from consumers and payable to financing partners of RMB470.1 million (US$67.5 million), partially offset by an increase
in payables, accruals and other current liabilities of RMB674.9 million (US$97.0 million) and a decrease in advance to consumers on behalf of financing
partners of RMB519.8 million (US$74.7 million). The increase in loan recognized as a result of payment under the guarantee was mainly due to the
fluctuation in outstanding facilitated-loan performance. The decrease in deposit of interests from consumers and payable to financing partners was mainly
because we no longer collected the upfront deposit of interests from consumers and have gradually paid the remaining interests back to the financing
partners. The increase in payables, accruals and other current liabilities was primarily attributable to our expansion of 2C online used car business. The
decrease in advance to consumers on behalf of financing partners was primarily because we ceased to provide loan facilitation related services and no
longer advanced funds to consumers on behalf of financing partners.
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Net cash used in operating activities was RMB2,281.3 million for the year ended December 31, 2018. In 2018, the difference between our net cash
used in operating activities and our net loss of RMB1,538.3 million mainly resulted from certain non-cash expenses, including fair value change of
derivative liabilities of RMB1,185.1 million, share-based compensation of RMB1,052.0 million, and changes in certain working capital accounts. Changes
in the working capital accounts mainly included an increase in receivables, prepaid expenses and other current assets of RMB595.3 million, a decrease in
deposit of interests from consumers and payable to financing partners of RMB563.5 million and an increase in advance to sellers of RMB446.4 million,
partially offset by an increase in payables, accruals and other current liabilities of RMB654.3 million and an increase in advance to consumers on behalf of
financing partners of RMB305.5 million. The increase in receivables, prepaid expenses and other current assets was primarily attributable to the increase of
prepaid marketing and consulting expenses. The decrease in deposit of interests from consumers and payable to financing partners was primarily because
we no longer collected the deposit of interests from consumers and have paid the remaining interests back to our financing partners. The increase in
advance to sellers was primarily attributable to the expansion of 2C online used car transaction business.
Net cash used in operating activities was RMB1,834.2 million for the year ended December 31, 2017. The difference between our net cash used in
operating activities and our net loss of RMB2,747.8 million mainly resulted from certain non-cash expenses or gains, including shared-based compensation
of RMB165.9 million, the fair value change of derivative liabilities of RMB885.8 million, and changes in certain working capital accounts. Changes in the
working capital accounts mainly included an increase in payables, accruals and other current liabilities of RMB911.6 million, an increase in deposit of
interests from consumers and payable to financing partners of RMB628.9 million, partially offset by an increase in advance to sellers of RMB200.5
million, and an increase in loan recognized as a result of payment under the guarantee of RMB478.5 million. The increase in payables, accruals and other
current liability was primarily attributable to our increasing guarantee liabilities driven by the fast growth of our then-existing loan facilitation business.
The increase in deposit of interests from consumers and payable to financing partners was primarily attributable to the upfront deposit of interests collected
from consumers and payable to financing partners and was in line with the growth of our then-existing loan facilitation business. The increase in advance
from buyers collected on behalf of sellers was primarily attributable to the rapid expansion of our 2B business.
Investing Activities
Net cash used in investing activities was RMB484.3 million (US$69.6 million) for the year ended December 31, 2019, primarily attributable to the
legal title of restricted cash transferred to Golden Pacer of RMB1,175.9 million (US$168.9 million) in connection with the divestiture of our loan
facilitation related business.
Net cash used in investing activities was RMB1,078.6 million for the year ended December 31, 2018, primarily attributable to an increase in short-
term investments of RMB595.1 million.
Net cash used in investing activities was RMB586.8 million for the year ended December 31, 2017, which was primarily attributable to the loan
extended to a related party of RMB451.4 million, and the cash paid for long term investments of RMB152.7 million.
Financing Activities
Net cash generated from financing activities was RMB73.6 million (US$10.6 million) for the year ended December 31, 2019, primarily
attributable to net proceeds of RMB1,853.4 million (US$266.2 million) from issuance of convertible notes, and repayment of convertible notes of
RMB1,190.2 million (US$171.0 million).
Net cash generated from financing activities was RMB4,274.1 million for the year ended December 31, 2018, primarily attributable to net
proceeds of RMB2,574.0 million from initial public offering and issuance of convertible notes.
Net cash generated from financing activities was RMB3,288.8 million for the year ended December 31, 2017, which was primarily attributable to
proceeds of RMB2,721.1 million from issuance of convertible redeemable preferred shares.
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Holding Company Structure
Uxin Limited is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries, our
VIEs and their subsidiaries in China. As a result, Uxin Limited’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our
existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their
ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their retained
earnings, if any, as determined in accordance with China accounting standards and regulations. Under PRC law, each of our subsidiaries and our VIEs in
China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50%
of its registered capital. In addition, each of our wholly foreign-owned subsidiaries in China may allocate a portion of its after-tax profits based on China
accounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and our VIEs may allocate a portion of their after-tax
profits based on China accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not
distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks
designated by SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet
the requirements for statutory reserve funds.
The table below sets forth the respective revenues and assets contribution of Uxin Limited and our subsidiaries and our VIEs as of the dates and
for the periods indicated:
Uxin Limited and its wholly-
owned subsidiaries
VIEs
Total
Net Revenues
For the Year
Ended
For the Year
Ended
For the Year
Ended
For the Year
Ended
December 31,
December 31,
December 31,
December 31,
2016
2017
2018
2019
As of
December
31,
2017
Total Assets
As of
December
31,
2018
As of
December
31,
2019
87.4%
12.6%
100.0%
87.5%
12.5%
100.0%
89.8%
10.2%
100.0%
95.4%
4.6%
100.0%
90.5%
9.5%
100.0%
96.1%
3.9%
100.0%
91.0%
9.0%
100.0%
Note: The percentages exclude the inter-company transactions and balances between Uxin Limited and its subsidiaries and the VIEs.
Capital Expenditures
We made capital expenditures of RMB81.2 million, RMB133.9 million and RMB46.8 million (US$6.7 million) in 2017, 2018 and 2019,
respectively. In these periods our capital expenditures were mainly used for the purchase of computer equipment and software and leasehold improvements.
We will continue to make such capital expenditures to support the expected growth of our business.
C. Research and Development
See “Item 4. Information on the Company—B. Business Overview—Technology” and “Item 4. Information on the Company—B. Business
Overview—Intellectual Property.”
D. Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the
year ended December 31, 2019 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital
resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.
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E. Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not
entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit,
liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market
risk or credit support to us or engages in leasing, hedging or product development services with us.
F. Contractual Obligations
The following table sets forth our contractual obligations as of December 31, 2019:
Borrowings
Convertible notes
Interests payable
Operating lease commitments
Total
Total
504,451
1,953,336
409,714
65,071
2,932,572
Less than 1
year
263,425
314,487
45,798
54,689
678,399
Payment due by period
1-3 years
(in RMB thousands)
241,026
34,323
63,067
9,336
347,752
3-5 years
Greater than
5 years
—
1,604,526
300,849
1,046
1,906,421
—
—
—
—
—
The borrowings, convertible notes and interests payable represent our borrowings from commercial banks or other financial institutions for our
working capital and the corresponding interests payable, as well as the outstanding convertible notes we issued and the corresponding interests payable.
Our operating lease commitments relate to our leases of offices, including our nationwide service network which are under non-cancellable
operating lease agreements.
Other than the above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31,
2019.
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
The following table sets forth information regarding our executive officers and directors as of the date of this annual report.
Directors and Executive Officers
Kun Dai
Cheung Lun Julian Cheng
Qiang Chang Sun
Muyuan Wang
Lin Cong
Rong Lu
Shun Lam Steven Tang
Yong Zhong Huang
Zhen Zeng
Zhitian Zhang
Age
38
46
63
38
39
49
64
51
38
38
Position/Title
Chairman of the Board of Directors and Chief Executive Officer
Director
Director
Director
Director
Independent Director
Independent Director
Independent Director
Chief Financial Officer
Chief Operating Officer
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Mr. Kun Dai is our founder and has served as chairman of our board of directors and chief executive officer since our inception. Mr. Dai has been
involved in internet and automobile industries for over ten years. Mr. Dai founded one of China’s first online used car websites, CarResume.com, in 2005.
From 2007 to 2011, Mr. Dai worked at an NYSE-listed auto information provider, BitAuto, first as deputy general manager and later as vice president.
Mr. Dai received a master’s degree in Commerce from Cardiff University.
Mr. Cheung Lun Julian Cheng has been serving as our director since March 2014. Presently, Mr. Cheng is a managing director at Warburg Pincus
Asia LLC and co-leads Warburg Pincus’ business in China. Mr. Cheng joined Warburg Pincus in 2000. Prior to joining Warburg Pincus, Mr. Cheng was in
investment banking with Salomon Smith Barney and Deutsche Bank in Hong Kong. Mr. Cheng received a bachelor’s degree from Harvard University.
Mr. Qiang Chang Sun has been serving as our director since June 2019. Mr. Sun currently serves as an independent director of SOHO China
Limited (HKEx: 00410), GDS Holdings Limited (Nasdaq: GDS) and Phoenix Media Investment (Holdings) Limited (HKEx: 02008). Mr. Sun has served as
TPG’s Managing Partner for China since September 2017. Prior to joining TPG, he was chairman of the board of directors and founder of Black Soil
Group, an agriculture investment holding company. From 1995 to 2015, Mr. Sun was a partner at Warburg Pincus Asia and served as chairman of Asia
Pacific for the firm and a member of the firm’s Executive Management Group. Mr. Sun holds a Bachelor of Arts degree from the Beijing Foreign Studies
University and a joint degree of MA/MBA from the Joseph Lauder Institute of International Management and the Wharton School of the University of
Pennsylvania.
Mr. Muyuan Wang has been serving as our director since November 2019. Mr. Wang currently serves as a senior director of the Mobile Ecological
Group of Baidu, Inc. (Nasdaq: BIDU) and is in charge of Baidu’s various business lines with a focus on exploring innovative business opportunities in the
car, business development, education, travelling and gaming industries. Mr. Wang received his bachelor’s and master’s degrees in automation from
Tsinghua University in 2003 and 2005, respectively, as well as a master’s degree from University of Illinois Urbana-Champaign in 2007.
Mr. Lin Cong has been serving as our director since December 2019. Mr. Cong has served as the Vice President of 58.com Group since
March 2017. Before joining 58.com, he was the co-founder and CEO of Youche.com Inc., a used car dealer chain in China, from February 2014 to
March 2017. From August 2010 to February 2014, Mr. Cong served as the Vice President of Finance and IT with 58.com. Mr. Cong also worked as a
management consultant with Boston Consulting Group from August 2008 to August 2009 and as an auditor with PricewaterhouseCoopers Zhong Tian LLP
from August 2002 to May 2005. Mr. Cong holds a bachelor’s degree in accounting from Tsinghua University and an M.B.A. degree from Stanford
University.
Ms. Rong Lu has been serving as our director since October 2017. Presently, Ms. Lu is an independent venture capitalist investing in technology
start-ups in the United States and China. In October 2019, she founded Atypical Ventures, an early-stage technology venture investment firm in China. In
2006, she co-founded DCM China, an early-stage venture capital firm. During her more than 12-year tenure at DCM, Ms. Lu invested in and served as a
board member for many companies including Kuaishou, BitAuto Holdings Ltd., E-Commerce China Dangdang Inc., Pactera Technology International Ltd.,
DXY.cn, and HaoDF.com. She also served as an independent director and on the audit committee of iKang Healthcare Group, Inc. and served as an
independent director and chairman of the special committee for iDreamSky Technologies Limited before those two companies were taken private. Ms. Lu
is currently an independent director on the board of Yum China Holdings Inc (NYSE; YUMC). Prior to joining DCM in 2003, Ms. Lu was a Vice President
in the technology, media and telecommunications investment banking group of Goldman Sachs & Co. in Menlo Park, California. Ms. Lu received her
master’s degree in international economics and energy, environment, science and technology from Johns Hopkins University, School of Advanced
International Studies and bachelor’s degree in economics from the University of Maryland, Baltimore County.
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Mr. Shun Lam Steven Tang has been serving as our director since June 2019. Mr. Tang served as an executive director at Vital Mobile Holdings
Limited (HKEx: 6133) from 2015 to 2019, where he oversaw the compliance of Vital Mobile as a public company. Prior to this, Mr. Tang served as the
chairman of the board of directors of RDA Microelectronics Limited (Nasdaq: RDA) from 2009 to 2015. Mr. Tang served as the chief executive officer of
Coolsand Technology from 2008 to 2010. Mr. Tang has over 35 years of experience in high-tech, semiconductors, electronics, automotive, forestry,
pharmaceutical and consumer sectors, and has served as directors and committee members of private companies and publicly-listed companies. Mr. Tang
received his bachelor’s degree in electrical and electronic engineering from Nottingham University and his MBA degree from Bradford University.
Mr. Yong Zhong Huang has been serving as our director since June 2019. Mr. Huang is the founder of Juntong Capital, an independent equity
investment firm that focuses on private equity investments in China. Before founding Juntong Capital in 2014, Mr. Huang was a global partner responsible
for Asian investments at Pantheon Ventures, a private equity fund of funds with over US$30 billion under management. Prior to joining Pantheon Ventures
in 2004, Mr. Huang was the head of Shanghai office for AIG Global Investment Co and also worked at Schroders and Merrill Lynch as investment banker.
Mr. Huang received his EMBA degree from the PBC Finance School of Tsing Hua University and his bachelor’s degree in finance from Shanghai
University of Finance and Economics.
Mr. Zhen Zeng joined us in 2011 and serves as our chief financial officer. Mr. Zeng has over ten years of experience in finance. From 2010 to
2011, Mr. Zeng served as a vice president in finance at Civa Printal. From 2006 to 2010, Mr. Zeng served as an audit manager at PricewaterhouseCoopers.
Mr. Zeng received a master’s degree in Commerce and Accounting from Griffith University.
Mr. Zhitian Zhang joined us in April 2012 and serves as our chief operating officer. Prior to his appointment as the chief operating officer,
Mr. Zhang served as president of our online used car transaction business, where he was responsible for operations and sales management, as well as
general manager of our sales management center. Prior to joining Uxin, Mr. Zhang worked for Bitauto Holdings Limited (NYSE: BITA) from 2007 to
2012, first as a director and then as vice general manager of its used car business. Mr. Zhang received his bachelor’s degree in Law from the National
Police University for Criminal Justice.
B. Compensation
Compensation of Directors and Executive Officers
For the year ended December 31, 2019, we paid an aggregate of RMB4.3 million (US$0.6 million) in cash to our executive officers, and we did
not pay any cash compensation to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar
benefits to our executive officers and directors. Our PRC subsidiaries and consolidated affiliated entity are required by law to make contributions equal to
certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and
a housing provident fund.
Employment Agreements and Indemnification Agreements
We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is
employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the
executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or
misconduct or a failure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon three-month advance
written notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the
jurisdiction where the executive officer is based. The executive officer may resign at any time with a three-month advance written notice.
Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence
and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our
confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary
information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in
confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment
with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these
inventions, designs and trade secrets.
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In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her
employment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our
suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the
purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment
with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our
express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the
executive officer’s termination, or in the year preceding such termination, without our express consent.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to
indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason
of their being a director or officer of our company.
2018 Amended and Restated Share Incentive Plan
We adopted the 2018 Amended and Restated Share Incentive Plan in February 2018, which was further amended in August 2018 and
November 2018, for the purpose of promoting the success and enhance the value of our company, by linking the personal interests of the members of the
board, employees, consultants and other individuals to those of our shareholders and, by providing an incentive for outstanding performance, to generate
superior returns for our shareholders. In November 2018, we increased the number of shares reserved for future awards under the plan, and renamed it 2018
Second Amended and Restated Share Incentive Plan, which we refer to as the Amended and Restated Plan in this annual report. Under the Amended and
Restated Plan, the maximum aggregate number of shares which may be issued pursuant to all awards is 102,040,053 Class A ordinary shares. As of
February 29, 2020, 311,845 restricted share units and 33,878,883 share options have been issued and outstanding under the Amended and Restated Plan.
On September 22, 2019, our board of directors approved a reduction in the exercise price for outstanding options previously granted by our
company with an exercise price higher than $1.03 per ordinary share to $1.03 per share, provided that any participating option holder agrees to amend the
number of shares subject to his or her option as determined by the plan administrator.
The following paragraphs summarize the terms of the Amended and Restated Plan.
Types of Awards. The Plan permits the awards of options, stock appreciation right, dividend equivalent right, restricted shares and restricted share
units or other right or benefit under the Plan.
Plan Administration. The board or a committee appointed by the board acts as the plan administrator. The plan administrator will determine the
participants who are to receive awards, the type or types of awards to be granted, the number of awards to be granted, and the terms and conditions of each
award grant. The plan administrator can amend outstanding awards and interpret the terms of the Amended and Restated Plan and any award agreement.
Award Agreement. Awards granted under the Amended and Restated Plan are evidenced by an award agreement that sets forth the terms and
conditions for each grant.
Exercise Price. The excises price of an option will be determined by the plan administrator, but in the case of an award issued in connection with
acquisitions, the exercise or purchase price for the award shall be determined in accordance with the provisions of the relevant instrument evidencing the
agreement to issue such award.
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Eligibility. We may grant awards to our employees, consultants, and all members of the board, and other individuals.
Term of the Awards. The term of each option or share appreciation right granted under the Amended and Restated Plan shall not exceed ten years
from date of the grant.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the relevant award agreement.
Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution,
except as otherwise provided by the plan administrator. The grantee may designate one or more beneficiaries of the grantee’s award in the event of the
grantee’s death on a beneficiary designation form provided by the administrator.
Termination. The plan shall terminate in February 2028, provided that our board may terminate the plan at any time and for any reason.
The following table summarizes the outstanding options and restricted share units that we had granted to our directors and executive officers under
the Amended and Restated Plan as of February 29, 2020:
Ordinary
Shares
Underlying
Outstanding
Options or
Restricted
Share units
Kun Dai
Rong Lu
Zhen Zeng
Zhitian Zhang
Exercise Price
($/Share)
—
—
0.0001 to 1.03
0.1 to 1.03
—
*
*
*
Grant Date
—
Various dates from
November 19, 2018 to
December 31, 2019
Various dates from
March 26, 2013 to
February 14, 2018
Various dates from
March 26, 2013 to March 1,
2019
Expiration Date
—
February 13, 2028
March 23, 2023
August 20, 2023
Total
9,146,748
* Less than 1% of our total ordinary shares outstanding on as-converted basis.
As of February 29, 2020, other grantees as a group held options to purchase 24,933,883 Class A ordinary shares of our company, with exercise
prices ranging from US$0.0001 to US$1.03 per share.
C. Board Practices
Board of Directors
Our board of directors consists of eight directors. A director is not required to hold any shares in our company by way of qualification. A director
may vote with respect to any contract, proposed contract or arrangement in which he is materially interested provided (i) such director, if his interest in
such contract or arrangement is material, has declared the nature of his interest at the earliest meeting of the board at which it is practicable for him to do
so, either specifically or by way of a general notice and (ii) if such contract or arrangement is a transaction with a related party, such transaction has been
approved by the audit committee. The directors may exercise all the powers of the company to borrow money, and to mortgage or charge its undertaking,
property and uncalled capital, and issue debentures, debenture stock or other securities whenever money is borrowed or as security for any debt, liability or
obligation of the company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upon
termination of service.
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Committees of the Board of Directors
We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and
corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described
below.
Audit Committee. Our audit committee consists of Shun Lam Steven Tang, Yong Zhong Huang and Rong Lu. Shun Lam Steven Tang is the
chairperson of our audit committee. We have determined that Shun Lam Steven Tang, Yong Zhong Huang and Rong Lu satisfy the “independence”
requirements of Rule 5605 of the Nasdaq Stock Market Rules. We have determined that Rong Lu qualifies as an “audit committee financial expert.” The
audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee
is be responsible for, among other things:
· appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent
auditors;
· reviewing with the independent auditors any audit problems or difficulties and management’s response;
· discussing the annual audited financial statements with management and the independent auditors;
· reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and
control major financial risk exposures;
· reviewing and approving all proposed related party transactions;
· meeting separately and periodically with management and the independent auditors; and
· monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to
ensure proper compliance.
Compensation Committee. Our compensation committee consists of Shun Lam Steven Tang, Yong Zhong Huang and Rong Lu. Rong Lu is the
chairperson of our compensation committee. We have determined that Rong Lu, Shun Lam Steven Tang and Yong Zhong Huang satisfy the
“independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing and approving
the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be
present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:
· reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive
officers;
· reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;
· reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and
· selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s
independence from management.
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Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Shun Lam Steven Tang,
Yong Zhong Huang and Rong Lu. Yong Zhong Huang is the chairperson of our nominating and corporate governance committee. We have determined that
Shun Lam Steven Tang, Yong Zhong Huang and Rong Lu satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules. The
nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining
the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:
· selecting and recommending to the board nominees for election by the shareholders or appointment by the board;
· reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge,
skills, experience and diversity;
· making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board;
and
· advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our
compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on
any remedial action to be taken.
Terms of Directors and Executive Officers
Our officers are elected by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and hold office
until such time as they resign by notice in writing to our company, or are removed from office by an ordinary resolution of the shareholders or by the board.
In addition, a director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or
composition with his creditors; or (ii) is found by our company to be or becomes of unsound mind; (iii) without special leave from the Board, is absent
from meetings of the Board for three consecutive meetings and the Board resolves that an office be rated; or (iv) is removed from office pursuant to our
current memorandum and articles of association.
D. Employees
As of December 31, 2019, we had a total of 6,455 employees. We had a total of 12,619 employees as of December 31, 2018 and 11,326 employees
as of December 31, 2017.
The following tables give breakdowns of our employees as of December 31, 2019 by function:
Functions:
Products and technology
Operations
Car inspection and inventory related personnel
Sales and pre-sales customer service
Fulfillment and after-sales customer service
Other operations
Finance and legal
Human resources
Corporate communication and marketing
Others
Total
107
As of
December
31,
2019
334
5,546
1,668
2,696
752
430
127
115
21
312
6,455
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E. Share Ownership
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 29, 2020 by:
· each of our directors and executive officers; and
· each of our principal shareholders who beneficially own 5% or more of our ordinary shares on an as-converted basis.
The calculations in the table below are based on 887,617,391 ordinary shares outstanding as of February 29, 2020, comprising of (i) 846,807,530
Class A ordinary shares, excluding the 16,562,988 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future
issuances upon the exercise or vesting of awards granted under our Amended and Restated Plan, and (ii) 40,809,861 Class B ordinary shares.
In June 2019, we issued convertible notes in an aggregate principal amount of US$230 million to Redrock Holding Investments Limited, TPG
Growth III SF Pte. Ltd., 58.com Holdings Inc., and certain other investors (the “Notes”). The purchasers of the convertible notes have the right to convert
the convertible notes into Class A ordinary shares of our company during the period from and including the 181st day after the issuance date to and
including the maturity date. The conversion price per Class A ordinary share of the Notes equals US$1.03 (the “Initial Conversion Price”) and may be
adjusted. Assuming the Notes are converted at the Initial Conversion Price, the Notes will be converted into approximately 223 million Class A ordinary
shares of our company. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Cash flows and working
capital.”
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including
through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the
computation of the percentage ownership of any other person.
(1)
Directors and Executive Officers**:
Kun Dai
Cheung Lun Julian Cheng
Qiang Chang Sun
Muyuan Wang
Lin Cong
Rong Lu
Shun Lam Steven Tang
Yong Zhong Huang
Zhen Zeng
Zhitian Zhang
All Directors and Executive Officers in the aggregate
Principal Shareholders:
(2)
Xin Gao Group Limited
Jeneration Capital Affiliated Entities
Redrock Holding Investments Limited
58.com Holdings Inc.
Baidu (Hong Kong) Limited
TPG Affiliated Entities
Kingkey Affiliated Entities
LC Affiliated Funds
Cathay Rong IV Limited
GIC Private Limited
(10)
(11)
(9)
(5)
(6)
(8)
(7)
(3)
(4)
Class A
Ordinary
Shares
93,170,300
—
—
—
—
*
—
—
*
*
100,168,298
—
129,076,788
151,032,260
97,087,378
79,832,280
78,385,277
75,893,890
63,142,198
57,045,450
48,865,050
108
Class B
Ordinary
Shares
40,809,861
—
—
—
—
—
—
—
—
—
40,809,861
40,809,861
—
—
—
—
—
—
—
—
—
Total
Ordinary
Shares
133,980,161
—
—
—
—
*
—
—
*
*
140,978,159
40,809,861
129,076,788
151,032,260
97,087,378
79,832,280
78,385,277
75,893,890
63,142,198
57,045,450
48,865,050
% of
Aggregate
Voting
Power†
†
†
%
15.1
—
—
—
—
*
—
—
*
*
15.9
4.6
14.5
16.3
9.9
9.0
8.3
8.6
7.1
6.4
5.5
39.9
—
—
—
—
*
—
—
*
*
40.5
32.5
10.3
11.7
7.2
6.4
6.0
6.1
5.0
4.5
3.9
Table of Contents
* Less than 1% of our total outstanding shares.
** Each of Mr. Kun Dai, Zhen Zeng, Zhitian Zhang, Shun Lam Steven Tang and Ms. Rong Lu’s business address is 2-5/F, Tower E, LSHM Center, No.8
Guangshun South Avenue, Chaoyang District, Beijing, People’s Republic of China. Mr. Cheung Lun Julian Cheng’s business address is
Suite 6703, International Finance Centre II, 8 Finance Street, Hong Kong. Mr. Sun’s business address is Level 12, Cyberport 1, 100 Cyberport Road,
Hong Kong. Mr. Wang’s business address is No. 10 Shangdi 10 Street, Haidian District, Beijing, People’s Republic of China. Mr. Cong’s business
address is Building 101, Jiayuanqiao North Road #10A, Chaoyang District, Beijing 100015, People’s Republic of China. Mr. Huang’s business address
is 21/F CMA Building, 64 Connaught Road Central, Hong Kong.
th
† For each person and group included in this column, percentage ownership is calculated by dividing the number of ordinary shares beneficially owned
by such person or group by the sum of the total number of ordinary shares outstanding, which is 887,617,391 as of February 29, 2020.
†† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such
person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is
entitled to one vote per share and each holder of our Class B ordinary shares is entitled to ten votes per share on all matters submitted to them for a
vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders,
except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares
on a one-for-one basis.
(1) Represents (i) 40,809,861 Class B ordinary shares directly held by Xin Gao Group Limited, a British Virgin Islands company beneficially owned by
Mr. Kun Dai through a trust and of which Mr. Kun Dai is the sole director, (ii) 17,276,410 Class A ordinary shares directly held by Gao Li Group
Limited, a British Virgin Islands company wholly owned by Mr. Dai and of which Mr. Kun Dai is the sole director, (iii) 61,129,800 Class A ordinary
shares directly held by Kingkey New Era Auto Industry Global Limited, a British Virgin Islands company, and (iv) 14,764,090 Class A ordinary shares
directly held by BOCOM International Supreme Investment Limited, a British Virgin Islands company, as reported on the Schedule 13G filed by
Mr. Dai, among others, on February 11, 2019. Mr. Kun Dai, together with Mr. Jiarong Chen and JenCap UX III, jointly decides the disposal of Uxin
Limited shares directly held by Kingkey New Era Auto Industry Global Limited, and is deemed to be the beneficial owner of all shares of Uxin
Limited held by Kingkey New Era Auto Industry Global Limited. Mr. Kun Dai, together with Mr. Jiarong Chen and JenCap UX, jointly controls the
voting power of all shares of Uxin Limited held by BOCOM International Supreme Investment Limited, and is deemed to be the beneficial owner of
all shares of Uxin Limited held by BOCOM International Supreme Investment Limited. For further details on Kingkey New Era Auto Industry Global
Limited and BOCOM International Supreme Investment Limited, please see footnote (8) below. For further details on JenCap UX III and JenCap UX,
please see footnote (3) below. The registered office of Xin Gao Group Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands. The registered office of Gao Li Group is OMC Chambers, Wickhams Cay I, Road Town, Tortola, British Virgin Islands. The
registered office of Kingkey New Era Auto Industry Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG
1110, British Virgin Islands. The registered office of BOCOM International Supreme Investment Limited is Craigmuir Chambers, Road Town, Tortola,
VG 1110, British Virgin Islands.
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To our knowledge, as of February 29, 2020, a total of 93,170,300 Class A ordinary shares beneficially owned by Mr. Kun Dai through Gao Li Group
Limited, Kingkey New Era Auto Industry Global Limited and BOCOM International Supreme Investment Limited, representing 2.0%, 6.9%, and 1.7%
of outstanding ordinary shares of Uxin Limited, respectively, had been pledged to third-party lenders in connection with certain loan agreements
entered into in 2017 in an aggregate principal amount of approximately US$163.1 million, most proceeds of which were used to fund the purchase of
shares in our company in the latest rounds of pre-IPO equity financings. The loans became due in June, November and December 2019, respectively,
and the borrowers are currently in discussion with the lenders to seek extensions of the loans. Assuming all these pledged shares have been sold or
otherwise disposed of pursuant to the enforcement of the share pledges, Mr. Kun Dai would have beneficially owned 4.6% of our outstanding ordinary
shares, representing 32.5% of our total voting power, as of February 29, 2020.
In addition, as of February 29, 2020, a total of 40,809,861 Class B ordinary shares beneficially owned by Mr. Kun Dai through Xin Gao Group
Limited, representing 4.6% of outstanding ordinary shares and 32.5% of voting power of Uxin Limited, had been pledged to Redrock Holding
Investments Limited, TPG Growth III SF Pte. Ltd. and 58.com Holdings Inc. (the “Key Investors”), in connection with the issuance of convertible
notes (“the Notes”) to the Key Investors, Zhuhai Guangkong Zhongying Industrial Investment Fund (Limited Partnership), Magic Carpet International
Limited and ClearVue UXin Holdings, Ltd., to secure certain obligations under the Investors’ Rights Agreement entered into on June 10, 2019. In
addition, pursuant to the Investors’ Rights Agreement, Mr. Kun Dai has agreed to not transfer any of the shares of Uxin Limited beneficially owned by
him without the prior written consent of each of the Key Investors during the three years following the issuance of the Notes (which may be extended
by another two years if all Key Investors agree to extend), subject to certain exceptions. See “Item 7. Major Shareholders and Related Party
Transactions —B. Related Party Transactions—Transactions with Redrock, TPG, 58.com and other existing shareholders.”
(2) Represents 40,809,861 ordinary shares, all of which are directly held by Xin Gao Group Limited, a British Virgin Islands company wholly owned by
Mr. Kun Dai. The registered office of Xin Gao Group Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin
Islands. As of February 29, 2020, all Class B ordinary shares held by Xin Gao Group Limited, representing 4.6% of outstanding ordinary shares and
32.5% of voting power of Uxin Limited, had been pledged to the Key Investors in connection with the issuance of the Notes. See footnote (1) above.
(3) Represents (i) 8,737,788 Class A Ordinary Shares held by Jeneration Capital Master Fund, a company incorporated in Cayman Islands, (ii) 42,336,300
Class A Ordinary Shares beneficially owned by Jeneration Capital Partners L.P., a company incorporated in Cayman Islands, comprising 27,572,210
Class A ordinary shares directly held by JenCap UX, a company incorporated in Cayman Islands, and 14,764,090 Class A Ordinary Shares directly
held by BOCOM International Supreme Investment Limited, a company incorporated in British Virgin Islands, (iii) 16,872,900 Class A ordinary
shares held by JenCap UX II Plus LLC., a limited liability company formed in the State of Delaware, United States, and (iv) 61,129,800 Class A
ordinary shares indirectly held by JenCap UX III through Kingkey New Era Auto Industry Global Limited, a British Virgin Islands company, as
reported on the Schedule 13G filed by JenCap UX, among others, on February 14, 2020. JenCap UX III, an exempted company incorporated in
Cayman Islands, indirectly holds 18.48% of shares in Kingkey New Era Auto Industry Global Limited through First Tycoon Ventures Limited which
holds 56% of shares in Kingkey New Era Auto Industry Global Limited. Mr. Kun Dai, Mr. Jiarong Chen and JenCap UX III jointly decide the disposal
of Uxin Limited shares directly held by Kingkey New Era Auto Industry Global Limited, and each of them is deemed to be the beneficial owner of all
shares of Uxin Limited held by Kingkey New Era Auto Industry Global Limited. Mr. Kun Dai, Mr. Jiarong Chen and JenCap UX, ultimately
controlled by Mr. Jimmy Ching-Hsin Chang, jointly control the voting power of all shares held by BOCOM International Supreme Investment
Limited, and each of them is deemed to be the beneficial owner of all shares of Uxin Limited held by BOCOM International Supreme Investment
Limited. For further details on Kingkey New Era Auto Industry Global Limitedand BOCOM International Supreme Investment Limited, please see
footnote (8) below. JenCap UX is wholly owned by Jeneration Capital Partners L.P., of which Jeneration Capital GP is the general partner. Jeneration
Capital GP is ultimately wholly owned by Jimmy Ching-Hsin Chang. JenCap UX II Plus LLC is wholly owned by JenCap UX II, of which the
management shareholder that controls the voting thereof is Jeneration Capital Management, an exempted company incorporated in Cayman Islands,
which is ultimately controlled by Jimmy Ching-Hsin Chang. The management shareholder which controls the voting of JenCap UX III is also
Jeneration Capital Management. Each of JenCap UX, JenCap UX II Plus LLC and JenCap UX III is unaffiliated with Mr. Kun Dai and Mr. Jiarong
Chen. The registered office of JenCap UX is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman
Islands. The registered office of JenCap UX II Plus LLC is 2711 Centerville Road, Suite 400, Wilmington, Delaware, New Castle County, USA. The
above is based on the Schedule 13G filed by JenCap UX, among others, on February 14, 2020.
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(4) Represents 112,197,309 Class A ordinary shares directly held by Redrock Holding Investments Limited in the form of 37,399,103 ADSs and
38,834,951 Class A ordinary shares upon the full conversion of the convertible notes held by Redrock Holding Investments Limited in principal
amount of US$40 million at a conversion price of $1.03 per Class A ordinary share convertible from the 181st day after June 10, 2019, the issuance
date, as reported on the Schedule 13D/A filed by Redrock Holding Investments Limited, among others, on February 10, 2020. Redrock Holdings
Investments Limited is incorporated in British Virgin Islands and is owned by Warburg Pincus Private Equity XI, L.P., a Delaware limited partnership,
Warburg Pincus Private Equity XI-B, L.P., a Delaware limited partnership, Warburg Pincus Private Equity XI-C, L.P., a Cayman Islands exempted
limited partnership, Warburg Pincus XI (Asia), L.P., a Cayman Islands exempted limited partnership, Warburg Pincus XI Partners, L.P., a Delaware
limited partnership, and WP XI Partners, L.P., a Delaware limited partnership. Warburg Pincus LLC, a New York limited liability company, is the
manager of Warburg Pincus Private Equity XI, L.P., Warburg Pincus Private Equity XI-B, L.P., Warburg Pincus Private Equity XI-C, L.P., Warburg
Pincus XI (Asia), L.P., Warburg Pincus XI Partners, L.P., and WP XI Partners, L.P. The general partner of Warburg Pincus Private Equity XI (Asia),
L.P., Warburg Pincus Private Equity XI-B, L.P., Warburg Pincus XI Partners and WP XI Partners is Warburg Pincus XI, L.P., a direct subsidiary of
Warburg Pincus & CO, a New York general partnership and the general partner of Warburg Pincus XI, L.P. Charles R. Kaye and Joseph P. Landy are
the managing general partners of Warburg Pincus & Co., and the ultimate general partners of Warburg Pincus Private Equity XI-C, L.P. and Warburg
Pincus XI (Asia), L.P. Charles R. Kaye and Joseph P. Landy disclaim beneficial ownership of all shares held by Warburg Pincus entities mentioned
herein. Investment and voting decisions with respect to the shares are made by a committee comprised of three or more individuals and all members of
such committee disclaim beneficial ownership of the shares held by Warburg Pincus entities mentioned herein. The registered office of Redrock
Holding Investments Limited is P.O. Box 3340, Road Town, Tortola, British Virgin Islands. The above is based on the Schedule 13D/A filed by
Redrock Holding Investments Limited, among others, on February 10, 2020.
(5) Represents 97,087,378 Class A ordinary shares 58.com Holdings Inc. will beneficially own upon the full conversion of the convertible notes it holds in
principal amount of US$100 million at a conversion price of $1.03 per Class A ordinary share convertible from the 181st day after June 10, 2019, the
issuance date. 58.com Holdings Inc. is incorporated in the British Virgin Islands and wholly owned by 58.com Inc., a public company listed on the
New York Stock Exchange. The above is based on the Schedule 13D filed by 58.com Holdings Inc. and 58.com Inc. on June 20, 2019.
(6) Represents 79,832,280 Class A ordinary shares directly held by Baidu (Hong Kong) Limited, as reported on the Schedule 13G filed by Baidu (Hong
Kong) Limited, among others, on February 1, 2019. Baidu (Hong Kong) Limited is incorporated in Hong Kong and wholly owned by Baidu, Inc., a
public company listed on the Nasdaq Global Select Market. The registered office of Baidu (Hong Kong) Limited is Rooms 2201-03, 22/F, World-Wide
House, 19 Des Voeux Road Central, Hong Kong. The above is based on the Schedule 13G filed by Baidu (Hong Kong) Limited, among others, on
February 1, 2019.
(7) Represents (i) 20,132,850 Class A Shares directly held by TPG Growth III SF, (ii) 58,252,427 Class A Shares issuable to TPG Growth III SF upon
conversion of the convertible notes it holds in principal amount of US$60 million at a conversion price of $1.03 per Class A ordinary share convertible
from the 181st day after June 10, 2019, the issuance date. TPG Growth III SF Pte. Ltd.is a company formed under the laws of Singapore and is wholly
owned by TPG Growth III SF Finance, Limited Partnership, a Prince Edwards Island limited partnership. TPG Growth III SF AIV GenPar, L.P., a
Cayman Islands limited partnership, is the general partner of TPG Growth III SF Finance, and TPG Growth III SF AIV GenPar Advisors, Inc., a
Cayman Islands exempted company, is the general partner of TPG Growth III SF AIV GenPar, L.P. TPG Growth III SF AIV GenPar Advisors, Inc. is
wholly owned by TPG Holdings III, L.P., a Delaware limited partnership. TPG Holdings III-A, L.P., a Cayman Islands limited partnership, is the
general partner of TPG Holdings III, L.P. TPG Holdings III-A, L.P. is wholly owned by TPG Group Holdings (SBS), L.P., a Delaware limited
partnership, and the general partner of TPG Group Holdings (SBS), L.P. is TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability
company, which is wholly owned by TPG Group Holdings (SBS) Advisors, Inc. The above is based on the Schedule 13D filed by TPG Group
Holdings (SBS) Advisors, Inc., among others, on June 20, 2019.
(8) Represents 61,129,800 Class A ordinary shares directly held by Kingkey New Era Auto Industry Global Limited, or Kingkey Global, a British Virgin
Islands company, and 14,764,090 Class A Ordinary Shares owned by BOCOM International Supreme Investment Limited, or BOCOM, a British
Virgin Islands company, as reported on the Schedule 13G/A filed by Kingkey Global, among others, on February 13, 2019. The shareholders of
Kingkey Global are First Tycoon Ventures Limited, Excellent Ace Holdings Limited and Mr. Jiarong Chen, holding 56%, 37.33% and 6.67% of
Kingkey Global, respectively. Excellent Ace Holdings Limited is wholly owned by Mr. Kun Dai. First Tycoon Ventures Limited is 66.7% and 33.3%
held by Sail Best Investments Limited and JenCap UX III, respectively. Sail Best Investments Limited is wholly owned by Kingkey Investment Group
Limited, a company jointly owned by Mr. Jiarong Chen and Mr. Jiajun Chen. Mr. Kun Dai, Mr. Jiarong Chen and JenCap UX III jointly decide the
disposal and voting of the shares of Uxin Limited directly held by Kingkey Global, and each of them is deemed to be the beneficial owner of all the
shares of Uxin Limited held by Kingkey Global. Mr. Kun Dai, Mr. Jiarong Chen and JenCap UX jointly decide the disposal and voting of the shares of
Uxin Limited directly held by BOCOM, and each of them is deemed to be the beneficial owner of all the shares of Uxin Limited held by BOCOM. The
registered office of Kingkey Global is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. The
registered office of BOCOM International Supreme Investment Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands.
For further details on JenCap UX III and JenCap UX, please see footnote (3) above.
As of February 29, 2020, a total of 75,893,890 Class A ordinary shares directly held by Kingkey Global and BOCOM, representing 6.9%, and 1.7% of
outstanding ordinary shares of Uxin Limited, respectively, had been pledged to third-party lenders in connection with certain loan agreements entered
into in 2017 in an aggregate principal amount of approximately US$179.0 million, most proceeds of which were used to fund the purchase of shares in
our company in the latest rounds of pre-IPO equity financings. The loans became due in November and December 2019, respectively, and the
borrowers are currently in discussion with the lenders to seek extensions of the loans. See footnote (1) above.
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Kingkey New Era Auto Industry Limited, or Kingkey, a British Virgin Islands company, directly held 57,045,450 Class A ordinary shares of Uxin
Limited immediately after the completion of our initial public offering, and currently does not hold any shares in Uxin Limited after the share transfer
as described below. The shareholders of Kingkey are Excellent Ace Holdings Limited and ACME Celestial Limited, which hold 40% and 60% of the
shares in Kingkey, respectively. Excellent Ace Holdings Limited is wholly owned by Mr. Kun Dai. ACME Celestial Limited is 66.7% and 33.3% held
by Mr. Jiarong Chen and JenCap UX, respectively. Kingkey as borrower pledged 57,045,450 Class A ordinary shares pursuant to a share charge in
favor of Cathay Rong IV Limited, a third-party lender, in connection with a loan in the principal amount of US$100.0 million under a facility
agreement entered into with the lender on October 25, 2017. The enforcement of the pledged shares by the lender upon an event of default is not
subject to restrictions in the lock-up agreement entered into between the shareholder and the underwriters of our initial public offering. After our initial
public offering, a confirmatory security deed relating to the original share charge was entered into by Kingkey as chargor on July 27, 2018 in light of
the pledged shares being converted from preferred shares into Class A ordinary shares upon the completion of our initial public offering, and a deed of
undertaking supplementing the original facility agreement was entered into by Kingkey as borrower on September 28, 2018, which added a margin call
and top-up requirement relating to the loan. On December 19, 2018, Cathay Rong IV Limited, as the lender, issued an instruction letter to enforce its
security interests in the pledged shares, and the pledged shares were transferred by Kingkey to the lender as a result thereof. Cathay Rong IV Limited
may hold or dispose of these securities at its discretion, including on the public market, as repayment of the outstanding loan and satisfaction of other
obligations under the facility agreement. For further details on Cathay Rong IV Limited, please see footnote (10) below.
The above is based on the Schedule 13G/A filed by Kingkey Global, among others, on February 13, 2019.
(9) Represents (i) 58,795,583 Class A ordinary shares directly held by LC Fund V, L.P., a limited partnership under Cayman Islands law, and (ii) 4,346,615
Class A ordinary shares directly held by LC Parallel Fund V, L.P., a limited partnership under Cayman Islands law, as reported on the Schedule 13G
filed by LC Fund V, L.P., among others, on January 28, 2019. The general partner of LC Fund V, L.P. and LC Parallel Fund V, L.P. is LC Fund V. GP
Limited, which is controlled by Right Lane Limited, a limited liability company incorporated in Hong Kong. Red Lane Limited is directly controlled
by Legend Holdings Corporation, a public company listed on Hong Kong Stock Exchange and incorporated in the People’s Republic of China. The
registered office of both LC Fund V, L.P. and LC Parallel Fund V, L.P. is P.O. Box 309, Ugland House, South Church Street, George Town, Grand
Cayman KY1-1104, Cayman, Islands. The above is based on the Schedule 13G filed by LC Fund V, L.P., among others, on January 28, 2019.
(10) Represents 57,045,450 Class A ordinary shares directly held by Cathay Rong IV Limited, as reported on the Schedule 13D filed by Cathay Rong IV
Limited, among others, on December 26, 2018. Cathay Rong acquired 57,045,450 Class A ordinary shares from Kingkey New Era Auto Industry
Limited as a result of foreclosing the shares pledged in connection with a loan in the principal amount of US$100.0 million under a facility agreement
entered into on October 25, 2017. For further details on the loan and foreclosure, please see footnote (8) above. Cathay Rong IV Limited is a British
Virgin Islands company wholly owned by China Huarong Macau (HK) Investment Holdings Limited, a company incorporated in Hong Kong. China
Huarong Macau (HK) Investment Holdings Limited is a wholly owned subsidiary of China Huarong (Macau) International Company Limited, a
company incorporated in Macau, which is a majority-owned subsidiary of Huarong (HK) Industrial and Financial Investment Limited, a company
incorporated in Hong Kong. Huarong (HK) Industrial and Financial Investment Limited is a wholly owned subsidiary of Huarong Real Estate Co., Ltd,
a company incorporated in the People’s Republic of China, which is a wholly owned subsidiary of China Huarong Asset Management Co., Ltd., a
company incorporated in the People’s Republic of China. The board of directors of China Huarong Asset Management Co., Ltd. comprises of Wang
Zhanfeng, Li Xin, Li Yi, Wang Cong, Dai Lijia, Zhou Langlang, Song Fengming, Tse Hau Yin, Liu Lunmin and Shao Jingchun, and Li Xin acts as the
chief executive officer. The registered office of Cathay Rong IV Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola,
VG 1110, British Virgin Islands. The address of the principal business office of China Huarong Macau (HK) Investment Holdings Limited is 12th
Floor, China Huarong Tower, 60 Gloucester Road, Wan Chai, Hong Kong. The address of the principal business office of China Huarong (Macau)
International Company Limited is 32/F, Bank of China Building, Avenida Doutor Mario Soares, Macau. The address of the principal business office of
Huarong (HK) Industrial and Financial Investment Limited is Unit 1503 Causeway Bay Plaza 2, 463-483 Lockhart Road, Hong Kong. The address of
the principal business office of Huarong Real Estate Co., Ltd. is Room 250, East Building, No. 30 Tianhe Street, Hengqing, Zhuhai, Guangdong, the
People’s Republic of China. The address of the principal office of China Huarong Asset Management Co., Ltd. is No. 8 Financial Street, Xicheng
District, Beijing, the People’s Republic of China. The above is based on the Schedule 13D filed by Cathay Rong IV Limited, among others, on
December 26, 2018.
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(11) Represents 48,865,050 Class A ordinary shares beneficially owned by GIC Private Limited (“GIC”), a fund manager established under Singapore law
with only two clients — the Government of Singapore (“GoS”) and the Monetary Authority of Singapore (“MAS”). Under the investment management
agreement with GoS, GIC has been given the sole discretion to exercise the voting rights attached to, and the disposition of, any shares managed on
behalf of GoS. As such, GIC has the sole power to vote and power to dispose of the 38,167,326 securities beneficially owned by the GoS. GIC shares
power to vote and dispose of 10,697,724 securities beneficially owned by it with MAS. The address of principal business office of GIC is 168
Robinson Road #37-01 Capital Tower Singapore 068912. The above is based on the Schedule 13G filed by GIC, among others, on February 14, 2020.
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one
vote per share, while holders of Class B ordinary shares are entitled to ten votes per share. Holders of Class A and Class B ordinary shares vote together as
one class on all matters subject to a shareholders’ vote. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder
thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance. See “Item 10. Additional Information—B.
Memorandum and Articles of Association” for a more detailed description of our Class A ordinary shares and Class B ordinary shares.
As of February 29, 2020, 887,617,391 of our ordinary shares were issued and outstanding. To our knowledge, a total of 650,449,107 Class A
ordinary shares were held by two record holders in the United States, representing approximately 73.3% of our total outstanding ordinary shares (including
the 16,562,988 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting
of awards granted under our share incentive plans). One of these holders is The Bank of New York Mellon, the depositary of our ADS program. The
number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the
United States.
Except for the above, we are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”
B. Related Party Transactions
Contractual Arrangements with Our Variable Interest Entities and Their Shareholders
PRC laws and regulations currently limit foreign ownership of companies that engage in a value-added telecommunications service business or the
distribution of media products in China. Due to these restrictions, we operate our relevant business through contractual arrangements between Youxinpai
and Yougu, our PRC subsidiaries, Youxin Hulian and Yishouche, our variable interest entities, and our variable interest entities’ respective shareholders.
For a description of these contractual arrangements, see “Item 4.C. Information on the Company—Organizational Structure.”
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Shareholder Agreements and Registration Rights
We entered into our fourteenth amended and restated shareholders’ agreement on January 2, 2018 with our then-existing shareholders. Pursuant to
this shareholders’ agreement, we have granted certain registration rights to preferred shareholders. Set forth below is a description of the registration rights
granted under the agreement.
Demand Registration Rights. At any time after the date that is six months after the completion of our initial public offering in June 2018, holders
of 30% or more of voting power of the outstanding preferred shares or ordinary shares issued upon the conversion of the preferred shares have the right to
request us effect a registration for their shares. Except for certain circumstances where we are entitled to defer a filing, upon receiving a notice of demand
registration, we should promptly give a written notice to all other holders of preferred shares or ordinary shares issued upon the conversion of our preferred
shares, and make best efforts to register the shares requested to be registered. We are not obligated to effect more than three demand registrations that have
been declared and ordered effective.
Piggyback Registration Rights. If we propose to file a registration statement for a public offering of our securities, we must afford preferred
shareholders or holders of ordinary shares issued upon the conversion of preferred shares an opportunity to participate in that offering. We have the right to
terminate or withdraw any registration initiated by us under the piggyback registration rights prior to the effectiveness of such registration. In case of an
underwritten offering, the underwriters have the right to exclude the shares requested to be registered in the initial public offering on a pro rata basis, up to
70% of the shares requested to be registered by the holders of piggyback registration rights, subject to certain preconditions.
Form F-3 Registration Rights. Any holders of series A preferred shares or ordinary shares issued upon the conversion of preferred shares may
request us to file an unlimited number of registration statements on Form F-3. We should promptly give a written notice to all other preferred shareholders,
Termination of Obligations. The registration rights shall terminate: (i) on the fifth anniversary of the completion of our initial public offering,
(ii) upon the termination, liquidation, dissolution of our company, or (iii) if and when in the opinion of our counsel, all such registrable securities proposed
to be sold by a shareholder may be sold without registration in any ninety day period pursuant to Rule 144 promulgated under the Securities Act, provided
that such counsel is qualified to and experienced in practicing U.S. securities regulations, and we shall provide such opinion of our counsel to the
shareholder.
Loans to Related Parties
On July 19, 2017, we entered into a loan agreement with Gao Li Group Limited, one of our shareholders controlled by Mr. Kun Dai, and loaned
US$56.5 million to Gao Li Group Limited with a term of five years bearing interest of 6% per annum. All outstanding principal and accrued interest under
this loan agreement were repaid in full on May 28, 2018.
On July 19, 2017, we entered into a loan agreement with Mr. Kun Dai, and loaned US$22.8 million to Mr. Kun Dai with a term of five years
bearing interest of 6% per annum. All outstanding principal and accrued interest under this loan agreement were repaid in full on May 28, 2018.
On December 17, 2017, we entered into a loan agreement with Mr. Kun Dai, and subsequently loaned US$10.7 million to Mr. Kun Dai with a
term of five years bearing interest of 6% per annum. All outstanding principal and accrued interest under this loan agreement were repaid in full on
May 28, 2018.
On May 28, 2018, Xin Gao Group Limited surrendered 19,226,040 ordinary shares, 3,313,980 Series A preferred shares and 8,424,970 Series C-1
preferred shares in the company to us to repay all of the outstanding principal and accrued interest owed to us by Xin Gao Group Limited, Gao Li Group
Limited and Mr. Kun Dai in an aggregate amount of approximately US$114.0 million. The number of shares surrendered was calculated based on an
estimated settlement price of US$3.68069 per share, which was the purchase price in our last round of preferred shares financing prior to our initial public
offering. We also agreed with Xin Gao Group Limited and Mr. Kun Dai that if the offering price per ordinary share in our initial public offering was lower
than the estimated settlement price, we would have the right to unilaterally redeem and cancel additional shares beneficially owned by Mr. Kun Dai so that
the value of the total shares surrendered and cancelled will be equal to the total loan amount owed to us based on the final price of our initial public
offering. As a result, 7,025,849 additional ordinary shares held by Xin Gao Limited were further surrendered immediately prior to the completion of our
initial public offering in June 2018.
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Transactions with Baidu
In 2017 and 2018, Baidu (Hong Kong) Limited, or Baidu, one of our shareholders, provided advertising and user acquisition services to us at
arm’s length in the amount of RMB0.8 million and RMB1.4 million, respectively. As of December 31, 2017, we had an amount of RMB0.8 million due
from Baidu, representing the unsettled balance of our prepaid service fees to Baidu. As of December 31, 2019, the remaining balance due from Baidu was
nil.
Transactions with Baogu
In 2017, Baogu Automobile Technology Services (Beijing) Co., or Baogu, provided warranty services to our customers in the amount of
RMB10.7 million. As of December 31, 2019, the remaining balance due from Baogu was nil as Baogu became our wholly owned subsidiary in
August 2017.
Transactions with Xiao Qing
In September 2015, we invested RMB5.0 million in Shanghai Xiao Qing Information Technology Co., Ltd., or Xiao Qing, an associate of our
company, for certain equity interests in Xiao Qing. In October 2016, we withdrew our investment in Xiao Qing, and as of December 31, 2019, the
remaining balance due from Xiao Qing was nil.
In 2017, Xiao Qing provided repair and maintenance inspection services to us in the amount of RMB1.5 million. Xiao Qing did not provide any
services to us in 2018 or 2019.
Share Conversion Agreement with Fairlubo’s shareholders
On June 8, 2018, we entered into an amended and restated share conversion agreement with the Fairlubo shareholders who have the right to
convert their shares in Fairlubo into the shares of our company under the Fairlubo shareholders’ agreement. Pursuant to the share conversion agreement, the
Fairlubo shareholders agree that, concurrently with the completion of our initial public offering, all their shares in Fairlubo will be converted into such
number of Class A ordinary shares of our company that is equal to the quotient of the value of the Fairlubo shares at the time divided by the public offering
price of this offering. The Fairlubo shareholders have agreed with us that the value of the Fairlubo shares at the time shall be the higher of (i) the value of
the Fairlubo shares as determined by an independent appraiser jointly approved by certain shareholders holding at least two-thirds of the issued and
outstanding series B preferred shares of Fairlubo, and (ii) the total investment amount paid by the Fairlubo shareholders plus an internal return rate of 50%
per annum calculated from January 21, 2016, the date of their investment, to June 1, 2018, which amounts to approximately US$39.1 million in the
aggregate. Upon the completion of our initial public offering in June 2018, we issued 13,026,713 Class A ordinary shares to certain Fiarlubo shareholders
at the initial public offering price of US$9.00 per ADS as a result of the share conversion.
Transactions with Redrock, TPG, 58.com and other existing shareholders
Convertible Note Purchase Agreement
We entered into a convertible note purchase agreement (the “NPA”) with Redrock Holding Investment Limited, TPG Growth III SF Pte. Ltd.,
58.com Holdings Inc., ClearVue UXin Holdings, Ltd., Magic Carpet International Limited and Zhuhai Guangkong Zhongying Industrial Investment Fund
(Limited Partnership) (collectively, the “Purchasers”) and Mr. Kun Dai (the “Founder”) on May 29, 2019. Pursuant to the NPA, we issued convertible notes
in an aggregate principal amount of US$230 million to the Purchasers through a private placement on June 10, 2019. For a detailed description of the terms
of the convertible notes, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Cash flows and working
capital.”
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Investors’ Rights Agreement
In connection with the NPA, we entered into an investors’ rights agreement (the “IRA”) with Redrock Holding Investments Limited, TPG Growth
III SF Pte. Ltd., 58.com Holdings Inc. (each a “Key Investor”). Mr. Kun Dai, Xin Gao Group Limited, Gao Li Group Limited and JenCap UX on June 10,
2019.
Pursuant to the IRA, during the three years following the issuance of the notes pursuant to the NPA, which may be extended by another two years
if all Key Investors agree to extend (the “Period”), the Company’s board of directors (the “Board”) shall consist of eight directors, among which, subject to
certain limitations set forth in the Investors’ Rights Agreement, each of the Key Investors and Mr. Kun Dai shall be entitled to nominate one director, the
Key Investors shall be entitled to collectively nominate two independent directors, Mr. Kun Dai shall be entitled to nominate one independent director, and
the Board shall appoint the eighth director. Each party to the IRA has agreed that it or he will exercise its or his respective voting rights to (i) elect the
directors nominated by each of the Key Investors and Mr. Kun Dai (each a “Director Nominating Party”) to the Board, (ii) remove such director from the
Board if the Director Nominating Party so determines, and (iii) replace such director as nominated by the Director Nominating Party in the event of a
vacancy. The IRA also provides for certain corporate governance arrangements during the Period.
During the Period, for so long as the Key Investors hold in aggregate no less than 30% of the aggregate principal amount of the Notes they hold on
June 10, 2019, the Board shall maintain an executive committee (the “Executive Committee”) consisting of directors nominated by each of the Key
Investors and the Founder, to oversee certain matters of our company.
In addition, during the Period, without the affirmative prior written consent or approval of the required number of Key Investors as provided for in
the IRA, we shall not take any actions with respect to certain prescribed matters.
The Founder, Xin Gao Group Limited and Gao Li Group Limited also agreed that during the Period, (i) they will not transfer any of their shares
without the prior written consent of each of the Key Investors, and (ii) the Founder shall not and shall cause Xin Gao not to convert any Class B ordinary
share of Company held by Xin Gao into Class A ordinary share.
Transactions with 58.com
Divestiture of 2B Business and Business Cooperation on C2B Business
In March 2020, we entered into definitive agreements to divest our 2B business to 58.com. See “Item 4. Information on the Company—A. History
and Development of the Company— Divestitures of Our Loan Facilitation, Salvage Car and 2B Businesses.” As part of the transaction, we also entered
into a business cooperation agreement with 58.com pursuant to which we will provide 58.com with information related to used cars for sale by individuals.
Other Transactions with 58.com
In 2019, 58.com provided advertising and other services to us at arm’s length in the amount of RMB47.1 million (US$6.8 million). As of
December 31, 2019, we had an amount of RMB51.6 million (US$7.4 million) due from 58.com, representing the unsettled balance of our advertising
expenses paid to 58.com.
Employment Agreements and Indemnification Agreements
See “Item 6. Directors, Senior Management and Employees—B. Compensation.”
Share Incentives
See “Item 6. Directors, Senior Management and Employees—B. Compensation.”
C. Interests of Experts and Counsel
Not applicable.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
We have appended consolidated financial statements filed as part of this annual report.
Legal Proceedings
We and certain of our current and former officers and directors have been named as defendants in two putative securities class actions. Both cases
were purportedly brought on behalf of a class of persons who allegedly suffered damages as a result of alleged misstatements and omissions in certain
disclosure documents in connection with our initial public offering in June 2018.
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The first case, In re Uxin Limited Securities Litigation, Index No. 650427/2019 (Sup. Ct. N.Y. Cty.), consolidated six complaints filed in the
Supreme Court of the State of New York in January 2019. A Consolidated Amended Complaint was filed in August 5, 2019, and on March 9, 2020, the
Court granted in part and denied in part our motion to dismiss. On March 12, 2020, we filed a notice of appeal in the Appellate Division of the Supreme
Court of the State of New York for the First Department. The second case, Machniewicz v. Uxin Limited et al, Case No. 1:19-cv-00822 (E.D.N.Y.), was
filed in the United States District Court for the Eastern District of New York on February 11, 2019. On April 24, 2020, we completed briefing on a motion
to dismiss, and a decision is pending. Both actions remain in preliminary stages. For risks and uncertainties relating to the pending cases against us, please
see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We have been named as a defendant in a putative
shareholder class action lawsuit that could have a material adverse impact on our business, financial condition, results of operation, cash flows and
reputation.”
We are also subject to ongoing trademark, unfair competition, contractual disputes and other proceedings in the PRC, and may be subject to other
legal or administrative claims and proceedings arising in the ordinary course of business. Litigations or any other legal or administrative proceedings,
regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention. See “Item 3.
Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may be subject to legal proceedings in the ordinary course of our
business. If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, results of operations and financial
condition.”
Dividend Policy
Our board of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our
shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case,
all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share
premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they
fall due in the ordinary course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and
earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem
relevant.
We have not declared or paid any dividends on our ordinary shares, nor do we have any present plan to pay any cash dividends on our ordinary
shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our
business.
We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in China for our cash
requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to
us. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations Relating to Foreign Exchange—Regulations on
Dividend Distribution.” If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the ordinary shares
underlying our ADSs to the depositary, as the registered holder of such ordinary shares, and the depositary then will pay such amounts to the ADS holders
in proportion to ordinary shares underlying the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and
expenses payable thereunder. See “Item 12. Description of Securities Other than Equity Securities—D. American Depositary Shares.” Cash dividends on
our ordinary shares, if any, will be paid in U.S. dollars.
B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated
financial statements included in this annual report.
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Item 9. The Offer and Listing
A. Offering and Listing Details
Our ADSs, each representing three of our Class A ordinary shares, have been listed on Nasdaq since June 27, 2018. Our ADSs trade under the
symbol “UXIN.”
B. Plan of Distribution
Not applicable.
C. Markets
Our ADSs have been listed on Nasdaq since June 27, 2018 under the symbol “UXIN.”
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
Item 10. Additional Information
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
We are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and articles of association, as
amended and restated from time to time, and the Companies Law (2018 Revision) of the Cayman Islands, which is referred to as the Companies Law
below, and the common law of the Cayman Islands.
The following are summaries of material provisions of our current memorandum and articles of association, insofar as they relate to the material
terms of our ordinary shares.
Registered Office and Objects
Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at P.O. Box 309, Ugland House, Grand
Cayman, KY1-1104, Cayman Islands, or at such other location within the Cayman Islands as our board of directors may from time to time decide. The
objects for which our company is established are unrestricted and we have full power and authority to carry out any object not prohibited by the Companies
Law, as amended from time to time, or any other law of the Cayman Islands.
Board of Directors
See “Item 6. Directors, Senior Management and Employees—C. Board Practices.”
Ordinary Shares
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B
ordinary shares will have the same rights except for voting and conversion rights. Our ordinary shares are issued in registered form and are issued when
registered in our register of shareholders. We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely
hold and vote their shares.
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Conversion
Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not
convertible into Class B ordinary shares under any circumstances. Upon (i) any direct or indirect sale, transfer, assignment or disposition of Class B
ordinary shares by a holder thereof or the direct or indirect transfer or assignment of the voting power attached to such number of Class B ordinary shares
through voting proxy or otherwise to any person or entity that is not an Affiliate (as defined in our memorandum and articles of association) of such holder,
or (ii) the direct or indirect sale, transfer, assignment or disposition of a majority of the issued and outstanding voting securities of, or the direct or indirect
transfer or assignment of the voting power attached to such voting securities through voting proxy or otherwise, or the direct or indirect transfer, sale,
assignment or disposition of all or substantially all of the assets of a holder of Class B ordinary shares that is an entity to any person or entity that is not an
Affiliate of such holder, such Class B ordinary shares will be automatically and immediately converted into an equal number of Class A ordinary shares.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors, subject to our memorandum and
articles of association. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend shall exceed the amount recommended
by our directors. Under the laws of the Cayman Islands, our company may declare and pay a dividend only out of funds legally available, namely out of
either our profit or share premium account, provided that in no circumstances may a dividend be paid if, immediately after this payment, this would result
in our company being unable to pay its debts as they fall due in the ordinary course of business. Dividends received by each Class B ordinary share and
Class A ordinary share in any dividend distribution shall be the same.
Voting Rights
Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders,
except as may otherwise be required by law or provided for in our memorandum and articles of association. In respect of matters requiring shareholders’
vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes. Voting at any shareholders’ meeting is by
show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one or more shareholders who together hold not
less than 10% of the votes attaching to the total ordinary shares which are present in person or by proxy at the meeting.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the
ordinary shares cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires
the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding ordinary shares cast by those shareholders entitled to vote who
are present or by proxy at a general meeting. Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed
by all the shareholders of our company, as permitted by the Companies Law and our memorandum and articles of association. A special resolution will be
required for important matters such as a change of name or making changes to our memorandum and articles of association. Holders of the ordinary shares
may, among other things, divide or combine their shares by ordinary resolution.
General Meetings of Shareholders
As a Cayman Islands exempted company, we are not obliged by the Companies Law to call shareholders’ annual general meetings. Our
memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in
which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be
determined by our directors.
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Shareholders’ general meetings may be convened by a majority of our board of directors. Advance notice of at least seven (7) calendar days is
required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for
any general meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all votes attaching to the
issued and outstanding shares in our company entitled to vote at general meetings.
The Companies Law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any
right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and
articles of association provide that upon the requisition of shareholders representing in aggregate not less than a majority of all votes attaching to the issued
and outstanding shares of our company entitled to vote at general meetings, our board is obliged to call an extraordinary general meeting and put the
resolutions so requisitioned to a vote at such meeting. However, our memorandum and articles of association do not provide our shareholders with any right
to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
Transfer of Ordinary Shares
Subject to the restrictions in our memorandum and articles of association as set out below, any of our shareholders may transfer all or any of his or
her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which
we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
· the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence
as our board of directors may reasonably require to show the right of the transferor to make the transfer;
· the instrument of transfer is in respect of only one class of ordinary shares;
· the instrument of transfer is properly stamped, if required; and
· in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four.
· a fee of such maximum sum as the Nasdaq Stock Market LLC may determine to be payable or such lesser sum as our directors may from time
to time require is paid to us in respect thereof.
If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to
each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of the Nasdaq Stock Market LLC, be suspended and our register of
members closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of
transfers shall not be suspended nor our register of members closed for more than 30 days in any year as our board may determine.
Liquidation
On a return of capital or the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than
sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in
proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which
there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all
of the paid-up capital, the assets will be distributed so that, as nearly as may be, the losses are borne by our shareholders in proportion to the par value of
the shares held by them.
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Calls on Shares and Forfeiture of Shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such
shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to
forfeiture.
Redemption, Repurchase and Surrender of Shares
We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such
terms and in such manner as may be determined by our board of directors or by the shareholders by special resolution. Our Company may also repurchase
any of our shares on such terms and in such manner as have been approved by our board of directors or by an ordinary resolution of our shareholders.
Under the Companies Law, the redemption or repurchase of any share may be paid out of our Company’s profits or out of the proceeds of a new issue of
shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our
company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Law
no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares
outstanding or (c) if our company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no
consideration.
Variations of Rights of Shares
If at any time, our share capital is divided into different classes or series of shares, the rights attached to any class or series of shares (unless
otherwise provided by the terms of issue of the shares of that class or series), whether or not our company is being wound-up, may only be materially
adversely varied with the consent in writing of all the holders of the issued shares of that class or series or with the sanction of an ordinary resolution
passed at a separate meeting of the holders of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall
not, subject to any rights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by the creation,
allotment or issue of further shares ranking pari passu with or subsequent to such existing class of shares, or the redemption or purchase of any shares of
any class by our company. The rights of the holders of our shares shall not be deemed to be materially adversely varied by the creation or issue of shares
with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.
Issuance of Additional Shares
Our memorandum of association authorize our board of directors to issue additional Class A ordinary shares from time to time as our board of
directors shall determine, to the extent of available authorized but unissued shares.
Our memorandum of association also authorize our board of directors to establish from time to time one or more series of preference shares and to
determine, with respect to any series of preference shares, the terms and rights of that series, including:
· the designation of the series;
· the number of shares of the series;
· the dividend rights, dividend rates, conversion rights, voting rights; and
· the rights and terms of redemption and liquidation preferences.
Our board of directors may issue preference shares without action by our shareholders to the extent authorized but unissued. Issuance of these
shares may dilute the voting power of holders of Class A ordinary shares.
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Inspection of Books and Records
Holders of our Class A ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders
or our corporate records. However, we will provide our shareholders with annual audited financial statements.
Anti-Takeover Provisions
Some provisions of our memorandum and articles of association may discourage, delay or prevent a change of control of our company or
management that shareholders may consider favorable, including provisions that:
· authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and
restrictions of such preference shares without any further vote or action by our shareholders; and
· limit the ability of shareholders to requisition and convene general meetings of shareholders.
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our memorandum and articles
of association for a proper purpose and for what they believe in good faith to be in the best interests of our company.
Exempted Company
We are an exempted company with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident
companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands
may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company
except that an exempted company:
· does not have to file an annual return of its shareholders with the Registrar of Companies;
· is not required to open its register of members for inspection;
· does not have to hold an annual general meeting;
· may issue negotiable or bearer shares or shares with no par value;
· may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
· may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
· may register as a limited duration company; and
· may register as a segregated portfolio company.
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of our company
(except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other
circumstances in which a court may be prepared to pierce or lift the corporate veil).
Changes in Capital
Our shareholders may from time to time by ordinary resolution:
· increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe;
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· consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
· sub-divide our existing shares, or any of them into shares of a smaller amount, provided that in the subdivision the proportion between the
amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced
share is derived; or
· cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the
amount of our share capital by the amount of the shares so cancelled.
Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company
for an order confirming such reduction, reduce our share capital or any capital redemption reserve in any manner permitted by law.
Register of Members
Under Companies Law, we must keep a register of members and there should be entered therein:
· the names and addresses of the members, together with a statement of the shares held by each member, and such statement shall confirm (i) of
the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and category of shares held by each
member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles of association of the
company, and if so, whether such voting rights are conditional;
· the date on which the name of any person was entered on the register as a member; and
· the date on which any person ceased to be a member.
Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of
members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members should be
deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Once our register of members
has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name in the register
of members.
If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay in
entering on the register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any member of our
company or our company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Court may either
refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.
C. Material Contracts
Other than in the ordinary course of business and other than those described in “Item 4. Information on the Company” or “Item 7. Major
Shareholders and Related Party Transactions—B. Related Party Transactions” or elsewhere in this annual report, we have not entered into any material
contract during the two years immediately preceding the date of this annual report.
D. Exchange Controls
See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations Relating to Foreign Exchange.”
E. Taxation
The following summary of the principal Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ADSs or
ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This
summary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under
U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, the People’s Republic of China and the United States.
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Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no
taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us or our shareholders levied by the government of
the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the
Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made by our company. There are no
exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the Cayman Islands and no
withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares or the ADSs, nor will gains derived from the
disposal of our ordinary shares or the ADSs be subject to Cayman Islands income or corporation tax.
People’s Republic of China Taxation
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto
management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global
income. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall
management of the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued a
circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled
enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC
enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the State Administration of
Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises.
According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax
resident by virtue of having its “de facto management body” in China only if all of the following conditions are met: (i) the primary location of the day-to-
day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to
approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and
shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the
PRC.
We believe that Uxin Limited is not a PRC resident enterprise for PRC tax purposes. Uxin Limited is not controlled by a PRC enterprise or PRC
enterprise group and we do not believe that Uxin Limited meets all of the conditions above. Uxin Limited is a company incorporated outside the PRC. As a
holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its
board of directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe our other entities outside of
China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and
uncertainties remain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will
ultimately take a view that is consistent with us.
If the PRC tax authorities determine that Uxin Limited is a PRC resident enterprise for enterprise income tax purposes, we may be required to
withhold a 10% tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of the ADSs. In addition, non-
resident enterprise shareholders (including our ADS holders) may be subject to a 10% PRC tax on gains realized on the sale or other disposition of ADSs or
ordinary shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders (including our ADS
holders) would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are deemed to be a PRC
resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% which in the case of dividends may
be withheld at source. Any PRC tax liability may be reduced by an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of Uxin
Limited would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that Uxin Limited is treated
as a PRC resident enterprise.
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Provided that our Cayman Islands holding company, Uxin Limited, is not deemed to be a PRC resident enterprise, holders of our ADSs and
ordinary shares who are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other
disposition of our shares or the ADSs. SAT Public Notice 7 further clarifies that, if a non-resident enterprise derives income by acquiring and selling shares
in an offshore listed enterprise in the public market, such income will not be subject to PRC tax. However, there is uncertainty as to the application of SAT
Public Notice 7, we and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Public Notice 7 and we
may be required to expend valuable resources to comply with SAT Public Notice 7 or to establish that we should not be taxed under SAT Public Notice 7.
Under SAT Circular 7, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity
interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the
transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using
a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial
purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be
subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable
taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. See “Item 3. Key Information—D. Risk Factors—Risks
Related to Doing Business in China—We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC
shareholders.”
United States Federal Income Taxation
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of the
ADSs or Class A ordinary shares by a U.S. Holder (as defined below) that holds the ADSs or Class A ordinary shares as “capital assets” (generally,
property held for investment) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing U.S. federal
tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the IRS with respect to any
U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This
discussion, moreover, does not address the U.S. federal estate, gift, and alternative minimum tax considerations, Medicare tax on certain net investment or
any state, local and non-U.S. tax considerations, relating to the ownership or disposition of the ADSs or Class A ordinary shares. The following summary
does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to
persons in special tax situations such as:
· banks and other financial institutions;
· insurance companies;
· pension plans;
· cooperatives;
· regulated investment companies;
· real estate investment trusts;
· broker-dealers;
· traders that elect to use a mark-to-market method of accounting;
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· certain former U.S. citizens or long-term residents;
· tax-exempt entities (including private foundations);
· holders who acquire their ADSs or Class A ordinary shares pursuant to any employee share option or otherwise as compensation;
· investors that will hold their ADSs or Class A ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated
transaction for U.S. federal income tax purposes;
· investors that have a functional currency other than the U.S. dollar;
· persons that actually or constructively own 10% or more of the total combined voting power or value of our stock; or
· partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or Class A ordinary shares
through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below.
Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and
the state, local, non-U.S. and other tax considerations of the ownership and disposition of the ADSs or Class A ordinary shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or Class A ordinary shares that is, for U.S. federal income tax
purposes:
· an individual who is a citizen or resident of the United States;
· a corporation (or other entity subject to tax as a corporation for U.S. federal income tax purposes) created in, or organized under the law of the
United States or any state thereof or the District of Columbia;
· an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
· a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have
the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the
Code.
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of the ADSs or Class A
ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.
Partnerships holding the ADSs or Class A ordinary shares and their partners are urged to consult their tax advisors regarding an investment in the ADSs or
Class A ordinary shares.
The discussion below assumes that the representations contained in the deposit agreement and any related agreement are true and that the
obligations in such agreements will be complied with in accordance with their terms. Accordingly for U.S. federal income tax purposes, it is generally
expected that a U.S. Holder of ADSs will be treated as the beneficial owner of the underlying Class A ordinary shares represented by the ADSs, and
therefore deposits or withdrawals of Class A ordinary shares for ADSs will generally not be subject to U.S. federal income tax.
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Passive Foreign Investment Company Considerations
A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year, if either
(i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally
based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive
income (the “asset test”). A separate determination must be made after the close of each taxable year as to whether a non-United States corporation is a
PFIC for that year. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property
producing such income and net foreign currency gains. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and
the company’s goodwill associated with active business activity is taken into account as a non-passive asset.
In addition, a non-U.S. corporation will be treated as owning its proportionate share of the assets and earning its proportionate share of the income
of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock. Although the law in this regard is not entirely clear,
we treat our VIEs as being owned by us for U.S. federal income tax purposes because we control the management decisions and are entitled to substantially
all of the economic benefits associated with these entities. As a result, we consolidate their results of operations in our consolidated U.S. GAAP financial
statements.
Based on the market price of our ADSs and the composition of our assets (in particular, the substantial amount of cash and other cash-like assets),
we believe that we were a PFIC for United States federal income tax purposes for the taxable year ended December 31, 2019 because the volatility of the
market price of our ADSs caused us to narrowly exceed the asset test percentage threshold. Further, we believe that we will likely be classified as a PFIC
for our current taxable year ending December 31, 2020 unless the market price of our ADSs increases and /or we invest a substantial amount of the cash
and other passive assets we hold in assets that produce or are held for the production of non-passive income.
If we area PFIC for any year during which a U.S. Holder holds our ADSs or Class A common shares, we generally would continue to be treated as
a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or Class A common shares even if we cease to meet the threshold
requirements for PFIC status, unless a U.S. Holder makes a taxable “deemed sale” election that may allow the U.S. Holder to eliminate the continuing
PFIC status under certain circumstances.
The United States federal income tax rules that apply if we are classified as a PFIC for the current taxable year or any subsequent taxable year are
generally discussed below under “Passive Foreign Investment Company Rules.”
Dividends
Subject to the discussion below under “—Passive Foreign Investment Company Rules,” any cash distributions (including the amount of any PRC
tax withheld) paid on the ADSs or Class A ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal income
tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the
U.S. Holder, in the case of Class A ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our earnings and
profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax
purposes. Dividends received on the ADSs or Class A ordinary shares will not be eligible for the dividends received deduction allowed to corporations in
respect of dividends received from U.S. corporations.
Individuals and other non-corporate U.S. Holders will be subject to tax at the lower capital gains tax rate applicable to “qualified dividend
income,” provided that certain conditions are satisfied, including that (1) the ADSs or Class A ordinary shares on which the dividends are paid are readily
tradable on an established securities market in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the PRC tax law,
we are eligible for the benefit of the United States-PRC income tax treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S. Holder (as
discussed below) for the taxable year in which the dividend is paid or the preceding taxable year, (3) certain holding period requirements are met, and
(4) such non-corporate U.S. Holders are not under an obligation to make related payments with respect to positions in substantially similar or related
property. For this purpose, ADSs listed on the Nasdaq Global Select Market will generally be considered to be readily tradable on an established securities
market in the United States. Although the law in this regard is not entirely clear, since we do not expect our Class A ordinary shares will be listed on any
securities market, we do not believe that Class A ordinary shares that are not represented by ADSs will generally be considered to be readily tradable on an
established securities market in the United States. Furthermore, as mentioned above, we believe that we were a PFIC for the taxable year ended
December 31, 2019, and we will likely be classified as a PFIC for our current taxable year ending December 31, 2020. Each U.S. Holder should consult its
tax advisors regarding the availability of the lower rate for dividends paid with respect to the ADSs or Class A ordinary shares.
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In the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see “Item 4. Information on the
Company—B. Business Overview—Regulation—Regulations Relating to Tax—Enterprise Income Tax”), we may be eligible for the benefits of the United
States-PRC income tax treaty. If we are eligible for such benefits, dividends we pay on our Class A ordinary shares, regardless of whether such shares are
represented by the ADSs, and regardless of whether our ADSs are readily tradable on an established securities market in the United States, would be
eligible for the reduced rates of taxation applicable to qualified dividend income, as described in the preceding paragraph.
For U.S. foreign tax credit purposes, dividends paid on the ADSs or Class A ordinary shares generally will be treated as income from foreign
sources and generally will constitute passive category income. If PRC withholding taxes apply to dividends paid to you with respect to the ADSs or
Class A ordinary shares, you may be able to obtain a reduced rate of PRC withholding taxes under the United States-PRC income tax treaty if certain
requirements are met. In addition, subject to certain conditions and limitations, PRC withholding taxes on dividends that are non-refundable under the
income tax treaty between the United States and the PRC may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. If
a U.S. Holder does not elect to claim a foreign tax credit, such holder may instead claim a deduction for U.S. federal income tax purposes in respect of such
withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. Each U.S. Holder should consult its tax
advisors regarding the creditability of any PRC tax.
Sale or Other Disposition
Subject to the discussion below under “—Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize gain or loss upon
the sale or other disposition of our ADSs or Class A ordinary shares in an amount equal to the difference between the amount realized upon the disposition
and the holder’s adjusted tax basis in such ADSs or Class A ordinary shares. The gain or loss will generally be capital gain or loss. Individuals and other
non-corporate U.S. Holders who have held the ADS or Class A ordinary shares for more than one year will generally be eligible for reduced tax rates. The
deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source
income or loss for foreign tax credit limitation purposes, which will generally limit the availability of foreign tax credits. However, in the event we are
deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law, a U.S. Holder may be subject to PRC tax upon the disposition of our
ADSs or Class A ordinary shares. In such event, if PRC tax were to be imposed on any gain from such disposition, a U.S. Holder that is eligible for the
benefits of the United States-PRC income tax treaty may elect to treat such gain as PRC source income. Each U.S. Holder should consult its tax advisors
regarding the creditability of any PRC tax.
Passive Foreign Investment Company Rules
As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2019, and we will likely be classified as a PFIC for
our current taxable year ending December 31, 2020. If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or
Class A ordinary shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to
special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S.
Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding
period for the ADSs or Class A ordinary shares), and (ii) any gain realized on the sale or other disposition of ADSs or Class A ordinary shares. Under the
PFIC rules:
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· such excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or Class A ordinary shares;
· such amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in
which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income;
· such amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for
individuals or corporations, as appropriate, for that year; and
· an interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a
pre-PFIC year.
If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or Class A ordinary shares and any of our subsidiaries, our VIEs
or any of the subsidiaries of our VIEs is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the
lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC
rules to any of our subsidiaries, our VIEs or any of the subsidiaries of our VIEs.
As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election
with respect to such stock. If a U.S. Holder makes this election with respect to the ADSs, the holder will generally (i) include as ordinary income for each
taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such
ADSs and (ii) deduct as an ordinary loss in each such taxable year the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of
such ADSs held at the end of the taxable year, but such deduction will only be allowed to the extent of the amount previously included in income as a result
of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-
to-market election. If a U.S. Holder makes a mark-to-market election in respect of the ADSs and we cease to be classified as a PFIC, the holder will not be
required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If a U.S. Holder makes a mark-to-
market election, any gain such U.S. Holder recognizes upon the sale or other disposition of the ADSs in a year when we are a PFIC will be treated as
ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously
included in income as a result of the mark-to-market election.
The mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded on a qualified exchange or other
market, as defined in applicable United States Treasury regulations. We expect that our ADSs will continue to be listed on the NASDAQ Global Select
Market, which is a qualified exchange for these purposes, and, consequently, assuming that the ADSs are regularly traded, it is expected that the mark-to-
market election would be available to a U.S Holder of our ADSs if were we to become a PFIC, but no assurances are given in this regard.
Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the
PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal
income tax purposes.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in
tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.
If a U.S. Holder owns our ADSs or Class A ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual
report containing such information as the United States Treasury Department may require. Each U.S. Holder should consult its tax advisors regarding the
U.S. federal income tax consequences of owning and disposing of the ADSs or Class A ordinary shares if we are or become a PFIC.
F. Dividends and Paying Agents
Not applicable.
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G. Statement by Experts
Not applicable.
H. Documents on Display
We previously filed with the SEC our registration statement on Form F-1 (Registration No. 333-225266), as amended, including the annual report
contained therein, to register the issuance and sale of our ordinary shares represented by ADSs in relation to our initial public offering. We have also filed
with the SEC the registration statement on Form F-6 (Registration No. 333-225594) to register the ADSs.
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers, and are
required to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form 20-F within four months
after the end of each fiscal year, which is December 31. All information filed with the SEC can be obtained over the internet at the SEC’s website at
www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports
and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained
in Section 16 of the Exchange Act.
We will furnish the Bank of New York Mellon, the depositary of the ADSs, with our annual reports, which will include a review of operations and
annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and
communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to
holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received
by the depositary from us.
In accordance with Nasdaq Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at http://ir.xin.com. In
addition, we will provide hardcopies of our annual report free of charge to shareholders and ADS holders upon request.
I. Subsidiary Information
Not applicable.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We have not been exposed to material risks due to changes in market interest rates, and we have not used any derivative financial instruments to
manage our interest risk exposure.
We may invest in interest-earning instruments. Investments in both fixed rate and floating rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may
produce less income than expected if interest rates fall.
Foreign Exchange Risk
Substantially all of our revenues and expenses are denominated in RMB. We do not believe that we currently have any significant direct foreign
exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Although our exposure to foreign exchange risks
should be limited in general, the value of your investment in our ADSs will be affected by the exchange rate between U.S. dollar and Renminbi because the
value of our business is effectively denominated in RMB, while our ADSs will be traded in U.S. dollars.
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The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has
fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy
may impact the exchange rate between Renminbi and the U.S. dollar in the future.
To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would
have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose
of making payments for dividends on our Class A ordinary shares or the ADSs or for other business purposes, appreciation of the U.S. dollar against the
Renminbi would have a negative effect on the U.S. dollar amounts available to us.
As of December 31, 2019, we had RMB-denominated cash and cash equivalents and restricted cash RMB797.5 million, and U.S. dollar-
denominated cash balances of US$59.2 million. Assuming we had converted RMB797.5 million into U.S. dollars at the exchange rate of RMB6.9618 for
US$1.00 as of December 31, 2019, our U.S. dollar cash balance would have been US$114.6 million. If the RMB had depreciated by 10% against the U.S.
dollar, our U.S. dollar cash balance would have been US$104.1 million instead. Assuming we had converted US$59.2 million into RMB at the exchange
rate of RMB6.9618 for US$1.00 as of December 31, 2019, our RMB cash balance would have been RMB411.9 million. If the RMB had depreciated by
10% against the U.S. dollar, our RMB cash balance would have been RMB453.1 million instead.
Inflation
To date, inflation in the PRC has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the
year-over-year percent changes in the consumer price index for December 2017, 2018 and 2019 were increases of 1.8%, 1.9% and 4.5%, respectively.
Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected in the future by higher
rates of inflation in the PRC. For example, certain operating costs and expenses, such as employee compensation and office operating expenses may
increase as a result of higher inflation. Additionally, because a substantial portion of our assets consists of cash and cash equivalents and short-term
investments, high inflation could significantly reduce the value and purchasing power of these assets. We are not able to hedge our exposure to higher
inflation in China.
Item 12. Description of Securities Other than Equity Securities
A. Debt Securities
Not applicable.
B. Warrants and Rights
Not applicable.
C. Other Securities
Not applicable.
D. American Depositary Shares
Fees and Charges Our ADS holders May Have to Pay
An ADS holder will be required to pay the following service fees to the depositary bank and certain taxes and governmental charges (in addition
to any applicable fees, expenses, taxes and other governmental charges payable on the deposited securities represented by any of the ADSs):
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Persons depositing or withdrawing Class A
ordinary shares or ADS holders must pay:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
Issuance of ADSs, including issuances resulting from a distribution of
Class A ordinary shares or rights or other property
For:
Cancellation of ADSs for the purpose of withdrawal, including if the
deposit agreement terminates
$0.05 (or less) per ADS
Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if securities
distributed to you had been Class A ordinary shares and the Class A
ordinary shares had been deposited for issuance of ADSs
Distribution of securities distributed to holders of deposited securities
(including rights) that are distributed by the depositary to ADS holders
$0.05 (or less) per ADS per calendar year
Depositary services
Registration or transfer fees
Expenses of the depositary
Transfer and registration of Class A ordinary shares on our share register to
or from the name of the depositary or its agent when you deposit or
withdraw Class A ordinary shares
Cable and facsimile transmissions (when expressly provided in the deposit
agreement)
Converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian
has to pay on any ADSs or Class A ordinary shares underlying ADSs,
such as stock transfer taxes, stamp duty or withholding taxes
As necessary
Any charges incurred by the depositary or its agents for servicing the
deposited securities
As necessary
Fees and Other Payments Made by the Depositary to Us
The depositary has agreed to reimburse us annually for our expenses incurred in connection with investor relationship programs and any other
program related to our ADS facility and the travel expense of our key personnel in connection with such programs. The depositary has also agreed to
provide additional payments to us based on the applicable performance indicators relating to our ADS facility. There are limits on the amount of expenses
for which the depositary will reimburse us, but the amount of reimbursement available to us is not necessarily tied to the amount of fees the depositary
collects from investors. In 2019, we received approximately US$3.8 million (after tax) reimbursement from the depositary for our expenses incurred in
connection with investor relationship programs related to the ADS facility and the travel expense of our key personnel in connection with such programs.
Item 13. Defaults, Dividend Arrearages and Delinquencies
None.
PART II
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Material Modifications to the Rights of Security Holders
None.
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Item 15. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness
of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as
required by Rule 13a-15(b) under the Exchange Act.
Based upon that evaluation, our management, with the participation of our chief executive officer and chief financial officer, has concluded that, as
of the end of the period covered by this annual report, our disclosure controls and procedures were ineffective as of December 31, 2019 and as of the date
that the evaluation of the effectiveness of our disclosure controls and procedures was completed, because of the material weaknesses in our internal control
over financial reporting described below. However, we believe that the consolidated financial statements included in this annual report on Form 20-F
correctly present our financial position, results of operations and cash flows for the fiscal years covered thereby in all material respects.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-
15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP, and includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in
accordance with U.S. GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management
and directors; and (3) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our
company’s assets that could have a material effect on the consolidated financial statements. Our management evaluated the effectiveness of our internal
control over financial reporting as of December 31, 2019, as required by Rule 13a-15(c) of the Exchange Act, based on criteria established in the
framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this evaluation, our management has concluded that our internal control over financial reporting was ineffective as of December 31, 2019. This
assessment identified two material weaknesses in our internal control over financial reporting, as follows:
(i) Our lack of adequate number of accounting staff and management resources with appropriate knowledge of U.S. GAAP and SEC
reporting and compliance requirements.
(ii) Insufficient documented financial closing policies and procedures, specifically those related to period end expenses cut-off and accruals.
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over
financial reporting as we qualify as an “emerging growth company” under section 3(a) of the Securities Exchange Act of 1934, as amended, and are
therefore exempt from the attestation requirement.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of
any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
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We are in the process of implementing a number of measures to address these material weaknesses identified, including: (i) hire more qualified
financial and reporting personnel, including financial controller, equipped with relevant U.S. GAAP and SEC reporting experiences and qualifications to
strengthen the financial reporting function and to set up financial and system control framework; (ii) implement regular and continuous U.S. GAAP
accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) set up an internal audit function as well as to
engage an external consulting firm to assist us to assess Sarbanes-Oxley compliance readiness and improve overall internal controls, and (iv) establish
sufficient and formal financial closing policies and procedures, especially those related to period end cut-off and accruals. We expect that we will incur
significant costs in the implementation of such measures. However, we cannot assure you that we will remediate our material weaknesses in a timely
manner. See “Risk Factors—Risks Related to Our Business and Industry— If we fail to develop and maintain an effective system of internal control over
financial reporting, we may be unable to accurately report our financial results or prevent fraud.”
As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the
JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally
to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in
the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company
does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply
with such new or revised accounting standards. We intend to take advantage of the extended transition period for complying with new or revised
accounting standards provided under the JOBS Act in the future.
Changes in Internal Control over Financial Reporting
Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by
this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
Our board of directors has determined that Rong Lu, an independent director (under the standards set forth in Nasdaq Stock Market Rule 5605(a)
(2) and Rule 10A-3 under the Exchange Act) and member of our audit committee, is an audit committee financial expert.
Item 16B. Code of Ethics
Our board of directors adopted a code of business conduct and ethics that applies to our directors, officers and employees in June 2018. We have
posted a copy of our code of business conduct and ethics on our website at http://ir.xin.com.
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Item 16C. Principal Accountant Fees and Services
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by
PricewaterhouseCoopers Zhong Tian LLP, our principal external auditors, for the periods indicated.
(1)
Audit fees
All other fees
(2)
US$
US$
2018
2019
1,092,785
138,419
US$
US$
1,146,756
38,703
(1) “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit
of our annual financial statements and assistance with and review of documents filed with the SEC. In 2018 and 2019, the audit refers to financial
audit.
(2) “All other fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors associated
with certain financial due diligence projects, permissible services to review and comment on internal control design over financial reporting and other
advisory services.
The policy of our audit committee is to pre-approve all audit and non-audit services provided by PricewaterhouseCoopers Zhong Tian LLP,
including audit services, audit-related services, tax services and other services as described above, other than those for de minimis services which are
approved by the audit committee prior to the completion of the audit.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
As a Cayman Islands company listed on Nasdaq, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq
rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the
Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. Maples and Calder (Hong
Kong) LLP, our Cayman Islands counsel, has provided letters to the Nasdaq Stock Market certifying that under Cayman Islands law, (i) we are not required
to hold annual shareholders meetings every year and (ii) shareholder approval is not required for the adoption or amendment of an equity compensation
plan. We followed and intend to continue to follow our home country practice in lieu of the requirement to hold an annual meeting of shareholders no later
than one year after the end of a fiscal year under Nasdaq Rule 5620(a). We also followed home country practice when adopting our 2018 Second Amended
and Restated Share Incentive Plan in November 2018 without seeking shareholder approval.
Other than the practices described above, there are no significant differences between our corporate governance practices and those followed by
U.S. domestic companies under Nasdaq Stock Market Rules.
However, if we choose to follow other home country practice in the future, our shareholders may be afforded less protection than they otherwise
would under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information—D. Risk Factors—
Risks Related to Our ADSs—We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from
certain provisions applicable to U.S. domestic public companies.”
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Item 16H. Mine Safety Disclosure
Not applicable.
Item 17. Financial Statements
We have elected to provide financial statements pursuant to Item 18.
Item 18. Financial Statements
PART III
The consolidated financial statements of Uxin Limited, its subsidiaries and its consolidated variable interest entities are included at the end of this
annual report.
Item 19. Exhibits
Exhibit
Number
1.1
2.1
2.2
2.3
2.4
3.1*
4.1
4.2
Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2 of the
registration statement on Form F-1/A (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange
Commission on June 1, 2018)
Description of Document
Registrant’s Specimen American Depositary Receipt (incorporated by reference to Exhibit 4.1 of the registration statement on Form F-
1/A (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on June 13, 2018)
Registrant’s Specimen Certificate for Ordinary Shares (incorporated by reference to Exhibit 4.2 of the registration statement on Form F-
1/A (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on June 13, 2018)
Deposit Agreement, among the Registrant, the depositary and the holders and beneficial owners of American Depositary Shares issued
thereunder dated June 27, 2018 (incorporated by reference to Exhibit 4.3 of the registration statement on Form S-8 (file no. 333-
227576), filed by the Registrant with the Securities and Exchange Commission on September 28, 2018)
Shareholders Agreement, between the Registrant and other parties thereto dated as of January 2, 2018 (incorporated by reference to
Exhibit 4.4 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and
Exchange Commission on May 29, 2018)
Description of the Registrant’s Securities
2018 Second Amended and Restated Share Incentive Plan (incorporated by reference to Exhibit 4.1 of the annual report on Form 20-F
filed by the Registrant with the Securities and Exchange Commission on April 29, 2019)
Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference to
Exhibit 10.2 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and
Exchange Commission on May 29, 2018)
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Exhibit
Number
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
Form of Employment Agreement between the Registrant and its executive officers (incorporated by reference to Exhibit 10.3 of the
registration statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange
Commission on May 29, 2018)
Description of Document
English translation of the Amended and Restated Exclusive Business Cooperation Agreement between Youxinpai and Youxin Hulian
dated September 11, 2014 (incorporated by reference to Exhibit 10.4 of the registration statement on Form F-1 (file no. 333-225266), as
amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Fourth Amended and Restated Equity Interest Pledge Agreement among Youxinpai, Youxin Hulian and
Mr. Kun Dai dated November 23, 2016 (incorporated by reference to Exhibit 10.5 of the registration statement on Form F-1 (file no.
333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Fourth Amended and Restated Power of Attorney issued by Mr. Kun Dai to Youxinpai dated November 23,
2016 (incorporated by reference to Exhibit 10.6 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by
the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Fifth Amended and Restated Exclusive Option Agreement among Youxinpai, Youxin Hulian and Mr. Kun Dai
dated February 4, 2018 (incorporated by reference to Exhibit 10.7 of the registration statement on Form F-1 (file no. 333-225266), as
amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Equity Interest Pledge Agreement among Youxinpai, Youxin Hulian and Beijing Min Si Lian Hua Investment
Management Co., Ltd. dated September 11, 2014 (incorporated by reference to Exhibit 10.8 of the registration statement on Form F-1
(file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Power of Attorney issued by Beijing Min Si Lian Hua Investment Management Co., Ltd. to Youxinpai dated
September 11, 2014 (incorporated by reference to Exhibit 10.9 of the registration statement on Form F-1 (file no. 333-225266), as
amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Amended and Restated Exclusive Option Agreement among Youxinpai, Youxin Hulian and Beijing Min Si
Lian Hua Investment Management Co., Ltd. dated February 4, 2018 (incorporated by reference to Exhibit 10.10 of the registration
statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on
May 29, 2018)
English translation of the Loan Agreement between Youxinpai and Mr. Kun Dai dated November 23, 2016 (incorporated by reference to
Exhibit 10.11 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities
and Exchange Commission on May 29, 2018)
English translation of the Exclusive Business Cooperation Agreement between Yougu and Yishouche dated April 9, 2016 (incorporated
by reference to Exhibit 10.12 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with
the Securities and Exchange Commission on May 29, 2018)
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Table of Contents
Exhibit
Number
4.13
4.14
4.15
4.16
4.17
4.18
English translation of the Equity Interest Pledge Agreement among Yougu, Yishouche and Mr. Kun Dai dated April 9, 2016
(incorporated by reference to Exhibit 10.13 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the
Registrant with the Securities and Exchange Commission on May 29, 2018)
Description of Document
English translation of the Power of Attorney issued by Mr. Kun Dai to Yougu dated April 9, 2016 (incorporated by reference to
Exhibit 10.14 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities
and Exchange Commission on May 29, 2018)
English translation of the Amended and Restated Exclusive Option Agreement among Yougu, Yishouche and Mr. Kun Dai dated
February 4, 2018 (incorporated by reference to Exhibit 10.15 of the registration statement on Form F-1 (file no. 333-225266), as
amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Amended and Restated Equity Interest Pledge Agreement among Yougu, Yishouche and Beijing Min Si Lian
Hua Investment Management Co., Ltd. dated February 4, 2018 (incorporated by reference to Exhibit 10.16 of the registration statement
on Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on May 29,
2018)
English translation of the Power of Attorney issued by Beijing Min Si Lian Hua Investment Management Co., Ltd. to Yougu dated
February 4, 2018 (incorporated by reference to Exhibit 10.17 of the registration statement on Form F-1 (file no. 333-225266), as
amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
English translation of the Amended and Restated Exclusive Option Agreement among Yougu, Yishouche and Beijing Min Si Lian Hua
Investment Management Co., Ltd. dated February 4, 2018 (incorporated by reference to Exhibit 10.18 of the registration statement on
Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
138
Table of Contents
Exhibit
Number
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29*†
4.30*†
Description of Document
English translation of Vehicle Financing Business Cooperation Agreement by and among Kaifeng and Zhejiang Chouzhou Commercial
Bank Co., Ltd. dated November 9, 2016 and Supplemental Agreements dated June 29, 2017, August 17, 2017, and November 28, 2017
(incorporated by reference to Exhibit 10.47 of the registration statement on Form F-1/A (file no. 333-225266), as amended, filed by the
Registrant with the Securities and Exchange Commission on June 22, 2018)
English translation of Vehicle Financing Business Cooperation Agreement by and among Kaifeng and Sichuan XW Bank Co., Ltd.
dated June 8, 2017 and Supplemental Agreement dated June 30, 2017 (incorporated by reference to Exhibit 10.48 of the registration
statement on Form F-1/A (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on
June 22, 2018)
English translation of the Auto Financing Business Cooperation Agreement by and among Kaifeng and a third-party financing partner
dated June 28, 2018 and Supplemental Agreements dated October 19, 2018 and December 7, 2018, respectively (incorporated by
reference to Exhibit 4.35 of the annual report on Form 20-F filed by the Registrant with the Securities and Exchange Commission on
April 29, 2019)
Amended and Restated Share Conversion Agreement by and among Fengshion Capital Investment Fund, LP, LC Fund V, L.P., LC
Parallel Fund V, L.P., Fairlubo Auction Company Limited, and the Registrant dated June 8, 2018 (incorporated by reference to
Exhibit 10.50 of the registration statement on Form F-1/A (file no. 333-225266), as amended, filed by the Registrant with the Securities
and Exchange Commission on June 13, 2018)
Share Surrender and Loan Settlement Agreement between Mr. Kun Dai, Xin Gao Group Limited and the Registrant dated May 28, 2018
(incorporated by reference to Exhibit 10.51 of the registration statement on Form F-1 (file no. 333-225266), as amended, filed by the
Registrant with the Securities and Exchange Commission on May 29, 2018)
Convertible Note Purchase Agreement by and among the Registrant, CNCB (Hong Kong) Investment Limited and CNCB (Hong Kong)
Capital Limited dated June 9, 2018 (incorporated by reference to Exhibit 10.52 of the registration statement on Form F-1/A (file no.
333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on June 13, 2018)
Convertible Note Purchase Agreement by and between the Registrant and Golden Fortune Company Limited dated June 12, 2018
(incorporated by reference to Exhibit 10.53 of the registration statement on Form F-1/A (file no. 333-225266), as amended, filed by the
Registrant with the Securities and Exchange Commission on June 13, 2018)
Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 of the registration statement on Form F-1/A (file no. 333-
225266), as amended, filed by the Registrant with the Securities and Exchange Commission on June 13, 2018)
Convertible Note Purchase Agreement by and among the Registrant, Mr. Kun Dai, Redrock Holding Investments Limited, TPG Growth
III SF Pte. Ltd., 58.com Holdings Inc., ClearVue UXin Holdings, Ltd., Magic Carpet International Limited and Zhuhai Guangkong
Zhongying Industrial Investment Fund (Limited Partnership) dated May 29, 2019 (incorporated by reference to Exhibit 7.02 of the
registration statement on Form 13D (file no. 005-90751) filed by 58.com Holdings Inc. and 58.com Inc. with the Securities and
Exchange Commission on June 20, 2019)
Investors’ Rights Agreement by and among the Registrant, Redrock Holding Investments Limited, TPG Growth III SF Pte. Ltd., 58.com
Holdings Inc.. Mr. Kun Dai, Xin Gao Group Limited, Gao Li Group Limited and JenCap UX dated June 10, 2019 (incorporated by
reference to Exhibit 99.2 of the registration statement on Form 13D (file no. 005-90751) filed by Mr. Kun Dai, among others, with the
Securities and Exchange Commission on June 20, 2019)
Convertible Note Purchase Agreement (First Closing) by and between the Registrant and PacificBridge Asset Management dated
July 12, 2019
Convertible Note Purchase Agreement (Second Closing) by and between the Registrant and PacificBridge Asset Management dated
July 12, 2019
139
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Exhibit
Number
4.31*†
4.32*†
4.33*†
4.34*†
4.35*†
4.36*†
4.37*†
4.38*†
4.39*†
8.1*
11.1
12.1*
12.2*
13.1**
13.2**
15.1*
15.2*
Amendment to Convertible Note Purchase Agreement (Second Closing) by and between the Registrant and PacificBridge Asset
Management dated August 13, 2019
Description of Document
Convertible Note Purchase Agreement (Third Closing) by and between the Registrant and PacificBridge Asset Management dated
July 12, 2019
Amendment to Convertible Note Purchase Agreement (Third Closing) by and between the Registrant and PacificBridge Asset
Management dated August 13, 2019
Second Amendment to Convertible Note Purchase Agreement (Third Closing) by and between the Registrant and PacificBridge Asset
Management dated October 10, 2019
Asset Transfer Agreement by and among the Registrant, Tianjin Wuba Rongxin Information Technology Co., Ltd. and certain other
parties dated September 30, 2019
Supplementary Agreements to Assets Transfer Agreement by and among the Registrant, Tianjin Wuba Rongxin Information Technology
Co., Ltd. and certain other parties dated April 23, 2020
Equity Acquisition Agreement by and among certain affiliates of the Registrant, Beijing Hengtai Boche Auction Co. Ltd. and certain
other parties dated January 15, 2020
Assets and Business Transfer Agreement by and among the Registrant, Beijing 58 Paipai Information Technology Co., Ltd. and certain
other parties dated March 24, 2020
Business Cooperation Agreement by and among the Registrant, Beijing 58 Paipai Information Technology Co., Ltd. and certain other
parties dated April 14, 2020
List of Principal Subsidiaries and Consolidated Affiliated Entities of the Registrant
Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 99.1 of the registration statement on
Form F-1 (file no. 333-225266), as amended, filed by the Registrant with the Securities and Exchange Commission on May 29, 2018)
Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Consent of PricewaterhouseCoopers Zhong Tian LLP
Consent of JunHe LLP
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
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Exhibit
Number
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
Description of Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith
** Furnished herewith
† Certain information has been excluded from this exhibit pursuant to Rule 406 under the Securities Act.
141
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
Date: May 12, 2020
Uxin Limited
/s/ Kun Dai
Name: Kun Dai
Title:
Chairman and Chief Executive Officer
By:
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UXIN LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2018 and 2019
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2017, 2018 and 2019
Consolidated Statements of Changes in Shareholders’ (Deficit)/Equity for the years ended December 31, 2017, 2018 and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2018 and 2019
Notes to the Consolidated Financial Statements
F-2
F-3-F-5
F-6-F-8
F-9-F-11
F-12-F-14
F-15-F-84
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Uxin Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Uxin Limited and its subsidiaries (the “Company”) as of December 31, 2019 and 2018,
and the related consolidated statements of comprehensive loss, changes in shareholders’ (deficit)/equity and cash flows for each of the three years in the
period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of
our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
May 12, 2020
We have served as the Company’s auditor since 2017.
F-2
Table of Contents
UXIN LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2018 AND 2019
(All amounts in thousands, except for share and per share data, unless otherwise noted)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable
Amounts due from related parties
Advance to consumers on behalf of financing partners
Loan recognized as a result of payment under the guarantee, net
Advance to sellers
Other receivables, net
Inventory
Prepaid expenses and other current assets
Financial lease receivables, net
Assets held for sale
Net assets transferred
Total current assets
Non-current assets:
Property, equipment and software, net
Intangible assets, net
Goodwill
Long-term investments
Right-of-use assets, net
Total non-current assets
Total assets
5
6
3
3
F-3
December 31,
2018
RMB
December 31,
2019
RMB
US$
800,997
1,011,705
596,078
51,610
—
521,908
553,688
692,714
707,404
19,380
417,314
294,511
1,001,325
—
478,200
706,988
—
44,605
51,590
2,135
1,580,464
288,550
440,056
13,792
158,908
121,820
230,051
827,710
6,668,634
4,944,869
199,271
21,179
110,424
349,882
—
680,756
110,114
190
9,541
272,936
45,446
438,227
68,547
101,343
—
6,395
7,395
306
226,551
41,362
63,080
1,977
22,779
17,462
32,977
118,648
708,822
15,784
27
1,368
39,124
6,514
62,817
7,349,390
5,383,096
771,639
Table of Contents
UXIN LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
December 31,
2018
RMB
December 31,
2019
RMB
US$
LIABILITIES AND EQUITY
Current liabilities (including amounts of the consolidated VIEs and VIEs’
subsidiaries without recourse to the primary beneficiary of RMB261,226 and
RMB371,474 as of December 31, 2018 and 2019, respectively)
Short-term borrowings and current portion of long-term borrowings
Accounts payable
Guarantee liabilities
Deposit of interests from consumers and payable to financing partners, current
Advance from buyers collected on behalf of sellers
Other payables and accruals
Deferred revenue
Convertible notes, current
Operating lease liabilities, current
Liabilities held for sale
Total current liabilities
Non-current liabilities
Long-term borrowings
Deposit of interests from consumers and payable to financing partners, non-current
Deferred tax liabilities
Convertible notes, non-current
Operating lease liabilities, non-current
Total non-current liabilities
Total liabilities
F-4
624,588
156,320
146,427
314,231
270,347
1,128,068
115,160
1,188,192
—
528,498
263,425
127,836
388,307
42,199
147,923
1,302,292
54,267
324,644
32,892
310,029
4,471,831
2,993,814
481,801
19,356
4,759
—
—
505,916
241,026
265
—
1,672,796
10,075
1,924,162
4,977,747
4,917,976
37,761
18,325
55,662
6,049
21,204
186,676
7,779
46,536
4,715
44,441
429,148
34,550
38
—
239,786
1,444
275,818
704,966
Table of Contents
UXIN LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Commitments and contingencies
Shareholders’ equity
Ordinary shares (US$0.0001 par value, 10,000,000,000 shares
authorized as of December 31, 2018 and 2019, respectively;
839,850,038 Class A ordinary shares and 40,809,861 Class B
ordinary shares issued and outstanding as of December 31, 2018;
846,807,530 Class A ordinary shares and 40,809,861 Class B
ordinary shares issued and outstanding as of December 31, 2019)
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total UXIN LIMITED shareholders’ equity
Non-controlling interests
Total shareholders’ equity
December 31,
2018
RMB
December 31,
2019
RMB
US$
Notes
30
575
12,967,986
86,061
(10,680,489)
2,374,133
(2,490)
2,371,643
581
13,069,560
68,192
(12,669,165)
469,168
(4,048)
465,120
83
1,873,450
9,775
(1,816,055)
67,253
(580)
66,673
Total liabilities and shareholders’ equity
7,349,390
5,383,096
771,639
The accompanying notes are an integral part of these consolidated financial statements
F-5
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 2017, 2018 AND 2019
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Revenues:
To consumers (“2C”)
- Commission revenue
- Value-added service revenue
Others
Total Revenues
Cost of revenues
Gross profit
Operating expenses:
Sales and marketing
Research and development
General and administrative
Gains/(losses) from guarantee liabilities
Provision for credit losses
Total operating expenses
2017
RMB
2018
RMB
2019
RMB
US$
—
—
309,133
309,133
(92,735)
216,398
(179,328)
—
(389,072)
1,840
(38,075)
(604,635)
203,158
166,482
289,450
659,090
(418,852)
240,238
(1,488,699)
(124,513)
(1,070,419)
(4,414)
(40,626)
(2,728,671)
711,362
636,046
240,623
1,588,031
(689,292)
898,739
(1,184,997)
(140,006)
(402,040)
(194,385)
(271,372)
(2,192,800)
101,970
91,174
34,492
227,636
(98,806)
128,830
(169,863)
(20,069)
(57,630)
(27,864)
(38,900)
(314,326)
Other operating income
—
—
1,925
276
Loss from continuing operations
(388,237)
(2,488,433)
(1,292,136)
(185,220)
Interest income
Interest expenses
Other income
Other expenses
Foreign exchange (losses) /gains
Fair value change of derivative liabilities
Gain from disposal of investments, net
Impairment of long-term investment
Loss from continuing operations before income tax expense
Income tax (expense)/credit
Equity in income of affiliates
Net loss from continuing operations, net of tax
Less: net loss attributable to non-controlling interests
shareholders
Net loss from continuing operations, attributable to UXIN
LIMITED
2,234
(199)
4,248
(3,808)
(627)
(885,821)
—
—
(1,272,210)
(211)
3,597
(1,268,824)
24,554
(63,880)
23,721
(25,568)
(8,232)
1,185,090
—
—
(1,352,748)
(1,644)
2,631
(1,351,761)
14,958
(112,587)
71,142
(36,569)
4,247
—
28,257
(37,775)
(1,360,463)
2,554
30,231
(1,327,678)
2,144
(16,139)
10,198
(5,242)
609
—
4,050
(5,415)
(195,015)
366
4,333
(190,316)
(25,202)
(15,771)
(1,452)
(208)
(1,243,622)
(1,335,990)
(1,326,226)
(190,108)
F-6
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 2017, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Discontinued operations
Loss from discontinued operations before income tax
Income tax expense
Net loss from discontinued operations, net of tax
Net loss from discontinued operations, attributable to UXIN
(1,478,615)
(359)
(1,478,974)
(173,583)
(12,941)
(186,524)
(659,458)
(2,992)
(662,450)
LIMITED
(1,478,974)
(186,524)
(662,450)
(94,530)
(429)
(94,959)
(94,959)
2017
RMB
2018
RMB
2019
RMB
US$
Net loss
Less: net loss attributable to non-controlling interests
shareholders
Net loss attributable to UXIN LIMITED
Accretion on redeemable preferred shares
Deemed dividend to preferred shareholders
Deemed dividend from preferred shareholders
(2,747,798)
(1,538,285)
(1,990,128)
(285,275)
(25,202)
(2,722,596)
(555,824)
(587,564)
92,779
(15,771)
(1,522,514)
(318,951)
(544,773)
—
(1,452)
(1,988,676)
(208)
(285,067)
—
—
—
—
—
—
Net loss attributable to ordinary shareholders
(3,773,205)
(2,386,238)
(1,988,676)
(285,067)
Net loss
Foreign currency translation
(2,747,798)
43,406
(1,538,285)
4,818
(1,990,128)
(17,976)
(285,275)
(2,577)
Total comprehensive loss
Less: total comprehensive loss attributable to non-controlling
interests shareholders
Total comprehensive loss attributable to UXIN LIMITED
(2,704,392)
(1,533,467)
(2,008,104)
(287,852)
(27,861)
(2,676,531)
(22,359)
(1,511,108)
(1,558)
(2,006,546)
(223)
(287,629)
F-7
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 2017, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Net loss from continuing operations, attributable to ordinary
shareholders
Net loss from discontinued operations, attributable to ordinary
shareholders
Net loss attributable to ordinary shareholders
Weighted average number of ordinary shares used in computing
2017
RMB
2018
RMB
2019
RMB
US$
(2,294,231)
(2,199,714)
(1,326,226)
(190,108)
(1,478,974)
(3,773,205)
(186,524)
(2,386,238)
(662,450)
(1,988,676)
(94,959)
(285,067)
net loss per share, basic and diluted
49,318,860
477,848,763
886,613,598
886,613,598
Loss per share for ordinary shareholders, basic
Continuing operations
Discontinued operations
Loss per share for ordinary shareholders, diluted
Continuing operations
Discontinued operations
(46.52)
(29.99)
(46.52)
(29.99)
(4.60)
(0.39)
(4.60)
(0.39)
(1.50)
(0.75)
(1.50)
(0.75)
(0.21)
(0.11)
(0.21)
(0.11)
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT)/EQUITY
FOR THE YAER ENDED DECEMBER 31, 2017, 2018 AND 2019
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Ordinary share
(US $0.0001 par value)
Number of
shares
Amount
RMB
Additional paid-
in
capital
RMB
Accumulated other
Total UXIN
LIMITED
Non-
Total
comprehensive
income
RMB
Accumulated shareholders’ controlling shareholders’
deficit
RMB
deficit
RMB
interest
RMB
deficit
RMB
Balance as of December 31, 2016
Foreign currency translation
49,318,860
adjustments
Net loss
Share-based compensation
Transaction with non-controlling
interests
Accretion on preferred shares to
redemption value
Non-controlling interests arising
from business combination
Deemed dividend to preferred
shareholders
Deemed dividend from preferred
shareholders
Balance as of December 31, 2017
—
—
—
—
—
—
—
—
49,318,860
30
—
—
—
—
—
—
—
—
30
—
30,542
(4,462,333)
(4,431,761)
(12,091)
(4,443,852)
—
—
165,873
—
(73,094)
—
—
(92,779)
—
F-9
46,065
—
—
—
(2,722,596)
—
46,065
(2,722,596)
165,873
(2,659)
(25,202)
—
43,406
(2,747,798)
165,873
—
—
—
—
(45,357)
(45,357)
(18,851)
(64,208)
(482,730)
(555,824)
—
(555,824)
—
—
8,342
8,342
(587,564)
(587,564)
—
(587,564)
—
76,607
92,779
(8,207,801)
—
(8,131,164)
—
(50,461)
—
(8,181,625)
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT)/EQUITY
FOR THE YAER ENDED DECEMBER 31, 2017, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Ordinary share
(US $0.0001 par value)
Number of
shares
Amount
RMB
Balance as of December 31, 2017
Foreign currency translation
49,318,860
adjustments
Net loss
Share-based compensation
Issuance of restricted shares to
Mr. Kun Dai
Issuance of ordinary shares due to
exercise of the share option
Conversion of redeemable
—
—
—
17,742,890
8,479,505
30
—
—
—
11
5
Deemed dividend to preferred
shareholders
Accretion on preferred shares to
redemption value
Issuance of ordinary shares upon
Initial Public Offering
Repurchase of the surrender shares
Fairlubo Auction Company
—
—
75,000,000
(26,251,889)
Limited share swap
13,026,713
Transaction with non-controlling
interests
—
—
—
50
(16)
9
—
Accumulated other
Total UXIN
LIMITED
Non-
Total
Additional paid-
in
capital
RMB
comprehensive
income
RMB
Accumulated
deficit
RMB
shareholders’
(deficit)/equity
RMB
controlling
interest
RMB
shareholders’
(deficit)/equity
RMB
—
76,607
(8,207,801)
(8,131,164)
(50,461)
(8,181,625)
—
—
151,274
620,435
286,676
—
(38,582)
1,342,831
(573,600)
11,407
—
—
—
(1,522,514)
—
11,407
(1,522,514)
151,274
(6,589)
(15,771)
—
4,818
(1,538,285)
151,274
—
—
—
—
—
—
—
—
—
—
620,446
286,681
11,013,180
(544,773)
(544,773)
(280,369)
(318,951)
—
(125,064)
1,342,881
(698,680)
—
—
—
—
—
—
—
620,446
286,681
11,013,180
(544,773)
(318,951)
1,342,881
(698,680)
161,294
(1,953)
(182)
—
—
—
159,350
74,561
233,911
(182)
(4,819)
(5,001)
preferred shares
743,343,820
486
11,012,694
40,809,861 ordinary shares were
redesignated to Class B ordinary
shares with super voting power
granted to Mr. Kun Dai
Balance as of December 31, 2018
—
880,659,899
—
575
5,146
12,967,986
—
86,061
32
(10,680,489)
5,178
2,374,133
589
(2,490)
5,767
2,371,643
F-10
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT)/EQUITY
FOR THE YAER ENDED DECEMBER 31, 2017, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Ordinary share
(US $0.0001 par value)
Number of
shares
Amount
RMB
Additional paid-
in
capital
RMB
Accumulated other
Total UXIN
LIMITED
Non-
Total
comprehensive
income
RMB
Accumulated shareholders’ controlling shareholders’
deficit
RMB
equity
RMB
interest
RMB
equity
RMB
880,659,899
575
12,967,986
86,061
(10,680,489)
2,374,133
(2,490)
2,371,643
—
—
6,957,492
—
887,617,391
—
—
6
—
581
—
—
(17,869)
—
—
(1,988,676)
(17,869)
(1,988,676)
(106)
(1,452)
(17,975)
(1,990,128)
1,279
100,295
13,069,560
—
—
68,192
—
—
(12,669,165)
1,285
100,295
469,168
—
—
(4,048)
1,285
100,295
465,120
Balance as of December 31, 2018
Foreign currency translation
adjustments
Net loss
Issuance of ordinary shares due to
exercise of the share option
Share-based compensation
Balance as of December 31, 2019
The accompanying notes are an integral part of these consolidated financial statements.
F-11
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017, 2018 AND 2019
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Cash flows from operating activities:
Net loss (continuing and discontinued operations)
Adjustments to reconcile net loss to net cash generated from operating
activities:
Shared-based compensation
Depreciation of property, equipment and software
Amortization of intangible assets
Amortization of right-of-use assets
Loss from disposal of property, equipment and software
Equity in income of affiliates
Cash dividend received
(Gains)/losses from guarantee liabilities
Accrual of allowance for doubtful accounts
Deferred income tax liabilities
Impairment of long-term investment
Gains from disposal of long-term investment, net
Provision for credit losses
Fair value change of derivative liabilities
Goodwill impairment
Changes in operating assets and liabilities:
Receivables, prepaid expenses and other current assets
Amounts due from related parties
Advance to consumers on behalf of financing partners
Loan recognized as a result of payment under the guarantee
Advance to sellers
Financial lease receivables
Inventory
Payables, accruals and other current liabilities
Deposit of interests from consumers and payable to financing partners
Deferred revenue
2017
RMB
2018
RMB
2019
RMB
US$
(2,747,798)
(1,538,285)
(1,990,128)
(285,275)
165,873
68,185
3,678
—
1,542
(3,597)
—
(2,284)
1,604
(620)
—
—
38,075
885,821
—
(222,391)
—
(796,278)
(478,492)
(200,513)
(26,832)
(67,252)
911,639
628,889
6,508
1,052,032
88,803
5,619
—
290
(2,631)
—
1,931
19,703
(1,107)
—
—
40,626
(1,185,090)
3,670
(595,277)
—
305,509
(409,093)
(446,427)
141,517
58,561
654,281
(563,527)
87,562
100,295
88,939
6,892
75,924
2,710
(30,231)
4,389
362,597
1,411
(1,678)
37,775
(28,257)
271,372
—
—
315,726
(51,590)
519,773
(1,533,259)
347,402
156,301
5,588
674,946
(470,105)
(60,893)
14,377
12,749
988
10,883
388
(4,333)
629
51,976
202
(241)
5,415
(4,050)
38,900
—
—
45,258
(7,395)
74,507
(219,784)
49,798
22,405
801
96,750
(67,387)
(8,729)
Net cash used in operating activities
(1,834,243)
(2,281,333)
(1,194,101)
(171,168)
F-12
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Cash flows from investing activities:
Proceeds from disposal of property, equipment and software
Purchase of property, equipment and software
Cash paid for long-term investments
Cash paid for acquisition, net of cash acquired
Proceeds from disposal of long-term investments
Decrease/(increase) in short-term investments
Loan extended to a related party
Cash deposits transferred to Golden Pacer (Note 3)
2017
RMB
2018
RMB
2019
RMB
US$
885
(81,211)
(152,723)
(3,575)
5,048
96,118
(451,385)
—
7,735
(133,907)
(189,450)
(66,339)
—
(595,078)
(101,578)
—
43,611
(46,820)
—
—
96,838
597,984
—
(1,175,867)
6,251
(6,711)
—
—
13,881
85,718
—
(168,554)
Net cash used in investing activities
(586,843)
(1,078,617)
(484,254)
(69,415)
Cash flows from financing activities:
Proceeds from borrowings
Net proceeds from issuance of convertible notes
Net proceeds from issuance of convertible redeemable preferred shares
Repayment of convertible notes
Repayment of borrowings
Acquisition of non-controlling interest in a subsidiary
Net proceeds from initial public offering and issuance of convertible
notes
Proceeds from exercise of options
800,887
—
2,721,065
—
(204,068)
(29,042)
—
—
1,209,431
—
1,674,408
—
(1,183,797)
—
2,574,010
—
Net cash generated from financing activities
3,288,842
4,274,052
132,809
1,853,381
—
(1,190,182)
(735,294)
—
—
12,916
73,630
19,037
265,672
—
(170,606)
(105,400)
—
—
1,851
10,554
Effect of exchange rate changes on cash, cash equivalents and restricted
cash
3,334
(9,278)
960
138
Net increase/(decrease) in cash, cash equivalents and restricted cash
871,090
904,824
(1,603,765)
(229,891)
F-13
Table of Contents
UXIN LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017, 2018 AND 2019 (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2017
RMB
2018
RMB
2019
RMB
US$
Cash, cash equivalents and restricted cash recorded in held for sale assets at
beginning of the year
Cash, cash equivalents and restricted cash at beginning of the year
—
1,038,113
179,202
1,730,001
1,001,325
1,812,702
Cash, cash equivalents and restricted cash recorded in held for sale assets at
end of the year
Cash, cash equivalents and restricted cash at end of the year
179,202
1,730,001
1,001,325
1,812,702
25,074
1,185,188
Supplemental disclosure of cash flow information
- Cash paid for income tax
- Cash paid for interest
Supplemental schedule of non-cash investing and financing activities
- Accretion on redeemable preferred shares
- Deemed dividend to preferred shareholders
- Deemed dividend from preferred shareholders
- Repurchase of the surrender shares
Cash and cash equivalents
Restricted cash
Cash, cash equivalents and restricted cash reclassified as held for sale assets
Total cash, cash equivalents and restricted cash
6,429
6,386
555,824
587,564
92,779
—
2017
RMB
291,973
1,438,028
179,202
1,909,203
4,575
32,113
318,951
544,773
—
746,253
7,754
77,924
—
—
—
—
December 31,
2018
RMB
800,997
1,011,705
1,001,325
2,814,027
2019
RMB
US$
478,200
706,988
25,074
1,210,262
68,547
101,343
3,594
173,484
143,534
259,841
3,594
169,890
1,111
11,170
—
—
—
—
The accompanying notes are an integral part of these consolidated financial statements.
F-14
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
1. PRINCIPAL ACTIVITIES AND ORGANIZATION
The accompanying consolidated financial statements include the financial statements of Uxin Limited (the “Company” or “Uxin”), its subsidiaries and
variable interest entities (“VIEs”). The Company, its subsidiaries and the consolidated VIEs are collectively referred to as the “Group”.
The Company was incorporated under the law of the Cayman Islands as the exempted limited liability company on December 8, 2011. The Company
serves as an investment holding company and currently has no operations of its own.
In 2016, the Group spun off its 2B business through a transfer of the equity interest of Youxinpai (Beijing) Information Technology Co., Ltd.(“Youxinpai”),
a subsidiary of the Company, to a series of shareholders, which represented the same offshore shareholders of the Company, i.e. same shareholders with
their respective onshore and offshore entities. In 2017, the Company made its strategic decision for the existing shareholders of Youxinpai to transfer 100%
equity interest in Youxinpai to the Company (referred to as “the Reorganization”).
On June 27, 2018, the Company completed its IPO on NASDAQ Global Select Market under the symbol “UXIN”. The Company offered 25,000,000
American Depositary Shares (“ADS”). Each ADS represents three ordinary share and was sold to the public at US$9.00 per ADS. Also, the Company
entered into Convertible Note Purchase Agreements with CNCB (Hong Kong) Investment Limited (the “CNCB (Hong Kong)”) and Golden Fortune
Company Limited (the “Golden Fortune”) concurrently with the closing of IPO. Net proceeds raised by the Company from the IPO and private placement
in total amounted to approximately US$382.1 million (equivalent to RMB 2.6 billion) after deducting underwriting discounts commissions and other
offering expenses.
The Group’s principal operation and geographic market is in the People’s Republic of China (“PRC”). In order to devote all resources towards developing
and scaling up its online used car business and to relieve its future growth from additional guarantee obligations or credit risks, the Group made a series of
strategic divestiture transactions (the “Divestiture Transactions”) that occurred during 2019 and subsequent period in 2020. Prior to these Divestiture
Transactions disclosed in below paragraphs, the Group was primarily engaged in operating used car e-commerce platforms through its mobile applications
(Uxin Used Car / Uxin Auction) and websites (www.xin.com / www.youxinpai.com), facilitating used car transaction services (2B / 2C) and facilitating
financing solutions offered by third-party financing partners to buyers for their used car purchases (2C).
Divestiture Transactions
On January 16, 2020, the Company entered into definitive agreements with Beijing Hengtai Boche Auction Co. Ltd. (“Boche”) to divest its salvage car
related business in exchange for a total cash consideration of RMB330 million. The transaction contemplated under the definitive agreements was closed in
January 2020.
On March 24, 2020, the Company entered into definitive agreements with 58.com to sell its 2B online used car auction business in exchange for a total
cash consideration of US$105 million. The transaction contemplated under the definitive agreements was closed in April 2020.
On July 12, 2019 and September 30, 2019, the Company entered into a binding term sheet and definitive agreements, respectively, with Golden Pacer
relating to the divestiture of its entire 2C intra-regional business and loan facilitation related service. On April 23, 2020, the Company entered into
supplemental agreements with Golden Pacer to modify and supplement certain terms and conditions in connection with the divestiture. Pursuant to the
series of agreements, the Company has divested its entire 2C intra-regional business to Golden Pacer and ceased to provide loan facilitation related
guarantee starting from the fourth quarter of 2019. The transaction contemplated under the definitive and supplemental agreements was closed upon the
signing of the supplemental agreements.
After the Divestiture Transactions, the Group will primarily operate its cross-regional online used car transaction business (2C).
F-15
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
1. PRINCIPAL ACTIVITIES AND ORGANIZATION (CONTINUED)
As of December 31, 2019, the Company’s principal subsidiaries and consolidated VIEs are as follows:
Subsidiaries
Youxinpai (Beijing) Information Technology Co., Ltd.
Youhan (Shanghai) Information Technology Co., Ltd.
Kai Feng Finance Lease (Hangzhou) Co., Ltd.
Bo Yu Finance Lease (Tianjin) Co., Ltd.
Yougu (Shanghai) Information Technology Co., Ltd.
Youzhen (Beijing) Business Consulting Co., Ltd.
Youxin (Shanghai) Second Hand Car Business Co., Ltd.
Beijing Youxin Fengshun Lubao Vehicle Auction Co., Ltd.
Youxin (Shanxi) Technology Information Co., Ltd.
Youyuan (Beijing) Information Technology Co., Ltd.
Youfang (Beijing) Information Technology Co., Ltd.
Place of
incorporation
Beijing
Shanghai
Hangzhou
Tianjin
Shanghai
Beijing
Shanghai
Beijing
Xi’an
Beijing
Beijing
Date of
incorporation or
acquisition
June 15, 2012
December 25, 2015
March 25, 2013
March 6, 2015
March 13, 2015
March 28, 2016
January 26, 2016
March 13, 2015
April 27, 2018
October 21, 2016
March 25, 2016
Percentage
of direct or
indirect
100%
100%
100%
100%
100%
100%
100%
94.94%
100%
100%
100%
Principal
activities
Used car auction
Used car auction
Loan facilitation
Loan facilitation
Transaction service
Transaction service
Transaction service
Salvage car auction
Transaction service
Transaction service
Transaction service
As of December 31, 2019, the Company’s principal subsidiaries and consolidated VIEs are as follows:
VIEs
Youxin Internet (Beijing) Information Technology Co., Ltd.
Beijing Fengshun Lubao Automotive Auction Co., Ltd.
Youxin Yishouche (Beijing) Information Technology
Co., Ltd.
Date of
incorporation or
acquisition
August 11, 2011
June 10, 2011
Percentage
of direct or
indirect
99.99%
94.94%
Principal
activities
Auction platform
Salvage car auction
March 12, 2015
99.99%
Transaction service
Place of
incorporation
Beijing
Beijing
Beijing
F-16
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
1. PRINCIPAL ACTIVITIES AND ORGANIZATION (CONTINUED)
Liquidity
The Company has incurred net incurring losses from operations since inception. The Company incurred net losses from continuing operations of
RMB1,268.8 million, RMB1,351.8 million and RMB1,327.7 million for the years ended December 31, 2017, 2018 and 2019, respectively. Accumulated
deficit amounted to RMB10,680.5 million and RMB12,669.2 million as of December 31, 2018 and 2019, respectively.
As of the issuance date of the annual consolidated financial statements for the year ended December 31, 2019, the Company expects that its cash and cash
equivalents, and cash consideration received from its recent Divestiture Transactions would be sufficient to fund its operating expenses, capital
requirements and other contractual obligations for at least the next 12 months. The Company is entitled to receive a total cash consideration of RMB330
million and US$105 million from the divestiture of its salvage car related business and 2B business, respectively, of which RMB165 million was received
in January 2020 and US$75 million was received in April 2020, and the remaining considerations will be received before the end of the first half of 2020.
In addition, as the Company no longer provides any loan facilitation related guarantee services as a result of the divestiture of its loan facilitation related
business, the Company is no longer obligated to incur any additional guarantee liabilities that would require any cash outflows going forward. The
consolidated financial statements of the Company have been prepared on a going concern basis, which assumes that the Company will continue in
operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they
come due.
F-17
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES
2.1 Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“US GAAP”).
Significant accounting policies followed by the Group in the preparation of its accompanying consolidated financial statements are summarized below.
2.2 Discontinued operations
A component of a reporting entity or a group of components of a reporting entity that are disposed or meet all of the criteria to be classified as held for sale
in accordance with ASC 205-20-45-1E Initial Criteria for Classification of Held for Sale, such as the management, having the authority to approve the
action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will
have) a major effect on an entity’s operations and financial results. Discontinued operations are reported when a component of an entity comprising
operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as
held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity’s financial results
and operations. Examples include a disposal of a major geographical location, line of business, or other significant part of the entity, or disposal of a major
equity method investment.
Non-current assets or disposal groups are classified as assets held for sale when the carrying amount is to be recovered principally through a sale
transaction rather than through continuing use. For this to be the case, the asset or disposal group must be available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such asset.
Once a disposed business meets the criteria of held for sales and be reported as a discontinued operation, According to ASC 205-20-45-10, in the
period(s) that a discontinued operation is classified as held for sale and for all prior periods presented, the assets and liabilities of the discontinued operation
shall be presented separately in the asset and liability sections, respectively, of the Consolidated Balance Sheet.
In the Consolidated statement of comprehensive loss, result from discontinued operations is reported separately from the income and expenses from
continuing operations and prior periods are presented on a comparative basis. Cash flows for discontinuing operations are presented separately (Note 3).
The following accounting policies support the basis of presentation of the Divestiture Transactions disclosed in Note 1.
Divestiture of 2C intra-regional business and loan-facilitation related service
On July 12, 2019 and September 30, 2019, the Company entered into a binding term sheet and definitive agreements with Golden Pacer relating to the
divestiture of its entire 2C intra-regional business and loan facilitation related service, respectively. On April 23, 2020, the Company entered into
supplemental agreements with Golden Pacer to modify and supplement certain terms and conditions in connection with the divestiture. Pursuant to the
series of agreements, the Company has divested its entire 2C intra-regional business to Golden Pacer and ceased to provide loan facilitation related
guarantee starting from the fourth quarter of 2019.
Assets and liabilities related to the divestiture of 2C intra-regional business and loan facilitation related service were reclassified as assets/liabilities held for
sale as of December 31, 2019, while results of operations related to discontinued operations were recorded in loss from discontinued operations in the
Consolidated Statements of Comprehensive Loss.
F-18
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.2 Discontinued operations (continued)
Divestiture of 2B business
On March 24, 2020, the Company entered into definitive agreements with 58.com to sell its 2B online used car auction business.
Assets and liabilities related to the divestiture of 2B online used car auction business were reclassified as assets/liabilities held for sale as of December 31,
2019, while results of operations related to discontinued operations were recorded in loss from discontinued operations in the Consolidated Statements of
Comprehensive Loss.
Divestiture of salvage car related business
On January 16, 2020, the Company entered into definitive agreements with Boche to divest its salvage car related business.
Assets and liabilities related to the divestiture of salvage car business were reclassified as assets held for sale of RMB230.1 million and liabilities held for
sale of RMB199.1 million as of December 31, 2019. The divestiture of the Company’s salvage car business did not meet the criteria of discontinued
operations and the results of operations were not presented as discontinued operations.
2.3 Basis of consolidation
The consolidated financial statements include the financial statements of the Company, its subsidiaries, VIEs and VIEs’ subsidiaries.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove
the majority of the members of the board of directors; to cast a majority of votes at the meeting of the board of directors or to govern the financial and
operating policies of the investee under a statute or agreement among the shareholders or equity holders.
The Company applies the guidance codified in Accounting Standard Codification 810, Consolidations (“ASC 810”) on accounting for VIEs and their
respective subsidiaries, which requires certain variable interest entities to be consolidated by the primary beneficiary of the entity in which it has a
controlling financial interest. A VIE is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to
permit the entity to finance its activities without additional financial support; (b) as a group, the holders of the equity investment at risk lack the ability to
make certain decisions, the obligation to absorb expected losses or the right to receive expected residual returns, or (c) an equity investor has voting rights
that are disproportionate to its economic interest and substantially all of the entity’s activities are on behalf of the investor.
All transactions and balances between the Company, its subsidiaries, VIEs and VIEs’ subsidiaries have been eliminated upon consolidation.
F-19
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.3 Basis of consolidation (continued)
Variable interest entities
In order to comply with PRC regulatory requirements restricting foreign ownership of internet information services under value-added telecommunications
services and certain other businesses in China, the Company operates online platforms that provide internet information services and engages in other
foreign-ownership-restricted businesses through certain PRC domestic companies, whose equity interests are held by certain management members of the
Company (“Nominee Shareholders”). The Company obtained control over these PRC domestic companies by entering into a series of Contractual
Arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements cannot be terminated by the
Nominee Shareholders or the PRC domestic companies. As a result, the Company which maintains the ability to control these PRC domestic companies is
entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb expected losses of these PRC domestic
companies. Management concluded that these PRC domestic companies are VIEs of the Company, of which the Company is the ultimate primary
beneficiary. As such, the Group consolidated financial results of these PRC domestic companies and their subsidiaries. The principal terms of the
agreements entered into amongst the VIEs, their respective shareholders and the Group’s subsidiaries (“Primary Beneficiaries”) are further described
below.
Prior to the Divestiture Transactions, the Company primarily operated 2B and 2C online platforms through one of the VIEs, Youxin Hulian via the
contractual agreements. In January 2015, the MIIT eliminates the restrictions on foreign ownership in the SHFTZ Notice for enterprises in Shanghai Pilot
Free Trade Zone that provide online data processing and transaction processing services (operating E-commerce) under value-added telecommunications
services. Certain of our eligible WFOE and subsidiary of WFOE, Yougu and Youhan applied for and obtained the VATS Licenses to conduct E-commerce
in 2015 and 2016, and they have been operating our 2B and 2C online platforms since then. After the Divestiture Transactions, the continued operations
will still be primarily operated by the Company’s subsidiaries.
Currently, Youxin Hulian, Yishouche and Fengshun Lubao hold the VATS Licenses for internet information services to operate other online platforms of
the Company and they may hold equity interests of subsidiaries conducting business that are restricted with foreign ownership.
Loan Agreements
Pursuant to the relevant loan agreements, the Group’s relevant PRC subsidiary has granted interest-free loans to the relevant Nominee Shareholders of the
relevant VIE with the sole purpose of providing funds necessary for the capital injection to the relevant VIEs. Only the Group’s relevant PRC subsidiary
can require the Nominee Shareholder to settle the loan amount with the equity interests of relevant VIEs, subject to any applicable PRC laws, rules and
regulations. And both parties have agreed that any proceeds from sale of the Nominee Shareholder’s equity interest in relevant VIE should be repaid to the
Group’s relevant PRC subsidiary. The terms of the loan agreements are ten years and can be extended with the written consent of both parties before its
expiration.
F-20
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.3 Basis of consolidation (continued)
Exclusive option agreements
The Nominee Shareholders of the VIEs have granted the Group’s relevant PRC subsidiaries the exclusive and irrevocable right to purchase or to designate
one or more person(s) at their discretion to purchase part or all of the equity interests in the VIEs from the Nominee Shareholders for a purchase price at
any time, subject to the lowest price permitted by PRC laws and regulations. The VIEs and their Nominee Shareholders have agreed that without prior
written consent of the Group’s relevant PRC subsidiaries, their respective Nominee Shareholders cannot sell, transfer, pledge or dispose their equity
interests, and the VIEs cannot sell, transfer, pledge or dispose, but not limit to the equity interest, significant assets, significant revenue and significant
business. Also as agreed, the VIEs cannot declare any dividend or change capitalization structure of the VIEs and cannot enter into any loan or investment
agreements. Furthermore, the Nominee Shareholders have agreed that any proceeds but not limited to the sales of the Nominee Shareholders’ equity
interest in relevant VIEs should be gratuitously paid to the Group’s relevant PRC subsidiaries or one or more person(s) at their discretion.
Power of attorney
Pursuant to the irrevocable power of attorney, each of the Nominee Shareholders appointed the Group’s relevant PRC subsidiaries as their attorney-in-fact
to exercise all shareholder rights under PRC law and the relevant articles of association, including but not limited to, attending shareholders meetings,
voting on their behalf on all matters requiring shareholder approval, including but not limited to sale, transfer, pledge, or disposition of all or part of the
Nominee Shareholders’ equity interests, and designation and appointing the legal representative, directors, supervisors, chief executive officer and other
senior management members of the VIEs. Each power of attorney will remain in force during the period when the Nominee Shareholders continue to be
shareholders of the VIEs. Each Nominee Shareholder has waived all the rights which have been authorized to the person designated by the Group’s relevant
PRC subsidiaries under each power of attorney.
Exclusive business cooperation agreement
Pursuant to the exclusive business cooperation agreement, the Group’s relevant PRC subsidiaries have agreed to provide to the VIEs services, including,
but not limited to, development, maintenance and update software, design, installation, daily management, maintenance and updating of the network
system, hardware and database design, marketing. The VIEs shall pay to the Group’s relevant PRC subsidiaries service fees determined based on the
complexity and difficulty of the services, title of and time consumed by employees, contents and value of the services, operation conditions and market
price of the service provided. The agreement shall remain in full force and effect unless terminated in accordance with the provisions of this Agreement or
terminated in writing by the Group’s relevant PRC subsidiaries.
Equity pledge agreements
Pursuant to the relevant equity pledge agreements, the Nominee Shareholders of the VIEs have pledged all of their equity interests in relevant VIEs to the
Group’s relevant PRC subsidiaries as collateral for all of their to direct, indirect and derivate losses and anticipated profits of the PRC subsidiaries incurred
in the event of default and to secure their obligations under the above agreements. The relevant PRC subsidiaries are entitled to have any dividends based
on the pledged equity interest in relevant VIEs. The Nominee Shareholders may not transfer or assign the equity interests, the rights and obligations in the
equity pledge agreements and may not create or permit to create any pledges which may have an adverse effect on the rights or benefits of the Group’s
relevant PRC subsidiaries without the Group’s relevant PRC subsidiaries’ pre-approval. In addition, the Group’s relevant PRC subsidiaries are entitled to
purchase at a discount, auction or sell the equity interests pledged and have priority to obtain the proceeds from above auctions or sales, if an event of
default happens. The equity pledge agreements will expire only when the Nominee Shareholders have completed all their obligations under the above
agreements.
F-21
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.3 Basis of consolidation (continued)
Risks in relation to the VIE structure
In the opinion of the Company’s legal counsel, (i) the ownership structure relating to the VIEs of the Company is in compliance with existing PRC laws
and regulations; and (ii) the contractual arrangements with the VIEs and their Nominee Shareholders are valid, binding and enforceable, and will not result
in any violation of PRC laws or regulations currently in effect.
However, uncertainties in the interpretation and application of current and future PRC laws, regulations and rules could cause the Company’s current
ownership structure to be found in violation of any existing or future PRC laws or regulations and could limit the Company’s ability, through the Primary
Beneficiaries, to enforce its rights under these contractual arrangements. Furthermore, Nominee Shareholders of the VIEs may have interests that are
different with those of the Company, which could potentially increase the risk that they would seek to act in contrary to the terms of the aforementioned
agreements.
In addition, if the current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC law, the Company
may be subject to penalties, which may include but not be limited to, the cancellation or revocation of the Company’s business and operating licenses,
being required to restructure the Company’s operations or discontinue the Company’s operating activities. The imposition of any of these or other penalties
may result in a material and adverse effect on the Company’s ability to conduct its operations. In such case, the Company may not be able to operate or
control the VIEs, which may result in deconsolidation of the VIEs.
There are, however, substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. Accordingly, the
Company cannot be assured that the PRC government authorities will not ultimately take a view that is contrary to the Company’s belief and the opinion of
its PRC legal counsel. In March 2019, the draft Foreign Investment Law was submitted to the National People’s Congress for review and was approved on
March 15, 2019, which will come into effect from January 1, 2020. The approved Foreign Investment Law does not touch upon the relevant concepts and
regulatory regimes that were historically suggested for the regulation of VIE structures, and thus this regulatory topic remains unclear under the Foreign
Investment Law. Since the Foreign Investment Law is new, there are substantial uncertainties exist with respect to its implementation and interpretation and
the possibility that such entities will be deemed as foreign-invested enterprise and subject to relevant restrictions in the future shall not be excluded. If the
contractual arrangements establishing the Company’s VIE structure are found to be in violation of any existing law and regulations or future PRC laws and
regulations, the relevant PRC government authorities will have broad discretion in dealing with such violation, including, without limitation, levying fines,
confiscating income or the income of affiliated Chinese entities, revoking business licenses or the business licenses of affiliated Chinese entities, requiring
affiliated Chinese entities to restructure ownership structure or operations and requiring affiliated Chinese entities to discontinue any portion or all of value-
added telecommunications, E-commerce and internet information services. Any of these actions could cause significant disruption to the Company’s
business operations, and have a severe adverse impact on the Company’s cash flows, financial position and operating performance. If the imposing of these
penalties cause the Company to lose its rights to direct the activities of and receive economic benefits from its VIEs, which in turn may restrict the
Company’s ability to consolidate and reflect in its financial statements the financial position and results of operations of its VIEs.
Pursuant to the contractual arrangements with the VIEs, the Company has the power to direct activities of the VIEs, and can have assets transferred freely
out of the VIEs without any restrictions. Therefore, the Company considers there to be no assets of a consolidated VIE that can be used only to settle
obligations of the VIE, except for registered capital of the VIEs amounting to a total of RMB144.2 million as of December 31, 2018 and 2019. As all the
consolidated VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general
credit of the Company for any of the liabilities of the consolidated VIEs.
F-22
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.3 Basis of consolidation (continued)
The following table sets forth the assets, liabilities and results of operations and cash flows of the VIEs and their subsidiaries taken as a whole, which are
included in the Group’s consolidated financial statements. Transactions between the VIEs and their subsidiaries are eliminated in the balances presented
below:
Cash and cash equivalents
Amounts due from related parties
Accounts receivable
Other receivables, net
Inventory
Prepaid expense and other current assets
Assets held for sale
Long-term investments
Property, equipment and software, net
Intangible assets, net
Goodwill
Total assets
Accounts payable
Amounts due to related parties
Current portion of long-term borrowings
Liabilities held for sale
Deferred tax liability
Other payables and accruals
Total liabilities
Total revenues
Cost of revenues
Net loss
Net cash used in operating activities
Net cash (used in)/generated from investing activities
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents reclassified as held for sale assets
Cash and cash equivalents at end of the year
F-23
December 31, 2018
RMB
December 31, 2019
RMB
67,940
165,940
6,957
95,297
2,120
22,364
—
27,427
12,436
17,295
38,246
456,022
7,379
914,109
281
—
3,725
249,841
1,175,335
913
201,303
7,073
74,283
2,120
2,600
150,767
30,028
4,398
11,085
—
484,570
3
880,079
—
176,902
2,667
191,902
1,251,553
2017
RMB
2018
RMB
2019
RMB
244,830
(130,099)
(603,030)
(584,072)
(5,529)
604,314
14,713
90,967
—
105,680
416,578
(156,093)
(85,882)
(51,713)
(67,516)
81,489
(37,740)
105,680
—
67,940
160,626
(46,670)
(47,672)
(45,393)
3,071
319
(42,003)
67,940
25,024
913
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.4 Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets, long-lived assets and liabilities at the dates of the financial statements and the reported
amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. On an ongoing basis, the Company’s
management reviews these estimates based on information that is currently available. Changes in facts and circumstances may cause the Company to revise
its estimates. Significant accounting estimates reflected in the Group’s consolidated financial statements include, but are not limited to, the allowance for
loan recognized as a result of payment under the guarantee, guarantee liabilities and forfeiture rate of share-based compensation.
2.5 Fair value measurements
Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be
recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market
participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:
Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in
markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data
Level 3 — Unobservable inputs which are supported by little or no market activity
Financial instruments of the Company primarily comprise of cash equivalents, short-term investment, accounts receivable, loan recognized as a result of
payment under the guarantee, finance lease receivables, short-term borrowings, accounts payable, guarantee liabilities and deposit of interests collected
from customers and payable to financing partners. As of December 31, 2018 and 2019, their carrying values approximated their fair values because of their
generally short maturities. The fair value of the guarantee liabilities recorded at the inception of the loan was estimated based on the third-party appraisal’s
report.
F-24
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.6 Foreign currencies
The Group uses Renminbi (“RMB”) as its reporting currency. The USD (“US$”) is the functional currency of the Group’s entities incorporated in Cayman
Islands, British Virgin Islands and Hong Kong, and the RMB is the functional currency of the Group’s PRC subsidiaries.
Transactions denominated in other than the functional currencies are translated into the functional currency of the entity at the exchange rates prevailing on
the transaction dates. Assets and liabilities denominated in other than the functional currency are translated at the balance sheet date exchange rate. The
resulting exchange differences are recorded in the Consolidated Statements of Comprehensive Loss.
The financial statements of the Group are translated from the functional currency to the reporting currency, RMB. Assets and liabilities of the subsidiaries
are translated into RMB using the exchange rate in effect at each balance sheet date. Income and expenses are translated at the average exchange rates
prevailing for the year. Foreign currency translation adjustments arising from these are reflected in the accumulated other comprehensive income. The
exchange rates used for translation on at the end of the year of 2018 and 2019 were US$1.00=RMB 6.8632 and RMB 6.9762, respectively, representing the
index rates stipulated by the People’s Bank of China.
Transactions of the Consolidated Balance Sheets, the Consolidated Statements of Comprehensive Loss and the Consolidated Statements of Cash Flows
from RMB into US$ as of and for the year ended December 31, 2019 are solely for the convenience of the readers and were calculated at the rate of
US$1.00=RMB 6. 9762, representing the index rates stipulated by the People’s Bank of China. No representation is made that the RMB amounts could
have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2019, or at any other rate.
2.7 Cash and cash equivalents
Cash includes currency on hand and deposits held by financial institutions that can be added to or withdrawn without limitation. Cash equivalents represent
short-term, highly liquid investments that are readily convertible to known amount of cash and with original maturities from the date of purchase of
generally three months or less.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.8 Restricted cash and short-term investment
Cash restricted as to withdrawal or for use or pledged as security is reported separately on the face of the Consolidated Balance Sheets. In the ordinary
course of business, the third-party financing partners offer financing solutions to buyers (the “Borrowers”) and the Company is required to provide a
guarantee (Note 2.12 guarantee liabilities). As a result, the Company, as the guarantor, is required to maintain a separate guarantee fund, held as an escrow
account with the third-party financing partners. This guarantee fund is required to be maintained at a fixed percentage of the balance of all loans
outstanding. Beginning in the fourth quarter of 2019, the Group no longer provides loan facilitation related services through its online platform.
As of December 31, 2018 and 2019, the restricted cash in relation to guarantee represented 7.5% and 4.4% of the outstanding facilitated loan balance,
respectively.
Short-term investments are mainly comprised of time deposits and investment products placed with banks with original maturities longer than three months
but less than one year.
2.9 Inventory
Inventories consist of GPS devices, auto check equipments and others. Inventories are valued at the lower of cost or market. Cost of inventories is
determined by the weighted-average method. Adjustments are recorded to write down the carrying amount of any obsolete and excess inventory to its
estimated net realizable value. The Group continually evaluates the recoverability based on assumptions about future customer demand and market
conditions. The evaluation may take into consideration inventory aging, expected demand, anticipated sales price, and other factors. The write-down is
equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future customer demand and market
conditions. As of December 31, 2018, inventories mainly included GPS devices and auto check equipments of RMB8.1 million and RMB1.4 million,
respectively. As of December 31, 2019, inventories mainly included GPS devices and auto check equipments of RMB11.1 million and RMB1.4 million,
respectively.
2.10 Accounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Group makes credit assessments of customers to assess the
collectability of contract amounts prior to entering into contracts. The Group makes specific allowance for doubtful accounts when facts and circumstances
indicate that the receivable is unlikely to be collected. The allowance of accounts receivable was nil as of December 31, 2018 and 2019.
2.11 Advance to consumers on behalf of financing partners
Before the fourth quarter of 2019, the Group facilitates loans extended by third-party financing partners to consumers through its online platform. The
Group started to cooperate with third-party financing partners beginning September 2015. From September 2015, the third-party financing partners
provided all the funds for the consumer loans, while the Group provides services to facilitate such financing transactions. Pursuant to the cooperation
agreements entered into with third-party financing partners, for the purpose of registering the collaterals over the cars purchased by consumers with
relevant government authorities, the Group advances the funds needed to purchase the car to the consumer on financing partners’ behalf to the applicable
car dealers directly. The balance represents a legal claim of the Group from third-party financing partners. The third-party financing partners shall pay the
corresponding amount to the Group as agreed in the corporation agreements. The Group no longer provides loan facilitation related services through its
online platform since the fourth quarter of 2019. As of December 31, 2018 and 2019, the advances to consumers on behalf of financing partners were
RMB521.9 million and RMB2.1 million, respectively.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.12 Financial lease receivables
Financial lease receivables include dealer inventory financing receivables and receivables generated from finance lease arrangements.
The Group provides short-term inventory financing to certain selected car dealers. Those car dealers can apply and obtain loans through the Easy Loan
program. The Group provides funding to the dealer and may in turn obtain financing from one of our financing partners to fund the Easy Loan program. In
order to fund the Easy Loan program, the Group and a third-party financing partner enter into a financing business cooperation agreement, which
establishes that loans provided to dealers are made with direct connection to the financial lease contracts entered into between the Group and the dealers for
the underlying cars. Accordingly, the Group is considered as the primary obligor in the lending relationship and therefore records the liabilities to the third-
party financing partner on its Consolidated Balance Sheets. Consequently, the Group considers that the financial lease receivables generated from financial
lease contracts with car dealers are not settled or extinguished. Therefore, the Group continues to account for the financial lease receivables on its
Consolidated Balance Sheets.
The Group started to cooperate with third-party financing partners from September 2015. Before September 2015, the Group entered into finance lease
arrangements with consumers who needed financing for car purchases. In the third quarter of 2018, the Group started to provide funds in the form of
financial lease agreements to selected Borrowers in addition to the financing facilitated by the Group for the purchase of the cars.
Financial lease receivables are measured at amortized cost and reported on the Consolidated Balance Sheets at outstanding principal adjusted for the
allowance for credit losses. Allowance for financial lease receivables is provided when the Group has determined the balance is impaired.
2.13 Guarantee liabilities
Before the fourth quarter of 2019, the third-party financing partners offered financing solutions to the Borrowers and the Company was required to provide
a guarantee in the event of default.
The financial guarantee is within the scope of ASC Topic 460, Guarantees. The portion of the contract consideration that relates to ASC 460 must first be
allocated to the guarantee, with the residual portion of the transaction price being recorded under ASC Topic 606, “Revenue from Contracts with
Customers”. The liability is recognized at fair value at the inception of the guarantee.
Subsequent to the initial recognition of the guarantee liabilities, the Company’s guarantee obligations are measured in a combination of two components:
(i) ASC 460 component and (ii) ASC 450 component. The liability recorded based on ASC 460 is determined on a contract-by-contract basis and is reduced
as the Company is released from the underlying risk, meaning as the loan is repaid by the Borrower or when the financing partners are compensated in the
event of a default. The liability is reduced only as the Company is released from the underlying risk. This component is a stand ready obligation which is
not subject to the probable threshold used to record a contingent obligation. The other component is a contingent liability determined using historical
experience of borrower defaults, representing the obligation to make future payments, measured using the guidance per ASC 450, Contingencies.
Subsequent to the initial recognition, the guarantee obligation is measured at the greater of the amount determined per ASC 460 (guarantee liability) and
the amount determined based on ASC 450 (contingent liability). As stated in ASC 460-10-35-1, the guarantee liability should generally be reduced by
recording a credit to net income as the guarantor is released from the guaranteed risk. Accordingly, the guarantee liabilities are recognized in “gains/(losses)
from guarantee liabilities” in the statements of comprehensive loss by a systematic and rational amortization method, e.g. over the term of the loan.
As of December 31, 2018 and 2019, the amount of maximum potential future payment that the Group could be required to make under the guarantee for the
underlying facilitated loan balance was RMB27.6 billion and RMB15.5 billion, respectively. Based on management assessment, the estimated value of
collateral approximated amounts of maximum potential future payments.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.14 Property, equipment and software, net
Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the
straight-line method over the following estimated useful lives, taking into account any estimated residual value:
Electronic equipment
Furniture
Vehicles and motors
Software
Leasehold improvement
3 years
5 years
4 years
5 years
lesser of the term of the lease or the estimated useful lives of the assets
The Company recognized the gain or loss on the disposal of property, equipment and software in the Consolidated Statements of Comprehensive Loss.
2.15 Intangible assets, net
Intangible assets represent software copyright and supplier relationship acquired. These intangible assets are carried at acquisition cost less accumulated
amortization and amortized on a straight line basis over their estimated useful lives of the respective assets, which is usually 5 years.
Separately identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable.
2.16 Goodwill
In accordance with ASC 805 Business Combination, goodwill represents the excess of the purchase consideration over the fair value of assets and liabilities
of businesses acquired.
Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually, or more frequently if events or changes in circumstances
indicate that it might be impaired based on the requirements of ASC 350-20. In accordance with the FASB guidance on “Testing of Goodwill for
Impairment,” we have elected to perform a qualitative assessment to determine whether the two-step impairment testing of goodwill is necessary. In this
assessment, we consider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific
information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than
the carrying amount, the quantitative impairment test is performed. Otherwise, no further testing is required. Recoverability of goodwill is evaluated using
a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unit exceeds the
carrying value of the net assets assigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carrying value of
the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, the second step of the impairment test is performed in order to
determine the implied fair value of a reporting unit’s goodwill. Determining the implied fair value of goodwill requires valuation of a reporting unit’s
tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of a
reporting unit’s goodwill exceeds its implied fair value, goodwill is deemed impaired and is written down to the extent of the difference. The Company
estimates total fair value of the reporting unit using discounted cash flow analysis, and makes assumptions regarding future revenue, gross margins,
working capital levels, tax and cash flows of the reporting unit. As of December 31, 2019, there was no event or any circumstance that the Company
identified, which indicate that the fair value of the Company’s reporting unit was substantially lower than the respective carrying value.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.16 Goodwill (continued)
As of December 31, 2019, RMB100.9 million of the goodwill balance was reclassified as assets held for sale due to the Company’s divestiture of salvage
car related business.
2.17 Long-term investments
In accordance with ASC 323 Investment—Equity Method and Joint Ventures, the Company accounts for an equity investment over which it has significant
influence but does not own a majority of the equity interest or otherwise controls and the investments are either common stock or in substance common
stock using the equity method. The Company’s share of the investee’s profit and loss is recognized in the earnings of the period.
Equity securities without readily determinable fair values are measured and recorded using a measurement alternative that measures the securities at cost
minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. Prior to fiscal 2018, these securities were accounted
for using the cost method of accounting, measured at cost less other-than-temporary impairment.
The Group also invests in convertible redeemable securities. These securities are reported at fair value, classified and accounted for as available-for-sale
debt securities in investment securities. The treatment of a decline in the fair value of an individual security is based on whether the decline is other-than-
temporary. The Group assesses its available-for-sale debt securities for other-than-temporary impairment by considering factors including, but not limited
to, its ability and intent to hold the individual security, severity of the impairment, expected duration of the impairment and forecasted recovery of fair
value. Investments classified as available-for-sale debt securities are reported at fair value with unrealized gains or losses, if any, recorded in accumulated
other comprehensive income as a component of shareholders’ equity. If the Group determines a decline in fair value is other-than-temporary, the cost basis
of the individual security is written down to fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss charged in
others, net in the Consolidated Statements of Comprehensive Loss. The fair value of the investment would not be adjusted for subsequent recoveries for
increases in fair value.
2.18 Impairment of long-lived assets and intangible assets with definite lives
Long-lived assets including intangible assets with definite lives are assessed for impairment, whenever events or changes in circumstances indicate the
carrying value of an asset may not be recoverable in accordance with ASC 360, Property, Plant and Equipment. The Company measures the carrying
amount of long-lived assets against the estimated undiscounted future cash flows associated with it. The impairment exists when the estimated
undiscounted future cash flows are less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the
carrying value of the asset exceeds its fair value. No impairment of long-lived assets was recognized for the years ended December 31, 2018 and 2019.
2.19 Deferred revenue
Deferred revenue mainly represents warranty program provided by the Company and the share of fee revenue earned by the appointed depositary of the
Company. The warranty program includes a 6-month or 10,000 kilometer and 1-year or 20,000 kilometer warranty, covering both maintenance and all
major structural components. As of December 31, 2018 and 2019, the deferred revenue was RMB115.2 million and RMB54.3 million, respectively.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.20 Revenue recognition
Prior to the Divestiture Transactions occurred during 2019 and subsequent period in 2020 disclosed in Note 1, the Group used to primarily engage in
operating used car e-commerce platforms through its mobile applications (Uxin Used Car / Uxin Auction) and websites (www.xin.com /
www.youxinpai.com), facilitating used car transaction services (2B / 2C) and facilitating financing solutions offered by third-party financing partners to
buyers for their used car purchases (2C). Revenues generated from these businesses were presented as three revenue streams as Transaction facilitation
revenue and Loan facilitation revenue to consumers (2C), and Transaction facilitation revenue to business (2B). Meanwhile, the Group has been focusing
more on the 2C cross-regional service business since second half of 2018. The cross-regional transactions mean transactions completed on the Company’s
platform where the buyer completes the purchase of a car without having physically inspected the car on-site, which primarily comprise transactions where
the buyer is located in a different city from which the car purchased. Whereas the 2C intra-regional transactions mainly include similar transactions when
the consumers are located in the same city as where the cars are located.
Starting from the third quarter of 2019, given the divestiture of 2C intra-regional business and loan facilitation service to Golden Pacer (Note 1), the Group
modified its existing/surviving cross-regional service contract and no longer provides loan guarantee service. Therefore, 2C cross-regional business is
renamed as Online used car transaction to consumers. Accordingly, the revenues generated from the Online used car transaction are renamed as 2C -
Commission revenue, and value-added service revenue starting in the third quarter of 2019 and beyond. For the divestiture of 2C business, the Group
presented the results as discontinued operations for the year of 2019 and all the prior comparable periods (Note 3).
Besides these two main revenue streams, the Group always has Other revenue generated from the other services and businesses throughout all periods.
The Group adopted ASC Topic 606, “Revenue from Contracts with Customers” for all periods presented. Consistent with the criteria of Topic 606, the
Group recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to receive in exchange for those goods or services. To achieve that core principle, an entity should apply five steps defined under Topic 606. The
Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. Revenue arrangements with
multiple performance obligations are divided into separate units of accounting. The Company considered appropriate method to allocate the transaction
price to each performance obligations, based on the relative standalone selling prices of the services provided. In estimating the standalone selling price for
the services that are not directly observable, the Company considered the suitable methods included in ASC 606-10-21-34, and determined the adjusted
market assessment approach is the most appropriate method. When estimating the relative standalone selling prices, the Group considers selling prices of
similar services. Revenue is recognized upon transfer of control of these promised services to a customer.
The Group, from time to time, provides incentives to consumers. These incentives are given in the form of discount coupon to consumers. As these
incentives were provided without any distinct good or service in return, these incentives have been recorded as reduction of revenue, pursuant to the
guidance under ASC 606.
Revenue is recorded net off cash incentives and value-added-tax collected from customers.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.20 Revenue recognition (continued)
Online used car transaction services
The Company’s online platform and offline infrastructure enable consumers to buy used cars online via online used car transaction services. The online
used car transaction services help individual consumers complete their purchases of cars without having the consumers physically inspect the cars on-site,
which primarily apply for the transactions when the consumers are located in different cities from where the cars are located. The Company’s offline
infrastructure provides consumers with payment and settlement, delivery and fulfilment services (including logistics and delivery, title transfer and vehicle
registration), and warranty services. The Company uses www.xin.com as its 2C online platform, which assists in publishing the used cars of car dealers (the
“B”, the “Dealer” or the “Seller”) for consumers (the “C”, the “Consumer”, or the “Buyer”). The online used car business mainly includes three services as
follows:
· Broker transaction (or commission-related service): The Company provides used car purchase assistance, used car inspection services, title
transfer and title registration service, as well as logistics service during the purchase process. The Company charges the Consumer the commission
fees based on agreed percentage of final car sales price;
· Value-added service: For the Consumers that have financing needs, the Company provides additional services to Consumers based on agreed
amount or agreed percentages, including but not limited to the following:
1. Channel service:
· Uxin provides advice on financial solutions and refer Consumers to financing platforms
· Uxin helps check the documents in relation to application of financial products prepared by Consumers
2. Safety-guaranteed service:
· Uxin provides GPS purchase and installation service
· Uxin provides other assistances to Consumers if necessary, such as sharing the GPS trajectory when there is a car theft, etc.
3. Mortgage service:
· Uxin assists in mortgage registration process if needed
· Uxin assists on the purchase of insurance policy offered by insurance company
· Warranty service: is provided for selected cars sold with Uxin’s authentication, e.g. for cars sold with “Uxin golden authentication”, the Group
provides the Buyer with 30-day return due to significant issues that existed prior to deal close & 1-year or 20,000-kilemeter warranty service for
qualified issues up to the car price; For cars sold with “Uxin silver authentication”, the Group provides the Buyer with 30-day return due to issues
that existed prior to deal close & 6-month or 10,000-kilemeter warranty service for qualified issues up to RMB 20,000.
The Company determined the Consumer as customer of the online used car business in accordance with ASC 606, the Company collects the fees for both
of the Broker transaction service and Value-added service from the Consumer, only. The Company may sell the Broker transaction service alone, but does
not sell the Value-added service or warranty service individually or separately. These two services are sold together with the Commission-related service
either separately or collectively. Each of these services is identified as one performance obligation. The Company allocates the transaction price to each of
these performance obligations on a relative standalone selling price basis or market price, based on different type of the contract or combined contracts.
The Company recognizes both the Commission revenue from the Broker transaction service and the Value-added services upon the closing of car sale; For
warranty service (6-month and 1-year types only), since the Consumer receives, consumes and benefits the warranty service simultaneously when the
Company performs the service, therefore the Company recognizes the warranty revenue over the warranty period, i.e. 6-month or 1-year period. Revenue
derives from value-added service and warranty service were collectively reported as Value-added service revenue on the Company’s Consolidated
Statement of Comprehensive Loss.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.20 Revenue recognition (continued)
Others
Other revenue is mainly comprised of sales of commission of salvage cars sales, interest income of financial lease, etc.
In the third quarter in 2018, the Group started to provide funds in the form of financial lease agreements to selected Borrowers in addition to the financing
facilitated by the Group for the purchase of the cars. In these arrangements, the Group is considered the originator of the financing and held such creditor’s
rights. The Group generates interest income from these arrangements. Interest income is recognized over the financial lease period, taking into account of
the principal outstanding and the effective interest rate over the period to maturity.
2C
Given the divestiture of the Group’s 2C intra-regional business and loan-facilitation related service, the Group presented the results of the these business as
discontinued operation for the year of 2019 and all the prior comparable periods (Note 3) based on the following recognition policy:
The Company’s online platform and offline infrastructure facilitates used car dealers to list and sell its used cars to individual consumers via cross-regional
service and intra-regional service. The Company started its cross-regional transaction facilitation service in the first quarter of 2018. The cross-regional
transaction facilitation services help individual consumers complete their purchases of cars without having the consumers physically inspect the cars on-
site, which primarily apply for the transactions when the consumers are located in different cities from where the cars are located; whereas intra-regional
transaction facilitation services cater to local individual consumers. For each used car sold through intra-regional 2C business with financing solutions and
each used car sold through cross-regional 2C business with or without financing solutions, the Company charges a transaction facilitation service fee to the
consumer that equals the higher of a certain percentage of the price of the car and a minimum fee. The Company used to charge transaction facilitation
service fees to car dealers for each used car sold through its intra-regional 2C business without financing solutions. Starting in the second half of 2018, to
further facilitate market expansion, the Company gradually discontinued charging car dealers transaction facilitation service fees in intra-regional
transactions without financing solutions. The transaction facilitation service fee is for services provided through its platform in connecting consumers with
used car sellers, facilitating car sales to consumers and providing after-sale warranty. The Company’s offline infrastructure provides consumers with
vehicle inspection, payment and settlement, delivery and fulfilment services, and warranty services. The Company has identified two performance
obligations for these transactions—warranty services and other transaction facilitation services. The revenue relating to warranty services is deferred and
recognized over the warranty period as the Company stands ready to perform during that period. Other than the warranty services provided, the transaction
facilitation revenue is recognized at a point in time when the service is rendered, which occurs upon the completion of the successful transaction.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.20 Revenue recognition (continued)
2B
Given the divestiture of the Group’s entire 2B online used car auction business occurred in the first quarter of 2020, the Group presented the results of the
2B business as discontinued operation for the year of 2019 and all the prior comparable periods (Note 3) based on the following revenue recognition
policy:
Launched in 2011, the Company’s 2B business, Uxin Auction (“优信拍”), caters to business buyers with a comprehensive suite of solutions, connecting
businesses with one another across China, helping them source vehicles, optimizing their turnover and facilitating cross-regional transactions. Business
sellers include used car dealers, 4S dealership, which are dealerships that are authorized to sell the products of a single brand of automobiles and provide
key automobile-related services, car rental companies, auto manufactures and large corporation that may need to dispose of large fleets of used cars. Cars
are sold through Uxin Auction through online auctions. The Group earns transaction facilitation income upon each successful close of an auction from
buyers. Transaction facilitation income, which is a certain percentage of the selling price of the underlying car or a minimum amount is recognized at a
point in time following the transfer of control of such services to the customer, which occurs upon the completion of a successful transaction. As the
Company does not assume inventory risk for the used cars, it is considered to be an agent in accordance with ASC 606. Accordingly, the Company
recognizes the transaction facilitation income when the performance obligation is satisfied.
Remaining performance obligations
Revenue allocated to remaining performance obligations represents that portion of the overall transaction price that has been received (or for which the
Group has an unconditional right to payment) allocated to performance obligations that the Group has not yet fulfilled, which is presented as deferred
revenue that has not yet been recognized. As of December 31, 2019, the aggregate amount of the transaction price allocated to remaining performance
obligations was RMB31.3 million, reflecting the Group’s remaining obligations. The Group expects to recognize approximately 100% of the revenue over
the next 12 months.
2.21 Value-added-tax (“VAT”) and surcharges
The Company’s subsidiaries and VIEs are subject to value-added tax and related surcharges on the revenues earned for services provided in the PRC. The
applicable value-added-tax rate for general VAT payers is set out in the following table.
Type of service
Commission
Value-added service
Other services
Applicable VAT rate (%)
6%
6%
6%
The surcharges (i.e. urban construction and maintenance tax, educational surtax, local educational surtax), vary from 5% to 12% of the value-added-tax
depending on the tax payer’s location. The surcharges are recorded in the cost of revenue in the Consolidated Statements of Comprehensive Loss.
2.22 Cost of revenues
Cost of revenues primarily consists of salaries and benefits expenses, cost of title transfer and registration, delivery and logistics cost, rental for transaction
centers, platform maintenance cost, GPS tracking device costs, cost of warranty services provided, etc. Cost of revenues in relation to 2C intra-regional and
loan facilitation related business and 2B related business was reclassified as discontinued operations.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.23 Sales and marketing expenses
Sales and marketing expenses primarily consist of salaries and benefits expenses for sales and marketing personnel, and advertising and promotion
expenses. Advertising and promotion expenses primarily include branding advertisements, online traffic acquisition costs and costs incurred in other
marketing activities. Advertising costs are expensed as incurred and the total amounts charged to the Consolidated Statements of Comprehensive Loss
amounted to approximately RMB27.6 million, RMB889.0 million and RMB443.6 million for the years ended December 31, 2017, 2018 and 2019,
respectively.
2.24 Research and development expenses
Research and development expenses primarily consist of salaries and benefits expenses, fees for outsourced technical services and depreciation of servers
and computers relating to research and development.
All research and development costs are expensed as incurred. Software development costs required to be capitalized under ASC 350-40, Internal-Use
Software, were not material to our consolidated financial statements.
2.25 General and administrative expenses
General and administrative expenses primarily consist of salaries and benefits and share-based compensation for employees engaged in management and
administration positions or involved in general corporate functions, office rental, professional service fees and depreciation.
2.26 Share-based compensation
The Company follows ASC 718 to determine whether a share option or a restricted share unit should be classified and accounted for as a liability award or
equity award. All grants of share-based awards to employees and directors classified as equity awards are recognized in the financial statements based on
their grant date fair values which are calculated using an option pricing model. The Company classifies the share-based awards granted to employees as
equity award, and has elected to recognize compensation expense on share-based awards with service condition on a graded vesting basis over the requisite
service period, which is generally the vesting period.
Under ASC 718, the Company applies the Binominal option pricing model in determining the fair value of options granted.
ASC 718 requires forfeiture rates to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial
estimates. Share-based compensation expense is recorded net of estimated forfeitures such that expense is recorded only for those share-based awards that
are expected to vest.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.27 Taxation
Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not
assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.
Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the
consolidated financial statements, net operating loss carries forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided
in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities are measured using enacted rates expected to apply to
taxable income in which temporary differences are expected to be received or settled. The effect on deferred tax assets and liabilities of changes in tax rates
is recognized in the statement of comprehensive loss in the period of the enactment of the change.
The Group considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely than not be
realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future
profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused, and its tax planning strategies. The ultimate
realization of deferred tax assets is dependent upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in
the tax law and during the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Group
has considered possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income
exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies, and
(iv) specific known trend of profits expected to be reflected within the industry.
The Group recognizes a tax benefit associated with an uncertain tax position when, in its judgment, it is more likely than not that the position will be
sustained upon examination by a taxing authority. For a tax position that meets the-more-likely-than-not recognition threshold, the Group initially and
subsequently measures the tax benefit as the largest amount that the Group judges to have a greater than 50% likelihood of being realized upon ultimate
settlement with a taxing authority. The Group’s liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances,
such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which
they are identified. The Group’s effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent
adjustments as considered appropriate by management. The Group classifies interest and penalties recognized on the liability for unrecognized tax benefits
as income tax expense.
F-35
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.28 Business combinations and non-controlling interests
The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.”
The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to
the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities
acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The
excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in
the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference is recognized directly in the Consolidated Statements of Comprehensive Loss. During the
measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities
assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired
or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Consolidated Statements of Comprehensive Loss.
In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquire immediately before obtaining
control at its acquisition date fair value and the remeasurement gain or loss, if any, is recognized in the Consolidated Statements of Comprehensive Loss.
For the Company’s majority owned subsidiaries and consolidated VIEs, a non-controlling interest is recognized to reflect the portion of their equity which
is not attributable, directly or indirectly, to the Company. When the non-controlling interest is contingently redeemable upon the occurrence of a conditional
event, which is not solely within the control of the Company, the non-controlling interest is classified as mezzanine equity. Consolidated net loss on the
Consolidated Statements of Comprehensive Loss includes net loss attributable to non-controlling interests when applicable.
2.29 Loss per share
Basic loss per share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding
during the period using the two-class method. Under the two-class method, the net loss is allocated between ordinary shares and other participating
securities based on their participating rights. Net loss is not allocated to other participating securities if based on their contractual terms they are not
obligated to share in the loss. Diluted loss per share is calculated by dividing net loss attributable to ordinary shareholders by the weighted average number
of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of shares issuable upon the conversion
of the preferred shares using the if-converted method, and shares issuable upon the exercise of share options using the treasury stock method. Ordinary
equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive.
F-36
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.30 Operating leases
The Company applied ASC 842, Leases, on January 1, 2019 on modified retrospective basis and has elected not to recast comparative periods. The
Company has elected the package of practical expedients on the adoption date, which allows the Company not to reassess (1) whether any expired or
existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and
(3) initial direct costs for any expired or existing leases. The Company determines if an arrangement is or contains a lease at inception. Operating leases are
primarily for offices and stores and are included in Right-of-use assets, net, Operating lease liabilities, current and Operating lease liabilities, non-current
on its Consolidated Balance Sheet. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and Operating lease
liabilities represent obligation to make lease payment arising from the lease. The operating lease right of use assets and liabilities are recognized at lease
commencement date based on the present value of lease payment over the lease term. As most of the Company’s leases do not provide an implicit rate, the
Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease
payments. The right of use assets also includes any lease payments made. The Company’s lease term may include options to extend or terminate the lease.
Renewal options are considered within the operating lease right of use assets and liabilities when it is reasonably certain that the Company will exercise
that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
For operating lease with a term of one year or less, the Company has elected to not recognize a lease liability or lease right of use asset on its Consolidated
Balance Sheet. Instead, it recognizes the lease payment as expense on a straight-line basis over the lease term. Short-term lease costs are immaterial to its
Consolidated Statements of Comprehensive Loss. The Company has operating lease agreements with insignificant non-lease components and has elected
the practical expedient to combine and account for lease and non-lease components as a single lease component.
Upon the adoption of the new lease standard, on January 1, 2019, the Company recognized operating lease assets of RMB271.9 million and total operating
lease liabilities of RMB257.5 million (including current liabilities of RMB55.1 million) on the Consolidated Balance Sheet. There was no impact to
accumulated deficit at adoption.
F-37
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.31 Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,
which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The amortized cost basis of
financial assets should be reduced by expected credit losses to present the net carrying value in the financial statements at the amount expected to be
collected. The measurement of expected credit losses is based on past events, historical experience, current conditions and forecasts that affect the
collectability of the financial assets. Additionally, credit losses relating to available-for-sale debt securities should be recorded through an allowance for
credit losses. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for
fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments
in this Update are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities,
including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this Update
are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. All entities
may adopt the amendments in this Update earlier as of fiscal year beginning after December 15, 2018, including interim periods within these fiscal years.
The Company will adopt this new guidance on January 1, 2020 using the modified retrospective transition approach. The guidance replaces the incurred
loss impairment methodology with an expected credit loss model, which would mainly have impact on credit losses in connection with loans recognized as
a result of payment under the guarantee liabilities and guarantee liabilities. In 2019, the FASB subsequently issued ASU 2019-04, ASU 2019-05, and ASU
2019-11, respectively, which contained updates to ASU 2016-13. The cumulative effect on the opening balance of accumulated deficit upon adoption of
ASC326 would not be greater than RMB350.0 million.
In January 2017, the FASB issued ASU No. 2017-04 Intangibles—Goodwill and Other (Topic 350). Under the amendments in this Update, an entity should
perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should
not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible
goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the
requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to
perform Step 2 of the goodwill impairment test. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer, other than smaller
reporting companies (SRCs), should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning
after December 15, 2019. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual
or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. The Company will adopt this new guidance on January 1, 2020 and will apply the
revised impairment model for all goodwill impairment tests within that fiscal year. The Company has determined that the impact of this new guidance on
its consolidated financial statements is not expected to be material.
In August 2018, the FASB issued ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirement
for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the FASB’s
disclosure framework project. The new guidance is effective for the fiscal years and interim reporting periods within those fiscal years, beginning after
December 15, 2019. Early adoption is permitted for the adoption of either the entire ASU or only the provisions that eliminate or modify the requirements.
The Company has determined that the impact of this new guidance on its consolidated financial statements is not expected to be material.
F-38
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
2. PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
2.31 Recent Accounting Pronouncements (continued)
In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an
exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.
This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for
any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be
considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a
separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in
the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with
early adoption permitted. The Company is currently evaluating the impact.
F-39
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
3. DISCONTINUED OPERATIONS
Divestiture of 2C intra-regional business and loan-facilitation related service
On July 12, 2019 and September 30, 2019, the Company entered into a binding term sheet and definitive agreements with Golden Pacer relating to the
divestiture of its entire 2C intra-regional business and loan facilitation related service, respectively. On April 23, 2020, the Company entered into
supplemental agreements with Golden Pacer to modify and supplement certain terms and conditions in connection with the divestiture. Pursuant to the
series of agreements, the Company has divested its entire 2C intra-regional business to Golden Pacer and ceased to provide loan facilitation related
guarantee starting from the fourth quarter of 2019.
Results of the discontinued operations of 2C intra-regional business and loan facilitation related service were as follows:
Revenues
To consumers (“2C”)
Transaction facilitation revenue
Loan facilitation revenue
Total revenues
Cost of revenues
Gross profit
Operating expenses
Sales and marketing
Research and development
General and administrative
Gains/(losses) from guarantee liabilities
Total operating expenses
Loss from operations
Interest income, net
Other expenses, net
Foreign exchange gain
Loss from discontinued operations before income tax expense
Income tax expense
Net loss from discontinued operations
F-40
2017
RMB
2018
RMB
2019
RMB
230,250
944,406
1,174,656
(478,137)
696,519
(1,758,892)
(201,082)
(99,361)
444
(2,058,891)
(1,362,372)
(32,218)
(12,552)
1,104
(1,406,038)
(359)
(1,406,397)
481,055
1,568,705
2,049,760
(427,548)
1,622,212
(1,010,446)
(185,488)
(504,066)
2,483
(1,697,517)
(75,305)
(81,128)
(14,965)
—
(171,398)
(12,941)
(184,339)
391,447
1,141,981
1,533,428
(296,347)
1,237,081
(1,018,483)
(155,168)
(486,098)
(168,212)
(1,827,961)
(590,880)
(14,355)
(4,468)
534
(609,169)
(2,992)
(612,161)
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
3. DISCONTINUED OPERATIONS (CONTINUED)
Divestiture of 2C intra-regional business and loan-facilitation related service (continued)
In the fourth quarter of 2019, the Company transferred the legal titles of assets and liabilities in relation to the historically-facilitated loans for XW bank to
Golden Pacer as one of the pre-closing conditions with no consideration exchanged. The transaction contemplated under the definitive and supplemental
agreements was closed upon the signing of the supplemental agreements on April 23, 2020. Due to the legal titles of the assets and liabilities being
transferred prior to year-end of 2019 while the transaction was not closed yet, these pre-transferred assets and liabilities were reclassified on a net basis
under the name of “Net asset transferred” as of December 31, 2019.
The related assets and liabilities classified as held for sale of 2C intra-regional business and loan facilitation related service as of December 31, 2018 were
as follows:
Asset
Restricted cash
Total asset held for sale
Liabilities
Guarantee liabilities
Deposit for interest collected from consumers and payable to financing partners - current
Total current liabilities
Deposit for interest collected from consumers and payable to financing partners - non-current
Total non-current liabilities
Total liabilities held for sale
December 31, 2018
RMB
1,001,325
1,001,325
174,828
168,596
343,424
10,386
10,386
353,810
The cash flow summary of the discontinued operations of 2C intra-regional business and loan facilitation related service were as follows:
Net cash used in operating activities
Net cash used in investing activities
F-41
2017
RMB
2018
RMB
2019
RMB
(1,526,122)
(2,491)
(808,893)
(4,642)
(821,185)
(187)
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
3. DISCONTINUED OPERATIONS (CONTINUED)
Divestiture of 2B business
On March 24, 2020, the Company entered into definitive agreements with 58.com to sell its 2B online used car auction business.
Results of the discontinued operations of 2B business were as follows:
Transaction Facilitation Revenue
Cost of revenues
Gross profit
Operating expenses
Sales and marketing
Research and development
General and administrative
Total operating expenses
Net loss from discontinued operations
Assets and liabilities classified as held for sale of 2B business were as follows:
Advance from buyers collected on behalf of sellers
Other payables and accruals
Total liabilities held for sale
The condensed cash flows of the discontinued operations of 2B business were as follows:
2017
RMB
2018
RMB
2019
RMB
467,583
(176,916)
290,667
(264,919)
(24,928)
(73,397)
(363,244)
(72,577)
606,599
(292,595)
314,004
(187,811)
(19,429)
(108,949)
(316,189)
(2,185)
283,711
(157,653)
126,058
(120,082)
(13,629)
(42,636)
(176,347)
(50,289)
December 31,
2018
RMB
December 31,
2019
RMB
105,456
69,232
174,688
50,396
60,525
110,921
2017
RMB
2018
RMB
2019
RMB
Net cash used generated from/(used in) operating activities
Net cash (used in)/generated from investing activities
27,897
(17,206)
(20,699)
(40,180)
2,338
1,159
F-42
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4. BUSINESS COMBINATION
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
During the periods presented, the Company completed several transactions to acquire controlling shares to enrich its products and to expand its business.
The Company makes estimates and judgments in determining the fair value of the acquired assets and liabilities, based in part on independent appraisal
reports as well as its experience with purchasing similar assets and liabilities in similar industries. The amount excess of the purchase price over the fair
value of the identifiable assets and liabilities acquired is recorded as goodwill. The major acquisitions during the periods presented are as follows:
Acquisition of Beijing Youxin Chefang Automotive Technical Service Co., Ltd. (“Chefang”)
Chefang is a company that engages in services related to car maintenance. In order to enhance the service quality to consumers, on October 8, 2015, the
Company acquired 26% ordinary equity interests in Chefang with the consideration of RMB10 million. On September 28, 2016, the Company paid
RMB10 million with which the acquired ordinary equity interests in Chefang increased to 40.96%. On May 31, 2017, the Company acquired further
10.04% ordinary equity interest in Chefang with the consideration of RMB3 million in cash and obtained the power to control Chefang with the
accumulated acquired ordinary equity interests stepped up to 51%. These investments were accounted for under equity method due to significant influence
the Group has over Chefang until the control was obtained and the investments were in the form of ordinary shares. The goodwill recognized for the
acquisition was RMB7.8 million. The Group also recognized a gain of RMB3.9 million upon the acquisition of the remeasurement of previously held
equity interests. In the fourth quarter of 2018, the Company acquired further 49% ordinary equity interest in Chefang with the consideration of RMB 2.0
million in cash and controlled Chefang with the accumulated acquired ordinary equity interests stepped up to 100%. RMB3.7 million goodwill impairment
was recorded for the year ended December 31, 2018.
Acquisition of Baogu Vehicle Technology Service (Beijing) Co., Ltd. (“Baogu”)
In order to enhance the service quality to consumers, in June 2015, the Company acquired 30% ordinary shares of Baogu, a vehicle warranty service
provider, and accounted for the investment using equity method. The purchase consideration was RMB12.2 million. In August 2017, the Company
acquired the remaining 70% ordinary shares of Baogu with consideration of RMB4 million in cash and obtained the power to control Baogu. The
investment in the first 30% of ordinary shares of Baogu was accounted for under equity method due to significant influence the Group had over Baogu until
the Group obtained control of Baogu. The goodwill recognized from the acquisition was RMB4.2 million. The Group also recognized a gain of RMB1.3
million upon the acquisition of the remeasurement of previously held equity interests.
The results of the acquired entities’ operations have been included in continuing operation in the Company’s consolidated financial statements since their
respective dates of acquisition.
Acquisition of Zhejiang Dongwang Internet Technology Co., Ltd. (“Dongwang”) and Fairlubo Auction Company Limited (“Fairlubo”)
In addition to the above mentioned business transactions, the Company acquired Fairlubo in 2015 and Dongwang in 2018, both of which engage in salvage
car related business. Dongwang and Fairlubo along with goodwill of RMB100.9 million resulted from their acquisition will be divested in 2020 (Note 1)
and reclassified as held for sale assets as of December 31, 2019 in the Company’s consolidated financial statements.
F-43
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
5. ADVANCE TO CONSUMERS ON BEHALF OF FINANCING PARTNERS
December 31, 2018
RMB
December 31, 2019
RMB
Advance to consumers on behalf of financing partners
521,908
2,135
The Group facilitated loans extended by third-party financing partners to consumers through their online platform before the fourth quarter of 2019. The
third-party financing partners provided all the funds for the consumer loans, while the Group provided services to facilitate such financing transactions.
Pursuant to the cooperation agreements entered into with third-party financing partners, for the purpose of registering the collateral over the car purchased
by consumers with relevant government authorities, the Group advanced the funds needed to purchase the car to the consumer on financing partners’ behalf
to the applicable car dealers directly. The third-party financing partners paid the corresponding amounts to the Group as agreed in the corporation
agreements. Since the fourth quarter of 2019, the Company ceased to provide loan facilitation related services and no longer advanced funds to consumers
on behalf of financing partners.
The balance of RMB2.1million as of December 31, 2019 have been subsequently paid by financing partners.
F-44
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
6. LOAN RECOGNIZED AS A RESULT OF PAYMENT UNDER THE GUARANTEE
The third-party financing partners offer financing solutions to the Borrowers and the Group is required to provide a guarantee. In the event of a payment
default from the Borrower, the Group is required to repay the monthly installment or full amount of outstanding loan to the financing partner as the
guarantor. As such, the Group recognized loan receivables as a result of payment under the guarantee deducted by an allowance to its expected recoverable
amounts in the consolidated balance sheets.
Loan recognized as a result of payment under the guarantee
Less: allowance for doubtful accounts
December 31, 2018
RMB
December 31, 2019
RMB
810,327
(256,639)
553,688
2,343,586
(763,122)
1,580,464
The movement of allowance for doubtful accounts for the years ended December 31, 2017, 2018 and 2019 was as follows:
Beginning of the year
Addition
Provision for credit losses (i)
Write-off
Bought out by certain non-bank financing institutions without recourse
Payments from the borrowers or other recoveries
Ending of the year
2017
RMB
2018
RMB
2019
RMB
(7,222)
(184,586)
(36,474)
15,606
—
23,371
(189,305)
(189,305)
(257,953)
(37,961)
37,757
85,560
105,263
(256,639)
(256,639)
(398,167)
(255,105)
—
—
146,789
(763,122)
(i) Due to the impact of a series of regulations governing lending and debt collection promulgated by relevant authorities in the fourth quarter of 2019, the
performance of the loan recognized as a result of payment under the guarantee has been adversely affected, and significant provision for additional credit
losses was incurred in the fourth quarter of 2019, taking into the consideration of credit grades, vehicle collateral repossession and residual value of vehicle
collateral.
F-45
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
6. LOAN RECOGNIZED AS A RESULT OF PAYMENT UNDER THE GUARANTEE (CONTINUED)
The Company relies on the consumers’ credit history, loan-to-value ratio and other certain application information to evaluate and rank their risk on an
ongoing basis. The credit grades represent the relative likelihood of repayment. Customers assigned a grade of “Normal” are determined to have the highest
probability of repayment, customers assigned a grade of “Attention” are determined to have a lower probability of repayment, and customers assigned a
grade of “Secondary” are determined to have a lowest probability of repayment. Loan performance is reviewed on a recurring basis to identify whether the
assigned grades adequately reflect the customers’ likelihood of repayment.
The balance of loan recognized as result of payment under the guarantee by grade of monitored credit risk quality indicator as of December 31, 2018 and
2019 were listed as below:
Normal
Attention
Secondary
December 31, 2018
RMB
December 31, 2019
RMB
286,644
229,474
294,209
810,327
807,023
1,156,067
380,496
2,343,586
Loan recognized as a result of payment under the guarantee of RMB 435.3 million was pledged as collateral for long-term borrowings of RMB8.0 million
and current portion of long-term borrowings of RMB152.3 million (Note 14).
7. ADVANCE TO SELLERS
Advance to sellers
December 31, 2018
RMB
December 31, 2019
RMB
692,714
288,550
When facilitating used car transaction, the Group connects the sellers and buyers and provides service in relation to the cash flow remittance, for example,
the Group collects the cash from buyers and remits to sellers. The balance represents the prepayments to sellers by the Group. No allowance of advance to
sellers was provided at December 31, 2018 and 2019, since no collection issues occurred in the past.
F-46
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
8. OTHER RECEIVABLES, NET
Deposits in non-bank financing partners (i)
Rental and other deposits
Staff advance
Receivables from third-party payment settlement platform
Others
Less: allowance for doubtful accounts
December 31, 2018
RMB
December 31, 2019
RMB
502,550
77,902
55,652
34,787
42,970
713,861
(6,457)
707,404
294,763
89,761
28,080
7,143
26,428
446,175
(6,119)
440,056
(i) In relation with the Company’s historically-facilitated loans for non-banking financial institutions, which were not transferred to Golden Pacer during
the divestiture of loan facilitation related business (Note 3), the Company, as the guarantor, is required to deposit a separate guarantee fund with those
financial institutions.
The movement of allowance for doubtful accounts for the years ended December 31, 2017, 2018 and 2019 was as follows:
At the beginning of year
Addition
Write-off
Reclassified as assets held for sale
At the ending of year
9. PREPAID EXPENSES AND OTHER CURRENT ASSETS
VAT-input deductible
Prepaid non-banking financing partners service fees
Prepaid rental expense
Prepaid consulting and professional service fees
Prepaid marketing expense
Others
F-47
2017
RMB
2018
RMB
2019
RMB
(269)
(3)
—
—
(272)
(272)
(23,608)
17,423
—
(6,457)
(6,457)
(1,411)
—
1,749
(6,119)
December 31, 2018
RMB
December 31, 2019
RMB
64,237
26,295
46,581
37,236
218,145
24,820
417,314
74,746
21,335
16,560
13,124
12,627
20,516
158,908
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
10. FINANCIAL LEASE RECEIVABLES
Financial lease receivables include dealer inventory financing receivables and receivables generated from finance lease arrangements entered into with
consumers.
The following table presents financial lease receivables as of December 31, 2018 and 2019, respectively.
Financial lease receivables due from car dealers
Less: allowance for doubtful accounts
Financial lease receivables due from consumers
Less: allowance for doubtful accounts
Financial lease receivables, net
December 31, 2018
RMB
December 31, 2019
RMB
239,854
—
239,854
61,547
(6,890)
54,657
294,511
130,631
(16,390)
114,241
14,346
(6,767)
7,579
121,820
The following present the aging of past-due financial lease receivables as of December 31, 2018:
1-90 days
RMB
Above 90 days
RMB
Total past due
RMB
Current
RMB
Total
RMB
Financial lease receivables due from car dealers
Financial lease receivables from consumers
—
—
—
—
7,748
7,748
—
7,748
7,748
239,854
53,799
293,653
239,854
61,547
301,401
The following presents the aging of past-due financial lease receivables as of December 31, 2019:
Financial lease receivables due from car dealers
Financial lease receivables due from consumers
1,510
—
1,510
14,628
6,767
21,395
16,138
6,767
22,905
114,493
7,579
122,072
130,631
14,346
144,977
1-90 days
RMB
Above 90 days
RMB
Total past due
RMB
Current
RMB
Total
RMB
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
10. FINANCIAL LEASE RECEIVABLES (CONTINUED)
The movement of allowance for doubtful accounts for the years ended December 31, 2017, 2018 and 2019 was as follows:
At the beginning of year
Provision for credit losses
At the ending of year
2017
RMB
2018
RMB
2019
RMB
(2,624)
(1,601)
(4,225)
(4,225)
(2,665)
(6,890)
(6,890)
(16,267)
(23,157)
The following lists the components of the net investment in financial lease receivables due from car dealers and consumers as of December 31, 2018 and
2019.
Total minimum lease payments to be received
Less: allowance for uncollectibles
Net minimum lease payments receivable
Less: unearned income
Net investment
11. PROPERTY, EQUIPMENT AND SOFTWARE, NET
Property, equipment and software, net, consist of the following:
Cost
Leasehold improvement
Computer equipment
Software
Furniture
Vehicle and motor
Construction in progress
Total property, equipment and software
Less: accumulated depreciation and amortization
Leasehold improvement
Computer equipment
Software
Furniture
Vehicle and motor
Total accumulated depreciation and amortization
Net book value
F-49
December 31, 2018
RMB
December 31, 2019
RMB
303,273
(6,890)
296,383
(1,872)
294,511
146,006
(23,157)
122,849
(1,029)
121,820
December 31, 2018
RMB
December 31, 2019
RMB
147,704
194,513
23,500
19,611
12,220
13,629
411,177
(100,269)
(90,134)
(6,523)
(8,037)
(6,943)
(211,906)
199,271
155,548
155,419
26,031
23,491
6,553
4,763
371,805
(142,774)
(99,358)
(8,453)
(8,311)
(2,795)
(261,691)
110,114
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
11. PROPERTY, EQUIPMENT AND SOFTWARE, NET (CONTINUED)
The total amounts charged to the Consolidated Statements of Comprehensive Loss for depreciation and amortization expenses amounted to approximately
RMB68.2 million, RMB88.8 million and RMB88.9 million for the year ended December 31, 2017, 2018 and 2019, respectively.
12. INTANGIBLE ASSETS, NET
Acquired intangible assets, net, consist of the following:
Supplier relationship
Software copyright
Others
Total intangible assets
Less: amortization
Net book value
December 31, 2018
RMB
December 31, 2019
RMB
18,200
7,000
10,002
35,202
(14,023)
21,179
—
—
3,490
3,490
(3,300)
190
A total net book value of RMB12.3 million intangible assets related with salvage car business, mainly including supplier relationship, software copyright,
was reclassified to assets held for sale as of December 31, 2019. The total amounts charged to the Consolidated Statements of Comprehensive Loss for
amortization expenses amounted to approximately RMB3.7 million, RMB5.6 million and RMB6.9 million for the year ended December 31, 2017, 2018
and 2019, respectively.
The annual estimated amortization expense for intangible assets subject to amortization for the remaining two years is as follows:
2020
2021
F-50
December 31, 2019
RMB
154
36
190
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
13. LONG-TERM INVESTMENTS
The Group’s long-term investments consist of the following:
Available-for-sales debt security investment
Orange Inc.
Less: impairment
Foreign currency translation adjustment
Equity method investments
Jincheng Consumer Finance (Sichuan) Co., Ltd. (“Jincheng”)
Beijing Gangjian Shoubao Cultural Media Center LLP
Weiche Information Technology Co., Ltd. (“Weiche”)
Measurement alternative method investments
ClearVue Pony Holdings Limited. (“ClearVue Pony”)
Bai’an Online Property Insurance Co., Ltd. (“Bai’an”)
Total long-term investments
December 31, 2018
RMB
December 31, 2019
RMB
41,179
—
—
41,179
236,642
—
2,006
238,648
68,632
1,423
70,055
349,882
41,857
(37,775)
(968)
3,114
263,792
4,500
1,530
269,822
—
—
—
272,936
Major investments of the Company during the year ended December 31, 2018 and 2019 are summarized as follows:
Investment accounted for as available-for-sale debt security investment
Investment in Orange Inc.
In June 2017, the Group subscribed convertible preferred shares of Orange Inc., a technology company, for a consideration of US$6 million. The Group’s
investment represented 10.26% of the equity interests, on an if-converted basis. The preferred shares were not considered in-substance ordinary shares as
they provide substantive redemption rights, liquidation rights and fixed dividends to the Group, which are not available to ordinary shareholders. Thus the
investment was classified as an available-for-sale investment in debt securities. As Orange Inc. incurred continuous losses starting from 2019 and began to
liquidate the business in June 2019, the Company recorded other-than-temporary impairment of US$ 5.6 million (equivalent to RMB 38.7 million) as of
December 31, 2019.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
13. LONG-TERM INVESMENTS (CONTINUED)
Investments accounted for using equity method
Investment in Jincheng
In September 2017, the Company invested in Jincheng, a professional consumer financial service company. The Company acquired 19% ordinary equity
interest with a total consideration of RMB 233.0 million. The Company exercises significant influence in Jincheng and therefore accounts for this as a
long-term investment using equity method. In 2019, dividends of RMB 4.4 million was received from Jincheng.
Investment in Beijing Gangjian Shoubao Cultural Media Center LLP
In April 2019, the Company invested in Beijing Gangjian Shoubao Cultural Media Center LLP, focusing on advertising and media business. The Company
is one of the limited partners and does not have control of the partnership. The investee has not started to operate yet.
Investment in Weiche
In May 2018, the Company invested in Weiche, a professional information technology company focusing on technology development and technology
consulting service. The Company acquired 40% ordinary equity interest with a total consideration of RMB 3 million. The Company exercises significant
influence in Weiche and therefore accounts for this as a long-term investment using equity method.
Investments accounted for using a measurement alternative
The Group does not have significant influence over these equity investments which do not have readily determinable market value, and therefore accounted
for these investments using a measurement alternative.
Investment in ClearVue Pony
The Company’s wholly-owned subsidiary Xin Limited entered into an agreement with ClearVue Partner II, L.P to establish ClearVue Pony to invest in
Pony AI, a technology company focusing on automobiles pilotless system. After the transaction, the Company held 23.8% ownership with a consideration
of US$10 million. Since the Company did not appoint Board member in ClearVue Pony and could not exercise significant influence, this investment
accounted for as long-term investment using measurement alternative. In April 2019, the Company disposed the investment for a total cash consideration of
US$16 million, with a net investment gain of US$4.3 million (equivalent to RMB29.5 million) recorded in gains from disposal of long-term investment,
net on the Consolidated Statement of Comprehensive Loss.
Investment in Bai’an
In April 2019, the Company disposed the investment in Bai’an for a total cash consideration of RMB0.2 million, with the investment loss of RMB1.2
million recorded in gain from disposal of long-term investment, net on the Consolidated Statement of Comprehensive Loss.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
14. SHORT-TERM AND LONG-TERM BORROWINGS
The following table presents short-term and long-term borrowings from commercial banks or other institutions as of December 31, 2018 and 2019. Short-
term borrowings include borrowings with maturity terms shorter than one year and the current portion of the long-term borrowings.
Funding Partners
Fixed annual
interest rate
Term
Short-term borrowings
Current portion of long-term borrowings
Long-term borrowings
8.2%
5.9%-9.8%
5.0%-6.7%
within 12 months
mature in 2020
2 - 4 years
December 31,
2018
RMB
December 31,
2019
RMB
325,715
298,873
481,801
1,106,389
111,122
152,303
241,026
504,451
Long-term borrowings of RMB8.0 million and current portion of long-term borrowings of RMB152.3 million were secured by loan recognized as a result
of payment under the guarantee of RMB435.3 million as at December 31, 2019 (Note 6).
Short-term borrowings of RMB 111.1 million were secured by financial lease receivable — car dealers of RMB 130.6 million (Note 10).
The weighted average interest rate for the outstanding borrowings was approximately 6.5% and 6.1% as of December 31, 2018 and 2019, respectively.
15. GUARANTEE LIABILITIES
The movement of guarantee liabilities was as follows:
Balance at the beginning of the year
Fair value of guarantee liabilities upon the inception of new guarantees
Guarantee settled
(Gains)/losses from guarantee liabilities
Reclassified as liabilities held for sale (Note 3)
Net assets transferred (Note 3)
Balance at the end of the year
2017
RMB
2018
RMB
2019
RMB
76,325
284,452
(184,586)
(2,284)
(33,802)
—
140,105
173,907
403,370
(257,953)
1,931
(174,828)
—
146,427
321,255
405,084
(398,167)
362,597
—
(302,462)
388,307
Pursuant to the series of agreements with Golden Pacer, the Company ceased to provide loan facilitation related business starting from the fourth quarter of
2019. The remaining balances of guarantee liabilities as of December 31, 2019 are related to the guarantee obligations associated with the portion of the
Company’s historically-facilitated loans which were not transferred to Golden Pacer during the divestiture of the Company’s loan facilitation related
business (Note 3). The Company is also actively seeking appropriate solutions to properly settle and relieve itself from the remaining guarantee obligations
to mitigate any relevant compliance risk associated with the newly promulgated laws and regulations, including the most recent Financing Guarantee
Circular 37 promulgated in October 2019.
The terms of the guarantee range from 2 years to 4 years, as of December 31, 2019.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
16. DEPOSIT OF INTERESTS FROM CONSUMERS AND PAYABLE TO FINANCING PARTNERS
Deposit of interests from consumers and payable to financing partners
Less: current portion
Non-current portion
December 31, 2018
RMB
December 31, 2019
RMB
333,587
(314,231)
19,356
42,464
(42,199)
265
The Group facilitates loans extended by third-party financing partners to consumers through online platform. The third-party financing partners provide all
the funds for the consumer loans, while the Group provides services to facilitate such financing transactions, including collection of interest deposits from
the consumers at inception. The interest deposit approximates all the interest throughout the life of the loan. The balance represents the interest deposits
from the consumers and subsequently payable to the financing partners. Since the second quarter of 2018, the Group ceased the practice of collecting
interest on behalf of the financing partners, and the down payments made by the consumers no longer include deposits of interest.
As part of the transaction with Golden Pacer, the legal title of deposit of interest from consumers and payable to financing partners related with XW bank
was transferred to Golden Pacer in the fourth quarter of 2019 (Note 3). Total amount was RMB45.7 million. The remaining balance as of December 31,
2019 represents the interest deposits payable to the remaining financing partners that were not part of the Golden Pacer transaction.
17. ADVANCE FROM BUYERS COLLECTED ON BEHALF OF SELLERS
Advance from buyers collected on behalf of sellers
270,347
147,923
When facilitating used car transaction, the Group connects sellers and buyers and provides service in relation to the cash flow remittance, for example, the
Group collects the cash from buyers and remits to sellers. The balance represents the advance payments collected from buyers, which are subsequently paid
to sellers in a short period of time.
December 31, 2018
RMB
December 31, 2019
RMB
18. OTHER PAYABLES AND ACCRUALS
Accrued advertising expenses
Accrued service fee for transaction support
Accrued salaries and benefits
Installments collected on behalf of financing partners
Tax payables
Accrued service fee for IT and office support
Deposits
Contract liabilities
Interest payable
Others
December 31, 2018
RMB
December 31, 2019
RMB
407,557
14,151
185,597
46,445
102,324
101,833
137,844
9,704
61,434
61,179
1,128,068
373,563
233,970
150,465
138,080
104,496
98,371
77,709
27,025
25,447
73,166
1,302,292
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19. CONVERTIBLE NOTES
2019 Notes
2020 Notes
2021 Notes
2024 Notes
Less: debt issuance cost
Description of 2019 Notes
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
December 31, 2018
RMB
December 31, 2019
RMB
1,201,060
—
—
—
(12,868)
1,188,192
—
330,934
34,998
1,638,485
(6,977)
1,997,440
On June 9, 2018, the Company entered into a Convertible Note Purchase Agreement with CNCB (Hong Kong) Investment Limited (the “CNCB (Hong
Kong)”), a company incorporated under the laws of Hong Kong. CNCB (Hong Kong) agreed to purchase convertible notes from the Company in the total
principal amount of US$100 million (equivalent to RMB 686.3 million) bearing interest rate of 6% per annum. On June 12, 2018, the Company entered
into the other Convertible Note Purchase Agreement with Golden Fortune Company Limited (the “Golden Fortune”), a company incorporated under the
laws of the Cayman Islands and whose investment manager is ICBC Asset Management (Global) Company Limited. Golden Fortune agreed to purchase
convertible notes from the Company in the total principal amount of US$75 million (equivalent to RMB 514.7 million) bearing interest rate of 6.5% per
annum. Both of convertible notes (the “Notes”) would mature in 363 days since the offering date. CNCB (Hong Kong) and Golden Fortune may elect to
convert their respective Notes into Class A ordinary shares from the 181st day after June 27, 2018 with conversion price per ordinary shares equal to
109.5% and 108% of IPO price per ordinary share, respectively. These two notes are together called 2019 Notes. The Company repaid the 2019 Notes
shortly before due at the end of June 2019.
The Company has accounted for the 2019 Notes as a single instrument. The value of the 2019 Notes is measured by the cash received. The Company
recorded the interest expenses according to its annual interest rate. There was no BCF attribute to the 2019 Notes as the set conversion price for each of the
Notes was greater than the fair value of the ordinary share at the date of the issuance.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
19. CONVERTIBLE NOTES (CONTINUED)
Description of 2020 Notes
On July 12, 2019, the Company entered into a convertible note purchase agreement with PacificBridget Diamond CB Fund 1 with an aggregate principal
amount of US$ 6.2 million bearing interest rate of 10% per annum due on July 12, 2020 and US$ 14.4 million bearing interest rate of 11% per annum due
on October 12, 2020. Debt issuance cost was US$ 0.4 million. The Company also entered into a convertible note purchase agreement with PacificBridget
Diamond CB Fund 2 on the same day with an aggregate principal amount of US$ 1.5 million bearing interest rate of 10% per annum due on July 12, 2020
and US$ 2.7 million bearing interest rate of 11% per annum due on October 12, 2020. Debt issuance cost was US$ 0.1 million and is being amortized to
interest expense. The Notes may be converted, at an initial conversion rate of 200.4 ADSs per US$1,000 principal amount of the Notes (which represents
an initial conversion price of US$4.99 per ADS) upon maturity.
On August 16, 2019, the Company entered into a convertible note purchase agreement with PacificBridget Inner Circle Mezzanine 1 with an aggregate
principal amount of US$ 6.58 million bearing interest rate of 10% per annum due on August 16, 2020. Debt issuance cost was US$ 0.1 million. The
Company also entered into a convertible note purchase agreement with PacificBridget TMT Mezzanine 1 on the same day with an aggregate principal
amount of US$ 7.93 million bearing interest rate of 11% per annum due on November 12, 2020. Debt issuance cost was US$ 0.2 million and is being
amortized to interest expense. The Notes may be converted, at an initial conversion rate of 198.06 ADSs per US$1,000 principal amount of the Notes
(which represents an initial conversion price of US$5.05 per ADS) upon maturity.
On October 10, 2019, the Company entered into a convertible note purchase agreement with PacificBridget Global Mezzanine 1 with an aggregate
principal amount of US$ 5.77 million bearing interest rate of 10% per annum due on October 9, 2020. Debt issuance cost was US$ 0.1 million and is being
amortized to interest expense. The Notes may be converted, at an initial conversion rate of 196.08 ADSs per US$1,000 principal amount of the Notes
(which represents an initial conversion price of US$5.10 per ADS) upon maturity.
Above convertible notes together are called 2020 Notes.
Description of 2021 Notes
On November 18, 2019, the Company entered into a convertible note purchase agreement with PacificBridge Overseas Pionner 1 with an aggregate
principal amount of US$ 4.92 million bearing interest rate of 11% per annum due on February 7, 2021. Debt issuance cost was US$ 0.1 million and is being
amortized to interest expense. 2021 Notes may be converted, at an initial conversion rate of 196.1 ADSs per US$1,000 principal amount of the 2020 Notes
(which represents an initial conversion price of US$5.10 per ADS) upon maturity.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
19. CONVERTIBLE NOTES (CONTINUED)
Description of 2024 Notes
The Company entered into a convertible note purchase agreement with affiliates of 58.com, Warburg Pincus, TPG and certain other investors on May 28,
2019, pursuant to which the Company issued and sold convertible notes in an aggregate principal amount of US$230 million on June 10, 2019 bearing
3.75% interest rate per annum due on June 9, 2024 (“2024 Notes”). Early redemption is permitted if requested by holders in advance in writing three years
after June 9, 2019. 2024 Notes may be converted, at an initial conversion rate of 323.6246 ADSs per US$1,000 principal amount of the 2020 Notes (which
represents an initial conversion price of US$3.09 per ADS) upon maturity.
The Company has accounted for the 2020 Notes, 2021 Notes and 2024 Notes as a single instrument each. The value of the 2020 Notes, 2021 Notes and
2024 Notes are measured by the cash received. The debt issuance cost was recorded as a reduction to the long-term debts and are amortized as interest
expenses using the effective interest method.
20. OTHER OPERATING INCOME
2017
RMB
2018
RMB
2019
RMB
VAT in super deduction
—
—
1,925
From 2019, in accordance with “the Notice of Regulations on Deepening the Reform of Value-Added Tax Reform” and relevant government policies
announced by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs of China, several subsidiaries of
the Company, is allowed to enjoy additional 10% VAT-in deduction for any services it purchased (“VAT-in super deduction”) from April 1, 2019 to
December 31, 2021. The VAT-in super deduction is considered as operating given that all VAT-in were derived from the purchases for that subsidiaries’
daily operations in nature, and therefore is presented in Other operating income in the Consolidation Statements of Comprehensive Loss.
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21. OPERATING LEASE
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
The Company has operating leases primarily for office and operation space. The Company’s operating lease arrangements have remaining terms of one
year to nine years.
Supplemental consolidated balance sheet information related to leases were as follows:
Right-of-use assets
Operating lease liabilities - current
Operating lease liabilities — non-current
Total lease liabilities
Weighted average remaining lease term
Weighted average discount rate
December 31, 2019
RMB
45,446
32,892
10,075
42,967
1.75
6.14%
Total operating lease costs were RMB161.3 million for the year ended December 31, 2019, including RMB58.7 million recorded from continuing business
and RMB102.6 million from discontinued operations. Total short-term lease cost were RMB75.3 million for the year ended December 31, 2019, including
RMB10.6 million recorded from continuing business and RMB64.7 million from discontinued operations.
Supplemental cash flow information related to leases in both continuing and discontinued operations were as follows:
Cash paid for amounts included in the measurement of lease liabilities
Right-of-use assets obtained in exchange for operating lease liabilities
F-58
2019
RMB
134,071
87,350
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
21. OPERATING LEASE (CONTINUED)
Maturities of lease liabilities are as follows:
2020
2021
2022
2023
2024
Thereafter
Total operating lease payments
Less: imputed interest
Total lease liabilities
At December 31, 2018, minimum lease payments for operating leases under the previous lease standard (“ASC 840”) were as follows:
2019
2020
2021
2022
2023
Thereafter
Total operating lease payments
December 31, 2019
RMB
34,236
8,668
334
334
334
712
44,618
(1,651)
42,967
December 31, 2018
RMB
102,057
51,969
30,392
26,913
23,203
110,980
345,514
For the years ended December 31, 2017 and 2018, the Company recognized lease expense of RMB137.2 million and RMB201.8 million, respectively.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
22. RELATED PARTY BALANCES AND TRANSACTIONS
The table below sets forth the major related parties and their relationships with the Group as of December 31, 2019:
Name of related parties
Relationship with the Group
Baidu (Hong Kong) Limited (“Baidu”)
Baogu
Shanghai Xiao Qing Information Technology Co., Ltd. (“Xiao Qing”)
58.com
Preferred Shareholder of the Company before June 27, 2018 and Class A
ordinary shareholder of the Company after June 27, 2018
An associate of the Group before August 31, 2017
An associate of the Group
2024 Notes holder who appointed one of the Board members of the
Company
Details of related party balances as of December 31, 2018 and 2019 and transactions for the year ended December 31, 2017, 2018 and 2019 were as
follows:
Amounts due from related parties
Prepaid advertising expenses
58.com
Transactions with related parties
Service provided by the related parties
58.com
Baidu
Baogu
Xiao Qing
December 31, 2018
RMB
December 31, 2019
RMB
—
51,590
2017
RMB
2018
RMB
2019
RMB
—
780
10,747
1,503
13,030
—
1,391
—
—
1,391
47,054
—
—
—
47,054
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23. INCOME TAX EXPENSE
Cayman Islands
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
Under the current laws of the Cayman Islands, the Company and its subsidiaries incorporated in the Cayman Islands are not subject to tax on income or
capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
British Virgin Islands
Under the current laws of the British Virgin Islands, entities incorporated in the British Virgin Islands are not subject to tax on their income or capital gains.
Hong Kong
Under the current Hong Kong Inland Revenue Ordinance, the Group’s subsidiaries in Hong Kong are subject to 16.5% Hong Kong profit tax on its taxable
income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are
not subject to any Hong Kong withholding tax.
China
On March 16, 2007, the National People’s Congress of PRC enacted a new Corporate Income Tax Law (“new CIT law”), under which Foreign Investment
Enterprises (“FIEs”) and domestic companies would be subject to corporate income tax at a uniform rate of 25%. The new CIT law became effective on
January 1, 2008. Under the new CIT law, preferential tax treatments will continue to be granted to entities which conduct businesses in certain encouraged
sectors and to entities otherwise classified as “High and New Technology Enterprises” or “Software Enterprises”.
Youxinpai (Beijing) Information Technology Co., Ltd. and Youfang (Beijing) Information Technology Co., Ltd. have been qualified as “high and new
technology enterprise” and enjoys a preferential income tax rate of 15% from 2019 to 2021. Youxin Internet (Beijing) Information Technology Co., Ltd.
has been qualified as “Software Enterprises” and enjoys the preferential period for preferential tax treatments shall be calculated from the profit-making
year, and the enterprise was exempted from CIT in 2016 and 2017, and will be allowed a 50% tax reduction at a statutory rate of 25% in 2018, 2019 and
2020.
Tax holiday had no impact as there is no taxable profit for Youxinpai (Beijing) Information Technology Co., Ltd. , Youxin Internet (Beijing) Information
Technology Co., Ltd. and Youfang (Beijing) Information Technology Co. for the year ended December 31, 2018 and 2019.
The Group’s other PRC subsidiaries, VIEs and VIEs’ subsidiaries are subject to the statutory income tax rate of 25%.
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
23. INCOME TAX EXPENSE (CONTINUED)
Withholding tax on undistributed dividends
The new CIT Law also provides that an enterprise established under the laws of a foreign country or region but whose “actual management body” is
located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its
global income. The Implementing Rules of the EIT Law merely define the location of the “actual management body” as “the place where the exercising, in
substance, of the overall management and control of the production and business operation, personnel, accounting, property, etc., of a non-PRC company is
located.” Based on a review of surrounding facts and circumstances, the Group does not believe that it is likely that its operations outside of the PRC
should be considered a resident enterprise for PRC tax purposes.
The new CIT law also imposes a withholding income tax of 10% on dividends distributed by an FIE to its immediate holding company outside of China, if
such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends
have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s
jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. According to the arrangement between
Mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006,
dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the
foreign investor owns directly at least 25% of the shares of the FIE). The Company did not record any dividend withholding tax, as it has no retained
earnings for any of the periods presented.
F-62
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
23. INCOME TAX EXPENSE (CONTINUED)
Composition of income tax expense
The current and deferred portions of income tax expense included in the Consolidated Statements of Comprehensive Loss during the year ended
December 31, 2017, 2018 and 2019 are as follows:
Continuing operations:
- Current income tax (expense)/credit
- Deferred income tax credit
Discontinued operations:
- Current income tax expense
Total income tax expense
2017
RMB
2018
RMB
2019
RMB
(831)
620
(211)
(359)
(570)
(2,751)
1,107
(1,644)
(12,941)
(14,585)
876
1,678
2,554
(2,992)
(438)
Reconciliation of the differences between statutory tax rate and the effective tax rate
Reconciliation of the differences between the statutory EIT rate applicable to losses of the consolidated entities and the income tax expenses of the
Company:
Loss before tax from continuing operations
Loss before tax from discontinued operations
Loss before tax
Income tax computed at PRC statutory tax rate
Effect of different tax rate
Non-deductible expense
Change of valuation allowance
2017
RMB
2018
RMB
2019
RMB
(1,272,210)
(1,478,615)
(2,750,825)
(687,706)
6,709
241,114
439,313
(570)
(1,352,748)
(173,583)
(1,526,331)
(381,583)
(21,369)
93,925
294,442
(14,585)
(1,360,463)
(659,458)
(2,019,921)
(504,980)
42,085
180,699
281,758
(438)
F-63
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
23. INCOME TAX EXPENSE (CONTINUED)
Deferred tax assets and deferred tax liabilities
The following table sets forth the significant components of the deferred tax assets:
Deferred tax assets
Net accumulated losses-carry forward
Deductible advertising expense
Provision for credit losses
Accruals
Allowance
Less: valuation allowance
Net deferred tax assets
Deferred tax liabilities
Intangible assets arisen from business combinations
Reclassified to liabilities held for sale
Net deferred tax liabilities
Movement of valuation allowance
Balance at beginning of the year
Changes of valuation allowance
Balance at end of the year
December 31, 2018
RMB
December 31, 2019
RMB
636,440
540,627
—
68,271
6,915
(1,252,253)
—
780,265
617,918
67,843
67,067
918
(1,534,011)
—
December 31, 2018
RMB
December 31, 2019
RMB
4,759
—
4,759
3,081
(3,081)
—
2017
RMB
2018
RMB
2019
RMB
(518,498)
(439,313)
(957,811)
(957,811)
(294,442)
(1,252,253)
(1,252,253)
(281,758)
(1,534,011)
As of December 31, 2019, the Group had net operating loss carries forwards of approximately RMB4,035.9 million which arose from the subsidiaries,
VIEs and VIEs’ subsidiaries established in the PRC. For Youxinpai (Beijing) Information Technology Co., Ltd and Youfang (Beijing) Information
Technology Co., Ltd. which have been qualified as “high and technology enterprise”, its loss carries forwards will expire from 2020 to 2029 according to
newly issued Caishui 2018[78]. For all other remaining subsidiaries in China, the loss carries forwards will expire from 2020 to 2023.
A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets
will not be realized. In making such determination, the Group evaluates a variety of factors including the Group’s operating history, accumulated deficit,
the existence of taxable temporary differences and reversal periods.
The Group has incurred net accumulated operating losses for income tax purposes since its inception. The Group believes that it is more likely than not that
these net accumulated operating losses and other deferred tax assets will not be utilized in the future. Therefore, the Group has provided full valuation
allowances for the deferred tax assets as of December 31, 2018 and 2019.
F-64
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24. ORDINARY SHARES
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
As of December 31, 2018 and 2019, 10,000,000,000 ordinary shares had been authorized respectively. A total of 887,617,391 ordinary shares, par value
US$0.0001 per share, consists of 846,807,530 Class A ordinary shares and 40,809,861 Class B ordinary shares, had been issued and outstanding as of
December 31, 2019. A total of 880,659,899 ordinary shares, par value US$0.0001 per share, consists of 839,850,038 Class A ordinary shares and
40,809,861 Class B ordinary shares, had been issued and outstanding as of December 31, 2018. 40,809,861 ordinary shares were redesignated to Class B
ordinary shares with super voting power (one share with ten votes) granted to Mr. Kun Dai, Founder and CEO of the Group, upon the completion of the
IPO.
The Company issued and granted 17,742,890 restricted shares to Mr. Kun Dai on May 14, 2018. The restricted shares were vested immediately upon
consummation of the IPO. On May 25, 2018, one of the Company’s executive officers exercised his vested stock options to acquire 3,333,330 ordinary
shares of the Company. In addition, the Company also offered vesting acceleration to that executive officer’s 1,666,670 unvested stock options on May 25,
2018 and the executive officer also exercised such stock options to acquire 1,666,670 ordinary shares of the Company. Besides of which, certain option
holders exercised their stock options and acquired 3,479,505 ordinary shares.
Immediately prior to the completion of the IPO, all classes of preferred shares of the Company were converted and redesignated as 743,343,820 Class A
ordinary shares on a one-for-one basis, all ordinary shares of the Company were redesignated as Class B ordinary share. Mr. Kun Dai, founder, chairman
and chief executive officer of the Company, will be deemed to beneficially own all of our issued Class B ordinary shares
On June 27, 2018, the Company completed its IPO on NASDAQ Global Select Market. The Company offered 75,000,000 Class A ordinary shares which
represented 25,000,000 ADS.
Pursuant to an agreement entered into by the Company with Mr. Kun Dai and Xin Gao Group on May 28, 2018, Mr. Kun Dai and Xin Gao Group agreed to
surrender and deliver 37,990,839 shares held by Xin Gao Group to the Company, and the Company agreed to accept these surrendered shares to settle all
the outstanding principal and interest accrued of the loan due from Xin Gao Group, Mr. Kun Dai and Gao Li Group.
Fairlubo Share Swap represents the issuance of 13,026,713 Class A ordinary shares upon the conversion of Fairlubo shares held by certain Fairlubo
shareholders upon completion of this offering, at an initial public offering price of US$9.00 per ADS.
F-65
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
25. SHARE-BASED COMPENSATION
On March 26, 2013, the Company adopted the 2013 Stock Incentive Plan (“2013 Plan”).
Under the 2013 Plan, the Company’s Board of Directors has approved that a maximum aggregate number of shares that may be issued pursuant to all
awards granted under the 2013 Plan shall be 34,275,990 shares. On November 13, 2015, the Company increased the maximum number of shares available
for grants of awards to 40,942,650. On April 20, 2016, the Company increased the maximum number of shares available to 65,000,000.
On February 14, 2018, the Company adopted the 2018 Amended and Restated Share Incentive Plan (“2018 Plan”) and replaced 2013 Plan. Under the 2018
Plan, the Company increased the maximum number of shares available to 87,742,890.
On November 19, 2018, the Company amended and restated the 2018 Plan, and renamed it 2018 Second Amended and Restated Incentive Plan (“2018
Second Plan”). Under the 2018 Second Plan, the Company increased the maximum number of shares available to 102,040,053.
Stock options granted to an employee under the 2018 Second Plan are generally be exercisable upon the Company completes a Qualified IPO or a defined
Corporate Transaction (i.e. change of control, etc.) and the employee renders service to the Company in accordance with a stipulated service schedule.
Employees are generally subject to a four-year service schedule, under which an employee earns an entitlement to vest in 25% of his option grants at the
end of each year of completed service.
For the Company’s key management grantee, the vested stock options granted could be retained and be exercised until the earlier of (i) any day
commencing from the day that is six (6) months prior to the anticipated consummation of an IPO, or (ii) the day immediately prior to the consummation of
a Corporate Transaction before March 26, 2023. For the Company’s employee grantee, prior to the Company completes a Qualified IPO or Corporate
Transaction, the stock options granted to the employee shall be forfeited three months after termination of employment of the employee. The Company’s
key management, management and employee grantees are collectively hereafter referred to as “Grantees”.
The Company accounted for the share based compensation costs using an acceleration method over the requisite service period for the award based on the
fair value on their respectively grant date.
Option modification
On September 22, 2019, the Company’s board of directors approved a reduction in the exercise price for all outstanding options previously granted by the
Company with any exercise prices which were higher than US$1.03 per ordinary share, up to US$3.00 per ordinary share, to US$1.03 per ordinary share,
provided that any participating option holder agrees to amendment in the number of shares subject to his or her option as determined by the plan
administrator. The Company accounted for this reduction as a share option modification which required the remeasurement of these share options at the
time of the modification. The total incremental cost as a result of the modification was US$4.1 million. The incremental cost related to vested options
amounted to US$2.1 million and was recorded in the Consolidated Statements of Comprehensive Loss in the year ended December 31, 2019. The
incremental cost related to unvested options amounted to US$2.0 million and will be recorded over the remaining service period.
The Company granted 12,819,330, 25,224,000 and 4,247,500 stock options to Grantees for the years ended December 31, 2017, 2018 and 2019,
respectively.
F-66
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
25. SHARE-BASED COMPENSATION (CONTINUED)
The following table sets forth the stock options activity for the years ended December 31, 2017, 2018 and 2019:
Outstanding as of January 1, 2017
Granted
Forfeited
Outstanding as of December 31, 2017
Granted
Forfeited
Exercised
Outstanding as of December 31, 2018
Granted
Forfeited
Exercised
Modified
Outstanding as of December 31, 2019
Number of
shares
Weighted-
average
exercise price
US$
Weighted average
remaining
contractual term
Aggregate
intrinsic
value
000’US$
Weighted
average fair
value of
options
US$
31,572,960
12,819,330
(3,146,130)
41,246,160
25,224,000
(2,822,511)
(8,452,649)
55,195,000
4,247,500
(11,454,468)
(6,772,504)
(5,873,482)
35,342,046
F-67
0.45
2.13
1.31
0.90
2.90
2.39
0.20
1.85
1.36
2.36
0.03
2.82
1.81
8.02
57,467.59
—
—
—
—
7.53
147,427.66
—
—
—
—
—
—
7.74
27,773.18
—
—
—
—
—
—
—
—
8.33
31,391.17
0.85
1.72
1.06
1.10
3.32
2.32
1.23
2.03
0.02
2.65
0.54
2.95
1.72
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
25. SHARE-BASED COMPENSATION (CONTINUED)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the estimated fair value of the
underlying stock at each reporting date.
Prior to our initial public offering, in determining the grant date fair value of our ordinary shares for purposes of recording share-based compensation in
connection with employee stock options, we, with the assistance of independent appraisers, performed retrospective valuations instead of contemporaneous
valuations because, at the time of the valuation dates, our financial and limited human resources were principally focused on business development efforts.
This approach is consistent with the guidance prescribed by the AICPA Audit and Accounting Practice Aid, Valuation of Privately-Held-Company Equity
Securities Issued as Compensation, or the Practice Aid. Specifically, the ‘‘Level B’’ recommendation in paragraph 16 of the Practice Aid sets forth the
preferred types of valuation that should be used.
We, with the assistance of an independent valuation firm, evaluated the use of three generally accepted valuation approaches: market, cost and income
approaches to estimate our enterprise value. We and our appraisers considered the market and cost approaches as inappropriate for valuing our ordinary
shares because no exactly comparable market transaction could be found for the market valuation approach and the cost approach does not directly
incorporate information about the economic benefits contributed by our business operations. Consequently, we and our appraisers relied solely on the
income approach in determining the fair value of our ordinary shares. This method eliminates the discrepancy in the time value of money by using a
discount rate to reflect all business risks including intrinsic and extrinsic uncertainties in relation to our company.
The income approach involves applying discounted cash flow analysis based on our projected cash flow using management’s best estimate as of the
valuation dates. Estimating future cash flow requires us to analyze projected revenue growth, gross margins, operating expense levels, effective tax rates,
capital expenditures, working capital requirements, and discount rates. Our projected revenues were based on expected annual growth rates derived from a
combination of our historical experience and the general trend in this industry. The revenue and cost assumptions we used are consistent with our long-term
business plan and market conditions in this industry. We also have to make complex and subjective judgments regarding our unique business risks, our
limited operating history, and future prospects at the time of grant. Other assumptions we used in deriving the fair value of our equity include:
· no material changes will occur in the applicable future periods in the existing political, legal, fiscal or economic conditions in China;
· no material changes will occur in the current taxation law in China and the applicable tax rates will remain consistent;
· we have the ability to retain competent management and key personnel to support our ongoing operations; and
· industry trends and market conditions for the used car e-commerce businesses will not deviate significantly from current forecasts.
After our initial public offering in June 2018, the fair value of ordinary shares is determined by the closing market price of the ordinary shares on the
relevant grant dates.
F-68
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
25. SHARE-BASED COMPENSATION (CONTINUED)
Options granted to Grantees were measured at fair value on the dates of grant using the Binomial Option Pricing Model with the following assumptions:
Expected volatility
Risk-free interest rate (per annum)
Exercise multiple
Expected dividend yield
Contractual term (in years)
Year ended
December 31, 2017
Year ended
December 31, 2018
Year ended
December 31, 2019
43%-51%
2.08%-2.32%
2.8/2.2
0%
10
42%-47%
2.49%~2.69%
2.8/2.2
0%
10
44%~45%
1.6%~1.9%
2.8/2.2
0%
10
The expected volatility was estimated based on the historical volatility of comparable peer public companies with a time horizon close to the expected term
of the Company’s options. The risk-free interest rate was estimated based on the yield to maturity of U.S. treasury bonds denominated in US$ for a term
consistent with the expected term of the Company’s options in effect at the option valuation date. The exercise multiple is estimated as the ratio of fair
value of underlying shares over the exercise price as at the time the option is exercised, based on a consideration of empirical studies on the actual exercise
behavior of employees. The expected dividend yield is zero as the Company has never declared or paid any cash dividends on its shares, and the Company
does not anticipate any dividend payments in the foreseeable future. The expected term is the contract life of the option.
For the Company’s stock options granted to Grantees, the completion of an IPO or the Corporate Transaction is considered to be a performance condition
of the awards. An IPO or the Corporate Transaction, is not considered to be probable until it is completed. Under ASC 718, compensation cost should be
accrued if it is probable that the performance condition will be achieved. As a result, no compensation expense will be recognized related to these options
until the completion of an IPO or the Corporate Transaction. In case when it is considered probable that a Qualified IPO will be completed, the
compensation cost should be recognized earlier for the key management grantees, at six (6) months prior to the anticipated consummation of the IPO, based
on this special term offered to the key management grantees. All the options granted to key management are fully vested as at December 31, 2017, and a
share-based compensation expense of US$ 4.2 million (equivalent to RMB 28.2 million) was recognized for the vested options offered to key management
grantees for the year ended December 31, 2017, given the Qualified IPO is expected to be consumed within 6 months. A total of US$ 36.7 million
(equivalent to RMB 242.9 million) share compensation expense was recognized immediately upon the completion of IPO on June 27, 2018. A total of
US$21.7 million (equivalent to RMB 150.9 million) share-based compensation expense was recognized for the vested options offered to management and
employees.
The Company granted 160,190 and 151,655 restricted shares to Grantees for the year ended December 31, 2018 and 2019, respectively.
F-69
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
25. SHARE-BASED COMPENSATION (CONTINUED)
The following table sets forth the restricted shares activity for the year ended December 31, 2019:
Unvested as of December 31, 2017
Granted
Vested
Unvested as of December 31, 2018
Granted
Vested
Forfeited
Unvested as of December 31, 2019
Number of
shares
Weighted average
grant date fair
value
US$
—
160,190
(26,856)
133,334
151,655
(184,988)
(66,667)
33,334
—
1.95
0.39
2.26
1.41
0.75
2.26
2.26
Total share-based compensation cost for the restricted shares amounted to US$ 0.1 million and US$ 0.1 million (equivalent to RMB 0.7 million) for the
years ended December 31, 2018 and 2019, respectively.
Other share-based compensation
The Company issued and granted 17,742,890 restricted shares to Mr. Kun Dai, Founder and CEO of the Group, on May 14, 2018. The restricted shares
were vested immediately upon consummation of a successful IPO of the Company. In June 2018, the Company recorded share-based compensation
expense of US$ 93.8 million (equivalent to RMB 620.4 million) in general and administrative expense.
On May 25, 2018, one of the Company’s executive officers exercised his vested stock options to acquire 3,333,330 ordinary shares of the Company. In
addition, the Company also offered vesting acceleration to that executive officer’s 1,666,670 unvested stock options on May 25, 2018 and the executive
officer also exercised such stock options to acquire 1,666,670 ordinary shares of the Company. Therefore, in May 2018, the Company recorded all
remaining unrecognized compensation costs which were accelerated in the amount of US$ 4.8 million (equivalent to RMB 31.8 million) in general and
administrative expense.
On June 27, 2018, US$ 0.8 million (equivalent to RMB 5.2 million) share-based compensation was recorded as the redesignation of the Company’s
ordinary shares and super voting power was granted to Class B beneficial owner, Mr. Kun Dai in general and administrative expense.
F-70
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
25. SHARE-BASED COMPENSATION (CONTINUED)
Stock incentive plan adopted by Fairlubo
In 2017, Fairlubo Auction Company Limited, one of the Group’s non-wholly owned subsidiaries adopted and started to operate its own share-based
compensation plan. Their exercise prices of the share options, as well as the vesting periods of the share options and awarded shares are determined by the
board of directors of this subsidiary at their sole discretion. The share options granted are normally vested over 4-year period, with ¼ of the total shares to
be vested on each anniversary of the vesting commencement date, and the exercises of the awards of the Fairlubo are also subject to the completion of an
IPO or immediately prior to a defined corporate transaction, which are considered to be a performance condition of the awards. An IPO or the defined
corporate transaction is not considered to be probable until it is completed. Under ASC 718, compensation cost should be accrued if it is probable that the
performance condition will be achieved. As a result, no compensation expense will be recognized related to the Fairlubo’s stock options until the
completion of an IPO or the corporate transaction, and hence no share-based compensation expense was recognized for the years ended December 31,
2017, 2018 and 2019, respectively. The salvage car related business was divested in January 2020 subsequently.
26. SEGMENT INFORMATION
Segments are business units that offer different services and are reviewed separately by the chief operating decision maker (the “CODM”), or the decision-
making group, in deciding how to allocate resources and in assessing performance.
The CODM, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as Uxin’s Chief Executive
Officer.
The Group operates as a single operating segment. The single operating segment is reported in a manner consistent with the internal reporting provided to
the CODM.
The Group primarily generates its revenues in China, and assets of the Company are also primarily located in China Area. Accordingly, no geographical
segments are presented.
27. FAIR VALUE MEASUREMENTS
Assets and liabilities disclosed at fair value
The Company measures its cash and cash equivalents, accounts receivables, loan recognized as a result of payment under the guarantee, financial lease
receivables and short-term borrowing at amortized cost. The carrying value of accounts receivable and financial lease receivables approximate their fair
value which are considered a level 3 measurement. The fair value was estimated by discounting the scheduled cash flows through to estimated maturity
using estimated discount rates based on current offering rates of comparable institutions with similar services. The carrying value of the Company’s debt
obligations approximate fair value as the borrowing rates are similar to the market rates that are currently available to the Company for financing
obligations with similar terms and credit risks and represent a level 2 measurement. The guarantee liabilities are presented as a level 3 measurement, with
the fair value estimated by discounting expected future payouts, net loss rates, expected collection rates and a discount rate for time value.
Assets measured at fair value on a nonrecurring basis
The Company measured its property and equipment, intangible assets and equity method investment at fair value on a nonrecurring basis whenever events
or changes in circumstances indicate that the carrying value may no longer be recoverable.
F-71
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
27. FAIR VALUE MEASUREMENTS (CONTINUED)
Assets and liabilities measured at fair value on a recurring basis
The Company measured its available-for-sale debt security investment, derivative liabilities, and guarantee liabilities at fair value on a recurring basis. As
the Company’s available-for-sale debt security investments, derivative liabilities and guarantee liabilities are not traded in an active market with readily
observable prices, the Company uses significant unobservable inputs to measure the fair value of available-for-sale investment, derivatives liabilities and
guarantee liabilities. These instruments are categorized in the Level 3 valuation hierarchy based on the significance of unobservable factors in the overall
fair value measurement. The Company did not transfer any assets or liabilities in or out of level 3 during the year ended December 31, 2018 and 2019.
The following table summarizes the Company’s financial assets and liabilities measured and recorded at fair value on recurring basis as of December 31,
2018 and 2019:
Assets:
Short-term investments
Available-for-sale debt security investment
Liabilities:
Guarantee liabilities
Assets:
Available-for-sale debt security investment
Liabilities:
Guarantee liabilities
—
—
—
—
—
—
Active market
(Level 1)
RMB
December 31, 2018
Active market
(Level 1)
RMB
Observable input
(Level 2)
RMB
Non-
observable input
(Level 3)
RMB
553,568
—
553,568
42,510
41,179
83,689
Total
RMB
596,078
41,179
637,257
—
146,427
146,427
December 31, 2019
Observable input
(Level 2)
RMB
Non-
observable input
(Level 3)
RMB
Total
RMB
—
—
3,114
3,114
388,307
388,307
Refer to Note 13 and 15 for additional information about Level 3 available-for-sale debt security investment and guarantee liabilities measured at fair value
on a recurring basis for the year ended December 31, 2018 and 2019.
F-72
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
27. FAIR VALUE MEASUREMENTS (CONTINUED)
The roll forward of major Level 3 investments are as followings:
Fair value of Level 3 investments as of December 31, 2017
New addition
Disposal of investments
Effect of exchange rate change
Fair value of Level 3 investments as of December 31, 2018
Maturity of investments
Fair value of Level 3 investments as of December 31, 2019
Valuation Techniques
a. Short-term investment
Total
RMB
—
237,510
(195,000)
—
42,510
(42,510)
—
Short-term investment primarily including term deposits and investment products placed with banks with original maturities longer than three months but
less than one year.
b. Available-for-sale debt security investment
Available-for-sale financial assets represent investment of redeemable preferred shares, and fair value of which is determined with reference to the issuance
price of latest round of financing.
c. Guarantee liabilities
The fair value of the guarantee liabilities at loan inception is estimated by applying several different statistical methods allowing for the different features of
loan products. The assumptions used are based on historical data and supplemented by market benchmarking. The time value of the estimated guarantee
liabilities is recognized through discounting which considers the duration of the future payment pattern. The selected discount rate is based on the one year
benchmark interest rate published by The People’s Bank of China.
F-73
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
27. FAIR VALUE MEASUREMENTS (CONTINUED)
c. Guarantee liabilities (continued)
Valuation Methodology
· Paid Chain-ladder Development (“PCD”) method
The PCD method projects ultimate guarantee liabilities by using historical development patterns of cumulative loan default payments. The historical
pattern is shown as the ratios of quarterly increases in cumulative payments by loan origination quarter. The methodology implicitly allows for future
inflation as past inflation is included in the observed factors.
The methodology implies that the past payment history is a good estimate for the future pattern of guarantee liabilities development, assuming stable
pricing and claim pattern, and no significant changes in external factors.
· Expected Delinquent Ratio (“EDR”) method
The EDR method estimates the ultimate guarantee liabilities by applying the expected delinquent ratio to the total loan amount (total risk exposure). This is
done for different product types and by different loan origination quarter.
This method largely relies on the expected delinquent ratios used where the ratios are selected based on historical loss experiences of similar products in the
market, future loss trends and etc.
F-74
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
27. FAIR VALUE MEASUREMENTS (CONTINUED)
· Paid Bornhuetter-Ferguson (“PBF”) method
The PBF method is normally used in situations where the claims data is scarce and/or the loan origination quarters are less matured. The method assumes
each loan origination quarter has an expected delinquent ratio at the outset with an expected pattern of the emergence of loan default payments.
There are two major assumptions for this method:
(a) The initial expected delinquent ratios which are selected following the same logic of the EDR method;
(b) The expected portion of the ultimate yet to be paid which is derived from loan default payment patterns used in PCD method.
The estimated ultimate guarantee liabilities from PBF method are then the sum of the following two:
(a) Expected ultimate guarantee liabilities that have not been paid as at the valuation date: the product of initial expected ultimate guarantee liabilities,
which are the product of the total loan amount and the selected initial expected ultimate delinquent ratio for each loan origination quarter, multiplied by the
expected portion of the ultimate yet to be paid as at the valuation date; and
(b) Actual paid claim amount as at the valuation date.
· Life Cycle (“LC”) method
The LC method first categorizes each loan by its maturity (the difference between the total loan periods and the remaining loan periods). By analyzing the
historical claim data, we got the actual delinquent ratios for each loan maturity. The cumulative product of the actual delinquent ratios of each maturity is
then the estimated ultimate delinquent ratio.
The development to ultimate pattern of each loan maturity is just the following:
The actual delinquent ratio at that maturity / The estimated ultimate delinquent ratio
Using the above implied pattern, we simulate the development to ultimate pattern for each loan origination month. We then apply the corresponding
development pattern to the specific loan origination month to derive the ultimate guarantee liabilities for that month
Assumptions
· Selected Payment Pattern for PCD and PBF Methods
Payment patterns are selected for different product groups due to different risk factors. The largest development factor is observed in the second quarter
where the amount of payment at end of first quarter tends to be 65 times more when reaching the end of second quarter on average. The development
factors for payment matured two quarters and more are in the range of 3.11 to 1.01.
F-75
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
27. FAIR VALUE MEASUREMENTS (CONTINUED)
· Initial Expected Delinquent Ratios for EDR and PBF Methods
The initial expected delinquent ratios used in the EDR and PBF methods are the same and are selected based on the historical experiences and
supplemented with industry benchmark. The range of initial expected delinquent ratios are generally between 9% and 12%. If there are any abnormal loss
events, the initial expected delinquent ratio will be set at a higher level incorporating the actual abnormal loss experiences.
· Discount Factors
The discount factors are in the range of 0.95 to 1 for guarantee liabilities with different maturities.
· Final Selection of Ultimate Delinquent Ratios
The selected final ultimate delinquent ratios are weighted average of the estimated delinquent ratios from each valuation method applied, where the weights
are based on the applicability of each valuation method and the historical pattern observed from the historical data:
· Sufficient Historical Data
For more matured quarters, more weights are given to the PCD method and LC method while for less matured quarters, more weights are given to the PBF
method. This is in line with the applicability of each method.
· Sparse Historical Data
More weights are given to the EDR method as the loss pattern from the historical data are much less credible. However, when data becomes more and more
credible, more weights will be given to other methods.
· Collection Rate
The collection rate used is 57%, 68% and 66.4% for the years ended December 31, 2017, 2018 and 2019, which is based on the historical experience
supplemented with market benchmark.
F-76
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
28. NET LOSS PER SHARE
Basic and diluted net loss per share for each of the years presented are calculated as follows:
Numerator:
Net loss from continuing operations
Net loss from discontinued operations
Total net loss
Net loss from continuing operations
Less: net loss from operations attributable to non-controlling interests shareholders
Net loss from continuing operations, attributable to UXIN Limited
Accretion on convertible redeemable Preferred Shares
Deemed dividend to Preferred Shareholders
Deemed dividend from Preferred Shareholders
2017
RMB
2018
RMB
2019
RMB
(1,268,824)
(1,478,974)
(2,747,798)
(1,268,824)
(25,202)
(1,243,622)
(555,824)
(587,564)
92,779
(1,351,761)
(186,524)
(1,538,285)
(1,351,761)
(15,771)
(1,335,990)
(318,951)
(544,773)
—
(1,327,678)
(662,450)
(1,990,128)
(1,327,678)
(1,452)
(1,326,226)
—
—
—
Net loss attributable to ordinary shareholders from continuing operations
(2,294,231)
(2,199,714)
(1,326,226)
Net loss attributable to ordinary shareholders from discontinued operations
(1,478,974)
(186,524)
(662,450)
Denominator:
Weighted average number of ordinary shares outstanding, basic and diluted
49,318,860
477,848,763
886,613,598
Net loss per share attributable to ordinary shareholders, basic
- Continuing
- Discontinued
Net loss per share attributable to ordinary shareholders, diluted
- Continuing
- Discontinued
F-77
(46.52)
(29.99)
(46.52)
(29.99)
(4.60)
(0.39)
(4.60)
(0.39)
(1.50)
(0.75)
(1.50)
(0.75)
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
28. NET LOSS PER SHARE (CONTINUED)
As the Company incurred losses for the years ended December 31, 2017, 2018 and 2019, the potential ordinary shares were anti-dilutive and excluded from
the calculation of diluted net loss per share of the Company, pursuant to ASC 260, “Earnings Per Share”. The weighted-average numbers of Preferred
Shares, convertible notes, Fairlubo Share Swap, non-vested restricted shares and options granted excluded from the calculation of diluted net loss per share
of the Company of respective year were as follows:
Preferred Shares
Convertible notes
Fairlubo Share Swap
Non-vested restricted shares
Outstanding weighted average stock options
Total
29. EMPLOYEE BENEFIT
2017
2018
2019
541,283,717
—
2,571,946
—
28,283,332
572,138,995
367,859,970
53,589,548
6,352,753
133,328
14,118,546
442,054,145
—
253,165,870
—
33,331
4,096,724
257,295,925
Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits,
medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries,
VIEs and VIEs’ subsidiaries of the Group make contributions to the government for these benefits based on certain percentage of the employees’ salaries,
up to a maximum amount specified by the government. The Group has no legal obligation for the benefits beyond the contribution made.
The total amounts charged to the Consolidated Statements of Comprehensive Loss for such employee benefits amounted to approximately RMB28.7
million, RMB116.1 million and RMB169.8 million for the year ended December 31, 2017, 2018 and 2019.
30. COMMITMENTS AND CONTINGENCIES
Contingencies
In the ordinary course of business, the Group is from time to time involved in legal proceedings and litigations. During 2017, one competitor of the Group
has filed lawsuits against the Group relating to disputes with respect to trademarks. In January and June 2019, two competitors of the Group has filed
lawsuits against the Group relating to disputes with respect to unfair competition and infringement, respectively. During 2019, two putative securities class
actions were brought on behalf of a class of persons who allegedly suffered damages as a result of alleged misstatements and omissions in certain
disclosure documents in connection with the Company’s initial public offering in June 2018. Based on currently available information, the Group does not
believe that the ultimate outcome of any unresolved matter, individually and in aggregate, is reasonably possible to have a material adverse effect on the
Group’s consolidated financial statements. However, litigation is subject to inherent uncertainties and the Group’s view of these matters may change in the
future. The Group records a liability when it is both probable that a liability has been incurred and the amount of loss can be reasonable estimated. No
accrual has been recorded by the Group as of December 31, 2018 and 2019 in respect of these cases.
F-78
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
31. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Group to the concentration of credit risks consist of cash and cash equivalents.
The Group deposits its cash and cash equivalents with financial institutions located in jurisdictions where the subsidiaries are located. The Company
believes that no significant credit risk exists as these financial institutions and financing partners have high credit quality.
Substantially all revenue was derived from customers located in China. No single customer accounted for more than 10% of the Company’s consolidated
revenue in any of the periods presented.
32. SUBSEQUENT EVENTS
On January 16, 2020, the Company entered into definitive agreements with Boche to divest its salvage car related business in exchange for a total cash
consideration of RMB330 million, of which RMB165 million was received in January 2020. The transaction with Boche was closed in January 2020.
On March 24, 2020, the Company entered into definitive agreements with 58.com to sell its 2B online used car auction business in exchange for a total
cash consideration of US$105 million, of which US$75 million was received in April 2020. The transaction with 58.com was closed in April 2020.
Previously on July 12, 2019 and September 30, 2019, the Company entered into a binding term sheet and definitive agreements with Golden Pacer relating
to the divestiture of its 2C intra-regional business and loan facilitation related service, respectively. On April 23, 2020, the Company entered into
supplemental agreements with Golden Pacer to modify and supplement certain terms and conditions in connection with the divestiture. Pursuant to the
series of agreements, the Company has divested its entire 2C intra-regional business to Golden Pacer and ceased to provide loan facilitation related
guarantee starting from the fourth quarter of 2019. In exchange, upon Golden Pacer’s achievement of certain profitability-related performance targets for
both years of 2020 and 2021, the Company is entitled to purchase certain amount of preferred shares of Golden Pacer in 2020 and 2021, representing up to
an aggregate of 18.4% of Golden Pacer’s outstanding shares (assuming no further issue of new shares) on a fully diluted and as-converted basis for
US$0.00001 per share. In addition, the Company will be entitled to receive 85% of net cash inflow generated by the divested and transferred assets and
liabilities from Golden Pacer in relation to the historically-facilitated loans for XW Bank. The transaction contemplated under the definitive and
supplemental agreements was closed upon the signing of the supplemental agreements.
F-79
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
32. SUBSEQUENT EVENTS (CONTINUED)
COVID-19 Pandemic
Since early 2020, the epidemic of Coronavirus Disease 2019 (the “COVID-19 pandemic”) has spread across China and other countries, and has adversely
affected businesses and economic activities in the first quarter of 2020 and beyond. In response to that, the Company has assessed that the COVID-19
pandemic has the following related impacts on the Company’s business and operations:
i. The outbreak of COVID-19 has severely affected the used car industry with disruptions impacting the industry’s infrastructure and supply chains since
January 2020. Throughout February and early March 2020, the majority of local used car markets and dealerships in China were closed and unable to
resume operations. Logistics and delivery of used cars were also impacted by the closure of roads and highways in many regions across China. Title
transfers were also hindered as local vehicle registration and management bureaus either remained closed or had yet to resume full operations. All of
these measures created considerable barriers to used car purchase and fulfillment, therefore it has disrupted the Company’s business and operations
during the first quarter of 2020 and may continue to weigh on the Company’s operation results throughout the second quarter of 2020.
ii. In addition, borrowers’ abilities or willingness to repay their auto loans have been adversely affected by general economic downturns. Thus, additional
provisions for both credit losses and additional guarantee liabilities are warranted in the first quarter of 2020, as the Company expects a higher
delinquency ratio and a lower collection ratio for the historically-facilitated loans that were not divested. Up to the date of this report, the Company is
still assessing the aforementioned additional provisions in accordance with the new accounting standard ASU 2016-13, Financial Instruments—Credit
Losses (Topic 326) for credit loss effective January 1, 2020. The Company is still evaluating these provisions, which are expected to be material.
Change in Fiscal Year End to Adapt to Seasonality
On April 26, 2020, the Board of directors approved to change the Company’s fiscal year end from December 31 to March 31 to ensure that the Company
can allocate ample resources towards driving sales during peak season in the fourth quarter and focus on strategic planning for the new fiscal year during
slow season in the first quarter.
The Company will file a transition report on the Form 20-F to cover the transition period from January 1, 2020 to March 31, 2020 in due course as required
under the applicable regulations. The Company’s earnings release for the three months ended March 31, 2020 will be announced concurrently with the
filing of the transition report on the Form 20-F.
F-80
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
33. STATUTORY RESERVES AND RESTRICTED NET ASSETS
Pursuant to laws applicable to entities incorporated in the PRC, the Group’s subsidiaries in the PRC must make appropriations from after-tax profit to non-
distributable reserve funds. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff
bonus and welfare fund. Subject to certain cumulative limits, the general reserve fund requires an annual appropriation of 10% of after tax profit (as
determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of such reserve fund reaches 50%
of a company’s registered capital; the other fund appropriations are at the subsidiaries’ discretion. These reserve funds can only be used for specific
purposes of enterprise expansion and staff bonus and welfare and are not distributable as cash dividends. During the year ended December 31, 2017, 2018
and 2019, no appropriations to the statutory reserve, enterprise expansion fund and staff welfare and bonus fund have been made by the Group.
In addition, due to restrictions on the distribution of share capital from the Group’s PRC subsidiaries and also as a result of these entities’ unreserved
accumulated losses, total restrictions placed on the distribution of the Group’s PRC subsidiaries’ net assets was RMB825.2.million, or 177.4% of the
Group’s total consolidated net assets as of December 31, 2019 (RMB978.2 million, or 41.1% as of December 31, 2018).
The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with Securities and Exchange Commission Regulation
S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements
for the parent company.
The subsidiaries did not pay any dividend to the Company for the periods presented. For the purpose of presenting parent only financial information, the
Company records its investments in its subsidiaries under the equity method of accounting. Such investments are presented on the separate condensed
balance sheets of the Company as “investments deficit in subsidiaries” and the loss of the subsidiaries is presented as “share of loss of subsidiaries”.
Certain information and footnote disclosures generally included in financial statements prepared in accordance with US GAAP have been condensed and
omitted.
The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2018 and 2019.
F-81
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UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
34. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
Balance sheets
ASSETS
Current assets:
Cash and cash equivalents
Short-term investment
Prepaid expenses
Amounts due from related parties
Other receivables
Total assets
LIABILITIES AND EQUITY
Current liabilities
Other payables and accruals
Investment deficit in subsidiaries
Amounts due to related parties
Convertible notes, current
Other current liabilities
Non-current liabilities
Convertible notes, non-current
Total liabilities
Shareholders’ equity
Ordinary shares (US$0.0001 par value, 10,000,000,000 shares authorized as of December 31, 2018
and 2019, respectively; 839,850,038 Class A ordinary shares and 40,809,861 Class B ordinary
shares issued and outstanding as of December 31, 2018; 846,771,473 Class A ordinary shares and
40,809,861 Class B ordinary shares issued and outstanding as of December 31, 2019)
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total shareholders’ equity
Total liabilities and shareholders’ equity
F-82
December 31, 2018
RMB
December 31, 2019
RMB
10,288
553,568
23,100
9,318,188
18,015
9,923,159
10,584
6,195,553
90,251
1,188,192
64,446
3,341
—
1,047
9,140,957
6,984
9,152,329
93,821
8,194,449
12,937
324,644
22,998
—
34,312
7,549,026
8,683,161
575
12,967,986
86,061
(10,680,489)
2,374,133
581
13,069,560
68,192
(12,669,165)
469,168
9,923,159
9,152,329
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
34. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED)
Statements of comprehensive loss
Total revenues
Cost of revenues
Gross profit
Operation expense
Sales and marketing
Research and development
General and administrative
Total operating expenses
Loss from operations
Share of loss of subsidiaries and VIEs
Interest income/(expense), net
Other (expense)/income, net
Foreign exchange gain
Fair value change of derivative liabilities
Net loss
Accretion on redeemable preferred shares to redemption value
Deemed dividend to Preferred Shareholders
Deemed dividend on Preferred Shareholders
Net loss attributable to ordinary shareholders
Net loss
Other comprehensive income/(loss)
Foreign currency translation
Total comprehensive loss
F-83
2017
RMB
2018
RMB
2019
RMB
—
—
—
—
—
(171,172)
(171,172)
4,497
(147)
4,350
(34,591)
(17,376)
(1,019,055)
(1,071,022)
—
—
—
(24,622)
(258)
(136,459)
(161,339)
(171,172)
(1,066,672)
(161,339)
(1,703,491)
17,849
(14)
3,849
(869,617)
(2,722,596)
(555,824)
(587,564)
92,779
(3,773,205)
(1,641,754)
(25,262)
4,213
2,951
1,204,010
(1,522,514)
(318,951)
(544,773)
—
(2,386,238)
(1,818,665)
(47,677)
39,131
(126)
—
(1,988,676)
—
—
—
(1,988,676)
(2,722,596)
(1,522,514)
(1,988,676)
46,065
(2,676,531)
11,406
(1,511,108)
(17,869)
(2,006,545)
Table of Contents
UXIN LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
34. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED)
Statements of cash flows
Net cash generated from/ (used in) operating activities
Net cash generated from/(used in) investing activities
Net cash (used in)/generated from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
F-84
2017
RMB
2018
RMB
2019
RMB
6,080
102,577
(29,042)
(2,592)
77,023
796
77,819
(55,088)
(3,999,403)
3,982,230
4,730
(67,531)
77,819
10,288
18,977
755,553
(781,527)
50
(6,947)
10,288
3,341
Exhibit 3.1
Description of rights of each class of securities
registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”)
American Depositary Shares (“ADSs”) each representing three Class A ordinary shares of Uxin Limited, (the “we,” “our,” “our company,” or “us”) are
listed and traded on the Nasdaq Global Select Market and, in connection with this listing (but not for trading), the Class A ordinary shares are registered
under Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of (i) the holders of Class A ordinary shares and (ii) the holders of
ADSs. Class A ordinary shares underlying the ADSs are held by the Bank of New York Mellon, as depositary, and holders of ADSs will not be treated as
holders of the Class A ordinary shares.
Description of Class A Ordinary Shares
The following is a summary of material provisions of our currently effective amended and restated memorandum and articles of association (the
“Memorandum and Articles of Association”), as well as the Companies Law (2020 Revision) of the Cayman Islands (the “Companies Law”) insofar as
they relate to the material terms of our ordinary shares. Notwithstanding this, because it is a summary, it may not contain all the information that you may
otherwise deem important. For more complete information, you should read the entire Memorandum and Articles of Association, which has been filed with
the SEC as an exhibit to our Registration Statement on Form F-1 (File No. 333-225266).
Type and Class of Securities (Item 9.A.5 of Form 20-F)
Each Class A ordinary share has US$0.0001 par value. The number of Class A ordinary shares that have been issued as of the last day of the financial
year ended December 31, 2019 is provided on the cover of the annual report on Form 20-F filed on May 12, 2020 (the “2019 Form 20-F”). Our Class A
ordinary shares may be held in either certificated or non-certificated form.
Preemptive Rights (Item 9.A.3 of Form 20-F)
Our shareholders do not have preemptive rights.
Limitations or Qualifications (Item 9.A.6 of Form 20-F)
We have a dual-class share structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares with disparate voting
powers. Each Class A ordinary share shall entitle the holder thereof to one vote on all matters subject to the vote at general meetings of our company, and
each Class B ordinary share shall entitle the holder thereof to ten votes on all matters subject to the vote at general meetings of our company. Due to the
super voting power of holders of our Class B ordinary shares, the voting power of the holders of our Class A ordinary shares may be materially limited.
Rights of Other Types of Securities (Item 9.A.7 of Form 20-F)
Not applicable.
Rights of Class A Ordinary Shares (Item 10.B.3 of Form 20-F)
Classes of Ordinary Shares
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of our Class A ordinary shares and Class B ordinary
shares will have the same rights except for voting and conversion rights. Our ordinary shares are issued in registered form and are issued when registered in
our register of members (shareholders). We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold
and vote their shares.
Conversion
Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not
convertible into Class B ordinary shares under any circumstances. Upon (i) any direct or indirect sale, transfer, assignment or disposition of Class B
ordinary shares by a holder thereof or the direct or indirect transfer or assignment of the voting power attached to such number of Class B ordinary shares
through voting proxy or otherwise to any person or entity that is not an Affiliate (as defined in our memorandum and articles of association) of such holder,
or (ii) the direct or indirect sale, transfer, assignment or disposition of a majority of the issued and outstanding voting securities of, or the direct or indirect
transfer or assignment of the voting power attached to such voting securities through voting proxy or otherwise, or the direct or indirect transfer, sale,
assignment or disposition of all or substantially all of the assets of a holder of Class B ordinary shares that is an entity to any person or entity that is not an
Affiliate of such holder, such Class B ordinary shares will be automatically and immediately converted into an equal number of Class A ordinary shares.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors, subject to our memorandum and articles
of association. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend shall exceed the amount recommended by our
directors. Under the laws of the Cayman Islands, our company may declare and pay a dividend only out of funds legally available, namely out of either our
profit or share premium account, provided that in no circumstances may a dividend be paid if, immediately after this payment, this would result in our
company being unable to pay its debts as they fall due in the ordinary course of business. Dividends received by each Class B ordinary share and Class A
ordinary share in any dividend distribution shall be the same.
Voting Rights
Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as
may otherwise be required by law or provided for in our memorandum and articles of association. In respect of matters requiring shareholders’ vote, each
Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes. Voting at any shareholders’ meeting is by show of
hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one or more shareholders who together hold not less
than 10% of the votes attaching to the total ordinary shares which are present in person or by proxy at the meeting.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the
ordinary shares cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires
the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding ordinary shares cast by those shareholders entitled to vote who
are present or by proxy at a general meeting. Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed
by all the shareholders of our company, as permitted by the Companies Law and our memorandum and articles of association. A special resolution will be
required for important matters such as a change of name or making changes to our memorandum and articles of association. Holders of the ordinary shares
may, among other things, divide or combine their shares by ordinary resolution.
General Meetings of Shareholders
As a Cayman Islands exempted company, we are not obliged by the Companies Law to call shareholders’ annual general meetings. Our memorandum
and articles of association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting in which case we
shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our
directors.
Shareholders’ general meetings may be convened by a majority of our board of directors. Advance notice of at least seven (7) calendar days is required
for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for any
general meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all votes attaching to the
issued and outstanding shares in our company entitled to vote at general meetings.
The Companies Law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and articles
of association provide that upon the requisition of shareholders representing in aggregate not less than a majority of all votes attaching to the issued and
outstanding shares of our company entitled to vote at general meetings, our board is obliged to call an extraordinary general meeting and put the resolutions
so requisitioned to a vote at such meeting. However, our memorandum and articles of association do not provide our shareholders with any right to put any
proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
Transfer of Ordinary Shares
Subject to the restrictions in our memorandum and articles of association as set out below, any of our shareholders may transfer all or any of his or her
ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we
have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
· the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as
our board of directors may reasonably require to show the right of the transferor to make the transfer;
· the instrument of transfer is in respect of only one class of ordinary shares;
· the instrument of transfer is properly stamped, if required; and
· in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four.
· a fee of such maximum sum as Nasdaq Stock Market LLC may determine to be payable or such lesser sum as our directors may from time to time
require is paid to us in respect thereof.
If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each
of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of the Nasdaq Stock Market LLC, be suspended and our register of
members closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of
transfers shall not be suspended nor the register of members closed for more than 30 days in any year as our board may determine.
Liquidation Rights
On a return of capital or the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient
to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to
the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are
monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the
paid-up capital, the assets will be distributed so that, as nearly as may be, the losses are borne by our shareholders in proportion to the par value of the
shares held by them.
Calls on Ordinary Shares and Forfeiture of Ordinary shares
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such
shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain unpaid are subject to
forfeiture.
Redemption, Repurchase and Surrender of Ordinary Shares
We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such terms and
in such manner as may be determined by our board of directors or by the shareholders by special resolution. Our Company may also repurchase any of our
shares on such terms and in such manner as have been approved by our board of directors or by an ordinary resolution of our shareholders. Under the
Companies Law, the redemption or repurchase of any share may be paid out of our Company’s profits or out of the proceeds of a new issue of shares made
for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our company can,
immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Law no such share
may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or
(c) if our company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.
Requirements to Change the Rights of Holders of Class A Ordinary Shares (Item 10.B.4 of Form 20-F)
Variations of Rights of Shares
If at any time, our share capital is divided into different classes or series of shares, the rights attached to any class or series of shares (unless otherwise
provided by the terms of issue of the shares of that class or series), whether or not our company is being wound-up, may only be materially adversely
varied with the consent in writing of all the holders of the issued shares of that class or series or with the sanction of an ordinary resolution passed at a
separate meeting of the holders of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, subject
to any rights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by the creation, allotment or
issue of further shares ranking pari passu with or subsequent to such existing class of shares, or the redemption or purchase of any shares of any class by
our company. The rights of the holders of our shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred
or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.
Limitations on the Rights to Own Class A Ordinary Shares (Item 10.B.6 of Form 20-F)
There are no limitations under the laws of the Cayman Islands or under our memorandum and articles of association that limit the right of non-resident
or foreign owners to hold or vote Class A ordinary shares.
Provisions Affecting Any Change of Control (Item 10.B.7 of Form 20-F)
Anti-Takeover Provisions
Some provisions of our memorandum and articles of association may discourage, delay or prevent a change of control of our company or management
that shareholders may consider favorable, including provisions that:
· authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and
restrictions of such preference shares without any further vote or action by our shareholders; and
· limit the ability of shareholders to requisition and convene general meetings of shareholders.
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our memorandum and articles of
association for a proper purpose and for what they believe in good faith to be in the best interests of our company.
Ownership Threshold (Item 10.B.8 of Form 20-F)
There are no provisions under the laws of the Cayman Islands applicable to our company or our memorandum and articles of that require our company
to disclose shareholder ownership above any particular ownership threshold.
Differences Between the Law of Different Jurisdictions (Item 10.B.9 of Form 20-F)
The Companies Law is derived, to a large extent, from the older Companies Acts of England, but does not follow recent English statutory enactments
and accordingly there are significant differences between the Companies Law and the current Companies Act of England. In addition, the Companies Law
differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain significant differences between the
provisions of the Companies Law applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements. The Companies Law permits mergers and consolidations between Cayman Islands companies and between
Cayman Islands companies and non-Cayman Islands companies. For these purposes, (i) “merger” means the merging of two or more constituent companies
and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (ii) a “consolidation” means the
combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such
companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written
plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such
other authorization, if any, as may be specified in such constituent company’s articles of association. The plan must be filed with the Registrar of
Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a declaration as to the assets and
liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and
creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval
is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders
of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees
otherwise. For this purpose a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes
at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in
the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to
payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the
merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Law. The exercise of dissenter
rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares,
save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
Separate from the statutory provisions relating to mergers and consolidations, the Companies Law also contains statutory provisions that facilitate the
reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of
each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such
class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that
purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a
dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the Grand Court of the Cayman Islands
can be expected to approve the arrangement if it determines that:
· the statutory provisions as to the required majority vote have been met;
· the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the
minority to promote interests adverse to those of the class;
· the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
· the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law.
The Companies Law also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority
shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may,
within a two-month period commencing on the expiration of such four month period, require the holders of the remaining shares to transfer such shares to
the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an
offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, or if a tender offer is made and accepted, a dissenting shareholder would have no rights
comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to
receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a
derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive
authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v.
Harbottle and the exceptions thereto) which permit a minority shareholder to commence a class action against or derivative actions in the name of our
company to challenge actions where:
· a company acts or proposes to act illegally or ultra vires;
· the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been
obtained; and
· those who control our company are perpetrating a “fraud on the minority.”
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by
the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
Our memorandum and articles of association provide that that we shall indemnify our officers and directors against all actions, proceedings, costs, charges,
expenses, losses, damages or liabilities incurred or sustained by such directors or officer, other than by reason of such person’s dishonesty, willful default or
fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his
duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by
such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether
in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a
Delaware corporation.
In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional
indemnification beyond that provided in our memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the
foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its
shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the
care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to
shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner
he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty
prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed
by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been
made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this
presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a
director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to our company and therefore
it is considered that he owes the following duties to our company—a duty to act bona fide in the best interests of our company, a duty not to make a profit
based on his position as director (unless our company permits him to do so), a duty not to put himself in a position where the interests of our company
conflict with his personal interest or his duty to a third party, and a duty to exercise powers for the purpose for which such powers were intended. A director
of a Cayman Islands company owes to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in the
performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and
Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in
the Cayman Islands.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act
by written consent by amendment to its certificate of incorporation. The Companies Law and our memorandum and articles of association provide that our
shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been
entitled to vote on such matter at a general meeting without a meeting being held.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of
shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any
other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Companies Law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and articles
of association allow our shareholders holding in aggregate not less than a majority of all votes attaching to the issued and outstanding shares of our
company entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our board is obliged to
convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. Other than this right to requisition a
shareholders’ meeting, our memorandum and articles of association do not provide our shareholders with any other right to put proposals before annual
general meetings or extraordinary general meetings. As a Cayman Islands exempted company, we are not obliged by law to call shareholders’ annual
general meetings.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the
corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on
a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases
the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the
Cayman Islands but our memorandum and articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any
less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for
cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our
memorandum and articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders. A director shall
hold office until the expiration of his or her term or his or her successor shall have been elected and qualified, or until his or her office is otherwise vacated.
In addition, a director’s office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is
found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to our company; (iv) without special leave of absence from our
board of directors, is absent from three consecutive meetings of the board and the board resolves that his office be vacated; or (v) is removed from office
pursuant to any other provisions of our memorandum and articles of association.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware
corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it
is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes
an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding
voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all
shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an
interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an
interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the
target’s board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business
combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, the
directors of the Company are required to comply with the fiduciary duties which they owe to the Company under Cayman Islands law, including the duty to
ensure that, in their opinion, any such transaction are entered into bona fide in the best interests of our company, and are entered into for proper corporate
purpose and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution
must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors
may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of
incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Cayman Islands law, our company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of our
members or, if our company is unable to pay its debts as they fall due, by an ordinary resolution of our members. The court has authority to order winding
up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval
of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our memorandum and articles of
association, if our share capital is divided into more than one class of shares, we may only materially adversely vary the rights attached to any class with
the written consent of the holders of all of the issued shares of that class or with the sanction of an ordinary resolution passed at a general meeting of the
holders of the shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with
the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under the Companies Law
and our memorandum and articles of association, our memorandum and articles of association may only be amended by a special resolution of our
shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our currently effective amended and restated memorandum and
articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no
provisions in our memorandum and articles of association which require our company to disclose shareholder ownership above any particular ownership
threshold.
Changes in Capital (Item 10.B.10 of Form 20-F)
Our shareholders may from time to time by ordinary resolution:
· increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe;
· consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;
· sub-divide our existing shares, or any of them into shares of a smaller amount, provided that in the subdivision the proportion between the amount
paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived; or
· cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the
amount of our share capital by the amount of the shares so cancelled.
Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for
an order confirming such reduction, reduce our share capital or any capital redemption reserve in any manner permitted by law.
Debt Securities (Item 12.A of Form 20-F)
Not applicable.
Warrants and Rights (Item 12.B of Form 20-F)
Not applicable.
Other Securities (Item 12.C of Form 20-F)
Not applicable.
Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
The Bank of New York Mellon, as depositary, will register and deliver American Depositary Shares, also referred to as ADSs. Each ADS will
represent three Class A ordinary shares (or a right to receive three Class A ordinary shares) deposited with The Hongkong and Shanghai Banking
Corporation Limited, as custodian for the depositary in Hong Kong. Each ADS will also represent any other securities, cash or other property which may
be held by the depositary. The deposited shares together with any other securities, cash or other property held by the depositary are referred to as the
deposited securities. The depositary’s office at which the ADSs will be administered is located at 101 Barclay Street, New York, New York 10286. The
Bank of New York Mellon’s principal executive office is located at 225 Liberty Street, New York, New York 10286.
You may hold ADSs either (A) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a
specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (B) indirectly by holding a security
entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called
DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If
you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in
this section. You should consult with your broker or financial institution to find out what those procedures are.
Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.
As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. The laws of the Cayman Islands govern
shareholder rights. The depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights.
A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as
well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.
The deposit agreement gives the depositary or an ADS holder asserting a claim against us the right to require us to submit that claim to binding
arbitration in New York under the Rules of the American Arbitration Association, including any United Stated federal securities law claim. However, a
claimant could also elect not to submit its claim to arbitration and instead bring its claim in any court having jurisdiction of it. The deposit agreement does
not give us the right to require anyone to submit any claim to arbitration.
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit
agreement and the form of ADR.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay or distribute to ADS holders the cash dividends or other distributions it or the custodian receives on shares or other
deposited securities, upon payment or deduction of its fees and expenses. You will receive these distributions in proportion to the number of shares your
ADSs represent.
Cash. The depositary will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable
basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the
deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign
currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for
any interest.
Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be deducted. The depositary will distribute
only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the
depositary cannot convert the foreign currency, you may lose some of the value of the distribution.
Class A ordinary Shares. The depositary may distribute additional ADSs representing any Class A ordinary shares we distribute as a dividend or free
distribution. The depositary will only distribute whole ADSs. It will sell Class A ordinary shares which would require it to deliver a fraction of an ADS (or
ADSs representing those shares) and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs,
the outstanding ADSs will also represent the new Class A ordinary shares. The depositary may sell a portion of the distributed Class A ordinary shares (or
ADSs representing those shares) sufficient to pay its fees and expenses in connection with that distribution.
Rights to purchase additional shares. If we offer holders of our securities any rights to subscribe for additional shares or any other rights, the
depositary may (i) exercise those rights on behalf of ADS holders, (ii) distribute those rights to ADS holders or (iii) sell those rights and distribute the net
proceeds to ADS holders, in each case after deduction or upon payment of its fees and expenses. To the extent the depositary does not do any of those
things, it will allow the rights to lapse. In that case, you will receive no value for them. The depositary will exercise or distribute rights only if we ask it to
and provide satisfactory assurances to the depositary that it is legal to do so. If the depositary will exercise rights, it will purchase the securities to which the
rights relate and distribute those securities or, in the case of Class A ordinary shares, new ADSs representing the new shares, to subscribing ADS holders,
but only if ADS holders have paid the exercise price to the depositary. U.S. securities laws may restrict the ability of the depositary to distribute rights or
ADSs or other securities issued on exercise of rights to all or certain ADS holders, and the securities distributed may be subject to restrictions on transfer.
Other Distributions. The depositary will send to ADS holders anything else we distribute on deposited securities by any means it thinks is legal, fair
and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net
proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed
property. However, the depositary is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from
us that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses
in connection with that distribution. U.S. securities laws may restrict the ability of the depositary to distribute securities to all or certain ADS holders, and
the securities distributed may be subject to restrictions on transfer.
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no
obligation to register ADSs, Class A ordinary shares, rights or other securities under the Securities Act. We also have no obligation to take any other action
to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our
shares or any value for them if it is illegal or impractical for us to make them available to you.
Deposit, Withdrawal and Cancellation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposits Class A ordinary shares or evidence of rights to receive Class A ordinary shares with
the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will
register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the
deposit.
How can ADS holders withdraw the deposited securities?
You may surrender your ADSs to the depositary for the purpose of withdrawal. Upon payment of its fees and expenses and of any taxes or charges,
such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the shares and any other deposited securities underlying the ADSs to the ADS
holder or a person the ADS holder designates at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited
securities at its office, if feasible. However, the depositary is not required to accept surrender of ADSs to the extent it would require delivery of a fraction of
a deposited share or other security. The depositary may charge you a fee and its expenses for instructing the custodian regarding delivery of deposited
securities.
How do ADS holders interchange between certificated ADSs and uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that
ADR and will send to the ADS holder a statement confirming that the ADS holder is the registered holder of uncertificated ADSs. Upon receipt by the
depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs,
the depositary will execute and deliver to the ADS holder an ADR evidencing those ADSs.
Voting Rights
How do you vote?
ADS holders may instruct the depositary how to vote the number of deposited Class A ordinary shares their ADSs represent. If we request the
depositary to solicit your voting instructions (and we are not required to do so), the depositary will notify you of a shareholders’ meeting and send or make
voting materials available to you. Those materials will describe the matters to be voted on and explain how ADS holders may instruct the depositary how to
vote. For instructions to be valid, they must reach the depositary by a date set by the depositary. The depositary will try, as far as practical, subject to the
laws of the Cayman Islands and the provisions of our articles of association or similar documents, to vote or to have its agents vote the shares or other
deposited securities as instructed by ADS holders. If we do not request the depositary to solicit your voting instructions, you can still send voting
instructions, and, in that case, the depositary may try to vote as you instruct, but it is not required to do so.
Except by instructing the depositary as described above, you won’t be able to exercise voting rights unless you surrender your ADSs and withdraw the
Class A ordinary shares. However, you may not know about the meeting enough in advance to withdraw the Class A ordinary shares. In any event, the
depositary will not exercise any discretion in voting deposited securities and it will only vote or attempt to vote as instructed.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition,
the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means
that you may not be able to exercise voting rights and there may be nothing you can do if your shares are not voted as you requested.
In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to Deposited Securities, if we request
the Depositary to act, we agree to give the depositary notice of any such meeting and details concerning the matters to be voted upon at least 30 days in
advance of the meeting date.
Tender and Exchange Offers; Redemption, Replacement or Cancellation of Deposited Securities
The depositary will not tender deposited securities in any voluntary tender or exchange offer unless instructed to do by an ADS holder surrendering
ADSs and subject to any conditions or procedures the depositary may establish.
If deposited securities are redeemed for cash in a transaction that is mandatory for the depositary as a holder of deposited securities, the depositary will
call for surrender of a corresponding number of ADSs and distribute the net redemption money to the holders of called ADSs upon surrender of those
ADSs.
If there is any change in the deposited securities such as a sub-division, combination or other reclassification, or any merger, consolidation,
recapitalization or reorganization affecting the issuer of deposited securities in which the depositary receives new securities in exchange for or in lieu of the
old deposited securities, the depositary will hold those replacement securities as deposited securities under the deposit agreement. However, if the
depositary decides it would not be lawful and practical to hold the replacement securities because those securities could not be distributed to ADS holders
or for any other reason, the depositary may instead sell the replacement securities and distribute the net proceeds upon surrender of the ADSs.
If there is a replacement of the deposited securities and the depositary will continue to hold the replacement securities, the depositary may distribute
new ADSs representing the new deposited securities or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new
deposited securities.
If there are no deposited securities underlying ADSs, including if the deposited securities are cancelled, or if the deposited securities underlying ADSs
have become apparently worthless, the depositary may call for surrender or of those ADSs or cancel those ADSs upon notice to the ADS holders.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or
increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery
charges or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the
depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to
agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.
How may the deposit agreement be terminated?
The depositary will initiate termination of the deposit agreement if we instruct it to do so. The depositary may initiate termination of the deposit
agreement if
· 60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment;
· we delist our shares from an exchange on which they were listed and do not list the shares on another exchange;
· we appear to be insolvent or enter insolvency proceedings
· all or substantially all the value of the deposited securities has been distributed either in cash or in the form of securities;
· there are no deposited securities underlying the ADSs or the underlying deposited securities have become apparently worthless; or
· there has been a replacement of deposited securities.
If the deposit agreement will terminate, the depositary will notify ADS holders at least 90 days before the termination date. At any time after the
termination date, the depositary may sell the deposited securities. After that, the depositary will hold the money it received on the sale, as well as any other
cash it is holding under the deposit agreement, unsegregated and without liability for interest, for the pro rata benefit of the ADS holders that have not
surrendered their ADSs. Normally, the depositary will sell as soon as practicable after the termination date.
After the termination date and before the depositary sells, ADS holders can still surrender their ADSs and receive delivery of deposited securities,
except that the depositary may refuse to accept a surrender for the purpose of withdrawing deposited securities or reverse previously accepted surrenders of
that kind if it would interfere with the selling process. The depositary may refuse to accept a surrender for the purpose of withdrawing sale proceeds until
all the deposited securities have been sold. The depositary will continue to collect distributions on deposited securities, but, after the termination date, the
depositary is not required to register any transfer of ADSs or distribute any dividends or other distributions on deposited securities to the ADSs holder
(until they surrender their ADSs) or give any notices or perform any other duties under the deposit agreement except as described in this paragraph.
Limitations on Obligations and Liability to ADR Holders
Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs
The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the
depositary. We and the depositary:
· are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith, and the depositary will not be
a fiduciary or have any fiduciary duty to holders of ADSs;
· are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with
reasonable care or effort from performing our or its obligations under the deposit agreement;
· are not liable if we or it exercises discretion permitted under the deposit agreement;
· are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders
of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit
agreement, or for any;
· have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf
of any other person;
· may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person;.
· are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and
· the depositary has no duty to make any determination or provide any information as to our tax status, or any liability for any tax consequences that
may be incurred by ADS holders as a result of owning or holding ADSs or be liable for the inability or failure of an ADS holder to obtain the benefit
of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Right to Receive the Class A Ordinary Shares Underlying your ADSs
ADS holders have the right to cancel their ADSs and withdraw the underlying Class A ordinary shares at any time except:
· when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of
Class A ordinary shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our Class A ordinary shares;
· when you owe money to pay fees, taxes and similar charges; or
· when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal
of Class A ordinary shares or other deposited securities.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Shareholder communications; inspection of register of holders of ADSs
The depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that
we make generally available to holders of deposited securities. The depositary will send you copies of those communications or otherwise make those
communications available to you if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those
holders about a matter unrelated to our business or the ADSs.
Exhibit 4.29
Execution Version
CONVERTIBLE NOTE PURCHASE AGREEMENT
by and between
UXIN LIMITED
and
PACIFICBRIDGE ASSET MANAGEMENT
Dated July 12, 2019
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
1.
2.
3.
4.
5.
TABLE OF CONTENTS
DEFINITIONS
ISSUANCE OF THE NOTES
Issuance of the Notes
2.1
Closing
2.2
Payment and Delivery
2.3
Conditions to the Fund Manager’s Obligations to Effect the Closing
2.4
Conditions to the Company’s Obligations to Effect the Closing
2.5
Accuracy of Disclosure
Existence and Qualification
Capitalization; Issuance of Subscription Shares
Valid Issuance of the Notes and the Conversion Shares
Capacity, Authorization and Enforceability
Non-Contravention
Consents and Approvals
Financial Statements
Operating and non-GAAP financial Data
Related Party Transactions
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11 Absence of Certain Changes
Litigation
3.12
Compliance with Laws
3.13
3.14
Securities Laws
3.15 No Registration
3.16
3.17
3.18
3.19 Money Laundering Laws
3.20 OFAC
3.21
3.22
3.23
Ranking of the Notes
Listing and Maintenance Requirements
Investment Company
Foreign Corrupt Practices
PFIC
Tax Matters
REPRESENTATIONS AND WARRANTIES OF THE FUND MANAGER
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
Existence
Capacity
Authorization and Enforceability
Non-Contravention
Consents and Approvals
Investment Intent
Regulation S Eligibility; Restriction on Resale
Investment Experience
COVENANTS
5.1
5.2
5.3
5.4
Further Assurances
Reservation of Shares
Lock-Up
No Transfer to Adverse Persons
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5
5
5
5
6
6
6
7
7
7
8
8
8
8
8
9
9
9
9
9
9
9
9
9
9
10
10
10
10
11
11
11
11
11
11
11
11
12
12
12
12
12
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6.
7.
5.5
5.6
Use of Proceeds
Conversion to ADSs
INDEMNIFICATION
6.1
6.2
6.3
Indemnification
Third Party Claims
Other Claims
Survival of the Representations and Warranties
Governing Law; Dispute Resolution
Amendment
Binding Effect
Assignment
Notices
Entire Agreement
Severability
Fees and Expenses
Confidentiality
Specific Performance
Termination
MISCELLANEOUS
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13 Headings
7.14
7.15 No Waiver
Counterparts
Schedules and Exhibits
SCHEDULE 1 — PURCHASERS AND ALLOCATIONS
SCHEDULE 2 — ADVERSE PERSONS
EXHIBIT A — FORM OF 10.0% NOTE
EXHIBIT B — FORM OF 11.0% NOTE
ii
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14
15
15
15
15
16
16
16
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CONVERTIBLE NOTE PURCHASE AGREEMENT
This CONVERTIBLE NOTE PURCHASE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this
“Agreement”), dated July 12, 2019, is entered into by and between Uxin Limited, an exempted company with limited liability incorporated under the laws
of the Cayman Islands (the “Company”), and PacificBridge Asset Management (the “Fund Manager”) acting in its capacity as the fund manager of each of
the Persons listed in Schedule 1 hereto (each, a “Purchaser”).
W I T N E S S E T H:
WHEREAS, the Company desires to issue to each Purchaser, and the Fund Manager has agreed to cause each Purchaser to purchase from the
Company, the applicable Notes (as defined below), subject to the terms and conditions set forth herein and in the applicable Notes.
NOW, THEREFORE, in consideration of the respective undertakings stated herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Whenever used herein, unless the context otherwise requires, the following words and phrases shall have the following
meanings:
“10.0% Note” shall mean a promissory note, with a 10.0% coupon and a maturity date that is 12 months after the issuance date, to be issued by the
Company to the applicable Purchaser pursuant to Article 2 below, in the form of Exhibit A.
“11.0% Note” shall mean a promissory note, with a 11.0% coupon and a maturity date that is 15 months after the issuance date, to be issued by the
Company to the applicable Purchaser pursuant to Article 2 below, in the form of Exhibit B.
“ADSs” shall mean American Depositary Shares representing Class A Ordinary Shares.
“Adverse Person” shall mean any Person identified in Schedule 2 hereto, any additional Persons to be mutually agreed in writing by the Company
and the Fund Manager from time to time, and any Controlled Affiliates of any of the foregoing.
“Affiliate” of any specified Person shall mean any other Person directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such specified Person. For the avoidance of doubt, none of the Purchasers shall be considered as an Affiliate of the Company or the
Company’s Subsidiaries by reason of holding any Notes to be issued hereunder.
“Agreement” shall have the meaning specified in the preamble to this Agreement.
“Board” shall mean the board of directors of the Company.
“Business Day” shall mean any day that is not a Saturday, a Sunday or another day on which banking institutions in the State of New York, the
PRC, Hong Kong, the Republic of Korea or the Cayman Islands are required by law to be closed.
“Claim Notice” shall have the meaning specified in Section 6.2(a) of this Agreement.
“Class A Ordinary Shares” shall mean the Class A ordinary shares of the Company of a par value of US$0.0001 each.
“Class B Ordinary Shares” shall mean the Class B ordinary shares of the Company of a par value of US$0.0001 each.
“Closing” shall have the meaning specified in Section 2.2 of this Agreement.
“Closing Date” shall have the meaning specified in Section 2.2 of this Agreement. “Company” shall have the meaning specified in the preamble to
this Agreement.
“Company Securities” shall mean (a) Ordinary Shares or American Depositary Shares, depositary receipts or similar instruments issued in respect
of Ordinary Shares, (b) securities convertible into, or exercisable or exchangeable for, any Ordinary Shares or other instruments described in clause (a), and
(c) any options, warrants or other rights to acquire any of the foregoing Ordinary Shares, instruments or securities.
“Control” of a given Person shall mean the power or authority, whether exercised or not, to direct the business, management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, that such power or authority shall
conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled
to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such
Person. The terms “Controlled” and “Controlling” have meanings correlative to the foregoing.
“Conversion Shares” shall mean the Class A Ordinary Shares issuable upon conversion of the Notes in accordance with the terms thereof.
“Dispute” shall have the meaning specified in Section 7.2 of this Agreement.
“Encumbrance” shall mean (a) any mortgage, charge, pledge, lien, hypothecation, deed of trust, title retention, title defect, security interest,
encumbrance or other third-party rights of any kind securing or conferring any priority of payment in respect of any obligation of any Person, any other
restriction or limitation; (b) any easement or covenant granting a right of use or occupancy to any Person; (c) any proxy, power of attorney, voting trust
agreement, interest, option, right of first offer, right of pre-emptive negotiation, or refusal or transfer restriction in favor of any Person; and (d) any adverse
claim as to title.
“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended.
“Fund Manager” shall have the meaning specified in the preamble to this Agreement.
“Fundamental Company Representations” shall mean the representations and warranties by the Company contained in Sections 3.2, 3.3, 3.4, 3.5
“Fundamental Purchaser Representations” shall mean the representations and warranties by the Fund Manager contained in Sections 4.1, 4.2, 4.3
and 3.6.
and 4.4.
“Governmental Entity” shall mean any transnational or supranational, domestic or foreign federal, national, state, provincial, local or municipal
governmental, regulatory, judicial
2
or administrative authority, department, court, arbitral body, agency or official, including any department, commission, board, agency, bureau, subdivision
or instrumentality thereof or any stock exchange.
“Hong Kong” shall mean the Hong Kong Special Administrative Region of the PRC.
“Indemnified Party” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Indemnifying Party” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Indemnity Notice” shall have the meaning specified in Section 6.3 of this Agreement.
“Lock-Up Period” shall mean the period between the Closing Date and the date that is 180 days after the Closing Date (both dates inclusive).
“Loss Threshold” shall have the meaning specified in Section 6.1(c).
“Losses” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Material Adverse Effect” shall mean any event, occurrence, fact, condition, change or development, individually or together with other events,
occurrences, facts, conditions, changes or developments, that has had, has, or would reasonably be expected to have a material adverse effect on (a) the
business of the Company as presently conducted, or the condition (financial or otherwise), affairs, properties, employees, liabilities, assets or results of
operation of the Company and its Subsidiaries taken as a whole or (b) the ability of the Company to consummate the transactions contemplated by this
Agreement and the Notes and to timely perform its material obligations hereunder and thereunder; provided, however, that in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect on the business of the Company or the Company or any Subsidiary relating to or
arising in connection with (i) any action required to be taken pursuant to the terms and conditions of this Agreement or taken at the written direction of the
Fund Manager or any Purchaser, (ii) economic changes affecting the industry in which the Company and its Subsidiaries operate generally or the economy
of the PRC or any other market where the Company and its Subsidiaries have material operations or sales generally (provided in each case that such
changes do not have a unique and materially disproportionate impact on the business of the Company and its Subsidiaries compared to any other companies
that operate in the industry or market in which the Company and its Subsidiaries operate), (iii) the execution, announcement or disclosure of this
Agreement or the pendency or consummation of the transactions contemplated hereunder, (iv) actions or omissions of the Company and its Subsidiaries
that have been consented by the Fund Manager or any Purchaser in writing or otherwise contemplated by this Agreement, (v) changes in generally accepted
accounting principles that are generally applicable to comparable companies (provided that such changes do not have a unique and materially
disproportionate impact on the business of the Company and its Subsidiaries compared to compared to any other companies that operate in the industry or
market in which the Company and its Subsidiaries operate), (vi) changes in general legal, tax or regulatory conditions (provided that such changes do not
have a unique or materially disproportionate impact on the business of the Company and its Subsidiaries compared to any other companies that operate in
the industry or market in which the Company and its Subsidiaries operate), (vii) changes in national or international political or social conditions,
3
including any engagement in hostilities or the occurrence of any military or terrorist attack or civil unrest, or (viii) earthquakes, hurricanes, floods or other
natural disasters.
“Note(s)” shall mean any of the 10.0% Note and the 11.0% Note, as applicable.
“Ordinary Shares” shall mean the Class A Ordinary Shares and the Class B Ordinary Shares.
“Person” shall mean any natural person, firm, corporation, limited liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Entity or any other legal entity, including public bodies, whether acting in an individual, fiduciary or
other capacity.
“PRC” shall mean the People’s Republic of China, excluding, for the purpose of this Agreement, Hong Kong, the Macau Special Administrative
Region and Taiwan.
“Principal Amount” with respect to a Purchaser and a Note shall mean the U.S. dollar amount set forth next to the name of the Purchaser in the
column entitled “Principal Amount” in the applicable table in Schedule 1 hereto.
“Purchaser” shall have the meaning specified in the preamble to this Agreement.
“Purchaser Entities” shall mean, collectively, the Purchasers and the Fund Manager.
“Regulation S” shall have the meaning specified in Section 3.14 of this Agreement.
“SEC” shall mean the United States Securities and Exchange Commission.
“SEC Documents” shall mean all registration statements, proxy statements and other statements, reports, schedules, forms and other documents
required to be filed or furnished by the Company with the SEC from time to time, and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein.
“Securities Act” shall mean the United States Securities Act of 1933, as amended.
“Subsidiary” shall mean, with respect to any given Person, any other Person that is Controlled directly or indirectly by such given Person, which
shall, for the avoidance of doubt, include any variable interest entity whose assets and financial results are consolidated with the assets and financial results
of such given Person and are recorded on the financial statements of such given Person for financial reporting purposes in accordance with applicable
accounting standards (each, a “VIE” and collectively, the “VIEs”) and any Subsidiary of such VIEs.
“Third Party Claim” shall have the meaning specified in Section 6.2(a) of this Agreement.
“Transfer” shall mean directly or indirectly, offer, sell, contract to sell, pledge, transfer, assign, give, hypothecate, encumber, grant a security
interest in, convey in trust, gift, devise or descent, or otherwise dispose of, or suffer to exist (whether by operation of law of otherwise) any Encumbrance
on, any Company Securities or any right, title or interest therein or thereto, or enter into a transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any Company Securities, whether
any such aforementioned transaction is to be
4
settled by delivery of the Ordinary Shares, American Depositary Receipts or such other securities, in cash or otherwise, or publicly disclose the intention to
make any such disposition or to enter into any such transaction, swap, hedge or other arrangement, including transfers pursuant to divorce or legal
separation, transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether
voluntary or by operation of law, directly or indirectly, of any Company Securities.
“US$” and “U.S. dollar” shall mean the lawful currency of the United States of America.
2. ISSUANCE OF THE NOTES.
2.1 Issuance of the Notes. Subject to the satisfaction of terms and conditions of this Agreement, at the Closing, the Company agrees
to issue to each Purchaser, and the Fund Manager hereby agrees to cause each Purchaser to purchase from the Company, the 10.0% Note or the 11.0%
Note, in the principal amount equal to the applicable Principal Amount.
2.2 Closing. The closing of the issuance and purchase of the Notes shall take place remotely via the exchange of documents and
signatures after all closing conditions specified in Sections 2.4 and 2.5 hereof have been satisfied or waived (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof at the Closing). The date of the Closing (the “Closing Date”) will be
July 12, 2019 or such other date as the Company and the Fund Manager may mutually agree in writing.
2.3 Payment and Delivery. At the Closing, the Fund Manager shall cause each Purchaser to pay and deliver the applicable Principal
Amount to the Company in U.S. dollars by wire transfer, or by such other method as may be mutually agreed by the Company and the Fund Manager, of
immediately available funds to such bank account of the Company designated in writing by the Company. Such payment shall be delivered and made
available to such bank account on the Closing Date, and the Company shall deliver to each Purchaser the duly executed Note dated the Closing Date, free
and clear of Encumbrances.
2.4 Conditions to the Fund Manager’s Obligations to Effect the Closing. The obligation of the Fund Manager to cause each
Purchaser to purchase the Note at the Closing is subject to the satisfaction, on or before the Closing Date, of the following conditions, any of which may be
waived in writing by the Fund Manager in its sole and absolute discretion:
of the applicable Note shall have been completed;
(a) All corporate and other actions required to be taken by the Company in connection with the issuance, sale and delivery
(b) The representations and warranties of the Company contained in Article 3 of this Agreement shall have been true and
correct in all material respects on the date of this Agreement and true and correct as of the Closing Date, and the Company shall have performed and
complied in all material respects with all, and not be in breach or default in any material respect under any, agreements, covenants, conditions and
obligations contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date;
law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins, prevents, prohibits or otherwise makes illegal
(c) No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any
5
the consummation of the transactions contemplated by this Agreement, or imposes any damages or penalties in connection with the transactions
contemplated by this Agreement with respect to that Purchaser that are substantial in relation to the Company and its Subsidiaries; and no action, suit,
proceeding or investigation shall have been instituted by a Governmental Entity of competent jurisdiction or threatened that seeks to restrain, enjoin,
prevent, prohibit or otherwise make illegal the consummation of the transactions contemplated by this Agreement with respect to that Purchaser, or imposes
any damages or penalties in connection with the transactions contemplated by this Agreement with respect to that Purchaser that are substantial in relation
to the Company and its Subsidiaries;
Material Adverse Effect has occurred; and
(d) No event, occurrence, development or state of circumstances that has or could reasonably be expected to have a
the applicable Note) shall have occurred.
(e) No event, occurrence, development or state of circumstances that would constitute an Event of Default (as defined in
2.5 Conditions to the Company’s Obligations to Effect the Closing. The obligation of the Company to issue the Note to a Purchaser
at the Closing is subject to the satisfaction, on or before the Closing Date, of the following conditions, any of which may be waived in writing by the
Company in its sole discretion:
purchase of the applicable Note shall have been completed;
(a) All corporate and other actions required to be taken by that Purchaser and the Fund Manager in connection with the
(b) The representations and warranties of the Fund Manager contained in Article 4 of this Agreement shall have been true
and correct on the date of this Agreement and true and correct in all material respects as of the Closing Date, and the Fund Manager shall have performed
and complied in all material respects with all, and not be in breach or default in any material respect under any, agreements, covenants, conditions and
obligations contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date; and
(c) No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation
of the transactions contemplated by this Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this
Agreement with respect to the Company; and no action, suit, proceeding or investigation shall have been instituted by a Governmental Entity of competent
jurisdiction or threatened that seeks to restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the transactions contemplated by
this Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this Agreement with respect to the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise disclosed in the SEC Documents, the Company
represents and warrants to the Fund Manager as of the date hereof and as of the Closing that:
respective effective dates (in the case of the SEC Documents that are registration statements filed pursuant to the requirements
3.1 Accuracy of Disclosure. The Company has filed or furnished, as applicable, on a timely basis, all SEC Documents. As of their
6
of the Securities Act) and as of their respective SEC filing dates (in the case of all other SEC Documents), or in each case, if amended prior to the date
hereof, as of the date of the last such amendment: (A) each of the SEC Documents complied in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002, as amended, and any rules and regulations promulgated thereunder applicable to the
SEC Documents (as the case may be), and (B) none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the material statements therein, in the light of the circumstances under which they were
made, not misleading.
3.2 Existence and Qualification. The Company has been duly organized, is validly existing and in good standing under the laws of
the Cayman Islands and has the requisite power and authority to own, lease and operate its property and to conduct its business as currently conducted and
as described in the SEC Documents. Each of the Company and its Subsidiaries is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its respective business or its respective ownership, leasing or operation of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected have a Material
Adverse Effect.
3.3 Capitalization; Issuance of Subscription Shares. The authorized share capital of the Company is $1,000,000 divided into
10,000,000,000 shares comprising of (i) 9,600,000,000 Class A Ordinary Shares, of which 839,868,944 Class A Ordinary Shares (excluding the 23,501,589
Class A Ordinary Shares issued to the Company’s depositary bank for bulk issuance of American Depositary Shares reserved for future issuances upon the
exercise or vesting of awards granted under the Company’s share incentive plan) were issued and outstanding as of February 28, 2019, (ii) 100,000,000
Class B Ordinary Shares, of which 40,809,861 Class B Ordinary Shares were issued and outstanding as of February 28, 2019, and (iii) 300,000,000 shares
of a par value of $0.0001 each of such class or classes (however designated) as the Board may determine in accordance with the Company’s articles of
association. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, have been
issued in compliance with all applicable securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as set forth in the SEC Documents, the Company has no outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter.
3.4 Valid Issuance of the Notes and the Conversion Shares. The Notes and the Conversion Shares to be issued, sold and delivered
upon conversion of the Notes will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances except as imposed by
applicable securities laws, and based in part upon the representations and warranties of the Fund Manager in this Agreement, will be issued in compliance
with all applicable federal and state securities laws. Upon conversion of the Notes, each Purchaser will be entitled to all rights accorded to a holder of the
Company’s Class A Ordinary Shares and will be the record and beneficial owner of all such securities and have good and valid title to all such securities,
free and clear of all Encumbrances except as imposed by applicable securities laws. The Conversion Shares will be freely transferable in compliance with
Rule 144
7
under the Securities Act upon conversion of the Notes and no restrictive legend will be included in any certificate evidencing such shares.
3.5 Capacity, Authorization and Enforceability. The Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered
by the Company, and assuming the due authorization, execution and delivery by the Fund Manager, this Agreement is a valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
general principles of equity.
3.6 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of the Company or
(ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Entity to
which the Company or any of its Subsidiaries is subject, or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of or
creation of an Encumbrance under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement,
contract, lease, license, instrument, or other arrangement to which the Company or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which the Company’s or any of its Subsidiaries’ assets are subject, except in the case of clauses (ii) or (iii) as would not have a
Material Adverse Effect. There is no action, suit or proceeding, pending or, to the knowledge of the Company, threatened against the Company that
questions the validity of this Agreement or the right of the Company to enter into this Agreement to consummate the transactions contemplated hereby.
3.7 Consents and Approvals. Assuming the accuracy of the representations and warranties of the Fund Manager under this
Agreement, neither the execution and delivery by the Company of this Agreement, nor the consummation by the Company of any of the transactions
contemplated hereby, nor the performance by the Company of this Agreement in accordance with its terms requires the consent, approval, order or
authorization of, or registration with, or the giving notice to, any governmental or public body or authority or any third party, except such as have been or
will have been obtained, made or given on or prior to the Closing and those filings required to be made with the SEC and the Nasdaq Stock Market
(including, without limitation, a current report on Form 6-K).
3.8 Financial Statements. The financial statements (including any related notes) contained in the SEC Documents: (A) complied as
to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (B) were
prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods covered
thereby and (C) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of the Company and its Subsidiaries for the periods covered thereby, except as disclosed
therein and as permitted under the Exchange Act.
3.9 Operating and non-GAAP financial Data. All operating data and non-GAAP financial data of the Company and its Subsidiaries
disclosed in the SEC Documents, including but not limited to GMV, transaction volume, number of car listings and used car transaction facilitation service
take rate, are true and accurate in all material respects.
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3.10 Related Party Transactions. There are no material transactions between the Company or any of its Subsidiaries, on the one
hand, and the Company’s or any of its Subsidiaries’ respective 5% or greater shareholders, Affiliates, directors or executive officers, or any Affiliates of
such Persons, on the other hand, except as have been duly approved by the audit committee of the Board, or any other related party transactions required to
be disclosed that are not disclosed in the SEC Documents.
occurrence, development or state of circumstances that has or could reasonably be expected to have a Material Adverse Effect.
3.11 Absence of Certain Changes. Except as set forth in the SEC Documents, since December 31, 2018, there has been no event,
Company or its Subsidiaries or affecting the business or any of the assets of the Company or its Subsidiaries.
3.12 Litigation. Except as disclosed in the SEC Documents, there are no actions pending or may threatened against or involving the
3.13 Compliance with Laws. Except as disclosed in the SEC Documents, the business of the Company or its Subsidiaries is not
being conducted in violation of any applicable law or government order applicable to the Company or its Subsidiaries except for violations which do not
and would not have a Material Adverse Effect.
3.14 Securities Laws. (a) No “directed selling efforts” into the United States (as defined in Rule 902 of Regulation S under the
Securities Act (“Regulation S”)) with respect to the Notes have been made by the Company, any of its Affiliates, or any Person acting on its behalf, and
(b) none of the foregoing Persons has taken any actions that would result in the sale of the Notes to the Purchasers under this Agreement requiring
registration under the Securities Act or any U.S. state securities laws. The Company is a “foreign issuer” (as defined in Regulation S).
under the Securities Act is required for the offer and sale of the Notes by the Company to that Purchaser as contemplated hereby.
3.15 No Registration. Assuming the accuracy of the Fund Manager’s representations and warranties in Article 4, no registration
3.16 Ranking of the Notes. The Notes rank senior in right of payment to any of the Company’s other indebtedness that is expressly
subordinated in right of payment to the Notes, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so
subordinated, junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness,
and structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
contemplated hereby do not contravene the rules and regulations of the Nasdaq Global Select Market.
3.17 Listing and Maintenance Requirements. The issuance and sale of the Notes under this Agreement and the transactions
3.18 Investment Company. The Company is not, and upon the sale of the Notes contemplated herein and the application of the net
proceeds therefrom will not be, required to register as an “investment company” pursuant to the U.S. Investment Company Act of 1940, as amended.
compliance with the money laundering requirements of all applicable governmental authorities and any related or similar
3.19 Money Laundering Laws. The operations of the Company and its Subsidiaries have been and will be conducted at all times in
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rules, regulations or guidelines, issued administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”) and no action,
suit or proceeding by or before any Governmental Entity involving the Company or its Subsidiaries, its Affiliates employees or agents with respect to the
Money Laundering Laws is pending or threatened.
3.20 OFAC. (i) None of the Company, any of its Subsidiaries, or any director, officer or employee of any of the foregoing, or, to the
Company’s knowledge, any agent, Affiliate or representative of the Company, is a Person that is, or is owned 50% or more or controlled by one or more
Persons that are (such Persons referred to as “Sanctioned Persons”): (a) the target of any sanctions administered or enforced by the U.S. government
(including but not limited to the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including,
without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council, the European Union,
Her Majesty’s Treasury or any other relevant sanctions authority (collectively, “Sanctions”), including by being listed on any Sanctions related list of
designated persons, or (b) located, organized or resident in, or a national, Governmental Entity. or agent of, a country, region or territory that is the subject
or target Sanctions (as of the date hereof, including but not limited to, Cuba, Iran, North Korea, Syria and Crimea (each, a “Sanctioned Country”)). (ii) The
Company represents and covenants that the Company and its Significant Subsidiaries have not engaged in, are not now engaged in, and will not engage in,
any dealings or transactions directly or indirectly with any Sanctioned Person, or in any country or territory, that at the time of the dealing or transaction is
or was the subject or the target of Sanctions.
3.21 Foreign Corrupt Practices. Neither of the Company or its Subsidiaries, nor any Person acting on their behalf, has, directly or
indirectly (i) used any funds or will use and proceeds from the sale of the Notes for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign
or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any of its
Subsidiaries (or made by any Person acting on its behalf of which the Company or any of or its Subsidiaries is aware) which is in violation of any
applicable law, or (iv) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder which was
or is applicable to the Company or its Subsidiaries.
3.22 PFIC. Based on the Company’s current income and asset and projections as to the value of its assets and market value of its
ADSs, including the current and anticipated value of its assets, the Company believes that it was not and does not expect to be a “passive foreign
investment company” as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended for the current taxable year or in
foreseeable future.
3.23 Tax Matters. The Company and its Subsidiaries have filed all material tax returns required by applicable law to be filed by them,
have paid all taxes due pursuant to such returns (including interest and penalties), and have paid all other material taxes, fees, assessments and other
governmental charges owing by them or in respect of their respective property, income, profits and assets, except for such taxes (a) that are not yet
delinquent or (b) that are being appropriately contested in good faith by appropriate proceedings, and against which adequate reserves are being maintained
in accordance with GAAP (or the comparable accounting principles in the relevant jurisdiction). No material tax assessment has been imposed on (or
threatened in writing to be imposed on) the Company and its Subsidiaries or any of their respective assets.
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4. REPRESENTATIONS AND WARRANTIES OF THE FUND MANAGER. (i) The Fund Manager acting on behalf of each Purchaser
represents and warrants to the Company as of the date hereof and as of the Closing Date that:
4.1 Existence. Each Purchaser Entity has been duly organized, is validly existing and is in good standing under the laws of its
jurisdiction of organization.
4.2 Capacity. Each Purchaser Entity has the requisite power and authority to enter into and perform its respective obligations under
this Agreement and consummate the transactions contemplated hereby. The Fund Manager is the general partner and sole fund manager of each Purchaser
and has the capacity and authority to act on behalf of each Purchaser.
4.3 Authorization and Enforceability. This Agreement has been duly authorized, executed and delivered by the Fund Manager, and
assuming the due authorization, execution and delivery by the Company, this Agreement is a valid and binding agreement of the Fund Manager,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general
principles of equity.
4.4 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of any Purchaser
Entity or (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental
Entity to which any Purchaser Entity is subject, or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of or creation
of an Encumbrance under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement, contract,
lease, license, instrument, or other arrangement to which any Purchaser Entity is a party or by which any Purchaser Entity is bound or to which any assets
of any Purchaser Entity are subject. There is no action, suit or proceeding, pending or, to the knowledge of the Fund Manager, threatened against any
Purchaser Entity that questions the validity of this Agreement or the right of any Purchaser Entity to enter into this Agreement to consummate the
transactions contemplated hereby.
4.5 Consents and Approvals. Neither the execution and delivery by the Fund Manager of this Agreement, nor the consummation by
any Purchaser Entity of any of the transactions contemplated hereby, nor the performance by any Purchaser Entity of this Agreement in accordance with its
terms requires the consent, approval, order or authorization of, or registration with, or the giving notice to, any governmental or public body or authority or
any third party, except such as have been or will have been obtained, made or given on or prior to the Closing.
4.6 Investment Intent. Each Purchaser is purchasing the Notes solely for its own account for investment, and not with a view to, or
for sale in connection with, any distribution of the Notes or any portion thereof, and not with any present intention of selling, offering to sell, or otherwise
disposing of or distributing the Notes or any portion thereof in any transaction. The entire legal and beneficial interest of the Notes is being purchased, and
will be held, for each Purchaser’s own account only, and neither in whole or in part for the account of any other Person.
an “offshore transaction” (as
4.7 Regulation S Eligibility; Restriction on Resale. The Fund Manager acknowledges that each Purchaser is acquiring the Notes in
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defined in Regulation S) in reliance upon the exemption from registration provided by Regulation S. Each Purchaser is not a U.S. person as defined in
Rule 902 of Regulation S and is located outside of the United States. The Fund Manager understands that the Notes to be purchased by each Purchaser has
not been registered under the Securities Act or any U.S. state law and may not be offered or sold within the United States or to, or for the account or benefit
of, a U.S. person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and
applicable U.S. state law.
4.8 Investment Experience. Each Purchaser is a sophisticated purchaser with knowledge and experience in financial and business
matters such that such Purchaser is capable of evaluating the merits and risks of the investment in the Notes and the Conversion Shares. Each Purchaser is
able to bear the economic risks of an investment in the Notes and the Conversion Shares. The Fund Manager understands that securities prices are a
function of a large number of variables and that there is no way for the Company to predict or otherwise gauge the market’s reaction to the disclosure of
any material information. The Fund Manager acknowledges and affirms that, with the assistance of its advisors, it has conducted and completed its own
investigation, analysis and evaluation related to the investment in the Notes and the Conversion Shares. The Fund Manager understands and acknowledges
that the Company has or may have information concerning the Company and its Affiliates including, but not limited to, the short term and long-term plans
of the Company and its Affiliates. With full recognition of the foregoing, and after discussing these matters with its counsel and such other advisors as it
deems appropriate, the Fund Manager wishes to cause each Purchaser to consummate the transactions contemplated under this Agreement on the terms set
forth herein.
5. COVENANTS.
5.1 Further Assurances. From the date of this Agreement to the Closing Date, (i) the Company and the Fund Manager shall use their
reasonable efforts to fulfill, or obtain the fulfillment of, all of the conditions precedent to the consummation of the transactions contemplated hereby, and
(ii) the Fund Manager shall cause each Purchaser to take necessary and appropriate actions contemplated hereunder for the consummation of the
transactions contemplated hereby.
5.2 Reservation of Shares. At all times for so long as any Note (or any portion thereof) remains outstanding, the Company shall take
all actions necessary to have authorized, and reserved for the purpose of issuance, no less than one hundred percent (100%) of the aggregate number of
Class A Ordinary Shares needed to provide for the complete issuance of the Conversion Shares underlying such Notes.
5.3 Lock-Up. Notwithstanding any other provisions of this Agreement or any other agreement by the Company and the Purchaser
Entities, during the Lock-Up Period, the Fund Manager shall ensure that each Purchaser Entity will not, and will procure that none of its Subsidiaries will,
without the prior written consent of the Company, directly or indirectly through one or a series of transactions, Transfer any Company Securities to any
Person other than the Purchaser Entity’s Subsidiaries. Any Transfer of Company Securities made in violation of this Section 5.3 shall be null and void ab
initio and shall not be recorded on the books and records of the Company.
5.4 No Transfer to Adverse Persons. Notwithstanding any other provisions of this Agreement or any other agreement by the
Company and the Purchaser Entities, the Fund Manager shall ensure that each Purchaser Entity will not directly or indirectly Transfer, and
12
will not permit any direct or indirect Transfer, through one or a series of transactions, of any Company Securities held by it directly or indirectly (including
through any Affiliate) to any Adverse Person without the prior written consent of the Company. Any Transfer of any Company Securities made in violation
of this Section 5.4 shall be null and void ab initio and shall not be recorded on the books and records of the Company.
5.5 Use of Proceeds. The Company shall use the proceeds from the issuance of the Notes for general corporate purposes, and shall
not use the proceeds from the issuance of the Notes (a) to fund or facilitate any activities of or business with any Person that is the subject or the target of
Sanctions, (b) to fund or facilitate any activities of or business in any country or territory that is subject of any Sanctions, (c) in furtherance of an offer,
payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any anti-corruption
laws, or (d) in a way that that result in noncompliance with all applicable anti-money laundering or anti-terrorism statutes, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable Governmental Entity.
5.6 Conversion to ADSs. To the extent permitted by applicable law, after the conversion of either Note (or any portion thereof) by
any Purchaser into Conversion Shares, in the event that such Purchaser has delivered to the Company written notice specifying that such Purchaser
irrevocably elects to convert the Conversion Shares into ADSs subject to the compliance of applicable conditions under Rule 144(b), the Company shall
use its reasonable best efforts to effect (or cause to be effected) the conversion of such Conversion Shares into ADSs within seven (7) days after receiving
such written notice.
6. INDEMNIFICATION.
6.1 Indemnification.
(a) Subject to the other provisions of this Article 6, each of the Company and the Fund Manager (“Indemnifying Party”)
shall indemnify and hold each other, such other party’s respective Affiliates, and such other party’s and their respective Affiliates’ members, partners,
managers, directors, officers, employees, advisors and agents (collectively, the “Indemnified Party”) harmless from and against any losses, liabilities,
damages, costs and expenses, including reasonable attorney’s fees (collectively, “Losses”) resulting from or arising out of: (i) any breach or violation of, or
inaccuracy in, any representation or warranty made by the Indemnifying Party or its applicable Affiliates under this Agreement; or (ii) any breach or
violation of, or failure to perform, any covenants or agreements made by or on behalf of, or to be performed by, the Indemnifying Party or its applicable
Affiliates under this Agreement. The indemnity under this Article 6 shall not be prejudiced by or otherwise be subject to any disclosure and shall apply
regardless of whether the Indemnifying Party has any actual or constructive knowledge with respect thereto.
punitive damages are awarded to a third party against an Indemnified Party in connection with a Third Party Claim).
(b) No Indemnifying Party shall be liable for any Loss consisting of punitive damages (except to the extent that such
(c) The Fund Manager as the Indemnified Party shall not be entitled to recover any Losses, other than with respect to
breaches of Fundamental Company Representations or Fundamental Purchaser Representations (as applicable), until such time as the aggregate amount of
all such Losses that have been suffered or incurred by the Indemnified
13
Party exceeds two percent (2%) of the issued Principal Amount with respect to the Purchasers (the “Loss Threshold”), provided, however, that once the
aggregate amount of all such Losses exceeds the Loss Threshold, the Indemnifying Party shall be liable for all such Losses (including the Losses up to the
Loss Threshold).
(d) The maximum aggregate amount of Losses that the Indemnified Parties will be entitled to recover pursuant to this
Article 6 shall be limited to one hundred percent (100%) of the issued aggregate Principal Amount of all Purchasers. Notwithstanding the foregoing or
anything else to the contrary contained herein, the limitations on indemnification set forth in this Agreement (including, without limitation, the limitations
set forth in this Section 6.1) shall not apply to any claim based on fraud, willful misrepresentation or willful misconduct of the Indemnifying Party or its
Subsidiaries or Affiliates.
once in respect of the same Losses suffered.
(e) An Indemnified Party shall not be entitled to recover from the Indemnifying Party under this Agreement more than
(f) Notwithstanding any other provision contained herein, the remedies contained in this Article 6 shall be the sole and
exclusive monetary remedy of the Indemnified Parties for any claim arising out of or resulting from this Agreement, except that no limitation or exceptions
with respect to the obligations or liabilities on any party hereto provided hereunder shall apply to a Loss incurred by any Indemnified Party arising due to
fraud of the Indemnifying Party or its Subsidiaries or Affiliates. Nothing in this Article 6 or elsewhere in this Agreement shall affect any parties’ rights to
specific performance or other equitable or non-monetary remedies with respect to the covenants and agreements in this Agreement or that are to be
performed at or after the Closing; provided that for the avoidance of doubt, except in the case of fraud, nothing contained herein shall permit any party to
rescind this Agreement.
6.2 Third Party Claims.
(a) If any third party shall notify an Indemnified Party in writing with respect to any matter involving a claim by such third
party (a “Third Party Claim”) and such Indemnified Party believes such claim would give rise to a claim for indemnification against the Indemnifying Party
under this Article 6, then the Indemnified Party shall promptly (i) notify the Indemnifying Party thereof in writing and (ii) transmit to the Indemnifying
Party a written notice (“Claim Notice”) describing in reasonable detail the nature of the Third Party Claim, a copy of all papers served with respect to such
claim (if any), and the basis of the Indemnified Party’s request for indemnification under this Agreement. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party shall have been prejudiced by such
failure.
(b) Upon receipt of a Claim Notice with respect to a Third Party Claim, the Indemnifying Party shall have the right to
assume the defense of any Third Party Claim by, within thirty (30) days of receipt of the Claim Notice, notifying the Indemnified Party in writing that the
Indemnifying Party elects to assume the defense of such Third Party Claim, and upon delivery of such notice by the Indemnifying Party, the Indemnifying
Party shall have the right to control and settle the proceeding, provided that, (i) any such settlement or compromise shall be permitted hereunder only with
the written consent of the Indemnified Party which consent shall not be unreasonably withheld or delayed, and (ii) and the Indemnifying Party shall keep
the Indemnified Party reasonably informed of the progress of such defense on a regular basis.
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(c) If requested by the Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim which the Indemnifying Party elects to contest, including
the making of any related counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person. The Indemnified
Party shall have the right to receive copies of all pleadings, notices and communications with respect to any Third Party Claim for which indemnity is
sought under this Agreement, other than any privileged communications between the Indemnifying Party and its counsel, and shall be entitled, at its sole
cost and expense, to retain separate co-counsel and participate in, but not control, any defense or settlement (except for its consent required under
Section 6.2(b) above) of any Third Party Claim assumed by the Indemnifying Party pursuant to Section 6.2(b).
(d) In the event of a Third Party Claim for which the Indemnifying Party elects not to assume the defense or fails to make
such an election within thirty (30) days of the Claim Notice, the Indemnified Party may, at its option, defend, settle, compromise or pay such action or
claim at the expense of the Indemnifying Party; provided that, any such settlement or compromise shall be permitted hereunder only with the written
consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
6.3 Other Claims. In the event any Indemnified Party should have a claim against the Indemnifying Party hereunder which does not
involve a Third Party Claim, the Indemnified Party shall promptly transmit to the Indemnifying Party a written notice (the “Indemnity Notice”) describing
in reasonable detail the nature of the claim, the Indemnified Party’s good faith estimate of the amount of Losses attributable to such claim and the basis of
the Indemnified Party’s request for indemnification under this Agreement; provided, that no failure, delay or deficiency in providing such notice shall
constitute a waiver or otherwise modify the Indemnified Party’s right to indemnity hereunder, except to the extent that the Indemnifying Party shall have
been prejudiced by such failure, delay or deficiency. If the Indemnifying Party does not notify the Indemnified Party within thirty (30) days from its receipt
of the Indemnity Notice that the Indemnifying Party disputes such claim, the Indemnifying Party shall be deemed to have accepted and agreed with such
claim.
7. MISCELLANEOUS.
7.1 Survival of the Representations and Warranties. All representations and warranties made by any party hereto other than the
Fundamental Company Representations and the Fundamental Purchaser Representations shall survive for eighteen (18) months from and after the date
hereof, and shall terminate and be without further force or effect on the date that is eighteen (18) months from and after the date hereof, and the
Fundamental Company Representations and the Fundamental Purchaser Representations shall survive for five (5) years from and after the date hereof, and
shall terminate and be without further force or effect on the date that is five (5) years from and after the date hereof, except that any claim under any
representation or warranty made by any party hereto that have been asserted in writing pursuant to Section 6.1 against the party hereto making such
representation or warranty prior to the expiration of the applicable survival period set forth in this Section 7.1 shall survive until such claim is fully and
finally resolved.
7.2 Governing Law; Dispute Resolution. This Agreement shall be governed and interpreted in accordance with the laws of the State
of New York without giving effect to the conflicts of law principles thereof. Any dispute arising out of or relating to this Agreement or the Notes, including
any question regarding the existence, validity or termination hereof or
15
thereof (a “Dispute”) shall be referred to and finally resolved by arbitration at the Hong Kong International Arbitration Centre in accordance with the Hong
Kong International Arbitration Centre Administered Arbitration Rules then in force. In the case of any Dispute, there shall be three arbitrators. The
claimant(s) shall have the right to appoint one arbitrator, the respondent(s) shall have the right to appoint another arbitrator, and the third arbitrator shall be
appointed by the Hong Kong International Arbitration Centre. The language to be used in the arbitration proceedings shall be English. The seat of
arbitration shall be Hong Kong. Each of the parties hereto irrevocably waives any immunity to jurisdiction to which it may be entitled or become entitled
(including without limitation sovereign immunity, immunity to pre-award attachment, post-award attachment or otherwise) in any arbitration proceedings
and/or enforcement proceedings against it arising out of or based on this Agreement or the transactions contemplated hereby.
the parties hereto.
7.3 Amendment. This Agreement shall not be amended, changed or modified, except by another agreement in writing executed by
7.4 Binding Effect. This Agreement shall inure to the benefit of, and be binding upon, the Purchaser Entities, the Company, and
their respective heirs, successors and permitted assigns.
7.5 Assignment. Neither this Agreement nor any of the rights, duties or obligations hereunder may be assigned by the Company or
the Fund Manager without the express written consent of the other party hereto, except that the Fund Manager may assign all or any part of its rights and
obligations hereunder to any Affiliate of the Fund Manager without the consent of the other parties hereto, provided that no such assignment shall relieve
the Fund Manager of its obligations hereunder if such assignee does not perform such obligations. Any purported assignment in violation of the foregoing
sentence shall be null and void.
7.6 Notices. All notices, requests, demands, and other communications required or permitted to be given by one party hereto to the
other party hereto under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of actual delivery if delivered
personally, (ii) on the date sent if sent by facsimile, (iii) on the next Business Day following delivery to Federal Express for overnight courier service, or
(iv) on the day of attempted delivery by the postal service if mailed by registered or certified mail, return receipt requested, postage paid, in each case as
properly addressed or delivered as follows:
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If to the Company, at:
If to the Fund Manager, at:
Uxin Limited
2-5F, Tower E, LSHM Center,
No. 8 Guangshun South Avenue
Chaoyang District, Beijing, 100102
People’s Republic of China
E-mail: daikun@xin.com
Attn: Mr. Kun Dai
PacificBridge Asset Management
Unit No. 1904 (Trade Tower, Samsung-dong),
511 Yeongdong-daero, Gangnam-gu, Seoul, 06164
Republic of Korea
E-mail: dannysong@pacificbridgeam.com
Attn: Mr. Danny Song
Any party hereto may change its address for purposes of this Section 7.6 by giving the other party hereto written notice of the new address in the
manner set forth above.
7.7 Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties hereto with respect
to the matters covered hereby, and all prior agreements and understandings, oral or in writing, if any, between the parties hereto with respect to the matters
covered hereby are merged and superseded by this Agreement.
7.8 Severability. If any provisions of this Agreement shall be adjudicated to be illegal, invalid or unenforceable in any action or
proceeding whether in its entirety or in any portion, then such provision shall be deemed amended, if possible, or deleted, as the case may be, from the
Agreement in order to render the remainder of the Agreement and any provision thereof both valid and enforceable, and all other provisions hereof shall be
given effect separately therefrom and shall not be affected thereby.
7.9 Fees and Expenses. Each of the Company and the Fund Manager shall pay its own expenses incurred in connection with the
negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, including fees and expenses of attorneys, accountants,
consultants and financial advisors.
7.10 Confidentiality. (a) Each party hereto shall keep in confidence, and shall not use (except for the purposes of the transactions
contemplated hereby) or disclose, any non-public information disclosed to it or its Affiliates, representatives or agents in connection with this Agreement or
the transactions contemplated hereby, other than to its members, managers, directors, officers, employees, partners, co-investors, auditors, counsels,
consultants and other advisors and representatives who have a need to know such information, and (b) each party hereto shall ensure that its Affiliates,
representatives and agents keep in confidence, and do not use (except for the purposes of the transactions contemplated hereby) or disclose, any such non-
public information, provided, however, that nothing in this Agreement shall restrict any party from disclosing information (i) that is already publicly
available not as a result of a breach of this section, or (ii) that may be required by applicable law, statute, treaty, rule, regulation, order, right, privilege,
qualification, license or franchise or determination of an arbitrator or a Governmental Entity.
Agreement were not performed in accordance
7.11 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this
17
with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or
equity.
7.12 Termination. In the event that the Closing shall not have occurred by December 31, 2019, the Company or the Fund Manager
may terminate this Agreement, except for the provisions of Article 7, which shall survive any termination under this Section 7.12, provided that (a) any
party hereto who is then in a material breach of this Agreement shall not be entitled to terminate this Agreement pursuant to this Section 7.12.
convenience and do not expressly or by implication limit, define or extend the specific terms of the article or section so designated.
7.13 Headings. The headings of the various articles and sections of this Agreement are inserted merely for the purpose of
more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute but one and the same instrument.
7.14 Counterparts. For the convenience of the parties hereto and to facilitate execution, this Agreement may be executed in one or
7.15 No Waiver. Except as specifically set forth herein, the rights and remedies of the parties to this Agreement are cumulative and
not alternative. No failure or delay on the part of any party hereto in exercising any right, power or remedy under this Agreement will operate as a waiver
of such right, power or remedy, and no single or partial exercise of any such right, power or remedy will preclude any other or further exercise of such
right, power or remedy or the exercise of any other right, power or remedy. To the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement can be discharged by one party hereto, in whole or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party hereto; (b) no waiver that may be given by a party hereto will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party hereto will be deemed to be a waiver of any obligation of that party or of the right of the party hereto giving
such notice or demand to take further action without notice or demand as provided in this Agreement.
[Remainder of Page Intentionally Left Blank]
18
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Note Purchase Agreement as of the date first above written.
Uxin Limited
By:
/s/ Kun Dai
Name: Kun Dai
Title:Director and CEO
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Note Purchase Agreement as of the date first above written.
PacificBridge Asset Management, acting in its capacity as the fund
manager of each of the Purchasers
By:
/s/ DK LEE
Name: DK LEE
Title: CEO
SCHEDULE 1
PURCHASERS AND ALLOCATIONS
[*]
SCHEDULE 2
ADVERSE PERSONS
[*]
EXHIBIT A
FORM OF 10.0% NOTE
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER SECURITIES LAWS. THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
CONVERTIBLE PROMISSORY NOTE
[·], 2019 (“Date of Issuance”)
US$[·]
FOR VALUE RECEIVED, and subject to the terms and conditions of this convertible promissory note (this “Note”), Uxin Limited, an
exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), hereby promises to pay to the order of [•], a
[company incorporated under the laws of [•]](the “Purchaser”), or its assigns, in lawful money of the United States of America the principal amount of [•]
Dollars (US$[•]) (the “Principal Amount”), plus accrued interest thereon, on [·], 2020 (the “Maturity Date”), unless earlier duly converted in full into the
Conversion Shares pursuant to and in accordance with the terms of this Note.
This Note is issued pursuant to the Convertible Note Purchase Agreement, dated July 12, 2019, by and between the Company, the
Purchaser and certain other parties thereto (the “Convertible Note Purchase Agreement”), and is subject to the terms and conditions thereof. In case of any
conflict between this Note and the Convertible Note Purchase Agreement, the provisions of the Convertible Note Purchase Agreement shall control and
govern. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Convertible Note Purchase Agreement.
the acceptance of this Note, agrees:
The following is a statement of the rights of the Purchaser and the conditions to which this Note is subject, and to which the Purchaser, by
1. Interest Rate. This Note shall bear interest on the outstanding Principal Amount at a simple interest rate of ten percent (10.0%) per annum from
the Date of Issuance until this Note is fully repaid or redeemed; provided, that if any portion of this Note is duly converted into the Conversion
Shares pursuant to and in accordance with Section 4 hereof, interest shall cease to accrue on the portion of the Principal Amount being converted
(and, for the avoidance of doubt, continue to accrue on any outstanding Principal Amount not being converted). Accrued interest on this Note shall
be computed on the basis of a 365-day year and actual days elapsed.
2. Repayment of this Note.
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(a) Unless to the extent earlier converted into Conversion Shares pursuant to Section 4 hereof, the outstanding Principal Amount (other than
any portion of the Principal Amount converted pursuant to Section 4 hereof) and the interest accrued thereon shall be due and payable by the
Company upon the earlier of (i) the Maturity Date, and (ii) the occurrence of an Event of Default set forth in Section 5 hereof (the “Due Date”).
Upon the due conversion in full of this Note pursuant to and in accordance with Section 4 hereof, any and all payment obligations of the Company
under this Note and the Convertible Note Purchase Agreement shall be fully discharged.
(b) All amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall be paid to the Purchaser in lawful money of
the United States of America within three (3) Business Days after the Due Date. The Company shall make such payments of the unpaid Principal
Amount (other than any portion of the Principal Amount converted pursuant to Section 4 hereof), together with accrued and unpaid interest
thereon, to the Purchaser by wire transfer of immediately available funds for the account of the Purchaser as the Purchaser may designate and
notify in writing to the Company at least five (5) Business Days prior to the payment date. Payment shall be credited first to accrued interest due
and payable, and any remainder shall be applied to the outstanding Principal Amount.
(c) All payments of principal and interest in respect of this Note by or on behalf of the Company shall be made free and clear of, and
without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or on behalf of the Cayman Islands or the PRC or any political subdivision thereof or any
authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is
required by law.
3. Seniority. This Note ranks senior in right of payment to any of the Company’s other indebtedness that is expressly subordinated in right of
payment to this Note, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so subordinated, junior
in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and
structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
4. Conversion.
(a) Conversion.
(i) During the period from and including the 181st day after the Date of Issuance to and including the Maturity Date, the Purchaser shall, by
written notice to the Company, have the right but not the obligation to convert all or any portion of the outstanding Principal Amount to a number
of Conversion Shares at the applicable Conversion Price, provided, however, that the Purchaser shall not exercise such right to convert more than
twice. As used in this Note, “Conversion Price” means US$1.663, as may be adjusted pursuant to Section 4(d) hereof.
(ii) The number of the Conversion Shares to be issued upon any conversion pursuant to this Section 4(a) shall be equal to the quotient obtained by
dividing the Principal Amount subject to such conversion by the Conversion Price.
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(b) No Fractional Shares. Upon the conversion of this Note into the Conversion Shares, in lieu of any fractional shares to which the
Purchaser would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion
Price.
(c) Mechanics of Conversion. In the event that the Purchaser has delivered to the Company a written notice in accordance with Section 4(a)
(i) hereof specifying that the Purchaser irrevocably elects to convert this Note (whether in part or in full), the Company shall at its expense take all
actions and execute all documents necessary to effect the issuance of all the Conversion Shares (including giving all necessary instructions to
update the register of members to effect such issuance) within two (2) weeks of delivery of the applicable written notice to convert, and deliver to
the Purchaser, upon surrender of this Note, a certificate or certificates for the number of fully paid Conversion Shares issuable upon such
conversion and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares. The
Company shall not be required to issue or deliver the Conversion Shares until the Purchaser has surrendered this Note to the Company.
(d) Adjustments to Conversion Price. The Conversion Price shall be adjusted according to the following items: When any of the Principal
Amount is outstanding at any time, (a) if the Company: (i) pays dividends in the form of securities or security equivalents of the Company;
(ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the
Company (including in the form of a reverse share split) to decrease the number of shares, the then-existing Conversion Price shall be multiplied
by a fraction, whose numerator is the number of outstanding securities of the Company immediately before the occurrence of the matter, and
whose denominator is the number of outstanding securities of the Company immediately after the occurrence of the matter; (b) if the Company
issues Ordinary Shares to all or substantially all shareholders as a class by way of rights issue, or issue or grant to all or substantially all
shareholders as a class, by way of rights issue, of options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at
less than 95 per cent of the closing price of the ADSs divided by the ratio of ADS to share (the “Market Price Per Share”) on the last trading day
preceding the date of the announcement of the terms of the issue or grant, the Conversion Price shall be multiplied by a fraction, whose numerator
is the number of Ordinary Shares in issue immediately before such announcement plus the number of Ordinary Shares which the aggregate
amount (if any) payable for the Ordinary Shares issued by way of rights issue or for the options or warrants or other rights issued or granted by
way of rights issue and for the total number of Ordinary Shares comprised therein would subscribe, purchase or otherwise acquire at Market Price
Per Share, and the denominator is the number of Ordinary Shares in issue immediately before such announcement plus the aggregate number of
Ordinary Shares issued or, as the case may be, comprised in the issue or grant, or (c) if the Company makes (or fixes a record date for the
determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in any
other asset or property (including cash, but excluding dividends by securities or security equivalents of the Company), then, and in each such
event, provision shall be made so that, upon conversion of the Note thereafter, the Purchaser shall receive, in addition to the number of Ordinary
Shares issuable thereon, such other asset or property which the holder of such Ordinary Shares would have received in connection with such event
had the
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outstanding Principal Amount been converted into Ordinary Shares immediately prior to each such event, all subject to further adjustment as
provided herein. Any adjustment made according to the aforesaid conditions shall come into effect immediately after the record date of deciding
the shareholders having rights to obtain dividends or allocations and, for the purpose of any share split, incorporation or reclassification, shall
come into effect immediately after such matters come into effect.
5. Events of Default. Each of the following events shall be considered an event of default (the “Event of Default”) with respect to this Note:
(a) Failure to Pay. The Company shall fail to pay when due (i) any principal payment or (ii) any interest payment or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten (10) Business Days after the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company or any of its Significant Subsidiaries shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability
to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose
of effecting any of the foregoing. As used in this Note, “Significant Subsidiary” means any Subsidiary of the Company, the total assets (after
intercompany eliminations) of which exceeds twenty percent (20%) of the consolidated total assets of the Company and its subsidiaries as of the
end of the Company’s most recently completed fiscal year.
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the
Company or any of its Significant Subsidiaries, or of all or a substantial part of their property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or its Significant Subsidiaries, or the debts thereof, under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and either (i) an order for relief shall be entered or (ii) such
proceeding shall not be dismissed or discharged within 45 days of commencement.
(d) Cessation to be a Public Company. The Company’s securities shall cease to be publicly traded on the Nasdaq Global Select Market.
(e) Change of Control. Any Change of Control shall occur. For the purpose of this provision 5(e), a “Change of Control” occurs if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than (i) Mr. Kun Dai, or any of his Affiliates,
(ii) any of Warburg Pincus, TPG Capital, 58.com Holdings Inc. or any of its respective Affiliates, or (iii) any “group” solely consisting of the
Persons set forth in clauses (i) and (ii) above, is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the Exchange Act),
directly or indirectly, of 50% or more voting power of the Company’s issued and outstanding securities.
A-4
(f) Breach of Other Obligations. The Company fails to perform or comply with one or more of its other obligations in this Note or the
Convertible Note Purchase Agreement in any material respect, or breach any representation or warranty of the Company contained in the
Convertible Note Purchase Agreement in any material respect, and in each case such failure is not capable of being cured or is not cured within
thirty (30) days.
(g) Material Adverse Effect. Any one or more events, facts, conditions, changes or developments shall have occurred that have caused or
constituted or could be reasonably expected to cause or constitute, either individually or in the aggregate, a Material Adverse Effect.
(h) Cross-Default. Any Significant Indebtedness (as defined below) of the Company or its Subsidiaries is not paid when due or (as the case
may be) within any originally applicable grace period, or any such Significant Indebtedness becomes (or becomes capable of being declared) due
and payable prior to its stated maturity otherwise than at the option of the Company or its Subsidiaries, or the Company or its Subsidiaries fails to
pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this Section 5(i),
“Significant Indebtedness” means, with respect to each event mentioned above, one or more indebtedness with an aggregate amount of no less
than US$10,000,000 or its equivalent in any other currency or currencies.
(i) Unsatisfied Judgment. One or more judgment(s) or order(s) for the payment of an aggregate amount of no less than US$10,000,000 is
rendered against the Company or its Subsidiaries and continue(s) unappealed, unsatisfied and unstayed for a period of sixty (60) days after the
date(s) thereof or, if later, the date therein specified for payment.
(j) Security Enforced. A secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a
material part of the undertaking, assets and revenues of the Company and its Subsidiaries taken as a whole.
(k) Enforcement Proceedings. A distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued
out on or against any material part of the property, assets or revenue of the Company or its Significant Subsidiaries.
(l) Winding up, etc. An order is made by any Governmental Entity having jurisdiction or an effective resolution is passed for the winding
up, liquidation or dissolution of the Company or any of its Significant Subsidiaries (other than, in the case of a Significant Subsidiary of the
Company, for the purposes of or pursuant to an amalgamation, reorganization or restructuring whilst solvent).
6. Remedies. Upon the occurrence of an Event of Default under Section 5 hereof, at the option and upon the written declaration of the Purchaser at
the Purchaser’s sole discretion, the entire unpaid Principal Amount and unpaid interest accrued thereon shall become forthwith due and payable,
and the Purchaser may immediately enforce payment of all amounts due and owing under this Note and exercise any and all other remedies
granted to it at law, in equity or otherwise. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default under
Section 5(e) hereof, the Company shall, if so requested by the Purchaser, cooperate in good faith with the Purchaser with respect to the Purchaser’s
efforts to receive equity securities of the
A-5
surviving entity (if any) in lieu of the acceleration of the Principal Amount and unpaid interest accrued thereon.
7. Prepayment. The Principal Amount or interest accrued thereon may not be prepaid prior to the Maturity Date without the written consent of the
Purchaser.
8. No Rights as Shareholder Prior to Conversion. For the avoidance of doubt, the Purchaser has not been conferred with any of the rights of a
shareholder of the Company, including the right to vote as such, by any of the provisions hereof or any provisions under the Convertible Note
Purchase Agreement, or any right (a) to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
(b) to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of
par value, or change of shares to no par value, consolidation, merger, scheme of arrangement, conveyance, or otherwise), (c) to receive notice of
meetings or to receive in-kind dividends or subscription rights or otherwise, in each case until this Note shall have been converted in whole or in
part and all the Conversion Shares issuable upon such whole or partial conversion hereof shall have been issued, as provided for in this Note and
the Convertible Note Purchase Agreement. For the avoidance of doubt, the Purchaser shall be conferred with all rights of a shareholder of the
Company immediately upon any partial or full conversion of the Note with respect to such Conversion Shares.
10. Termination of Rights.All rights under this Note shall automatically terminate when (a) all amounts owing on this Note have been paid in full or
(b) this Note is converted in full pursuant to Section 4 hereof. Upon the termination of all rights under this Note, this Note shall be surrendered by
the Purchaser to the Company and this Note so surrendered shall be cancelled and shall not be reissued. For the avoidance of doubt, the
Convertible Note Purchase Agreement shall not be terminated merely due to a termination of all rights under this Note, and shall remain in force
and effect or terminate pursuant to the terms thereof.
11. Amendments and Waivers; Notice. The amendment or waiver of any term of this Note shall be subject to the written consent of the Company and
the Purchaser. The provision of notice shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.
12. Successors and Assigns. This Note applies to, inures to the benefit of, and binds, the successors and assigns of the parties hereto; provided,
however, that no party hereto may assign its obligations under this Note without the written consent of the other party hereto. Notwithstanding
anything to the contrary, the Purchaser may, subject to applicable laws, transfer this Note to any of its Affiliates. Any transfer of this Note may
take effect by surrender of this Note to the Company and reissuance of a new note to the transferee.
13. Governing Law; Dispute Resolution. This Note shall be governed by and construed under the laws of the State of New York without regards to
principles of conflict of laws. The resolution of any controversy or claim arising out of or relating to this Note shall be conducted pursuant to the
terms of the Convertible Note Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
A-6
IN WITNESS WHEREOF, the Company has executed this Note as of the date first above written.
Uxin Limited
Name:
Title:
By:
A-7
EXHIBIT B
FORM OF 11.0% NOTE
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER SECURITIES LAWS. THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
CONVERTIBLE PROMISSORY NOTE
[·], 2019 (“Date of Issuance”)
US$[·]
FOR VALUE RECEIVED, and subject to the terms and conditions of this convertible promissory note (this “Note”), Uxin Limited, an
exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), hereby promises to pay to the order of [•], a
[company incorporated under the laws of [•]](the “Purchaser”), or its assigns, in lawful money of the United States of America the principal amount of [•]
Dollars (US$[•]) (the “Principal Amount”), plus accrued interest thereon, on [·], 2020 (the “Maturity Date”), unless earlier duly converted in full into the
Conversion Shares pursuant to and in accordance with the terms of this Note.
This Note is issued pursuant to the Convertible Note Purchase Agreement, dated July 12, 2019, by and between the Company, the
Purchaser and certain other parties thereto (the “Convertible Note Purchase Agreement”), and is subject to the terms and conditions thereof. In case of any
conflict between this Note and the Convertible Note Purchase Agreement, the provisions of the Convertible Note Purchase Agreement shall control and
govern. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Convertible Note Purchase Agreement.
the acceptance of this Note, agrees:
The following is a statement of the rights of the Purchaser and the conditions to which this Note is subject, and to which the Purchaser, by
1. Interest Rate. This Note shall bear interest on the outstanding Principal Amount at a simple interest rate of eleven percent (11.0%) per annum
from the Date of Issuance until this Note is fully repaid or redeemed; provided, that if any portion of this Note is duly converted into the
Conversion Shares pursuant to and in accordance with Section 4 hereof, interest shall cease to accrue on the portion of the Principal Amount being
converted (and, for the avoidance of doubt, continue to accrue on any outstanding Principal Amount not being converted). Accrued interest on this
Note shall be computed on the basis of a 365-day year and actual days elapsed.
2. Repayment of this Note.
B-1
(a) Unless to the extent earlier converted into Conversion Shares pursuant to Section 4 hereof, the outstanding Principal Amount (other than
any portion of the Principal Amount converted pursuant to Section 4 hereof) and the interest accrued thereon shall be due and payable by the
Company upon the earlier of (i) the Maturity Date, and (ii) the occurrence of an Event of Default set forth in Section 5 hereof (the “Due Date”).
Upon the due conversion in full of this Note pursuant to and in accordance with Section 4 hereof, any and all payment obligations of the Company
under this Note and the Convertible Note Purchase Agreement shall be fully discharged.
(b) All amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall be paid to the Purchaser in lawful money of
the United States of America within three (3) Business Days after the Due Date. The Company shall make such payments of the unpaid Principal
Amount (other than any portion of the Principal Amount converted pursuant to Section 4 hereof), together with accrued and unpaid interest
thereon, to the Purchaser by wire transfer of immediately available funds for the account of the Purchaser as the Purchaser may designate and
notify in writing to the Company at least five (5) Business Days prior to the payment date. Payment shall be credited first to accrued interest due
and payable, and any remainder shall be applied to the outstanding Principal Amount.
(c) All payments of principal and interest in respect of this Note by or on behalf of the Company shall be made free and clear of, and
without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or on behalf of the Cayman Islands or the PRC or any political subdivision thereof or any
authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is
required by law.
3. Seniority. This Note ranks senior in right of payment to any of the Company’s other indebtedness that is expressly subordinated in right of
payment to this Note, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so subordinated, junior
in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and
structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
4. Conversion.
(a) Conversion.
(i) During the period from and including the 181st day after the Date of Issuance to and including the Maturity Date, the Purchaser shall, by
written notice to the Company, have the right but not the obligation to convert all or any portion of the outstanding Principal Amount to a number
of Conversion Shares at the applicable Conversion Price, provided, however, that the Purchaser shall not exercise such right to convert more than
twice. As used in this Note, “Conversion Price” means US$1.663, as may be adjusted pursuant to Section 4(d) hereof.
(ii) The number of the Conversion Shares to be issued upon any conversion pursuant to this Section 4(a) shall be equal to the quotient obtained by
dividing the Principal Amount subject to such conversion by the Conversion Price.
B-2
(b) No Fractional Shares. Upon the conversion of this Note into the Conversion Shares, in lieu of any fractional shares to which the
Purchaser would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion
Price.
(c) Mechanics of Conversion. In the event that the Purchaser has delivered to the Company a written notice in accordance with Section 4(a)
(i) hereof specifying that the Purchaser irrevocably elects to convert this Note (whether in part or in full), the Company shall at its expense take all
actions and execute all documents necessary to effect the issuance of all the Conversion Shares (including giving all necessary instructions to
update the register of members to effect such issuance) within two (2) weeks of delivery of the applicable written notice to convert, and deliver to
the Purchaser, upon surrender of this Note, a certificate or certificates for the number of fully paid Conversion Shares issuable upon such
conversion and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares. The
Company shall not be required to issue or deliver the Conversion Shares until the Purchaser has surrendered this Note to the Company.
(d) Adjustments to Conversion Price. The Conversion Price shall be adjusted according to the following items: When any of the Principal
Amount is outstanding at any time, (a) if the Company: (i) pays dividends in the form of securities or security equivalents of the Company;
(ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the
Company (including in the form of a reverse share split) to decrease the number of shares, the then-existing Conversion Price shall be multiplied
by a fraction, whose numerator is the number of outstanding securities of the Company immediately before the occurrence of the matter, and
whose denominator is the number of outstanding securities of the Company immediately after the occurrence of the matter; (b) if the Company
issues Ordinary Shares to all or substantially all shareholders as a class by way of rights issue, or issue or grant to all or substantially all
shareholders as a class, by way of rights issue, of options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at
less than 95 per cent of the closing price of the ADSs divided by the ratio of ADS to share (the “Market Price Per Share”) on the last trading day
preceding the date of the announcement of the terms of the issue or grant, the Conversion Price shall be multiplied by a fraction, whose numerator
is the number of Ordinary Shares in issue immediately before such announcement plus the number of Ordinary Shares which the aggregate
amount (if any) payable for the Ordinary Shares issued by way of rights issue or for the options or warrants or other rights issued or granted by
way of rights issue and for the total number of Ordinary Shares comprised therein would subscribe, purchase or otherwise acquire at Market Price
Per Share, and the denominator is the number of Ordinary Shares in issue immediately before such announcement plus the aggregate number of
Ordinary Shares issued or, as the case may be, comprised in the issue or grant, or (c) if the Company makes (or fixes a record date for the
determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in any
other asset or property (including cash, but excluding dividends by securities or security equivalents of the Company), then, and in each such
event, provision shall be made so that, upon conversion of the Note thereafter, the Purchaser shall receive, in addition to the number of Ordinary
Shares issuable thereon, such other asset or property which the holder of such Ordinary Shares would have received in connection with such event
had the
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outstanding Principal Amount been converted into Ordinary Shares immediately prior to each such event, all subject to further adjustment as
provided herein. Any adjustment made according to the aforesaid conditions shall come into effect immediately after the record date of deciding
the shareholders having rights to obtain dividends or allocations and, for the purpose of any share split, incorporation or reclassification, shall
come into effect immediately after such matters come into effect.
5. Events of Default. Each of the following events shall be considered an event of default (the “Event of Default”) with respect to this Note:
(a) Failure to Pay. The Company shall fail to pay when due (i) any principal payment or (ii) any interest payment or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten (10) Business Days after the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company or any of its Significant Subsidiaries shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability
to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose
of effecting any of the foregoing. As used in this Note, “Significant Subsidiary” means any Subsidiary of the Company, the total assets (after
intercompany eliminations) of which exceeds twenty percent (20%) of the consolidated total assets of the Company and its subsidiaries as of the
end of the Company’s most recently completed fiscal year.
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the
Company or any of its Significant Subsidiaries, or of all or a substantial part of their property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or its Significant Subsidiaries, or the debts thereof, under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and either (i) an order for relief shall be entered or (ii) such
proceeding shall not be dismissed or discharged within 45 days of commencement.
(d) Cessation to be a Public Company. The Company’s securities shall cease to be publicly traded on the Nasdaq Global Select Market.
(e) Change of Control. Any Change of Control shall occur. For the purpose of this provision 5(e), a “Change of Control” occurs if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than (i) Mr. Kun Dai, or any of his Affiliates,
(ii) any of Warburg Pincus, TPG Capital, 58.com Holdings Inc. or any of its respective Affiliates, or (iii) any “group” solely consisting of the
Persons set forth in clauses (i) and (ii) above, is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the Exchange Act),
directly or indirectly, of 50% or more voting power of the Company’s issued and outstanding securities.
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(f) Breach of Other Obligations. The Company fails to perform or comply with one or more of its other obligations in this Note or the
Convertible Note Purchase Agreement in any material respect, or breach any representation or warranty of the Company contained in the
Convertible Note Purchase Agreement in any material respect, and in each case such failure is not capable of being cured or is not cured within
thirty (30) days.
(g) Material Adverse Effect. Any one or more events, facts, conditions, changes or developments shall have occurred that have caused or
constituted or could be reasonably expected to cause or constitute, either individually or in the aggregate, a Material Adverse Effect.
(h) Cross-Default. Any Significant Indebtedness (as defined below) of the Company or its Subsidiaries is not paid when due or (as the case
may be) within any originally applicable grace period, or any such Significant Indebtedness becomes (or becomes capable of being declared) due
and payable prior to its stated maturity otherwise than at the option of the Company or its Subsidiaries, or the Company or its Subsidiaries fails to
pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this Section 5(i),
“Significant Indebtedness” means, with respect to each event mentioned above, one or more indebtedness with an aggregate amount of no less
than US$10,000,000 or its equivalent in any other currency or currencies.
(i) Unsatisfied Judgment. One or more judgment(s) or order(s) for the payment of an aggregate amount of no less than US$10,000,000 is
rendered against the Company or its Subsidiaries and continue(s) unappealed, unsatisfied and unstayed for a period of sixty (60) days after the
date(s) thereof or, if later, the date therein specified for payment.
(j) Security Enforced. A secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a
material part of the undertaking, assets and revenues of the Company and its Subsidiaries taken as a whole.
(k) Enforcement Proceedings. A distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued
out on or against any material part of the property, assets or revenue of the Company or its Significant Subsidiaries.
(l) Winding up, etc. An order is made by any Governmental Entity having jurisdiction or an effective resolution is passed for the winding
up, liquidation or dissolution of the Company or any of its Significant Subsidiaries (other than, in the case of a Significant Subsidiary of the
Company, for the purposes of or pursuant to an amalgamation, reorganization or restructuring whilst solvent).
6. Remedies. Upon the occurrence of an Event of Default under Section 5 hereof, at the option and upon the written declaration of the Purchaser at
the Purchaser’s sole discretion, the entire unpaid Principal Amount and unpaid interest accrued thereon shall become forthwith due and payable,
and the Purchaser may immediately enforce payment of all amounts due and owing under this Note and exercise any and all other remedies
granted to it at law, in equity or otherwise. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default under
Section 5(e) hereof, the Company shall, if so requested by the Purchaser, cooperate in good faith with the Purchaser with respect to the Purchaser’s
efforts to receive equity securities of the
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surviving entity (if any) in lieu of the acceleration of the Principal Amount and unpaid interest accrued thereon.
7. Prepayment. The Principal Amount or interest accrued thereon may not be prepaid prior to the Maturity Date without the written consent of the
Purchaser.
8. No Rights as Shareholder Prior to Conversion. For the avoidance of doubt, the Purchaser has not been conferred with any of the rights of a
shareholder of the Company, including the right to vote as such, by any of the provisions hereof or any provisions under the Convertible Note
Purchase Agreement, or any right (a) to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
(b) to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of
par value, or change of shares to no par value, consolidation, merger, scheme of arrangement, conveyance, or otherwise), (c) to receive notice of
meetings or to receive in-kind dividends or subscription rights or otherwise, in each case until this Note shall have been converted in whole or in
part and all the Conversion Shares issuable upon such whole or partial conversion hereof shall have been issued, as provided for in this Note and
the Convertible Note Purchase Agreement. For the avoidance of doubt, the Purchaser shall be conferred with all rights of a shareholder of the
Company immediately upon any partial or full conversion of the Note with respect to such Conversion Shares.
10. Termination of Rights.All rights under this Note shall automatically terminate when (a) all amounts owing on this Note have been paid in full or
(b) this Note is converted in full pursuant to Section 4 hereof. Upon the termination of all rights under this Note, this Note shall be surrendered by
the Purchaser to the Company and this Note so surrendered shall be cancelled and shall not be reissued. For the avoidance of doubt, the
Convertible Note Purchase Agreement shall not be terminated merely due to a termination of all rights under this Note, and shall remain in force
and effect or terminate pursuant to the terms thereof.
11. Amendments and Waivers; Notice. The amendment or waiver of any term of this Note shall be subject to the written consent of the Company and
the Purchaser. The provision of notice shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.
12. Successors and Assigns. This Note applies to, inures to the benefit of, and binds, the successors and assigns of the parties hereto; provided,
however, that no party hereto may assign its obligations under this Note without the written consent of the other party hereto. Notwithstanding
anything to the contrary, the Purchaser may, subject to applicable laws, transfer this Note to any of its Affiliates. Any transfer of this Note may
take effect by surrender of this Note to the Company and reissuance of a new note to the transferee.
13. Governing Law; Dispute Resolution. This Note shall be governed by and construed under the laws of the State of New York without regards to
principles of conflict of laws. The resolution of any controversy or claim arising out of or relating to this Note shall be conducted pursuant to the
terms of the Convertible Note Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has executed this Note as of the date first above written.
By:
Name:
Title:
Uxin Limited
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Exhibit 4.30
Execution Version
CONVERTIBLE NOTE PURCHASE AGREEMENT
by and between
UXIN LIMITED
and
PACIFICBRIDGE ASSET MANAGEMENT
Dated July 12, 2019
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
1.
2.
3.
4.
5.
TABLE OF CONTENTS
DEFINITIONS
ISSUANCE OF THE NOTES
Issuance of the Notes
2.1
Closing
2.2
Payment and Delivery
2.3
Conditions to the Fund Manager’s Obligations to Effect the Closing
2.4
Conditions to the Company’s Obligations to Effect the Closing
2.5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
3.21
3.22
3.23
Accuracy of Disclosure
Existence and Qualification
Capitalization; Issuance of Subscription Shares
Valid Issuance of the Notes and the Conversion Shares
Capacity, Authorization and Enforceability
Non-Contravention
Consents and Approvals
Financial Statements
Operating and non-GAAP financial Data
Related Party Transactions
Absence of Certain Changes
Litigation
Compliance with Laws
Securities Laws
No Registration
Ranking of the Notes
Listing and Maintenance Requirements
Investment Company
Money Laundering Laws
OFAC
Foreign Corrupt Practices
PFIC
Tax Matters
REPRESENTATIONS AND WARRANTIES OF THE FUND MANAGER
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
Existence
Capacity
Authorization and Enforceability
Non-Contravention
Consents and Approvals
Investment Intent
Regulation S Eligibility; Restriction on Resale
Investment Experience
COVENANTS
5.1
5.2
5.3
5.4
Further Assurances
Reservation of Shares
Lock-Up
No Transfer to Adverse Persons
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5
5
5
5
5
6
6
6
7
7
7
8
8
8
8
8
9
9
9
9
9
9
9
9
9
9
10
10
10
10
11
11
11
11
11
11
11
11
12
12
12
12
12
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6.
7.
5.5
5.6
Use of Proceeds
Conversion to ADSs
INDEMNIFICATION
6.1
6.2
6.3
Indemnification
Third Party Claims
Other Claims
MISCELLANEOUS
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
Survival of the Representations and Warranties
Governing Law; Dispute Resolution
Amendment
Binding Effect
Assignment
Notices
Entire Agreement
Severability
Fees and Expenses
Confidentiality
Specific Performance
Termination
Headings
Counterparts
No Waiver
Schedules and Exhibits
SCHEDULE 1 — PURCHASERS AND ALLOCATIONS
SCHEDULE 2 — ADVERSE PERSONS
EXHIBIT A — FORM OF 10.0% NOTE
EXHIBIT B — FORM OF 11.0% NOTE
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13
13
14
15
15
15
15
16
16
16
16
17
17
17
17
17
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CONVERTIBLE NOTE PURCHASE AGREEMENT
This CONVERTIBLE NOTE PURCHASE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this
“Agreement”), dated July 12, 2019, is entered into by and between Uxin Limited, an exempted company with limited liability incorporated under the laws
of the Cayman Islands (the “Company”), and PacificBridge Asset Management (the “Fund Manager”) acting in its capacity as the fund manager of each of
the Persons listed in Schedule 1 hereto (each, a “Purchaser”).
W I T N E S S E T H:
WHEREAS, the Company desires to issue to each Purchaser, and the Fund Manager has agreed to cause each Purchaser to purchase from the
Company, the applicable Notes (as defined below), subject to the terms and conditions set forth herein and in the applicable Notes.
NOW, THEREFORE, in consideration of the respective undertakings stated herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Whenever used herein, unless the context otherwise requires, the following words and phrases shall have the following
meanings:
“10.0% Note” shall mean a promissory note, with a 10.0% coupon and a maturity date that is 12 months after the issuance date, to be issued by the
Company to the applicable Purchaser pursuant to Article 2 below, in the form of Exhibit A.
“11.0% Note” shall mean a promissory note, with a 11.0% coupon and a maturity date that is 15 months after the issuance date, to be issued by the
Company to the applicable Purchaser pursuant to Article 2 below, in the form of Exhibit B.
“ADSs” shall mean American Depositary Shares representing Class A Ordinary Shares.
“Adverse Person” shall mean any Person identified in Schedule 2 hereto, any additional Persons to be mutually agreed in writing by the Company
and the Fund Manager from time to time, and any Controlled Affiliates of any of the foregoing.
“Affiliate” of any specified Person shall mean any other Person directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such specified Person. For the avoidance of doubt, none of the Purchasers shall be considered as an Affiliate of the Company or the
Company’s Subsidiaries by reason of holding any Notes to be issued hereunder.
“Agreement” shall have the meaning specified in the preamble to this Agreement.
“Board” shall mean the board of directors of the Company.
“Business Day” shall mean any day that is not a Saturday, a Sunday or another day on which banking institutions in the State of New York, the
PRC, Hong Kong, the Republic of Korea or the Cayman Islands are required by law to be closed.
“Claim Notice” shall have the meaning specified in Section 6.2(a) of this Agreement.
“Class A Ordinary Shares” shall mean the Class A ordinary shares of the Company of a par value of US$0.0001 each.
“Class B Ordinary Shares” shall mean the Class B ordinary shares of the Company of a par value of US$0.0001 each.
“Closing” shall have the meaning specified in Section 2.2 of this Agreement.
“Closing Date” shall have the meaning specified in Section 2.2 of this Agreement. “Company” shall have the meaning specified in the preamble to
this Agreement.
“Company Securities” shall mean (a) Ordinary Shares or American Depositary Shares, depositary receipts or similar instruments issued in respect
of Ordinary Shares, (b) securities convertible into, or exercisable or exchangeable for, any Ordinary Shares or other instruments described in clause (a), and
(c) any options, warrants or other rights to acquire any of the foregoing Ordinary Shares, instruments or securities.
“Control” of a given Person shall mean the power or authority, whether exercised or not, to direct the business, management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, that such power or authority shall
conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled
to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such
Person. The terms “Controlled” and “Controlling” have meanings correlative to the foregoing.
“Conversion Shares” shall mean the Class A Ordinary Shares issuable upon conversion of the Notes in accordance with the terms thereof.
“Dispute” shall have the meaning specified in Section 7.2 of this Agreement.
“Encumbrance” shall mean (a) any mortgage, charge, pledge, lien, hypothecation, deed of trust, title retention, title defect, security interest,
encumbrance or other third-party rights of any kind securing or conferring any priority of payment in respect of any obligation of any Person, any other
restriction or limitation; (b) any easement or covenant granting a right of use or occupancy to any Person; (c) any proxy, power of attorney, voting trust
agreement, interest, option, right of first offer, right of pre-emptive negotiation, or refusal or transfer restriction in favor of any Person; and (d) any adverse
claim as to title.
“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended.
“Fund Manager” shall have the meaning specified in the preamble to this Agreement.
“Fundamental Company Representations” shall mean the representations and warranties by the Company contained in Sections 3.2, 3.3, 3.4, 3.5
“Fundamental Purchaser Representations” shall mean the representations and warranties by the Fund Manager contained in Sections 4.1, 4.2, 4.3
and 3.6.
and 4.4.
“Governmental Entity” shall mean any transnational or supranational, domestic or foreign federal, national, state, provincial, local or municipal
governmental, regulatory, judicial
2
or administrative authority, department, court, arbitral body, agency or official, including any department, commission, board, agency, bureau, subdivision
or instrumentality thereof or any stock exchange.
“Hong Kong” shall mean the Hong Kong Special Administrative Region of the PRC.
“Indemnified Party” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Indemnifying Party” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Indemnity Notice” shall have the meaning specified in Section 6.3 of this Agreement.
“Lock-Up Period” shall mean the period between the Closing Date and the date that is 180 days after the Closing Date (both dates inclusive).
“Loss Threshold” shall have the meaning specified in Section 6.1(c).
“Losses” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Material Adverse Effect” shall mean any event, occurrence, fact, condition, change or development, individually or together with other events,
occurrences, facts, conditions, changes or developments, that has had, has, or would reasonably be expected to have a material adverse effect on (a) the
business of the Company as presently conducted, or the condition (financial or otherwise), affairs, properties, employees, liabilities, assets or results of
operation of the Company and its Subsidiaries taken as a whole or (b) the ability of the Company to consummate the transactions contemplated by this
Agreement and the Notes and to timely perform its material obligations hereunder and thereunder; provided, however, that in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect on the business of the Company or the Company or any Subsidiary relating to or
arising in connection with (i) any action required to be taken pursuant to the terms and conditions of this Agreement or taken at the written direction of the
Fund Manager or any Purchaser, (ii) economic changes affecting the industry in which the Company and its Subsidiaries operate generally or the economy
of the PRC or any other market where the Company and its Subsidiaries have material operations or sales generally (provided in each case that such
changes do not have a unique and materially disproportionate impact on the business of the Company and its Subsidiaries compared to any other companies
that operate in the industry or market in which the Company and its Subsidiaries operate), (iii) the execution, announcement or disclosure of this
Agreement or the pendency or consummation of the transactions contemplated hereunder, (iv) actions or omissions of the Company and its Subsidiaries
that have been consented by the Fund Manager or any Purchaser in writing or otherwise contemplated by this Agreement, (v) changes in generally accepted
accounting principles that are generally applicable to comparable companies (provided that such changes do not have a unique and materially
disproportionate impact on the business of the Company and its Subsidiaries compared to compared to any other companies that operate in the industry or
market in which the Company and its Subsidiaries operate), (vi) changes in general legal, tax or regulatory conditions (provided that such changes do not
have a unique or materially disproportionate impact on the business of the Company and its Subsidiaries compared to any other companies that operate in
the industry or market in which the Company and its Subsidiaries operate), (vii) changes in national or international political or social conditions,
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including any engagement in hostilities or the occurrence of any military or terrorist attack or civil unrest, or (viii) earthquakes, hurricanes, floods or other
natural disasters.
“Note(s)” shall mean any of the 10.0% Note and the 11.0% Note, as applicable.
“Ordinary Shares” shall mean the Class A Ordinary Shares and the Class B Ordinary Shares.
“Person” shall mean any natural person, firm, corporation, limited liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Entity or any other legal entity, including public bodies, whether acting in an individual, fiduciary or
other capacity.
“PRC” shall mean the People’s Republic of China, excluding, for the purpose of this Agreement, Hong Kong, the Macau Special Administrative
Region and Taiwan.
“Principal Amount” with respect to a Purchaser and a Note shall mean the U.S. dollar amount set forth next to the name of the Purchaser in the
column entitled “Principal Amount” in the applicable table in Schedule 1 hereto.
“Purchaser” shall have the meaning specified in the preamble to this Agreement.
“Purchaser Entities” shall mean, collectively, the Purchasers and the Fund Manager.
“Regulation S” shall have the meaning specified in Section 3.14 of this Agreement.
“SEC” shall mean the United States Securities and Exchange Commission.
“SEC Documents” shall mean all registration statements, proxy statements and other statements, reports, schedules, forms and other documents
required to be filed or furnished by the Company with the SEC from time to time, and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein.
“Securities Act” shall mean the United States Securities Act of 1933, as amended.
“Subsidiary” shall mean, with respect to any given Person, any other Person that is Controlled directly or indirectly by such given Person, which
shall, for the avoidance of doubt, include any variable interest entity whose assets and financial results are consolidated with the assets and financial results
of such given Person and are recorded on the financial statements of such given Person for financial reporting purposes in accordance with applicable
accounting standards (each, a “VIE” and collectively, the “VIEs”) and any Subsidiary of such VIEs.
“Third Party Claim” shall have the meaning specified in Section 6.2(a) of this Agreement.
“Transfer” shall mean directly or indirectly, offer, sell, contract to sell, pledge, transfer, assign, give, hypothecate, encumber, grant a security
interest in, convey in trust, gift, devise or descent, or otherwise dispose of, or suffer to exist (whether by operation of law of otherwise) any Encumbrance
on, any Company Securities or any right, title or interest therein or thereto, or enter into a transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any Company Securities, whether
any such aforementioned transaction is to be
4
settled by delivery of the Ordinary Shares, American Depositary Receipts or such other securities, in cash or otherwise, or publicly disclose the intention to
make any such disposition or to enter into any such transaction, swap, hedge or other arrangement, including transfers pursuant to divorce or legal
separation, transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether
voluntary or by operation of law, directly or indirectly, of any Company Securities.
“US$” and “U.S. dollar” shall mean the lawful currency of the United States of America.
2. ISSUANCE OF THE NOTES.
2.1 Issuance of the Notes. Subject to the satisfaction of terms and conditions of this Agreement, at the Closing, the Company agrees
to issue to each Purchaser, and the Fund Manager hereby agrees to cause each Purchaser to purchase from the Company, the 10.0% Note or the 11.0%
Note, in the principal amount equal to the applicable Principal Amount.
2.2 Closing. The closing of the issuance and purchase of the Notes shall take place remotely via the exchange of documents and
signatures after all closing conditions specified in Sections 2.4 and 2.5 hereof have been satisfied or waived (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof at the Closing). The date of the Closing (the “Closing Date”) will be
August 16, 2019 or such other date as the Company and the Fund Manager may mutually agree in writing.
2.3 Payment and Delivery. At the Closing, the Fund Manager shall cause each Purchaser to pay and deliver the applicable Principal
Amount to the Company in U.S. dollars by wire transfer, or by such other method as may be mutually agreed by the Company and the Fund Manager, of
immediately available funds to such bank account of the Company designated in writing by the Company. Such payment shall be delivered and made
available to such bank account on the Closing Date, and the Company shall deliver to each Purchaser the duly executed Note dated the Closing Date, free
and clear of Encumbrances.
2.4 Conditions to the Fund Manager’s Obligations to Effect the Closing. The obligation of the Fund Manager to cause each
Purchaser to purchase the Note at the Closing is subject to the satisfaction, on or before the Closing Date, of the following conditions, any of which may be
waived in writing by the Fund Manager in its sole and absolute discretion:
of the applicable Note shall have been completed;
(a) All corporate and other actions required to be taken by the Company in connection with the issuance, sale and delivery
(b) The representations and warranties of the Company contained in Article 3 of this Agreement shall have been true and
correct in all material respects on the date of this Agreement and true and correct as of the Closing Date, and the Company shall have performed and
complied in all material respects with all, and not be in breach or default in any material respect under any, agreements, covenants, conditions and
obligations contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date;
(whether temporary, preliminary or
(c) No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law
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permanent) that is in effect and restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation of the transactions contemplated by this
Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this Agreement with respect to that Purchaser that are
substantial in relation to the Company and its Subsidiaries; and no action, suit, proceeding or investigation shall have been instituted by a Governmental
Entity of competent jurisdiction or threatened that seeks to restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the
transactions contemplated by this Agreement with respect to that Purchaser, or imposes any damages or penalties in connection with the transactions
contemplated by this Agreement with respect to that Purchaser that are substantial in relation to the Company and its Subsidiaries;
Material Adverse Effect has occurred; and
(d) No event, occurrence, development or state of circumstances that has or could reasonably be expected to have a
the applicable Note) shall have occurred.
(e) No event, occurrence, development or state of circumstances that would constitute an Event of Default (as defined in
2.5 Conditions to the Company’s Obligations to Effect the Closing. The obligation of the Company to issue the Note to a Purchaser
at the Closing is subject to the satisfaction, on or before the Closing Date, of the following conditions, any of which may be waived in writing by the
Company in its sole discretion:
purchase of the applicable Note shall have been completed;
(a) All corporate and other actions required to be taken by that Purchaser and the Fund Manager in connection with the
(b) The representations and warranties of the Fund Manager contained in Article 4 of this Agreement shall have been true
and correct on the date of this Agreement and true and correct in all material respects as of the Closing Date, and the Fund Manager shall have performed
and complied in all material respects with all, and not be in breach or default in any material respect under any, agreements, covenants, conditions and
obligations contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date; and
(c) No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law
(whether temporary, preliminary or permanent) that is in effect and restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation of
the transactions contemplated by this Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this Agreement
with respect to the Company; and no action, suit, proceeding or investigation shall have been instituted by a Governmental Entity of competent jurisdiction
or threatened that seeks to restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the transactions contemplated by this
Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this Agreement with respect to the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise disclosed in the SEC Documents, the Company
represents and warrants to the Fund Manager as of the date hereof and as of the Closing that:
respective effective dates (in the
3.1 Accuracy of Disclosure. The Company has filed or furnished, as applicable, on a timely basis, all SEC Documents. As of their
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case of the SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing
dates (in the case of all other SEC Documents), or in each case, if amended prior to the date hereof, as of the date of the last such amendment: (A) each of
the SEC Documents complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act
of 2002, as amended, and any rules and regulations promulgated thereunder applicable to the SEC Documents (as the case may be), and (B) none of the
SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to
make the material statements therein, in the light of the circumstances under which they were made, not misleading.
3.2 Existence and Qualification. The Company has been duly organized, is validly existing and in good standing under the laws of
the Cayman Islands and has the requisite power and authority to own, lease and operate its property and to conduct its business as currently conducted and
as described in the SEC Documents. Each of the Company and its Subsidiaries is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its respective business or its respective ownership, leasing or operation of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected have a Material
Adverse Effect.
3.3 Capitalization; Issuance of Subscription Shares. The authorized share capital of the Company is $1,000,000 divided into
10,000,000,000 shares comprising of (i) 9,600,000,000 Class A Ordinary Shares, of which 839,868,944 Class A Ordinary Shares (excluding the 23,501,589
Class A Ordinary Shares issued to the Company’s depositary bank for bulk issuance of American Depositary Shares reserved for future issuances upon the
exercise or vesting of awards granted under the Company’s share incentive plan) were issued and outstanding as of February 28, 2019, (ii) 100,000,000
Class B Ordinary Shares, of which 40,809,861 Class B Ordinary Shares were issued and outstanding as of February 28, 2019, and (iii) 300,000,000 shares
of a par value of $0.0001 each of such class or classes (however designated) as the Board may determine in accordance with the Company’s articles of
association. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, have been
issued in compliance with all applicable securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as set forth in the SEC Documents, the Company has no outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter.
3.4 Valid Issuance of the Notes and the Conversion Shares. The Notes and the Conversion Shares to be issued, sold and delivered
upon conversion of the Notes will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances except as imposed by
applicable securities laws, and based in part upon the representations and warranties of the Fund Manager in this Agreement, will be issued in compliance
with all applicable federal and state securities laws. Upon conversion of the Notes, each Purchaser will be entitled to all rights accorded to a holder of the
Company’s Class A Ordinary Shares and will be the record and beneficial owner of all such securities and have good and valid title to all such securities,
free and clear of all Encumbrances except as imposed by applicable securities laws. The Conversion Shares will be freely transferable in compliance with
Rule 144
7
under the Securities Act upon conversion of the Notes and no restrictive legend will be included in any certificate evidencing such shares.
3.5 Capacity, Authorization and Enforceability. The Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered
by the Company, and assuming the due authorization, execution and delivery by the Fund Manager, this Agreement is a valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
general principles of equity.
3.6 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of the Company or
(ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Entity to
which the Company or any of its Subsidiaries is subject, or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of or
creation of an Encumbrance under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement,
contract, lease, license, instrument, or other arrangement to which the Company or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which the Company’s or any of its Subsidiaries’ assets are subject, except in the case of clauses (ii) or (iii) as would not have a
Material Adverse Effect. There is no action, suit or proceeding, pending or, to the knowledge of the Company, threatened against the Company that
questions the validity of this Agreement or the right of the Company to enter into this Agreement to consummate the transactions contemplated hereby.
3.7 Consents and Approvals. Assuming the accuracy of the representations and warranties of the Fund Manager under this
Agreement, neither the execution and delivery by the Company of this Agreement, nor the consummation by the Company of any of the transactions
contemplated hereby, nor the performance by the Company of this Agreement in accordance with its terms requires the consent, approval, order or
authorization of, or registration with, or the giving notice to, any governmental or public body or authority or any third party, except such as have been or
will have been obtained, made or given on or prior to the Closing and those filings required to be made with the SEC and the Nasdaq Stock Market
(including, without limitation, a current report on Form 6-K).
3.8 Financial Statements. The financial statements (including any related notes) contained in the SEC Documents: (A) complied as
to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (B) were
prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods covered
thereby and (C) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of the Company and its Subsidiaries for the periods covered thereby, except as disclosed
therein and as permitted under the Exchange Act.
3.9 Operating and non-GAAP financial Data. All operating data and non-GAAP financial data of the Company and its Subsidiaries
disclosed in the SEC Documents, including but not limited to GMV, transaction volume, number of car listings and used car transaction facilitation service
take rate, are true and accurate in all material respects.
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3.10 Related Party Transactions. There are no material transactions between the Company or any of its Subsidiaries, on the one hand,
and the Company’s or any of its Subsidiaries’ respective 5% or greater shareholders, Affiliates, directors or executive officers, or any Affiliates of such
Persons, on the other hand, except as have been duly approved by the audit committee of the Board, or any other related party transactions required to be
disclosed that are not disclosed in the SEC Documents.
occurrence, development or state of circumstances that has or could reasonably be expected to have a Material Adverse Effect.
3.11 Absence of Certain Changes. Except as set forth in the SEC Documents, since December 31, 2018, there has been no event,
3.12 Litigation. Except as disclosed in the SEC Documents, there are no actions pending or may threatened against or involving the
Company or its Subsidiaries or affecting the business or any of the assets of the Company or its Subsidiaries.
3.13 Compliance with Laws. Except as disclosed in the SEC Documents, the business of the Company or its Subsidiaries is not being
conducted in violation of any applicable law or government order applicable to the Company or its Subsidiaries except for violations which do not and
would not have a Material Adverse Effect.
3.14 Securities Laws. (a) No “directed selling efforts” into the United States (as defined in Rule 902 of Regulation S under the
Securities Act (“Regulation S”)) with respect to the Notes have been made by the Company, any of its Affiliates, or any Person acting on its behalf, and
(b) none of the foregoing Persons has taken any actions that would result in the sale of the Notes to the Purchasers under this Agreement requiring
registration under the Securities Act or any U.S. state securities laws. The Company is a “foreign issuer” (as defined in Regulation S).
3.15 No Registration. Assuming the accuracy of the Fund Manager’s representations and warranties in Article 4, no registration under
the Securities Act is required for the offer and sale of the Notes by the Company to that Purchaser as contemplated hereby.
3.16 Ranking of the Notes. The Notes rank senior in right of payment to any of the Company’s other indebtedness that is expressly
subordinated in right of payment to the Notes, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so
subordinated, junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness,
and structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
3.17 Listing and Maintenance Requirements. The issuance and sale of the Notes under this Agreement and the transactions
contemplated hereby do not contravene the rules and regulations of the Nasdaq Global Select Market.
proceeds therefrom will not be, required to register as an “investment company” pursuant to the U.S. Investment Company Act of 1940, as amended.
3.18 Investment Company. The Company is not, and upon the sale of the Notes contemplated herein and the application of the net
compliance with the money laundering requirements of all applicable governmental authorities and any related or similar
3.19 Money Laundering Laws. The operations of the Company and its Subsidiaries have been and will be conducted at all times in
9
rules, regulations or guidelines, issued administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”) and no action,
suit or proceeding by or before any Governmental Entity involving the Company or its Subsidiaries, its Affiliates employees or agents with respect to the
Money Laundering Laws is pending or threatened.
3.20 OFAC. (i) None of the Company, any of its Subsidiaries, or any director, officer or employee of any of the foregoing, or, to the
Company’s knowledge, any agent, Affiliate or representative of the Company, is a Person that is, or is owned 50% or more or controlled by one or more
Persons that are (such Persons referred to as “Sanctioned Persons”): (a) the target of any sanctions administered or enforced by the U.S. government
(including but not limited to the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including,
without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council, the European Union,
Her Majesty’s Treasury or any other relevant sanctions authority (collectively, “Sanctions”), including by being listed on any Sanctions related list of
designated persons, or (b) located, organized or resident in, or a national, Governmental Entity. or agent of, a country, region or territory that is the subject
or target Sanctions (as of the date hereof, including but not limited to, Cuba, Iran, North Korea, Syria and Crimea (each, a “Sanctioned Country”)). (ii) The
Company represents and covenants that the Company and its Significant Subsidiaries have not engaged in, are not now engaged in, and will not engage in,
any dealings or transactions directly or indirectly with any Sanctioned Person, or in any country or territory, that at the time of the dealing or transaction is
or was the subject or the target of Sanctions.
3.21 Foreign Corrupt Practices. Neither of the Company or its Subsidiaries, nor any Person acting on their behalf, has, directly or
indirectly (i) used any funds or will use and proceeds from the sale of the Notes for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign
or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any of its
Subsidiaries (or made by any Person acting on its behalf of which the Company or any of or its Subsidiaries is aware) which is in violation of any
applicable law, or (iv) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder which was
or is applicable to the Company or its Subsidiaries.
3.22 PFIC. Based on the Company’s current income and asset and projections as to the value of its assets and market value of its
ADSs, including the current and anticipated value of its assets, the Company believes that it was not and does not expect to be a “passive foreign
investment company” as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended for the current taxable year or in
foreseeable future.
3.23 Tax Matters. The Company and its Subsidiaries have filed all material tax returns required by applicable law to be filed by them,
have paid all taxes due pursuant to such returns (including interest and penalties), and have paid all other material taxes, fees, assessments and other
governmental charges owing by them or in respect of their respective property, income, profits and assets, except for such taxes (a) that are not yet
delinquent or (b) that are being appropriately contested in good faith by appropriate proceedings, and against which adequate reserves are being maintained
in accordance with GAAP (or the comparable accounting principles in the relevant jurisdiction). No material tax assessment has been imposed on (or
threatened in writing to be imposed on) the Company and its Subsidiaries or any of their respective assets.
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4. REPRESENTATIONS AND WARRANTIES OF THE FUND MANAGER. (i) The Fund Manager acting on behalf of each Purchaser
represents and warrants to the Company as of the date hereof and as of the Closing Date that:
jurisdiction of organization.
4.1 Existence. Each Purchaser Entity has been duly organized, is validly existing and is in good standing under the laws of its
4.2 Capacity. Each Purchaser Entity has the requisite power and authority to enter into and perform its respective obligations under
this Agreement and consummate the transactions contemplated hereby. The Fund Manager is the general partner and sole fund manager of each Purchaser
and has the capacity and authority to act on behalf of each Purchaser.
4.3 Authorization and Enforceability. This Agreement has been duly authorized, executed and delivered by the Fund Manager, and
assuming the due authorization, execution and delivery by the Company, this Agreement is a valid and binding agreement of the Fund Manager,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general
principles of equity.
4.4 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of any Purchaser
Entity or (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental
Entity to which any Purchaser Entity is subject, or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of or creation
of an Encumbrance under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement, contract,
lease, license, instrument, or other arrangement to which any Purchaser Entity is a party or by which any Purchaser Entity is bound or to which any assets
of any Purchaser Entity are subject. There is no action, suit or proceeding, pending or, to the knowledge of the Fund Manager, threatened against any
Purchaser Entity that questions the validity of this Agreement or the right of any Purchaser Entity to enter into this Agreement to consummate the
transactions contemplated hereby.
4.5 Consents and Approvals. Neither the execution and delivery by the Fund Manager of this Agreement, nor the consummation by
any Purchaser Entity of any of the transactions contemplated hereby, nor the performance by any Purchaser Entity of this Agreement in accordance with its
terms requires the consent, approval, order or authorization of, or registration with, or the giving notice to, any governmental or public body or authority or
any third party, except such as have been or will have been obtained, made or given on or prior to the Closing.
4.6 Investment Intent. Each Purchaser is purchasing the Notes solely for its own account for investment, and not with a view to, or
for sale in connection with, any distribution of the Notes or any portion thereof, and not with any present intention of selling, offering to sell, or otherwise
disposing of or distributing the Notes or any portion thereof in any transaction. The entire legal and beneficial interest of the Notes is being purchased, and
will be held, for each Purchaser’s own account only, and neither in whole or in part for the account of any other Person.
an “offshore transaction” (as
4.7 Regulation S Eligibility; Restriction on Resale. The Fund Manager acknowledges that each Purchaser is acquiring the Notes in
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defined in Regulation S) in reliance upon the exemption from registration provided by Regulation S. Each Purchaser is not a U.S. person as defined in
Rule 902 of Regulation S and is located outside of the United States. The Fund Manager understands that the Notes to be purchased by each Purchaser has
not been registered under the Securities Act or any U.S. state law and may not be offered or sold within the United States or to, or for the account or benefit
of, a U.S. person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and
applicable U.S. state law.
4.8 Investment Experience. Each Purchaser is a sophisticated purchaser with knowledge and experience in financial and business
matters such that such Purchaser is capable of evaluating the merits and risks of the investment in the Notes and the Conversion Shares. Each Purchaser is
able to bear the economic risks of an investment in the Notes and the Conversion Shares. The Fund Manager understands that securities prices are a
function of a large number of variables and that there is no way for the Company to predict or otherwise gauge the market’s reaction to the disclosure of
any material information. The Fund Manager acknowledges and affirms that, with the assistance of its advisors, it has conducted and completed its own
investigation, analysis and evaluation related to the investment in the Notes and the Conversion Shares. The Fund Manager understands and acknowledges
that the Company has or may have information concerning the Company and its Affiliates including, but not limited to, the short term and long-term plans
of the Company and its Affiliates. With full recognition of the foregoing, and after discussing these matters with its counsel and such other advisors as it
deems appropriate, the Fund Manager wishes to cause each Purchaser to consummate the transactions contemplated under this Agreement on the terms set
forth herein.
5. COVENANTS.
5.1 Further Assurances. From the date of this Agreement to the Closing Date, (i) the Company and the Fund Manager shall use their
reasonable efforts to fulfill, or obtain the fulfillment of, all of the conditions precedent to the consummation of the transactions contemplated hereby, and
(ii) the Fund Manager shall cause each Purchaser to take necessary and appropriate actions contemplated hereunder for the consummation of the
transactions contemplated hereby.
5.2 Reservation of Shares. At all times for so long as any Note (or any portion thereof) remains outstanding, the Company shall take
all actions necessary to have authorized, and reserved for the purpose of issuance, no less than one hundred percent (100%) of the aggregate number of
Class A Ordinary Shares needed to provide for the complete issuance of the Conversion Shares underlying such Notes.
5.3 Lock-Up. Notwithstanding any other provisions of this Agreement or any other agreement by the Company and the Purchaser
Entities, during the Lock-Up Period, the Fund Manager shall ensure that each Purchaser Entity will not, and will procure that none of its Subsidiaries will,
without the prior written consent of the Company, directly or indirectly through one or a series of transactions, Transfer any Company Securities to any
Person other than the Purchaser Entity’s Subsidiaries. Any Transfer of Company Securities made in violation of this Section 5.3 shall be null and void ab
initio and shall not be recorded on the books and records of the Company.
Company and the Purchaser Entities, the Fund Manager shall ensure that each Purchaser Entity will not directly or indirectly Transfer, and
5.4 No Transfer to Adverse Persons. Notwithstanding any other provisions of this Agreement or any other agreement by the
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will not permit any direct or indirect Transfer, through one or a series of transactions, of any Company Securities held by it directly or indirectly (including
through any Affiliate) to any Adverse Person without the prior written consent of the Company. Any Transfer of any Company Securities made in violation
of this Section 5.4 shall be null and void ab initio and shall not be recorded on the books and records of the Company.
5.5 Use of Proceeds. The Company shall use the proceeds from the issuance of the Notes for general corporate purposes, and shall
not use the proceeds from the issuance of the Notes (a) to fund or facilitate any activities of or business with any Person that is the subject or the target of
Sanctions, (b) to fund or facilitate any activities of or business in any country or territory that is subject of any Sanctions, (c) in furtherance of an offer,
payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any anti-corruption
laws, or (d) in a way that that result in noncompliance with all applicable anti-money laundering or anti-terrorism statutes, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable Governmental Entity.
5.6 Conversion to ADSs. To the extent permitted by applicable law, after the conversion of either Note (or any portion thereof) by
any Purchaser into Conversion Shares, in the event that such Purchaser has delivered to the Company written notice specifying that such Purchaser
irrevocably elects to convert the Conversion Shares into ADSs subject to the compliance of applicable conditions under Rule 144(b), the Company shall
use its reasonable best efforts to effect (or cause to be effected) the conversion of such Conversion Shares into ADSs within seven (7) days after receiving
such written notice.
6. INDEMNIFICATION.
6.1 Indemnification.
(a) Subject to the other provisions of this Article 6, each of the Company and the Fund Manager (“Indemnifying Party”)
shall indemnify and hold each other, such other party’s respective Affiliates, and such other party’s and their respective Affiliates’ members, partners,
managers, directors, officers, employees, advisors and agents (collectively, the “Indemnified Party”) harmless from and against any losses, liabilities,
damages, costs and expenses, including reasonable attorney’s fees (collectively, “Losses”) resulting from or arising out of: (i) any breach or violation of, or
inaccuracy in, any representation or warranty made by the Indemnifying Party or its applicable Affiliates under this Agreement; or (ii) any breach or
violation of, or failure to perform, any covenants or agreements made by or on behalf of, or to be performed by, the Indemnifying Party or its applicable
Affiliates under this Agreement. The indemnity under this Article 6 shall not be prejudiced by or otherwise be subject to any disclosure and shall apply
regardless of whether the Indemnifying Party has any actual or constructive knowledge with respect thereto.
punitive damages are awarded to a third party against an Indemnified Party in connection with a Third Party Claim).
(b) No Indemnifying Party shall be liable for any Loss consisting of punitive damages (except to the extent that such
(c) The Fund Manager as the Indemnified Party shall not be entitled to recover any Losses, other than with respect to
breaches of Fundamental Company Representations or Fundamental Purchaser Representations (as applicable), until such time as the aggregate amount of
all such Losses that have been suffered or incurred by the Indemnified
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Party exceeds two percent (2%) of the issued Principal Amount with respect to the Purchasers (the “Loss Threshold”), provided, however, that once the
aggregate amount of all such Losses exceeds the Loss Threshold, the Indemnifying Party shall be liable for all such Losses (including the Losses up to the
Loss Threshold).
(d) The maximum aggregate amount of Losses that the Indemnified Parties will be entitled to recover pursuant to this
Article 6 shall be limited to one hundred percent (100%) of the issued aggregate Principal Amount of all Purchasers. Notwithstanding the foregoing or
anything else to the contrary contained herein, the limitations on indemnification set forth in this Agreement (including, without limitation, the limitations
set forth in this Section 6.1) shall not apply to any claim based on fraud, willful misrepresentation or willful misconduct of the Indemnifying Party or its
Subsidiaries or Affiliates.
once in respect of the same Losses suffered.
(e) An Indemnified Party shall not be entitled to recover from the Indemnifying Party under this Agreement more than
(f) Notwithstanding any other provision contained herein, the remedies contained in this Article 6 shall be the sole and
exclusive monetary remedy of the Indemnified Parties for any claim arising out of or resulting from this Agreement, except that no limitation or exceptions
with respect to the obligations or liabilities on any party hereto provided hereunder shall apply to a Loss incurred by any Indemnified Party arising due to
fraud of the Indemnifying Party or its Subsidiaries or Affiliates. Nothing in this Article 6 or elsewhere in this Agreement shall affect any parties’ rights to
specific performance or other equitable or non-monetary remedies with respect to the covenants and agreements in this Agreement or that are to be
performed at or after the Closing; provided that for the avoidance of doubt, except in the case of fraud, nothing contained herein shall permit any party to
rescind this Agreement.
6.2 Third Party Claims.
(a) If any third party shall notify an Indemnified Party in writing with respect to any matter involving a claim by such third
party (a “Third Party Claim”) and such Indemnified Party believes such claim would give rise to a claim for indemnification against the Indemnifying Party
under this Article 6, then the Indemnified Party shall promptly (i) notify the Indemnifying Party thereof in writing and (ii) transmit to the Indemnifying
Party a written notice (“Claim Notice”) describing in reasonable detail the nature of the Third Party Claim, a copy of all papers served with respect to such
claim (if any), and the basis of the Indemnified Party’s request for indemnification under this Agreement. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party shall have been prejudiced by such
failure.
(b) Upon receipt of a Claim Notice with respect to a Third Party Claim, the Indemnifying Party shall have the right to
assume the defense of any Third Party Claim by, within thirty (30) days of receipt of the Claim Notice, notifying the Indemnified Party in writing that the
Indemnifying Party elects to assume the defense of such Third Party Claim, and upon delivery of such notice by the Indemnifying Party, the Indemnifying
Party shall have the right to control and settle the proceeding, provided that, (i) any such settlement or compromise shall be permitted hereunder only with
the written consent of the Indemnified Party which consent shall not be unreasonably withheld or delayed, and (ii) and the Indemnifying Party shall keep
the Indemnified Party reasonably informed of the progress of such defense on a regular basis.
14
(c) If requested by the Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim which the Indemnifying Party elects to contest, including
the making of any related counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person. The Indemnified
Party shall have the right to receive copies of all pleadings, notices and communications with respect to any Third Party Claim for which indemnity is
sought under this Agreement, other than any privileged communications between the Indemnifying Party and its counsel, and shall be entitled, at its sole
cost and expense, to retain separate co-counsel and participate in, but not control, any defense or settlement (except for its consent required under
Section 6.2(b) above) of any Third Party Claim assumed by the Indemnifying Party pursuant to Section 6.2(b).
(d) In the event of a Third Party Claim for which the Indemnifying Party elects not to assume the defense or fails to make
such an election within thirty (30) days of the Claim Notice, the Indemnified Party may, at its option, defend, settle, compromise or pay such action or
claim at the expense of the Indemnifying Party; provided that, any such settlement or compromise shall be permitted hereunder only with the written
consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
6.3 Other Claims. In the event any Indemnified Party should have a claim against the Indemnifying Party hereunder which does not
involve a Third Party Claim, the Indemnified Party shall promptly transmit to the Indemnifying Party a written notice (the “Indemnity Notice”) describing
in reasonable detail the nature of the claim, the Indemnified Party’s good faith estimate of the amount of Losses attributable to such claim and the basis of
the Indemnified Party’s request for indemnification under this Agreement; provided, that no failure, delay or deficiency in providing such notice shall
constitute a waiver or otherwise modify the Indemnified Party’s right to indemnity hereunder, except to the extent that the Indemnifying Party shall have
been prejudiced by such failure, delay or deficiency. If the Indemnifying Party does not notify the Indemnified Party within thirty (30) days from its receipt
of the Indemnity Notice that the Indemnifying Party disputes such claim, the Indemnifying Party shall be deemed to have accepted and agreed with such
claim.
7. MISCELLANEOUS.
7.1 Survival of the Representations and Warranties. All representations and warranties made by any party hereto other than the
Fundamental Company Representations and the Fundamental Purchaser Representations shall survive for eighteen (18) months from and after the date
hereof, and shall terminate and be without further force or effect on the date that is eighteen (18) months from and after the date hereof, and the
Fundamental Company Representations and the Fundamental Purchaser Representations shall survive for five (5) years from and after the date hereof, and
shall terminate and be without further force or effect on the date that is five (5) years from and after the date hereof, except that any claim under any
representation or warranty made by any party hereto that have been asserted in writing pursuant to Section 6.1 against the party hereto making such
representation or warranty prior to the expiration of the applicable survival period set forth in this Section 7.1 shall survive until such claim is fully and
finally resolved.
7.2 Governing Law; Dispute Resolution. This Agreement shall be governed and interpreted in accordance with the laws of the State
of New York without giving effect to the conflicts of law principles thereof. Any dispute arising out of or relating to this Agreement or the Notes, including
any question regarding the existence, validity or termination hereof or
15
thereof (a “Dispute”) shall be referred to and finally resolved by arbitration at the Hong Kong International Arbitration Centre in accordance with the Hong
Kong International Arbitration Centre Administered Arbitration Rules then in force. In the case of any Dispute, there shall be three arbitrators. The
claimant(s) shall have the right to appoint one arbitrator, the respondent(s) shall have the right to appoint another arbitrator, and the third arbitrator shall be
appointed by the Hong Kong International Arbitration Centre. The language to be used in the arbitration proceedings shall be English. The seat of
arbitration shall be Hong Kong. Each of the parties hereto irrevocably waives any immunity to jurisdiction to which it may be entitled or become entitled
(including without limitation sovereign immunity, immunity to pre-award attachment, post-award attachment or otherwise) in any arbitration proceedings
and/or enforcement proceedings against it arising out of or based on this Agreement or the transactions contemplated hereby.
7.3 Amendment. This Agreement shall not be amended, changed or modified, except by another agreement in writing executed by
the parties hereto.
respective heirs, successors and permitted assigns.
7.4 Binding Effect. This Agreement shall inure to the benefit of, and be binding upon, the Purchaser Entities, the Company, and their
7.5 Assignment. Neither this Agreement nor any of the rights, duties or obligations hereunder may be assigned by the Company or
the Fund Manager without the express written consent of the other party hereto, except that the Fund Manager may assign all or any part of its rights and
obligations hereunder to any Affiliate of the Fund Manager without the consent of the other parties hereto, provided that no such assignment shall relieve
the Fund Manager of its obligations hereunder if such assignee does not perform such obligations. Any purported assignment in violation of the foregoing
sentence shall be null and void.
7.6 Notices. All notices, requests, demands, and other communications required or permitted to be given by one party hereto to the
other party hereto under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of actual delivery if delivered
personally, (ii) on the date sent if sent by facsimile, (iii) on the next Business Day following delivery to Federal Express for overnight courier service, or
(iv) on the day of attempted delivery by the postal service if mailed by registered or certified mail, return receipt requested, postage paid, in each case as
properly addressed or delivered as follows:
16
If to the Company, at:
If to the Fund Manager, at:
Uxin Limited
2-5F, Tower E, LSHM Center,
No. 8 Guangshun South Avenue
Chaoyang District, Beijing, 100102
People’s Republic of China
E-mail: daikun@xin.com
Attn: Mr. Kun Dai
PacificBridge Asset Management
Unit No. 1904 (Trade Tower, Samsung-dong),
511 Yeongdong-daero, Gangnam-gu, Seoul, 06164
Republic of Korea
E-mail: dannysong@pacificbridgeam.com
Attn: Mr. Danny Song
Any party hereto may change its address for purposes of this Section 7.6 by giving the other party hereto written notice of the new address in the
manner set forth above.
7.7 Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties hereto with respect to
the matters covered hereby, and all prior agreements and understandings, oral or in writing, if any, between the parties hereto with respect to the matters
covered hereby are merged and superseded by this Agreement.
7.8 Severability. If any provisions of this Agreement shall be adjudicated to be illegal, invalid or unenforceable in any action or
proceeding whether in its entirety or in any portion, then such provision shall be deemed amended, if possible, or deleted, as the case may be, from the
Agreement in order to render the remainder of the Agreement and any provision thereof both valid and enforceable, and all other provisions hereof shall be
given effect separately therefrom and shall not be affected thereby.
7.9 Fees and Expenses. Each of the Company and the Fund Manager shall pay its own expenses incurred in connection with the
negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, including fees and expenses of attorneys, accountants,
consultants and financial advisors.
7.10 Confidentiality. (a) Each party hereto shall keep in confidence, and shall not use (except for the purposes of the transactions
contemplated hereby) or disclose, any non-public information disclosed to it or its Affiliates, representatives or agents in connection with this Agreement or
the transactions contemplated hereby, other than to its members, managers, directors, officers, employees, partners, co-investors, auditors, counsels,
consultants and other advisors and representatives who have a need to know such information, and (b) each party hereto shall ensure that its Affiliates,
representatives and agents keep in confidence, and do not use (except for the purposes of the transactions contemplated hereby) or disclose, any such non-
public information, provided, however, that nothing in this Agreement shall restrict any party from disclosing information (i) that is already publicly
available not as a result of a breach of this section, or (ii) that may be required by applicable law, statute, treaty, rule, regulation, order, right, privilege,
qualification, license or franchise or determination of an arbitrator or a Governmental Entity.
7.11 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this
Agreement were not performed in accordance
17
with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or
equity.
7.12 Termination. In the event that the Closing shall not have occurred by December 31, 2019, the Company or the Fund Manager
may terminate this Agreement, except for the provisions of Article 7, which shall survive any termination under this Section 7.12, provided that (a) any
party hereto who is then in a material breach of this Agreement shall not be entitled to terminate this Agreement pursuant to this Section 7.12.
and do not expressly or by implication limit, define or extend the specific terms of the article or section so designated.
7.13 Headings. The headings of the various articles and sections of this Agreement are inserted merely for the purpose of convenience
more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute but one and the same instrument.
7.14 Counterparts. For the convenience of the parties hereto and to facilitate execution, this Agreement may be executed in one or
7.15 No Waiver. Except as specifically set forth herein, the rights and remedies of the parties to this Agreement are cumulative and
not alternative. No failure or delay on the part of any party hereto in exercising any right, power or remedy under this Agreement will operate as a waiver
of such right, power or remedy, and no single or partial exercise of any such right, power or remedy will preclude any other or further exercise of such
right, power or remedy or the exercise of any other right, power or remedy. To the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement can be discharged by one party hereto, in whole or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party hereto; (b) no waiver that may be given by a party hereto will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party hereto will be deemed to be a waiver of any obligation of that party or of the right of the party hereto giving
such notice or demand to take further action without notice or demand as provided in this Agreement.
[Remainder of Page Intentionally Left Blank]
18
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Note Purchase Agreement as of the date first above written.
Uxin Limited
By:
/s/ Kun Dai
Name
Title:
Kun Dai
Director and CEO
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Note Purchase Agreement as of the date first above written.
PacificBridge Asset Management,
acting in its capacity as the fund manager of each of the Purchasers
By:
/s/ DK Lee
Name: DK Lee
Title:
CEO
SCHEDULE 1
PURCHASERS AND ALLOCATIONS
[*]
SCHEDULE 2
ADVERSE PERSONS
[*]
EXHIBIT A
FORM OF 10.0% NOTE
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER SECURITIES LAWS. THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
CONVERTIBLE PROMISSORY NOTE
[·], 2019 (“Date of Issuance”)
US$[·]
FOR VALUE RECEIVED, and subject to the terms and conditions of this convertible promissory note (this “Note”), Uxin Limited, an
exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), hereby promises to pay to the order of [•], a
[company incorporated under the laws of [•]](the “Purchaser”), or its assigns, in lawful money of the United States of America the principal amount of [•]
Dollars (US$[•]) (the “Principal Amount”), plus accrued interest thereon, on [·], 2020 (the “Maturity Date”), unless earlier duly converted in full into the
Conversion Shares pursuant to and in accordance with the terms of this Note.
This Note is issued pursuant to the Convertible Note Purchase Agreement, dated July 12, 2019, by and between the Company, the
Purchaser and certain other parties thereto (the “Convertible Note Purchase Agreement”), and is subject to the terms and conditions thereof. In case of any
conflict between this Note and the Convertible Note Purchase Agreement, the provisions of the Convertible Note Purchase Agreement shall control and
govern. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Convertible Note Purchase Agreement.
the acceptance of this Note, agrees:
The following is a statement of the rights of the Purchaser and the conditions to which this Note is subject, and to which the Purchaser, by
1. Interest Rate. This Note shall bear interest on the outstanding Principal Amount at a simple interest rate of ten percent (10.0%) per annum from
the Date of Issuance until this Note is fully repaid or redeemed; provided, that if any portion of this Note is duly converted into the Conversion
Shares pursuant to and in accordance with Section 4 hereof, interest shall cease to accrue on the portion of the Principal Amount being converted
(and, for the avoidance of doubt, continue to accrue on any outstanding Principal Amount not being converted). Accrued interest on this Note shall
be computed on the basis of a 365-day year and actual days elapsed.
2. Repayment of this Note.
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(a) Unless to the extent earlier converted into Conversion Shares pursuant to Section 4 hereof, the outstanding Principal Amount (other than
any portion of the Principal Amount converted pursuant to Section 4 hereof) and the interest accrued thereon shall be due and payable by the
Company upon the earlier of (i) the Maturity Date, and (ii) the occurrence of an Event of Default set forth in Section 5 hereof (the “Due Date”).
Upon the due conversion in full of this Note pursuant to and in accordance with Section 4 hereof, any and all payment obligations of the Company
under this Note and the Convertible Note Purchase Agreement shall be fully discharged.
(b) All amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall be paid to the Purchaser in lawful money of
the United States of America within three (3) Business Days after the Due Date. The Company shall make such payments of the unpaid Principal
Amount (other than any portion of the Principal Amount converted pursuant to Section 4 hereof), together with accrued and unpaid interest
thereon, to the Purchaser by wire transfer of immediately available funds for the account of the Purchaser as the Purchaser may designate and
notify in writing to the Company at least five (5) Business Days prior to the payment date. Payment shall be credited first to accrued interest due
and payable, and any remainder shall be applied to the outstanding Principal Amount.
(c) All payments of principal and interest in respect of this Note by or on behalf of the Company shall be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or on behalf of the Cayman Islands or the PRC or any political subdivision thereof or any
authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is
required by law.
3. Seniority. This Note ranks senior in right of payment to any of the Company’s other indebtedness that is expressly subordinated in right of
payment to this Note, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so subordinated, junior
in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and
structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
4. Conversion.
(a) Conversion.
(i) During the period from and including the 181st day after the Date of Issuance to and including the Maturity Date, the Purchaser shall, by
written notice to the Company, have the right but not the obligation to convert all or any portion of the outstanding Principal Amount to a number
of Conversion Shares at the applicable Conversion Price, provided, however, that the Purchaser shall not exercise such right to convert more than
twice. As used in this Note, “Conversion Price” means US$1.663, as may be adjusted pursuant to Section 4(d) hereof.
(ii) The number of the Conversion Shares to be issued upon any conversion pursuant to this Section 4(a) shall be equal to the quotient obtained by
dividing the Principal Amount subject to such conversion by the Conversion Price.
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(b) No Fractional Shares. Upon the conversion of this Note into the Conversion Shares, in lieu of any fractional shares to which the
Purchaser would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion
Price.
(c) Mechanics of Conversion. In the event that the Purchaser has delivered to the Company a written notice in accordance with Section 4(a)
(i) hereof specifying that the Purchaser irrevocably elects to convert this Note (whether in part or in full), the Company shall at its expense take all
actions and execute all documents necessary to effect the issuance of all the Conversion Shares (including giving all necessary instructions to
update the register of members to effect such issuance) within two (2) weeks of delivery of the applicable written notice to convert, and deliver to
the Purchaser, upon surrender of this Note, a certificate or certificates for the number of fully paid Conversion Shares issuable upon such
conversion and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares. The
Company shall not be required to issue or deliver the Conversion Shares until the Purchaser has surrendered this Note to the Company.
(d) Adjustments to Conversion Price. The Conversion Price shall be adjusted according to the following items: When any of the Principal
Amount is outstanding at any time, (a) if the Company: (i) pays dividends in the form of securities or security equivalents of the Company;
(ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the
Company (including in the form of a reverse share split) to decrease the number of shares, the then-existing Conversion Price shall be multiplied
by a fraction, whose numerator is the number of outstanding securities of the Company immediately before the occurrence of the matter, and
whose denominator is the number of outstanding securities of the Company immediately after the occurrence of the matter; (b) if the Company
issues Ordinary Shares to all or substantially all shareholders as a class by way of rights issue, or issue or grant to all or substantially all
shareholders as a class, by way of rights issue, of options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at
less than 95 per cent of the closing price of the ADSs divided by the ratio of ADS to share (the “Market Price Per Share”) on the last trading day
preceding the date of the announcement of the terms of the issue or grant, the Conversion Price shall be multiplied by a fraction, whose numerator
is the number of Ordinary Shares in issue immediately before such announcement plus the number of Ordinary Shares which the aggregate
amount (if any) payable for the Ordinary Shares issued by way of rights issue or for the options or warrants or other rights issued or granted by
way of rights issue and for the total number of Ordinary Shares comprised therein would subscribe, purchase or otherwise acquire at Market Price
Per Share, and the denominator is the number of Ordinary Shares in issue immediately before such announcement plus the aggregate number of
Ordinary Shares issued or, as the case may be, comprised in the issue or grant, or (c) if the Company makes (or fixes a record date for the
determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in any
other asset or property (including cash, but excluding dividends by securities or security equivalents of the Company), then, and in each such
event, provision shall be made so that, upon conversion of the Note thereafter, the Purchaser shall receive, in addition to the number of Ordinary
Shares issuable thereon, such other asset or property which the holder of such Ordinary Shares would have received in connection with such event
had the
A-3
outstanding Principal Amount been converted into Ordinary Shares immediately prior to each such event, all subject to further adjustment as
provided herein. Any adjustment made according to the aforesaid conditions shall come into effect immediately after the record date of deciding
the shareholders having rights to obtain dividends or allocations and, for the purpose of any share split, incorporation or reclassification, shall
come into effect immediately after such matters come into effect.
5. Events of Default. Each of the following events shall be considered an event of default (the “Event of Default”) with respect to this Note:
(a) Failure to Pay. The Company shall fail to pay when due (i) any principal payment or (ii) any interest payment or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten (10) Business Days after the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company or any of its Significant Subsidiaries shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to
pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated,
(v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting
any of the foregoing. As used in this Note, “Significant Subsidiary” means any Subsidiary of the Company, the total assets (after intercompany
eliminations) of which exceeds twenty percent (20%) of the consolidated total assets of the Company and its subsidiaries as of the end of the
Company’s most recently completed fiscal year.
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the
Company or any of its Significant Subsidiaries, or of all or a substantial part of their property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or its Significant Subsidiaries, or the debts thereof, under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and either (i) an order for relief shall be entered or (ii) such
proceeding shall not be dismissed or discharged within 45 days of commencement.
(d) Cessation to be a Public Company. The Company’s securities shall cease to be publicly traded on the Nasdaq Global Select Market.
(e) Change of Control. Any Change of Control shall occur. For the purpose of this provision 5(e), a “Change of Control” occurs if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than (i) Mr. Kun Dai, or any of his Affiliates,
(ii) any of Warburg Pincus, TPG Capital, 58.com Holdings Inc. or any of its respective Affiliates, or (iii) any “group” solely consisting of the
Persons set forth in clauses (i) and (ii) above, is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the Exchange Act),
directly or indirectly, of 50% or more voting power of the Company’s issued and outstanding securities.
A-4
(f) Breach of Other Obligations. The Company fails to perform or comply with one or more of its other obligations in this Note or the
Convertible Note Purchase Agreement in any material respect, or breach any representation or warranty of the Company contained in the
Convertible Note Purchase Agreement in any material respect, and in each case such failure is not capable of being cured or is not cured within
thirty (30) days.
(g) Material Adverse Effect. Any one or more events, facts, conditions, changes or developments shall have occurred that have caused or
constituted or could be reasonably expected to cause or constitute, either individually or in the aggregate, a Material Adverse Effect.
(h) Cross-Default. Any Significant Indebtedness (as defined below) of the Company or its Subsidiaries is not paid when due or (as the case
may be) within any originally applicable grace period, or any such Significant Indebtedness becomes (or becomes capable of being declared) due
and payable prior to its stated maturity otherwise than at the option of the Company or its Subsidiaries, or the Company or its Subsidiaries fails to
pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this Section 5(i),
“Significant Indebtedness” means, with respect to each event mentioned above, one or more indebtedness with an aggregate amount of no less
than US$10,000,000 or its equivalent in any other currency or currencies.
(i) Unsatisfied Judgment. One or more judgment(s) or order(s) for the payment of an aggregate amount of no less than US$10,000,000 is
rendered against the Company or its Subsidiaries and continue(s) unappealed, unsatisfied and unstayed for a period of sixty (60) days after the
date(s) thereof or, if later, the date therein specified for payment.
(j) Security Enforced. A secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a
material part of the undertaking, assets and revenues of the Company and its Subsidiaries taken as a whole.
(k) Enforcement Proceedings. A distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued
out on or against any material part of the property, assets or revenue of the Company or its Significant Subsidiaries.
(l) Winding up, etc. An order is made by any Governmental Entity having jurisdiction or an effective resolution is passed for the winding
up, liquidation or dissolution of the Company or any of its Significant Subsidiaries (other than, in the case of a Significant Subsidiary of the
Company, for the purposes of or pursuant to an amalgamation, reorganization or restructuring whilst solvent).
6. Remedies. Upon the occurrence of an Event of Default under Section 5 hereof, at the option and upon the written declaration of the Purchaser at
the Purchaser’s sole discretion, the entire unpaid Principal Amount and unpaid interest accrued thereon shall become forthwith due and payable,
and the Purchaser may immediately enforce payment of all amounts due and owing under this Note and exercise any and all other remedies
granted to it at law, in equity or otherwise. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default under
Section 5(e) hereof, the Company shall, if so requested by the Purchaser, cooperate in good faith with the Purchaser with respect to the Purchaser’s
efforts to receive equity securities of the
A-5
surviving entity (if any) in lieu of the acceleration of the Principal Amount and unpaid interest accrued thereon.
7. Prepayment. The Principal Amount or interest accrued thereon may not be prepaid prior to the Maturity Date without the written consent of the
Purchaser.
8. No Rights as Shareholder Prior to Conversion. For the avoidance of doubt, the Purchaser has not been conferred with any of the rights of a
shareholder of the Company, including the right to vote as such, by any of the provisions hereof or any provisions under the Convertible Note
Purchase Agreement, or any right (a) to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
(b) to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of
par value, or change of shares to no par value, consolidation, merger, scheme of arrangement, conveyance, or otherwise), (c) to receive notice of
meetings or to receive in-kind dividends or subscription rights or otherwise, in each case until this Note shall have been converted in whole or in
part and all the Conversion Shares issuable upon such whole or partial conversion hereof shall have been issued, as provided for in this Note and
the Convertible Note Purchase Agreement. For the avoidance of doubt, the Purchaser shall be conferred with all rights of a shareholder of the
Company immediately upon any partial or full conversion of the Note with respect to such Conversion Shares.
9. Termination of Rights.All rights under this Note shall automatically terminate when (a) all amounts owing on this Note have been paid in full or
(b) this Note is converted in full pursuant to Section 4 hereof. Upon the termination of all rights under this Note, this Note shall be surrendered by
the Purchaser to the Company and this Note so surrendered shall be cancelled and shall not be reissued. For the avoidance of doubt, the
Convertible Note Purchase Agreement shall not be terminated merely due to a termination of all rights under this Note, and shall remain in force
and effect or terminate pursuant to the terms thereof.
10. Amendments and Waivers; Notice. The amendment or waiver of any term of this Note shall be subject to the written consent of the Company and
the Purchaser. The provision of notice shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.
11. Successors and Assigns. This Note applies to, inures to the benefit of, and binds, the successors and assigns of the parties hereto; provided,
however, that no party hereto may assign its obligations under this Note without the written consent of the other party hereto. Notwithstanding
anything to the contrary, the Purchaser may, subject to applicable laws, transfer this Note to any of its Affiliates. Any transfer of this Note may
take effect by surrender of this Note to the Company and reissuance of a new note to the transferee.
12. Governing Law; Dispute Resolution. This Note shall be governed by and construed under the laws of the State of New York without regards to
principles of conflict of laws. The resolution of any controversy or claim arising out of or relating to this Note shall be conducted pursuant to the
terms of the Convertible Note Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
A-6
IN WITNESS WHEREOF, the Company has executed this Note as of the date first above written.
Uxin Limited
By:
A-7
Name:
Title:
EXHIBIT B
FORM OF 11.0% NOTE
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER SECURITIES LAWS. THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
CONVERTIBLE PROMISSORY NOTE
[·], 2019 (“Date of Issuance”)
US$[·]
FOR VALUE RECEIVED, and subject to the terms and conditions of this convertible promissory note (this “Note”), Uxin Limited, an
exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), hereby promises to pay to the order of [•], a
[company incorporated under the laws of [•]](the “Purchaser”), or its assigns, in lawful money of the United States of America the principal amount of [•]
Dollars (US$[•]) (the “Principal Amount”), plus accrued interest thereon, on [·], 2020 (the “Maturity Date”), unless earlier duly converted in full into the
Conversion Shares pursuant to and in accordance with the terms of this Note.
This Note is issued pursuant to the Convertible Note Purchase Agreement, dated July 12, 2019, by and between the Company, the
Purchaser and certain other parties thereto (the “Convertible Note Purchase Agreement”), and is subject to the terms and conditions thereof. In case of any
conflict between this Note and the Convertible Note Purchase Agreement, the provisions of the Convertible Note Purchase Agreement shall control and
govern. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Convertible Note Purchase Agreement.
The following is a statement of the rights of the Purchaser and the conditions to which this Note is subject, and to which the Purchaser, by
the acceptance of this Note, agrees:
1. Interest Rate. This Note shall bear interest on the outstanding Principal Amount at a simple interest rate of eleven percent (11.0%) per annum
from the Date of Issuance until this Note is fully repaid or redeemed; provided, that if any portion of this Note is duly converted into the
Conversion Shares pursuant to and in accordance with Section 4 hereof, interest shall cease to accrue on the portion of the Principal Amount being
converted (and, for the avoidance of doubt, continue to accrue on any outstanding Principal Amount not being converted). Accrued interest on this
Note shall be computed on the basis of a 365-day year and actual days elapsed.
2. Repayment of this Note.
B-1
(a) Unless to the extent earlier converted into Conversion Shares pursuant to Section 4 hereof, the outstanding Principal Amount (other than
any portion of the Principal Amount converted pursuant to Section 4 hereof) and the interest accrued thereon shall be due and payable by the
Company upon the earlier of (i) the Maturity Date, and (ii) the occurrence of an Event of Default set forth in Section 5 hereof (the “Due Date”).
Upon the due conversion in full of this Note pursuant to and in accordance with Section 4 hereof, any and all payment obligations of the Company
under this Note and the Convertible Note Purchase Agreement shall be fully discharged.
(b) All amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall be paid to the Purchaser in lawful money of
the United States of America within three (3) Business Days after the Due Date. The Company shall make such payments of the unpaid Principal
Amount (other than any portion of the Principal Amount converted pursuant to Section 4 hereof), together with accrued and unpaid interest
thereon, to the Purchaser by wire transfer of immediately available funds for the account of the Purchaser as the Purchaser may designate and
notify in writing to the Company at least five (5) Business Days prior to the payment date. Payment shall be credited first to accrued interest due
and payable, and any remainder shall be applied to the outstanding Principal Amount.
(c) All payments of principal and interest in respect of this Note by or on behalf of the Company shall be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or on behalf of the Cayman Islands or the PRC or any political subdivision thereof or any
authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is
required by law.
3. Seniority. This Note ranks senior in right of payment to any of the Company’s other indebtedness that is expressly subordinated in right of
payment to this Note, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so subordinated, junior
in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and
structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
4. Conversion.
(a) Conversion.
(i) During the period from and including the 181st day after the Date of Issuance to and including the Maturity Date, the Purchaser shall, by
written notice to the Company, have the right but not the obligation to convert all or any portion of the outstanding Principal Amount to a number
of Conversion Shares at the applicable Conversion Price, provided, however, that the Purchaser shall not exercise such right to convert more than
twice. As used in this Note, “Conversion Price” means US$1.663, as may be adjusted pursuant to Section 4(d) hereof.
(ii) The number of the Conversion Shares to be issued upon any conversion pursuant to this Section 4(a) shall be equal to the quotient obtained by
dividing the Principal Amount subject to such conversion by the Conversion Price.
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(b) No Fractional Shares. Upon the conversion of this Note into the Conversion Shares, in lieu of any fractional shares to which the
Purchaser would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion
Price.
(c) Mechanics of Conversion. In the event that the Purchaser has delivered to the Company a written notice in accordance with Section 4(a)
(i) hereof specifying that the Purchaser irrevocably elects to convert this Note (whether in part or in full), the Company shall at its expense take all
actions and execute all documents necessary to effect the issuance of all the Conversion Shares (including giving all necessary instructions to
update the register of members to effect such issuance) within two (2) weeks of delivery of the applicable written notice to convert, and deliver to
the Purchaser, upon surrender of this Note, a certificate or certificates for the number of fully paid Conversion Shares issuable upon such
conversion and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares. The
Company shall not be required to issue or deliver the Conversion Shares until the Purchaser has surrendered this Note to the Company.
(d) Adjustments to Conversion Price. The Conversion Price shall be adjusted according to the following items: When any of the Principal
Amount is outstanding at any time, (a) if the Company: (i) pays dividends in the form of securities or security equivalents of the Company;
(ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the
Company (including in the form of a reverse share split) to decrease the number of shares, the then-existing Conversion Price shall be multiplied
by a fraction, whose numerator is the number of outstanding securities of the Company immediately before the occurrence of the matter, and
whose denominator is the number of outstanding securities of the Company immediately after the occurrence of the matter; (b) if the Company
issues Ordinary Shares to all or substantially all shareholders as a class by way of rights issue, or issue or grant to all or substantially all
shareholders as a class, by way of rights issue, of options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at
less than 95 per cent of the closing price of the ADSs divided by the ratio of ADS to share (the “Market Price Per Share”) on the last trading day
preceding the date of the announcement of the terms of the issue or grant, the Conversion Price shall be multiplied by a fraction, whose numerator
is the number of Ordinary Shares in issue immediately before such announcement plus the number of Ordinary Shares which the aggregate
amount (if any) payable for the Ordinary Shares issued by way of rights issue or for the options or warrants or other rights issued or granted by
way of rights issue and for the total number of Ordinary Shares comprised therein would subscribe, purchase or otherwise acquire at Market Price
Per Share, and the denominator is the number of Ordinary Shares in issue immediately before such announcement plus the aggregate number of
Ordinary Shares issued or, as the case may be, comprised in the issue or grant, or (c) if the Company makes (or fixes a record date for the
determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in any
other asset or property (including cash, but excluding dividends by securities or security equivalents of the Company), then, and in each such
event, provision shall be made so that, upon conversion of the Note thereafter, the Purchaser shall receive, in addition to the number of Ordinary
Shares issuable thereon, such other asset or property which the holder of such Ordinary Shares would have received in connection with such event
had the
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outstanding Principal Amount been converted into Ordinary Shares immediately prior to each such event, all subject to further adjustment as
provided herein. Any adjustment made according to the aforesaid conditions shall come into effect immediately after the record date of deciding
the shareholders having rights to obtain dividends or allocations and, for the purpose of any share split, incorporation or reclassification, shall
come into effect immediately after such matters come into effect.
5. Events of Default. Each of the following events shall be considered an event of default (the “Event of Default”) with respect to this Note:
(a) Failure to Pay. The Company shall fail to pay when due (i) any principal payment or (ii) any interest payment or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten (10) Business Days after the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company or any of its Significant Subsidiaries shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to
pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated,
(v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose of effecting
any of the foregoing. As used in this Note, “Significant Subsidiary” means any Subsidiary of the Company, the total assets (after intercompany
eliminations) of which exceeds twenty percent (20%) of the consolidated total assets of the Company and its subsidiaries as of the end of the
Company’s most recently completed fiscal year.
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the
Company or any of its Significant Subsidiaries, or of all or a substantial part of their property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or its Significant Subsidiaries, or the debts thereof, under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and either (i) an order for relief shall be entered or (ii) such
proceeding shall not be dismissed or discharged within 45 days of commencement.
(d) Cessation to be a Public Company. The Company’s securities shall cease to be publicly traded on the Nasdaq Global Select Market.
(e) Change of Control. Any Change of Control shall occur. For the purpose of this provision 5(e), a “Change of Control” occurs if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than (i) Mr. Kun Dai, or any of his Affiliates,
(ii) any of Warburg Pincus, TPG Capital, 58.com Holdings Inc. or any of its respective Affiliates, or (iii) any “group” solely consisting of the
Persons set forth in clauses (i) and (ii) above, is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the Exchange Act),
directly or indirectly, of 50% or more voting power of the Company’s issued and outstanding securities.
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(f) Breach of Other Obligations. The Company fails to perform or comply with one or more of its other obligations in this Note or the
Convertible Note Purchase Agreement in any material respect, or breach any representation or warranty of the Company contained in the
Convertible Note Purchase Agreement in any material respect, and in each case such failure is not capable of being cured or is not cured within
thirty (30) days.
(g) Material Adverse Effect. Any one or more events, facts, conditions, changes or developments shall have occurred that have caused or
constituted or could be reasonably expected to cause or constitute, either individually or in the aggregate, a Material Adverse Effect.
(h) Cross-Default. Any Significant Indebtedness (as defined below) of the Company or its Subsidiaries is not paid when due or (as the case
may be) within any originally applicable grace period, or any such Significant Indebtedness becomes (or becomes capable of being declared) due
and payable prior to its stated maturity otherwise than at the option of the Company or its Subsidiaries, or the Company or its Subsidiaries fails to
pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this Section 5(i),
“Significant Indebtedness” means, with respect to each event mentioned above, one or more indebtedness with an aggregate amount of no less
than US$10,000,000 or its equivalent in any other currency or currencies.
(i) Unsatisfied Judgment. One or more judgment(s) or order(s) for the payment of an aggregate amount of no less than US$10,000,000 is
rendered against the Company or its Subsidiaries and continue(s) unappealed, unsatisfied and unstayed for a period of sixty (60) days after the
date(s) thereof or, if later, the date therein specified for payment.
(j) Security Enforced. A secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a
material part of the undertaking, assets and revenues of the Company and its Subsidiaries taken as a whole.
(k) Enforcement Proceedings. A distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued
out on or against any material part of the property, assets or revenue of the Company or its Significant Subsidiaries.
(l) Winding up, etc. An order is made by any Governmental Entity having jurisdiction or an effective resolution is passed for the winding
up, liquidation or dissolution of the Company or any of its Significant Subsidiaries (other than, in the case of a Significant Subsidiary of the
Company, for the purposes of or pursuant to an amalgamation, reorganization or restructuring whilst solvent).
6. Remedies. Upon the occurrence of an Event of Default under Section 5 hereof, at the option and upon the written declaration of the Purchaser at
the Purchaser’s sole discretion, the entire unpaid Principal Amount and unpaid interest accrued thereon shall become forthwith due and payable,
and the Purchaser may immediately enforce payment of all amounts due and owing under this Note and exercise any and all other remedies
granted to it at law, in equity or otherwise. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default under
Section 5(e) hereof, the Company shall, if so requested by the Purchaser, cooperate in good faith with the Purchaser with respect to the Purchaser’s
efforts to receive equity securities of the
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surviving entity (if any) in lieu of the acceleration of the Principal Amount and unpaid interest accrued thereon.
7. Prepayment. The Principal Amount or interest accrued thereon may not be prepaid prior to the Maturity Date without the written consent of the
Purchaser.
8. No Rights as Shareholder Prior to Conversion. For the avoidance of doubt, the Purchaser has not been conferred with any of the rights of a
shareholder of the Company, including the right to vote as such, by any of the provisions hereof or any provisions under the Convertible Note
Purchase Agreement, or any right (a) to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
(b) to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of
par value, or change of shares to no par value, consolidation, merger, scheme of arrangement, conveyance, or otherwise), (c) to receive notice of
meetings or to receive in-kind dividends or subscription rights or otherwise, in each case until this Note shall have been converted in whole or in
part and all the Conversion Shares issuable upon such whole or partial conversion hereof shall have been issued, as provided for in this Note and
the Convertible Note Purchase Agreement. For the avoidance of doubt, the Purchaser shall be conferred with all rights of a shareholder of the
Company immediately upon any partial or full conversion of the Note with respect to such Conversion Shares.
9. Termination of Rights.All rights under this Note shall automatically terminate when (a) all amounts owing on this Note have been paid in full or
(b) this Note is converted in full pursuant to Section 4 hereof. Upon the termination of all rights under this Note, this Note shall be surrendered by
the Purchaser to the Company and this Note so surrendered shall be cancelled and shall not be reissued. For the avoidance of doubt, the
Convertible Note Purchase Agreement shall not be terminated merely due to a termination of all rights under this Note, and shall remain in force
and effect or terminate pursuant to the terms thereof.
10. Amendments and Waivers; Notice. The amendment or waiver of any term of this Note shall be subject to the written consent of the Company and
the Purchaser. The provision of notice shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.
11. Successors and Assigns. This Note applies to, inures to the benefit of, and binds, the successors and assigns of the parties hereto; provided,
however, that no party hereto may assign its obligations under this Note without the written consent of the other party hereto. Notwithstanding
anything to the contrary, the Purchaser may, subject to applicable laws, transfer this Note to any of its Affiliates. Any transfer of this Note may
take effect by surrender of this Note to the Company and reissuance of a new note to the transferee.
12. Governing Law; Dispute Resolution. This Note shall be governed by and construed under the laws of the State of New York without regards to
principles of conflict of laws. The resolution of any controversy or claim arising out of or relating to this Note shall be conducted pursuant to the
terms of the Convertible Note Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has executed this Note as of the date first above written.
Uxin Limited
By:
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Name:
Title:
Exhibit 4.31
AMENDMENT TO THE CONVERTIBLE NOTE PURCHASE AGREEMENT
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
THIS AMENDMENT TO THE CONVERTIBLE NOTE PURCHASE AGREEMENT (this “Amendment”), dated August 13th, 2019, is made by and
between each of the undersigned parties.
Reference is made to that certain Convertible Note Purchase Agreement, dated July 12, 2019, by and between Uxin Limited (the “Company”) and
PacificBridge Asset Management, acting in its capacity as the fund manager of PacificBridge Inner Circle Mezzanine 1, PacificBridge Inner Circle
Mezzanine 2, PacificBridge TMT Mezzanine 1 and PacificBridge TMT Mezzanine 2 (“PacificBridge”) (the “Convertible Note Purchase Agreement”).
Capitalized terms used and not defined in this Amendment shall have the meanings given to them in the Convertible Note Purchase Agreement, unless the
context requires otherwise.
WHEREAS, each of the undersigned, being a party to the Convertible Note Purchase Agreement, desires to effect certain amendments to the Convertible
Note Purchase Agreement; and
WHEREAS, pursuant to Section 7.3 of the Convertible Note Purchase Agreement, the Convertible Note Purchase Agreement may be amended by another
agreement in writing executed by the Company and PacificBridge.
NOW, THEREFORE, each of the undersigned agrees to amend the Convertible Note Purchase Agreement as set forth below.
Section 1. Definition of “Conversion Price” in the 10.0% Note. The last sentence of Section 4(a)(i) of Exhibit A (Form of 10.0% Note) to the
Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the following sentence:
“As used in this Note, “Conversion Price” means US$1.683, as may be adjusted pursuant to Section 4(d) hereof”
Section 2. Definition of “Conversion Price” in the 11.0% Note. The last sentence of Section 4(a)(i) of Exhibit B (Form of 11.0% Note) to the
Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the following sentence:
“As used in this Note, “Conversion Price” means US$1.683, as may be adjusted pursuant to Section 4(d) hereof.”
Section 3. SCHEDULE 1. Schedule 1 to the Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the following:
SCHEDULE 1
PURCHASERS AND ALLOCATIONS
[*]
For the avoidance of doubt, the detailed allocations between the Purchasers may be adjusted by the Fund Manager at its sole discretion upon a 10-day
advance written notice to the Company, as long as the total principal amounts remain US$14,510,000.
Section 4. Effectiveness. This Amendment shall become effective immediately on the date hereof.
Section 5. Effect. Except as expressly amended by this Amendment, the Convertible Note Purchase Agreement shall remain in full force and
effect as the same was in effect immediately prior to the effectiveness of this Amendment. All references in the Convertible Note Purchase Agreement to
“this Agreement” shall be deemed to refer to the Convertible Note Purchase Agreement as amended by this Amendment.
Section 6. Further Assurance. Each of the undersigned hereby agrees to execute and deliver all such other and additional instruments and
documents and do all such other acts and things as may be necessary or appropriate to effect this Amendment.
Section 7. Miscellaneous. Section 7.2 (Governing Law; Dispute Resolution), Sections 7.6 (Notices), 7.8 (Severability), 7.10 (Confidentiality),
7.13 (Headings) and 7.14 (Counterparts) are hereby incorporated into this Amendment, mutatis mutandis.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above.
Uxin Limited
/s/ Kun Dai
By:
Name: Kun Dai
Title: Director and CEO
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above.
PacificBridge Asset Management, acting in its capacity as the fund
manager of each of the Purchasers
/s/ DK LEE
By:
Name: DK LEE
Title: CEO
Exhibit 4.32
Execution Version
CONVERTIBLE NOTE PURCHASE AGREEMENT
by and between
UXIN LIMITED
and
PACIFICBRIDGE ASSET MANAGEMENT
Dated July 12, 2019
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
1.
2.
3.
4.
5.
TABLE OF CONTENTS
DEFINITIONS
ISSUANCE OF THE NOTES
Issuance of the Notes
2.1
Closing
2.2
Payment and Delivery
2.3
Conditions to the Fund Manager’s Obligations to Effect the Closing
2.4
Conditions to the Company’s Obligations to Effect the Closing
2.5
Accuracy of Disclosure
Existence and Qualification
Capitalization; Issuance of Subscription Shares
Valid Issuance of the Notes and the Conversion Shares
Capacity, Authorization and Enforceability
Non-Contravention
Consents and Approvals
Financial Statements
Operating and non-GAAP financial Data
Related Party Transactions
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11 Absence of Certain Changes
Litigation
3.12
Compliance with Laws
3.13
3.14
Securities Laws
3.15 No Registration
3.16
3.17
3.18
3.19 Money Laundering Laws
3.20 OFAC
3.21
3.22
3.23
Ranking of the Notes
Listing and Maintenance Requirements
Investment Company
Foreign Corrupt Practices
PFIC
Tax Matters
REPRESENTATIONS AND WARRANTIES OF THE FUND MANAGER
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
Existence
Capacity
Authorization and Enforceability
Non-Contravention
Consents and Approvals
Investment Intent
Regulation S Eligibility; Restriction on Resale
Investment Experience
COVENANTS
5.1
5.2
5.3
5.4
Further Assurances
Reservation of Shares
Lock-Up
No Transfer to Adverse Persons
i
1
5
5
5
5
5
6
6
6
7
7
7
8
8
8
8
8
9
9
9
9
9
9
9
9
9
9
10
10
10
10
11
11
11
11
11
11
11
11
12
12
12
12
12
12
6.
7.
5.5
5.6
Use of Proceeds
Conversion to ADSs
INDEMNIFICATION
6.1
6.2
6.3
Indemnification
Third Party Claims
Other Claims
Survival of the Representations and Warranties
Governing Law; Dispute Resolution
Amendment
Binding Effect
Assignment
Notices
Entire Agreement
Severability
Fees and Expenses
Confidentiality
Specific Performance
Termination
MISCELLANEOUS
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13 Headings
7.14
7.15 No Waiver
Counterparts
Schedules and Exhibits
SCHEDULE 1 — PURCHASERS AND ALLOCATIONS
SCHEDULE 2 — ADVERSE PERSONS
EXHIBIT A — FORM OF 10.0% NOTE
EXHIBIT B — FORM OF 11.0% NOTE
ii
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13
13
13
14
15
15
15
15
16
16
16
16
17
17
17
17
17
18
18
18
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CONVERTIBLE NOTE PURCHASE AGREEMENT
This CONVERTIBLE NOTE PURCHASE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this
“Agreement”), dated July 12, 2019, is entered into by and between Uxin Limited, an exempted company with limited liability incorporated under the laws
of the Cayman Islands (the “Company”), and PacificBridge Asset Management (the “Fund Manager”) acting in its capacity as the fund manager of each of
the Persons listed in Schedule 1 hereto (each, a “Purchaser”).
W I T N E S S E T H:
WHEREAS, the Company desires to issue to each Purchaser, and the Fund Manager has agreed to cause each Purchaser to purchase from the
Company, the applicable Notes (as defined below), subject to the terms and conditions set forth herein and in the applicable Notes.
NOW, THEREFORE, in consideration of the respective undertakings stated herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Whenever used herein, unless the context otherwise requires, the following words and phrases shall have the following
meanings:
“10.0% Note” shall mean a promissory note, with a 10.0% coupon and a maturity date that is 12 months after the issuance date, to be issued by the
Company to the applicable Purchaser pursuant to Article 2 below, in the form of Exhibit A.
“11.0% Note” shall mean a promissory note, with a 11.0% coupon and a maturity date that is 15 months after the issuance date, to be issued by the
Company to the applicable Purchaser pursuant to Article 2 below, in the form of Exhibit B.
“ADSs” shall mean American Depositary Shares representing Class A Ordinary Shares.
“Adverse Person” shall mean any Person identified in Schedule 2 hereto, any additional Persons to be mutually agreed in writing by the Company
and the Fund Manager from time to time, and any Controlled Affiliates of any of the foregoing.
“Affiliate” of any specified Person shall mean any other Person directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such specified Person. For the avoidance of doubt, none of the Purchasers shall be considered as an Affiliate of the Company or the
Company’s Subsidiaries by reason of holding any Notes to be issued hereunder.
“Agreement” shall have the meaning specified in the preamble to this Agreement.
“Board” shall mean the board of directors of the Company.
“Business Day” shall mean any day that is not a Saturday, a Sunday or another day on which banking institutions in the State of New York, the
PRC, Hong Kong, the Republic of Korea or the Cayman Islands are required by law to be closed.
“Claim Notice” shall have the meaning specified in Section 6.2(a) of this Agreement.
“Class A Ordinary Shares” shall mean the Class A ordinary shares of the Company of a par value of US$0.0001 each.
“Class B Ordinary Shares” shall mean the Class B ordinary shares of the Company of a par value of US$0.0001 each.
“Closing” shall have the meaning specified in Section 2.2 of this Agreement.
“Closing Date” shall have the meaning specified in Section 2.2 of this Agreement. “Company” shall have the meaning specified in the preamble to
this Agreement.
“Company Securities” shall mean (a) Ordinary Shares or American Depositary Shares, depositary receipts or similar instruments issued in respect
of Ordinary Shares, (b) securities convertible into, or exercisable or exchangeable for, any Ordinary Shares or other instruments described in clause (a), and
(c) any options, warrants or other rights to acquire any of the foregoing Ordinary Shares, instruments or securities.
“Control” of a given Person shall mean the power or authority, whether exercised or not, to direct the business, management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, that such power or authority shall
conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled
to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such
Person. The terms “Controlled” and “Controlling” have meanings correlative to the foregoing.
“Conversion Shares” shall mean the Class A Ordinary Shares issuable upon conversion of the Notes in accordance with the terms thereof.
“Dispute” shall have the meaning specified in Section 7.2 of this Agreement.
“Encumbrance” shall mean (a) any mortgage, charge, pledge, lien, hypothecation, deed of trust, title retention, title defect, security interest,
encumbrance or other third-party rights of any kind securing or conferring any priority of payment in respect of any obligation of any Person, any other
restriction or limitation; (b) any easement or covenant granting a right of use or occupancy to any Person; (c) any proxy, power of attorney, voting trust
agreement, interest, option, right of first offer, right of pre-emptive negotiation, or refusal or transfer restriction in favor of any Person; and (d) any adverse
claim as to title.
“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended.
“Fund Manager” shall have the meaning specified in the preamble to this Agreement.
“Fundamental Company Representations” shall mean the representations and warranties by the Company contained in Sections 3.2, 3.3, 3.4, 3.5
“Fundamental Purchaser Representations” shall mean the representations and warranties by the Fund Manager contained in Sections 4.1, 4.2, 4.3
and 3.6.
and 4.4.
“Governmental Entity” shall mean any transnational or supranational, domestic or foreign federal, national, state, provincial, local or municipal
governmental, regulatory, judicial
2
or administrative authority, department, court, arbitral body, agency or official, including any department, commission, board, agency, bureau, subdivision
or instrumentality thereof or any stock exchange.
“Hong Kong” shall mean the Hong Kong Special Administrative Region of the PRC.
“Indemnified Party” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Indemnifying Party” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Indemnity Notice” shall have the meaning specified in Section 6.3 of this Agreement.
“Lock-Up Period” shall mean the period between the Closing Date and the date that is 180 days after the Closing Date (both dates inclusive).
“Loss Threshold” shall have the meaning specified in Section 6.1(c).
“Losses” shall have the meaning specified in Section 6.1(a) of this Agreement.
“Material Adverse Effect” shall mean any event, occurrence, fact, condition, change or development, individually or together with other events,
occurrences, facts, conditions, changes or developments, that has had, has, or would reasonably be expected to have a material adverse effect on (a) the
business of the Company as presently conducted, or the condition (financial or otherwise), affairs, properties, employees, liabilities, assets or results of
operation of the Company and its Subsidiaries taken as a whole or (b) the ability of the Company to consummate the transactions contemplated by this
Agreement and the Notes and to timely perform its material obligations hereunder and thereunder; provided, however, that in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect on the business of the Company or the Company or any Subsidiary relating to or
arising in connection with (i) any action required to be taken pursuant to the terms and conditions of this Agreement or taken at the written direction of the
Fund Manager or any Purchaser, (ii) economic changes affecting the industry in which the Company and its Subsidiaries operate generally or the economy
of the PRC or any other market where the Company and its Subsidiaries have material operations or sales generally (provided in each case that such
changes do not have a unique and materially disproportionate impact on the business of the Company and its Subsidiaries compared to any other companies
that operate in the industry or market in which the Company and its Subsidiaries operate), (iii) the execution, announcement or disclosure of this
Agreement or the pendency or consummation of the transactions contemplated hereunder, (iv) actions or omissions of the Company and its Subsidiaries
that have been consented by the Fund Manager or any Purchaser in writing or otherwise contemplated by this Agreement, (v) changes in generally accepted
accounting principles that are generally applicable to comparable companies (provided that such changes do not have a unique and materially
disproportionate impact on the business of the Company and its Subsidiaries compared to compared to any other companies that operate in the industry or
market in which the Company and its Subsidiaries operate), (vi) changes in general legal, tax or regulatory conditions (provided that such changes do not
have a unique or materially disproportionate impact on the business of the Company and its Subsidiaries compared to any other companies that operate in
the industry or market in which the Company and its Subsidiaries operate), (vii) changes in national or international political or social conditions,
3
including any engagement in hostilities or the occurrence of any military or terrorist attack or civil unrest, or (viii) earthquakes, hurricanes, floods or other
natural disasters.
“Note(s)” shall mean any of the 10.0% Note and the 11.0% Note, as applicable.
“Ordinary Shares” shall mean the Class A Ordinary Shares and the Class B Ordinary Shares.
“Person” shall mean any natural person, firm, corporation, limited liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Entity or any other legal entity, including public bodies, whether acting in an individual, fiduciary or
other capacity.
“PRC” shall mean the People’s Republic of China, excluding, for the purpose of this Agreement, Hong Kong, the Macau Special Administrative
Region and Taiwan.
“Principal Amount” with respect to a Purchaser and a Note shall mean the U.S. dollar amount set forth next to the name of the Purchaser in the
column entitled “Principal Amount” in the applicable table in Schedule 1 hereto.
“Purchaser” shall have the meaning specified in the preamble to this Agreement.
“Purchaser Entities” shall mean, collectively, the Purchasers and the Fund Manager.
“Regulation S” shall have the meaning specified in Section 3.14 of this Agreement.
“SEC” shall mean the United States Securities and Exchange Commission.
“SEC Documents” shall mean all registration statements, proxy statements and other statements, reports, schedules, forms and other documents
required to be filed or furnished by the Company with the SEC from time to time, and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein.
“Securities Act” shall mean the United States Securities Act of 1933, as amended.
“Subsidiary” shall mean, with respect to any given Person, any other Person that is Controlled directly or indirectly by such given Person, which
shall, for the avoidance of doubt, include any variable interest entity whose assets and financial results are consolidated with the assets and financial results
of such given Person and are recorded on the financial statements of such given Person for financial reporting purposes in accordance with applicable
accounting standards (each, a “VIE” and collectively, the “VIEs”) and any Subsidiary of such VIEs.
“Third Party Claim” shall have the meaning specified in Section 6.2(a) of this Agreement.
“Transfer” shall mean directly or indirectly, offer, sell, contract to sell, pledge, transfer, assign, give, hypothecate, encumber, grant a security
interest in, convey in trust, gift, devise or descent, or otherwise dispose of, or suffer to exist (whether by operation of law of otherwise) any Encumbrance
on, any Company Securities or any right, title or interest therein or thereto, or enter into a transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any Company Securities, whether
any such aforementioned transaction is to be
4
settled by delivery of the Ordinary Shares, American Depositary Receipts or such other securities, in cash or otherwise, or publicly disclose the intention to
make any such disposition or to enter into any such transaction, swap, hedge or other arrangement, including transfers pursuant to divorce or legal
separation, transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether
voluntary or by operation of law, directly or indirectly, of any Company Securities.
“US$” and “U.S. dollar” shall mean the lawful currency of the United States of America.
2. ISSUANCE OF THE NOTES.
2.1 Issuance of the Notes. Subject to the satisfaction of terms and conditions of this Agreement, at the Closing, the Company agrees
to issue to each Purchaser, and the Fund Manager hereby agrees to cause each Purchaser to purchase from the Company, the 10.0% Note or the 11.0%
Note, in the principal amount equal to the applicable Principal Amount.
2.2 Closing. The closing of the issuance and purchase of the Notes shall take place remotely via the exchange of documents and
signatures after all closing conditions specified in Sections 2.4 and 2.5 hereof have been satisfied or waived (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof at the Closing). The date of the Closing (the “Closing Date”) will be
September 18, 2019 or such other date as the Company and the Fund Manager may mutually agree in writing.
2.3 Payment and Delivery. At the Closing, the Fund Manager shall cause each Purchaser to pay and deliver the applicable Principal
Amount to the Company in U.S. dollars by wire transfer, or by such other method as may be mutually agreed by the Company and the Fund Manager, of
immediately available funds to such bank account of the Company designated in writing by the Company. Such payment shall be delivered and made
available to such bank account on the Closing Date, and the Company shall deliver to each Purchaser the duly executed Note dated the Closing Date, free
and clear of Encumbrances.
2.4 Conditions to the Fund Manager’s Obligations to Effect the Closing. The obligation of the Fund Manager to cause each
Purchaser to purchase the Note at the Closing is subject to the satisfaction, on or before the Closing Date, of the following conditions, any of which may be
waived in writing by the Fund Manager in its sole and absolute discretion:
of the applicable Note shall have been completed;
(a) All corporate and other actions required to be taken by the Company in connection with the issuance, sale and delivery
(b) The representations and warranties of the Company contained in Article 3 of this Agreement shall have been true and
correct in all material respects on the date of this Agreement and true and correct as of the Closing Date, and the Company shall have performed and
complied in all material respects with all, and not be in breach or default in any material respect under any, agreements, covenants, conditions and
obligations contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date;
law (whether temporary, preliminary or
(c) No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any
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permanent) that is in effect and restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation of the transactions contemplated by this
Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this Agreement with respect to that Purchaser that are
substantial in relation to the Company and its Subsidiaries; and no action, suit, proceeding or investigation shall have been instituted by a Governmental
Entity of competent jurisdiction or threatened that seeks to restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the
transactions contemplated by this Agreement with respect to that Purchaser, or imposes any damages or penalties in connection with the transactions
contemplated by this Agreement with respect to that Purchaser that are substantial in relation to the Company and its Subsidiaries;
Material Adverse Effect has occurred; and
(d) No event, occurrence, development or state of circumstances that has or could reasonably be expected to have a
the applicable Note) shall have occurred.
(e) No event, occurrence, development or state of circumstances that would constitute an Event of Default (as defined in
2.5 Conditions to the Company’s Obligations to Effect the Closing. The obligation of the Company to issue the Note to a Purchaser
at the Closing is subject to the satisfaction, on or before the Closing Date, of the following conditions, any of which may be waived in writing by the
Company in its sole discretion:
purchase of the applicable Note shall have been completed;
(a) All corporate and other actions required to be taken by that Purchaser and the Fund Manager in connection with the
(b) The representations and warranties of the Fund Manager contained in Article 4 of this Agreement shall have been true
and correct on the date of this Agreement and true and correct in all material respects as of the Closing Date, and the Fund Manager shall have performed
and complied in all material respects with all, and not be in breach or default in any material respect under any, agreements, covenants, conditions and
obligations contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date; and
(c) No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins, prevents, prohibits or otherwise makes illegal the consummation
of the transactions contemplated by this Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this
Agreement with respect to the Company; and no action, suit, proceeding or investigation shall have been instituted by a Governmental Entity of competent
jurisdiction or threatened that seeks to restrain, enjoin, prevent, prohibit or otherwise make illegal the consummation of the transactions contemplated by
this Agreement, or imposes any damages or penalties in connection with the transactions contemplated by this Agreement with respect to the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise disclosed in the SEC Documents, the Company
represents and warrants to the Fund Manager as of the date hereof and as of the Closing that:
respective effective dates (in the
3.1 Accuracy of Disclosure. The Company has filed or furnished, as applicable, on a timely basis, all SEC Documents. As of their
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case of the SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing
dates (in the case of all other SEC Documents), or in each case, if amended prior to the date hereof, as of the date of the last such amendment: (A) each of
the SEC Documents complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act
of 2002, as amended, and any rules and regulations promulgated thereunder applicable to the SEC Documents (as the case may be), and (B) none of the
SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to
make the material statements therein, in the light of the circumstances under which they were made, not misleading.
3.2 Existence and Qualification. The Company has been duly organized, is validly existing and in good standing under the laws of
the Cayman Islands and has the requisite power and authority to own, lease and operate its property and to conduct its business as currently conducted and
as described in the SEC Documents. Each of the Company and its Subsidiaries is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its respective business or its respective ownership, leasing or operation of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected have a Material
Adverse Effect.
3.3 Capitalization; Issuance of Subscription Shares. The authorized share capital of the Company is $1,000,000 divided into
10,000,000,000 shares comprising of (i) 9,600,000,000 Class A Ordinary Shares, of which 839,868,944 Class A Ordinary Shares (excluding the 23,501,589
Class A Ordinary Shares issued to the Company’s depositary bank for bulk issuance of American Depositary Shares reserved for future issuances upon the
exercise or vesting of awards granted under the Company’s share incentive plan) were issued and outstanding as of February 28, 2019, (ii) 100,000,000
Class B Ordinary Shares, of which 40,809,861 Class B Ordinary Shares were issued and outstanding as of February 28, 2019, and (iii) 300,000,000 shares
of a par value of $0.0001 each of such class or classes (however designated) as the Board may determine in accordance with the Company’s articles of
association. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable, have been
issued in compliance with all applicable securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except as set forth in the SEC Documents, the Company has no outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the
shareholders of the Company on any matter.
3.4 Valid Issuance of the Notes and the Conversion Shares. The Notes and the Conversion Shares to be issued, sold and delivered
upon conversion of the Notes will be duly and validly issued, fully paid and non-assessable, free and clear of all Encumbrances except as imposed by
applicable securities laws, and based in part upon the representations and warranties of the Fund Manager in this Agreement, will be issued in compliance
with all applicable federal and state securities laws. Upon conversion of the Notes, each Purchaser will be entitled to all rights accorded to a holder of the
Company’s Class A Ordinary Shares and will be the record and beneficial owner of all such securities and have good and valid title to all such securities,
free and clear of all Encumbrances except as imposed by applicable securities laws. The Conversion Shares will be freely transferable in compliance with
Rule 144
7
under the Securities Act upon conversion of the Notes and no restrictive legend will be included in any certificate evidencing such shares.
3.5 Capacity, Authorization and Enforceability. The Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and consummate the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered
by the Company, and assuming the due authorization, execution and delivery by the Fund Manager, this Agreement is a valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
general principles of equity.
3.6 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of the Company or
(ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Entity to
which the Company or any of its Subsidiaries is subject, or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of or
creation of an Encumbrance under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement,
contract, lease, license, instrument, or other arrangement to which the Company or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which the Company’s or any of its Subsidiaries’ assets are subject, except in the case of clauses (ii) or (iii) as would not have a
Material Adverse Effect. There is no action, suit or proceeding, pending or, to the knowledge of the Company, threatened against the Company that
questions the validity of this Agreement or the right of the Company to enter into this Agreement to consummate the transactions contemplated hereby.
3.7 Consents and Approvals. Assuming the accuracy of the representations and warranties of the Fund Manager under this
Agreement, neither the execution and delivery by the Company of this Agreement, nor the consummation by the Company of any of the transactions
contemplated hereby, nor the performance by the Company of this Agreement in accordance with its terms requires the consent, approval, order or
authorization of, or registration with, or the giving notice to, any governmental or public body or authority or any third party, except such as have been or
will have been obtained, made or given on or prior to the Closing and those filings required to be made with the SEC and the Nasdaq Stock Market
(including, without limitation, a current report on Form 6-K).
3.8 Financial Statements. The financial statements (including any related notes) contained in the SEC Documents: (A) complied as
to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (B) were
prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods covered
thereby and (C) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of the Company and its Subsidiaries for the periods covered thereby, except as disclosed
therein and as permitted under the Exchange Act.
3.9 Operating and non-GAAP financial Data. All operating data and non-GAAP financial data of the Company and its Subsidiaries
disclosed in the SEC Documents, including but not limited to GMV, transaction volume, number of car listings and used car transaction facilitation service
take rate, are true and accurate in all material respects.
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3.10 Related Party Transactions. There are no material transactions between the Company or any of its Subsidiaries, on the one
hand, and the Company’s or any of its Subsidiaries’ respective 5% or greater shareholders, Affiliates, directors or executive officers, or any Affiliates of
such Persons, on the other hand, except as have been duly approved by the audit committee of the Board, or any other related party transactions required to
be disclosed that are not disclosed in the SEC Documents.
3.11 Absence of Certain Changes. Except as set forth in the SEC Documents, since December 31, 2018, there has been no event,
occurrence, development or state of circumstances that has or could reasonably be expected to have a Material Adverse Effect.
Company or its Subsidiaries or affecting the business or any of the assets of the Company or its Subsidiaries.
3.12 Litigation. Except as disclosed in the SEC Documents, there are no actions pending or may threatened against or involving the
3.13 Compliance with Laws. Except as disclosed in the SEC Documents, the business of the Company or its Subsidiaries is not
being conducted in violation of any applicable law or government order applicable to the Company or its Subsidiaries except for violations which do not
and would not have a Material Adverse Effect.
3.14 Securities Laws. (a) No “directed selling efforts” into the United States (as defined in Rule 902 of Regulation S under the
Securities Act (“Regulation S”)) with respect to the Notes have been made by the Company, any of its Affiliates, or any Person acting on its behalf, and
(b) none of the foregoing Persons has taken any actions that would result in the sale of the Notes to the Purchasers under this Agreement requiring
registration under the Securities Act or any U.S. state securities laws. The Company is a “foreign issuer” (as defined in Regulation S).
under the Securities Act is required for the offer and sale of the Notes by the Company to that Purchaser as contemplated hereby.
3.15 No Registration. Assuming the accuracy of the Fund Manager’s representations and warranties in Article 4, no registration
3.16 Ranking of the Notes. The Notes rank senior in right of payment to any of the Company’s other indebtedness that is expressly
subordinated in right of payment to the Notes, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so
subordinated, junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness,
and structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
contemplated hereby do not contravene the rules and regulations of the Nasdaq Global Select Market.
3.17 Listing and Maintenance Requirements. The issuance and sale of the Notes under this Agreement and the transactions
proceeds therefrom will not be, required to register as an “investment company” pursuant to the U.S. Investment Company Act of 1940, as amended.
3.18 Investment Company. The Company is not, and upon the sale of the Notes contemplated herein and the application of the net
compliance with the money laundering requirements of all applicable governmental authorities and any related or similar
3.19 Money Laundering Laws. The operations of the Company and its Subsidiaries have been and will be conducted at all times in
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rules, regulations or guidelines, issued administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”) and no action,
suit or proceeding by or before any Governmental Entity involving the Company or its Subsidiaries, its Affiliates employees or agents with respect to the
Money Laundering Laws is pending or threatened.
3.20 OFAC. (i) None of the Company, any of its Subsidiaries, or any director, officer or employee of any of the foregoing, or, to the
Company’s knowledge, any agent, Affiliate or representative of the Company, is a Person that is, or is owned 50% or more or controlled by one or more
Persons that are (such Persons referred to as “Sanctioned Persons”): (a) the target of any sanctions administered or enforced by the U.S. government
(including but not limited to the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including,
without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council, the European Union,
Her Majesty’s Treasury or any other relevant sanctions authority (collectively, “Sanctions”), including by being listed on any Sanctions related list of
designated persons, or (b) located, organized or resident in, or a national, Governmental Entity. or agent of, a country, region or territory that is the subject
or target Sanctions (as of the date hereof, including but not limited to, Cuba, Iran, North Korea, Syria and Crimea (each, a “Sanctioned Country”)). (ii) The
Company represents and covenants that the Company and its Significant Subsidiaries have not engaged in, are not now engaged in, and will not engage in,
any dealings or transactions directly or indirectly with any Sanctioned Person, or in any country or territory, that at the time of the dealing or transaction is
or was the subject or the target of Sanctions.
3.21 Foreign Corrupt Practices. Neither of the Company or its Subsidiaries, nor any Person acting on their behalf, has, directly or
indirectly (i) used any funds or will use and proceeds from the sale of the Notes for unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign
or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any of its
Subsidiaries (or made by any Person acting on its behalf of which the Company or any of or its Subsidiaries is aware) which is in violation of any
applicable law, or (iv) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder which was
or is applicable to the Company or its Subsidiaries.
3.22 PFIC. Based on the Company’s current income and asset and projections as to the value of its assets and market value of its
ADSs, including the current and anticipated value of its assets, the Company believes that it was not and does not expect to be a “passive foreign
investment company” as defined in Section 1297 of the United States Internal Revenue Code of 1986, as amended for the current taxable year or in
foreseeable future.
3.23 Tax Matters. The Company and its Subsidiaries have filed all material tax returns required by applicable law to be filed by them,
have paid all taxes due pursuant to such returns (including interest and penalties), and have paid all other material taxes, fees, assessments and other
governmental charges owing by them or in respect of their respective property, income, profits and assets, except for such taxes (a) that are not yet
delinquent or (b) that are being appropriately contested in good faith by appropriate proceedings, and against which adequate reserves are being maintained
in accordance with GAAP (or the comparable accounting principles in the relevant jurisdiction). No material tax assessment has been imposed on (or
threatened in writing to be imposed on) the Company and its Subsidiaries or any of their respective assets.
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4. REPRESENTATIONS AND WARRANTIES OF THE FUND MANAGER. (i) The Fund Manager acting on behalf of each Purchaser
represents and warrants to the Company as of the date hereof and as of the Closing Date that:
jurisdiction of organization.
4.1 Existence. Each Purchaser Entity has been duly organized, is validly existing and is in good standing under the laws of its
4.2 Capacity. Each Purchaser Entity has the requisite power and authority to enter into and perform its respective obligations under
this Agreement and consummate the transactions contemplated hereby. The Fund Manager is the general partner and sole fund manager of each Purchaser
and has the capacity and authority to act on behalf of each Purchaser.
4.3 Authorization and Enforceability. This Agreement has been duly authorized, executed and delivered by the Fund Manager, and
assuming the due authorization, execution and delivery by the Company, this Agreement is a valid and binding agreement of the Fund Manager,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general
principles of equity.
4.4 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of any Purchaser
Entity or (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental
Entity to which any Purchaser Entity is subject, or (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of or creation
of an Encumbrance under, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under, any agreement, contract,
lease, license, instrument, or other arrangement to which any Purchaser Entity is a party or by which any Purchaser Entity is bound or to which any assets
of any Purchaser Entity are subject. There is no action, suit or proceeding, pending or, to the knowledge of the Fund Manager, threatened against any
Purchaser Entity that questions the validity of this Agreement or the right of any Purchaser Entity to enter into this Agreement to consummate the
transactions contemplated hereby.
4.5 Consents and Approvals. Neither the execution and delivery by the Fund Manager of this Agreement, nor the consummation by
any Purchaser Entity of any of the transactions contemplated hereby, nor the performance by any Purchaser Entity of this Agreement in accordance with its
terms requires the consent, approval, order or authorization of, or registration with, or the giving notice to, any governmental or public body or authority or
any third party, except such as have been or will have been obtained, made or given on or prior to the Closing.
4.6 Investment Intent. Each Purchaser is purchasing the Notes solely for its own account for investment, and not with a view to, or
for sale in connection with, any distribution of the Notes or any portion thereof, and not with any present intention of selling, offering to sell, or otherwise
disposing of or distributing the Notes or any portion thereof in any transaction. The entire legal and beneficial interest of the Notes is being purchased, and
will be held, for each Purchaser’s own account only, and neither in whole or in part for the account of any other Person.
4.7 Regulation S Eligibility; Restriction on Resale. The Fund Manager acknowledges that each Purchaser is acquiring the Notes in
an “offshore transaction” (as
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defined in Regulation S) in reliance upon the exemption from registration provided by Regulation S. Each Purchaser is not a U.S. person as defined in
Rule 902 of Regulation S and is located outside of the United States. The Fund Manager understands that the Notes to be purchased by each Purchaser has
not been registered under the Securities Act or any U.S. state law and may not be offered or sold within the United States or to, or for the account or benefit
of, a U.S. person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and
applicable U.S. state law.
4.8 Investment Experience. Each Purchaser is a sophisticated purchaser with knowledge and experience in financial and business
matters such that such Purchaser is capable of evaluating the merits and risks of the investment in the Notes and the Conversion Shares. Each Purchaser is
able to bear the economic risks of an investment in the Notes and the Conversion Shares. The Fund Manager understands that securities prices are a
function of a large number of variables and that there is no way for the Company to predict or otherwise gauge the market’s reaction to the disclosure of
any material information. The Fund Manager acknowledges and affirms that, with the assistance of its advisors, it has conducted and completed its own
investigation, analysis and evaluation related to the investment in the Notes and the Conversion Shares. The Fund Manager understands and acknowledges
that the Company has or may have information concerning the Company and its Affiliates including, but not limited to, the short term and long-term plans
of the Company and its Affiliates. With full recognition of the foregoing, and after discussing these matters with its counsel and such other advisors as it
deems appropriate, the Fund Manager wishes to cause each Purchaser to consummate the transactions contemplated under this Agreement on the terms set
forth herein.
5. COVENANTS.
5.1 Further Assurances. From the date of this Agreement to the Closing Date, (i) the Company and the Fund Manager shall use their
reasonable efforts to fulfill, or obtain the fulfillment of, all of the conditions precedent to the consummation of the transactions contemplated hereby, and
(ii) the Fund Manager shall cause each Purchaser to take necessary and appropriate actions contemplated hereunder for the consummation of the
transactions contemplated hereby.
5.2 Reservation of Shares. At all times for so long as any Note (or any portion thereof) remains outstanding, the Company shall take
all actions necessary to have authorized, and reserved for the purpose of issuance, no less than one hundred percent (100%) of the aggregate number of
Class A Ordinary Shares needed to provide for the complete issuance of the Conversion Shares underlying such Notes.
5.3 Lock-Up. Notwithstanding any other provisions of this Agreement or any other agreement by the Company and the Purchaser
Entities, during the Lock-Up Period, the Fund Manager shall ensure that each Purchaser Entity will not, and will procure that none of its Subsidiaries will,
without the prior written consent of the Company, directly or indirectly through one or a series of transactions, Transfer any Company Securities to any
Person other than the Purchaser Entity’s Subsidiaries. Any Transfer of Company Securities made in violation of this Section 5.3 shall be null and void ab
initio and shall not be recorded on the books and records of the Company.
Company and the Purchaser Entities, the Fund Manager shall ensure that each Purchaser Entity will not directly or indirectly Transfer, and
5.4 No Transfer to Adverse Persons. Notwithstanding any other provisions of this Agreement or any other agreement by the
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will not permit any direct or indirect Transfer, through one or a series of transactions, of any Company Securities held by it directly or indirectly (including
through any Affiliate) to any Adverse Person without the prior written consent of the Company. Any Transfer of any Company Securities made in violation
of this Section 5.4 shall be null and void ab initio and shall not be recorded on the books and records of the Company.
5.5 Use of Proceeds. The Company shall use the proceeds from the issuance of the Notes for general corporate purposes, and shall
not use the proceeds from the issuance of the Notes (a) to fund or facilitate any activities of or business with any Person that is the subject or the target of
Sanctions, (b) to fund or facilitate any activities of or business in any country or territory that is subject of any Sanctions, (c) in furtherance of an offer,
payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any anti-corruption
laws, or (d) in a way that that result in noncompliance with all applicable anti-money laundering or anti-terrorism statutes, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable Governmental Entity.
5.6 Conversion to ADSs. To the extent permitted by applicable law, after the conversion of either Note (or any portion thereof) by
any Purchaser into Conversion Shares, in the event that such Purchaser has delivered to the Company written notice specifying that such Purchaser
irrevocably elects to convert the Conversion Shares into ADSs subject to the compliance of applicable conditions under Rule 144(b), the Company shall
use its reasonable best efforts to effect (or cause to be effected) the conversion of such Conversion Shares into ADSs within seven (7) days after receiving
such written notice.
6. INDEMNIFICATION.
6.1 Indemnification.
(a) Subject to the other provisions of this Article 6, each of the Company and the Fund Manager (“Indemnifying Party”)
shall indemnify and hold each other, such other party’s respective Affiliates, and such other party’s and their respective Affiliates’ members, partners,
managers, directors, officers, employees, advisors and agents (collectively, the “Indemnified Party”) harmless from and against any losses, liabilities,
damages, costs and expenses, including reasonable attorney’s fees (collectively, “Losses”) resulting from or arising out of: (i) any breach or violation of, or
inaccuracy in, any representation or warranty made by the Indemnifying Party or its applicable Affiliates under this Agreement; or (ii) any breach or
violation of, or failure to perform, any covenants or agreements made by or on behalf of, or to be performed by, the Indemnifying Party or its applicable
Affiliates under this Agreement. The indemnity under this Article 6 shall not be prejudiced by or otherwise be subject to any disclosure and shall apply
regardless of whether the Indemnifying Party has any actual or constructive knowledge with respect thereto.
punitive damages are awarded to a third party against an Indemnified Party in connection with a Third Party Claim).
(b) No Indemnifying Party shall be liable for any Loss consisting of punitive damages (except to the extent that such
breaches of Fundamental Company Representations or Fundamental Purchaser Representations (as applicable), until such time as the aggregate amount of
all such Losses that have been suffered or incurred by the Indemnified
(c) The Fund Manager as the Indemnified Party shall not be entitled to recover any Losses, other than with respect to
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Party exceeds two percent (2%) of the issued Principal Amount with respect to the Purchasers (the “Loss Threshold”), provided, however, that once the
aggregate amount of all such Losses exceeds the Loss Threshold, the Indemnifying Party shall be liable for all such Losses (including the Losses up to the
Loss Threshold).
(d) The maximum aggregate amount of Losses that the Indemnified Parties will be entitled to recover pursuant to this
Article 6 shall be limited to one hundred percent (100%) of the issued aggregate Principal Amount of all Purchasers. Notwithstanding the foregoing or
anything else to the contrary contained herein, the limitations on indemnification set forth in this Agreement (including, without limitation, the limitations
set forth in this Section 6.1) shall not apply to any claim based on fraud, willful misrepresentation or willful misconduct of the Indemnifying Party or its
Subsidiaries or Affiliates.
once in respect of the same Losses suffered.
(e) An Indemnified Party shall not be entitled to recover from the Indemnifying Party under this Agreement more than
(f) Notwithstanding any other provision contained herein, the remedies contained in this Article 6 shall be the sole and
exclusive monetary remedy of the Indemnified Parties for any claim arising out of or resulting from this Agreement, except that no limitation or exceptions
with respect to the obligations or liabilities on any party hereto provided hereunder shall apply to a Loss incurred by any Indemnified Party arising due to
fraud of the Indemnifying Party or its Subsidiaries or Affiliates. Nothing in this Article 6 or elsewhere in this Agreement shall affect any parties’ rights to
specific performance or other equitable or non-monetary remedies with respect to the covenants and agreements in this Agreement or that are to be
performed at or after the Closing; provided that for the avoidance of doubt, except in the case of fraud, nothing contained herein shall permit any party to
rescind this Agreement.
6.2 Third Party Claims.
(a) If any third party shall notify an Indemnified Party in writing with respect to any matter involving a claim by such third
party (a “Third Party Claim”) and such Indemnified Party believes such claim would give rise to a claim for indemnification against the Indemnifying Party
under this Article 6, then the Indemnified Party shall promptly (i) notify the Indemnifying Party thereof in writing and (ii) transmit to the Indemnifying
Party a written notice (“Claim Notice”) describing in reasonable detail the nature of the Third Party Claim, a copy of all papers served with respect to such
claim (if any), and the basis of the Indemnified Party’s request for indemnification under this Agreement. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party shall have been prejudiced by such
failure.
(b) Upon receipt of a Claim Notice with respect to a Third Party Claim, the Indemnifying Party shall have the right to
assume the defense of any Third Party Claim by, within thirty (30) days of receipt of the Claim Notice, notifying the Indemnified Party in writing that the
Indemnifying Party elects to assume the defense of such Third Party Claim, and upon delivery of such notice by the Indemnifying Party, the Indemnifying
Party shall have the right to control and settle the proceeding, provided that, (i) any such settlement or compromise shall be permitted hereunder only with
the written consent of the Indemnified Party which consent shall not be unreasonably withheld or delayed, and (ii) and the Indemnifying Party shall keep
the Indemnified Party reasonably informed of the progress of such defense on a regular basis.
14
(c) If requested by the Indemnifying Party, the Indemnified Party shall, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim which the Indemnifying Party elects to contest, including
the making of any related counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person. The Indemnified
Party shall have the right to receive copies of all pleadings, notices and communications with respect to any Third Party Claim for which indemnity is
sought under this Agreement, other than any privileged communications between the Indemnifying Party and its counsel, and shall be entitled, at its sole
cost and expense, to retain separate co-counsel and participate in, but not control, any defense or settlement (except for its consent required under
Section 6.2(b) above) of any Third Party Claim assumed by the Indemnifying Party pursuant to Section 6.2(b).
(d) In the event of a Third Party Claim for which the Indemnifying Party elects not to assume the defense or fails to make
such an election within thirty (30) days of the Claim Notice, the Indemnified Party may, at its option, defend, settle, compromise or pay such action or
claim at the expense of the Indemnifying Party; provided that, any such settlement or compromise shall be permitted hereunder only with the written
consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
6.3 Other Claims. In the event any Indemnified Party should have a claim against the Indemnifying Party hereunder which does not
involve a Third Party Claim, the Indemnified Party shall promptly transmit to the Indemnifying Party a written notice (the “Indemnity Notice”) describing
in reasonable detail the nature of the claim, the Indemnified Party’s good faith estimate of the amount of Losses attributable to such claim and the basis of
the Indemnified Party’s request for indemnification under this Agreement; provided, that no failure, delay or deficiency in providing such notice shall
constitute a waiver or otherwise modify the Indemnified Party’s right to indemnity hereunder, except to the extent that the Indemnifying Party shall have
been prejudiced by such failure, delay or deficiency. If the Indemnifying Party does not notify the Indemnified Party within thirty (30) days from its receipt
of the Indemnity Notice that the Indemnifying Party disputes such claim, the Indemnifying Party shall be deemed to have accepted and agreed with such
claim.
7. MISCELLANEOUS.
7.1 Survival of the Representations and Warranties. All representations and warranties made by any party hereto other than the
Fundamental Company Representations and the Fundamental Purchaser Representations shall survive for eighteen (18) months from and after the date
hereof, and shall terminate and be without further force or effect on the date that is eighteen (18) months from and after the date hereof, and the
Fundamental Company Representations and the Fundamental Purchaser Representations shall survive for five (5) years from and after the date hereof, and
shall terminate and be without further force or effect on the date that is five (5) years from and after the date hereof, except that any claim under any
representation or warranty made by any party hereto that have been asserted in writing pursuant to Section 6.1 against the party hereto making such
representation or warranty prior to the expiration of the applicable survival period set forth in this Section 7.1 shall survive until such claim is fully and
finally resolved.
7.2 Governing Law; Dispute Resolution. This Agreement shall be governed and interpreted in accordance with the laws of the State
of New York without giving effect to the conflicts of law principles thereof. Any dispute arising out of or relating to this Agreement or the Notes, including
any question regarding the existence, validity or termination hereof or
15
thereof (a “Dispute”) shall be referred to and finally resolved by arbitration at the Hong Kong International Arbitration Centre in accordance with the Hong
Kong International Arbitration Centre Administered Arbitration Rules then in force. In the case of any Dispute, there shall be three arbitrators. The
claimant(s) shall have the right to appoint one arbitrator, the respondent(s) shall have the right to appoint another arbitrator, and the third arbitrator shall be
appointed by the Hong Kong International Arbitration Centre. The language to be used in the arbitration proceedings shall be English. The seat of
arbitration shall be Hong Kong. Each of the parties hereto irrevocably waives any immunity to jurisdiction to which it may be entitled or become entitled
(including without limitation sovereign immunity, immunity to pre-award attachment, post-award attachment or otherwise) in any arbitration proceedings
and/or enforcement proceedings against it arising out of or based on this Agreement or the transactions contemplated hereby.
the parties hereto.
7.3 Amendment. This Agreement shall not be amended, changed or modified, except by another agreement in writing executed by
their respective heirs, successors and permitted assigns.
7.4 Binding Effect. This Agreement shall inure to the benefit of, and be binding upon, the Purchaser Entities, the Company, and
7.5 Assignment. Neither this Agreement nor any of the rights, duties or obligations hereunder may be assigned by the Company or
the Fund Manager without the express written consent of the other party hereto, except that the Fund Manager may assign all or any part of its rights and
obligations hereunder to any Affiliate of the Fund Manager without the consent of the other parties hereto, provided that no such assignment shall relieve
the Fund Manager of its obligations hereunder if such assignee does not perform such obligations. Any purported assignment in violation of the foregoing
sentence shall be null and void.
7.6 Notices. All notices, requests, demands, and other communications required or permitted to be given by one party hereto to the
other party hereto under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of actual delivery if delivered
personally, (ii) on the date sent if sent by facsimile, (iii) on the next Business Day following delivery to Federal Express for overnight courier service, or
(iv) on the day of attempted delivery by the postal service if mailed by registered or certified mail, return receipt requested, postage paid, in each case as
properly addressed or delivered as follows:
16
If to the Company, at:
If to the Fund Manager, at:
Uxin Limited
2-5F, Tower E, LSHM Center,
No. 8 Guangshun South Avenue
Chaoyang District, Beijing, 100102
People’s Republic of China
E-mail: daikun@xin.com
Attn: Mr. Kun Dai
PacificBridge Asset Management
Unit No. 1904 (Trade Tower, Samsung-dong),
511 Yeongdong-daero, Gangnam-gu, Seoul, 06164
Republic of Korea
E-mail: dannysong@pacificbridgeam.com
Attn: Mr. Danny Song
Any party hereto may change its address for purposes of this Section 7.6 by giving the other party hereto written notice of the new address in the
manner set forth above.
7.7 Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties hereto with respect
to the matters covered hereby, and all prior agreements and understandings, oral or in writing, if any, between the parties hereto with respect to the matters
covered hereby are merged and superseded by this Agreement.
7.8 Severability. If any provisions of this Agreement shall be adjudicated to be illegal, invalid or unenforceable in any action or
proceeding whether in its entirety or in any portion, then such provision shall be deemed amended, if possible, or deleted, as the case may be, from the
Agreement in order to render the remainder of the Agreement and any provision thereof both valid and enforceable, and all other provisions hereof shall be
given effect separately therefrom and shall not be affected thereby.
7.9 Fees and Expenses. Each of the Company and the Fund Manager shall pay its own expenses incurred in connection with the
negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, including fees and expenses of attorneys, accountants,
consultants and financial advisors.
7.10 Confidentiality. (a) Each party hereto shall keep in confidence, and shall not use (except for the purposes of the transactions
contemplated hereby) or disclose, any non-public information disclosed to it or its Affiliates, representatives or agents in connection with this Agreement or
the transactions contemplated hereby, other than to its members, managers, directors, officers, employees, partners, co-investors, auditors, counsels,
consultants and other advisors and representatives who have a need to know such information, and (b) each party hereto shall ensure that its Affiliates,
representatives and agents keep in confidence, and do not use (except for the purposes of the transactions contemplated hereby) or disclose, any such non-
public information, provided, however, that nothing in this Agreement shall restrict any party from disclosing information (i) that is already publicly
available not as a result of a breach of this section, or (ii) that may be required by applicable law, statute, treaty, rule, regulation, order, right, privilege,
qualification, license or franchise or determination of an arbitrator or a Governmental Entity.
7.11 Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this
Agreement were not performed in accordance
17
with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or
equity.
7.12 Termination. In the event that the Closing shall not have occurred by December 31, 2019, the Company or the Fund Manager
may terminate this Agreement, except for the provisions of Article 7, which shall survive any termination under this Section 7.12, provided that (a) any
party hereto who is then in a material breach of this Agreement shall not be entitled to terminate this Agreement pursuant to this Section 7.12.
convenience and do not expressly or by implication limit, define or extend the specific terms of the article or section so designated.
7.13 Headings. The headings of the various articles and sections of this Agreement are inserted merely for the purpose of
7.14 Counterparts. For the convenience of the parties hereto and to facilitate execution, this Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute but one and the same instrument.
7.15 No Waiver. Except as specifically set forth herein, the rights and remedies of the parties to this Agreement are cumulative and
not alternative. No failure or delay on the part of any party hereto in exercising any right, power or remedy under this Agreement will operate as a waiver
of such right, power or remedy, and no single or partial exercise of any such right, power or remedy will preclude any other or further exercise of such
right, power or remedy or the exercise of any other right, power or remedy. To the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement can be discharged by one party hereto, in whole or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party hereto; (b) no waiver that may be given by a party hereto will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party hereto will be deemed to be a waiver of any obligation of that party or of the right of the party hereto giving
such notice or demand to take further action without notice or demand as provided in this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Convertible Note Purchase Agreement as of the date first above written.
Uxin Limited
By:
/s/ Kun Dai
Name: Kun Dai
Title:Director and CEO
IN WITNESS WHEREOF, the parties hereto have executed this Convertible Note Purchase Agreement as of the date first above written.
PacificBridge Asset Management, acting in its capacity as the fund manager of each of the
Purchasers
By: /s/ DK LEE
Name: DK LEE
Title: CEO
SCHEDULE 1
PURCHASERS AND ALLOCATIONS
[*]
SCHEDULE 2
ADVERSE PERSONS
[*]
EXHIBIT A
FORM OF 10.0% NOTE
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER SECURITIES LAWS. THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
CONVERTIBLE PROMISSORY NOTE
[·], 2019 (“Date of Issuance”)
US$[·]
FOR VALUE RECEIVED, and subject to the terms and conditions of this convertible promissory note (this “Note”), Uxin Limited, an
exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), hereby promises to pay to the order of [•], a
[company incorporated under the laws of [•]](the “Purchaser”), or its assigns, in lawful money of the United States of America the principal amount of [•]
Dollars (US$[•]) (the “Principal Amount”), plus accrued interest thereon, on [·], 2020 (the “Maturity Date”), unless earlier duly converted in full into the
Conversion Shares pursuant to and in accordance with the terms of this Note.
This Note is issued pursuant to the Convertible Note Purchase Agreement, dated July 12, 2019, by and between the Company, the
Purchaser and certain other parties thereto (the “Convertible Note Purchase Agreement”), and is subject to the terms and conditions thereof. In case of any
conflict between this Note and the Convertible Note Purchase Agreement, the provisions of the Convertible Note Purchase Agreement shall control and
govern. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Convertible Note Purchase Agreement.
the acceptance of this Note, agrees:
The following is a statement of the rights of the Purchaser and the conditions to which this Note is subject, and to which the Purchaser, by
1. Interest Rate. This Note shall bear interest on the outstanding Principal Amount at a simple interest rate of ten percent (10.0%) per annum from
the Date of Issuance until this Note is fully repaid or redeemed; provided, that if any portion of this Note is duly converted into the Conversion
Shares pursuant to and in accordance with Section 4 hereof, interest shall cease to accrue on the portion of the Principal Amount being converted
(and, for the avoidance of doubt, continue to accrue on any outstanding Principal Amount not being converted). Accrued interest on this Note shall
be computed on the basis of a 365-day year and actual days elapsed.
2. Repayment of this Note.
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(a) Unless to the extent earlier converted into Conversion Shares pursuant to Section 4 hereof, the outstanding Principal Amount (other than
any portion of the Principal Amount converted pursuant to Section 4 hereof) and the interest accrued thereon shall be due and payable by the
Company upon the earlier of (i) the Maturity Date, and (ii) the occurrence of an Event of Default set forth in Section 5 hereof (the “Due Date”).
Upon the due conversion in full of this Note pursuant to and in accordance with Section 4 hereof, any and all payment obligations of the Company
under this Note and the Convertible Note Purchase Agreement shall be fully discharged.
(b) All amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall be paid to the Purchaser in lawful money of
the United States of America within three (3) Business Days after the Due Date. The Company shall make such payments of the unpaid Principal
Amount (other than any portion of the Principal Amount converted pursuant to Section 4 hereof), together with accrued and unpaid interest
thereon, to the Purchaser by wire transfer of immediately available funds for the account of the Purchaser as the Purchaser may designate and
notify in writing to the Company at least five (5) Business Days prior to the payment date. Payment shall be credited first to accrued interest due
and payable, and any remainder shall be applied to the outstanding Principal Amount.
(c) All payments of principal and interest in respect of this Note by or on behalf of the Company shall be made free and clear of, and
without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or on behalf of the Cayman Islands or the PRC or any political subdivision thereof or any
authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is
required by law.
3. Seniority. This Note ranks senior in right of payment to any of the Company’s other indebtedness that is expressly subordinated in right of
payment to this Note, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so subordinated, junior
in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and
structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
4. Conversion.
(a) Conversion.
(i) During the period from and including the 181st day after the Date of Issuance to and including the Maturity Date, the Purchaser shall, by
written notice to the Company, have the right but not the obligation to convert all or any portion of the outstanding Principal Amount to a number
of Conversion Shares at the applicable Conversion Price, provided, however, that the Purchaser shall not exercise such right to convert more than
twice. As used in this Note, “Conversion Price” means US$1.663, as may be adjusted pursuant to Section 4(d) hereof.
(ii) The number of the Conversion Shares to be issued upon any conversion pursuant to this Section 4(a) shall be equal to the quotient obtained by
dividing the Principal Amount subject to such conversion by the Conversion Price.
A-2
(b) No Fractional Shares. Upon the conversion of this Note into the Conversion Shares, in lieu of any fractional shares to which the
Purchaser would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion
Price.
(c) Mechanics of Conversion. In the event that the Purchaser has delivered to the Company a written notice in accordance with Section 4(a)
(i) hereof specifying that the Purchaser irrevocably elects to convert this Note (whether in part or in full), the Company shall at its expense take all
actions and execute all documents necessary to effect the issuance of all the Conversion Shares (including giving all necessary instructions to
update the register of members to effect such issuance) within two (2) weeks of delivery of the applicable written notice to convert, and deliver to
the Purchaser, upon surrender of this Note, a certificate or certificates for the number of fully paid Conversion Shares issuable upon such
conversion and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares. The
Company shall not be required to issue or deliver the Conversion Shares until the Purchaser has surrendered this Note to the Company.
(d) Adjustments to Conversion Price. The Conversion Price shall be adjusted according to the following items: When any of the Principal
Amount is outstanding at any time, (a) if the Company: (i) pays dividends in the form of securities or security equivalents of the Company;
(ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the
Company (including in the form of a reverse share split) to decrease the number of shares, the then-existing Conversion Price shall be multiplied
by a fraction, whose numerator is the number of outstanding securities of the Company immediately before the occurrence of the matter, and
whose denominator is the number of outstanding securities of the Company immediately after the occurrence of the matter; (b) if the Company
issues Ordinary Shares to all or substantially all shareholders as a class by way of rights issue, or issue or grant to all or substantially all
shareholders as a class, by way of rights issue, of options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at
less than 95 per cent of the closing price of the ADSs divided by the ratio of ADS to share (the “Market Price Per Share”) on the last trading day
preceding the date of the announcement of the terms of the issue or grant, the Conversion Price shall be multiplied by a fraction, whose numerator
is the number of Ordinary Shares in issue immediately before such announcement plus the number of Ordinary Shares which the aggregate
amount (if any) payable for the Ordinary Shares issued by way of rights issue or for the options or warrants or other rights issued or granted by
way of rights issue and for the total number of Ordinary Shares comprised therein would subscribe, purchase or otherwise acquire at Market Price
Per Share, and the denominator is the number of Ordinary Shares in issue immediately before such announcement plus the aggregate number of
Ordinary Shares issued or, as the case may be, comprised in the issue or grant, or (c) if the Company makes (or fixes a record date for the
determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in any
other asset or property (including cash, but excluding dividends by securities or security equivalents of the Company), then, and in each such
event, provision shall be made so that, upon conversion of the Note thereafter, the Purchaser shall receive, in addition to the number of Ordinary
Shares issuable thereon, such other asset or property which the holder of such Ordinary Shares would have received in connection with such event
had the
A-3
outstanding Principal Amount been converted into Ordinary Shares immediately prior to each such event, all subject to further adjustment as
provided herein. Any adjustment made according to the aforesaid conditions shall come into effect immediately after the record date of deciding
the shareholders having rights to obtain dividends or allocations and, for the purpose of any share split, incorporation or reclassification, shall
come into effect immediately after such matters come into effect.
5. Events of Default. Each of the following events shall be considered an event of default (the “Event of Default”) with respect to this Note:
(a) Failure to Pay. The Company shall fail to pay when due (i) any principal payment or (ii) any interest payment or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten (10) Business Days after the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company or any of its Significant Subsidiaries shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability
to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose
of effecting any of the foregoing. As used in this Note, “Significant Subsidiary” means any Subsidiary of the Company, the total assets (after
intercompany eliminations) of which exceeds twenty percent (20%) of the consolidated total assets of the Company and its subsidiaries as of the
end of the Company’s most recently completed fiscal year.
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the
Company or any of its Significant Subsidiaries, or of all or a substantial part of their property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or its Significant Subsidiaries, or the debts thereof, under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and either (i) an order for relief shall be entered or (ii) such
proceeding shall not be dismissed or discharged within 45 days of commencement.
(d) Cessation to be a Public Company. The Company’s securities shall cease to be publicly traded on the Nasdaq Global Select Market.
(e) Change of Control. Any Change of Control shall occur. For the purpose of this provision 5(e), a “Change of Control” occurs if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than (i) Mr. Kun Dai, or any of his Affiliates,
(ii) any of Warburg Pincus, TPG Capital, 58.com Holdings Inc. or any of its respective Affiliates, or (iii) any “group” solely consisting of the
Persons set forth in clauses (i) and (ii) above, is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the Exchange Act),
directly or indirectly, of 50% or more voting power of the Company’s issued and outstanding securities.
A-4
(f) Breach of Other Obligations. The Company fails to perform or comply with one or more of its other obligations in this Note or the
Convertible Note Purchase Agreement in any material respect, or breach any representation or warranty of the Company contained in the
Convertible Note Purchase Agreement in any material respect, and in each case such failure is not capable of being cured or is not cured within
thirty (30) days.
(g) Material Adverse Effect. Any one or more events, facts, conditions, changes or developments shall have occurred that have caused or
constituted or could be reasonably expected to cause or constitute, either individually or in the aggregate, a Material Adverse Effect.
(h) Cross-Default. Any Significant Indebtedness (as defined below) of the Company or its Subsidiaries is not paid when due or (as the case
may be) within any originally applicable grace period, or any such Significant Indebtedness becomes (or becomes capable of being declared) due
and payable prior to its stated maturity otherwise than at the option of the Company or its Subsidiaries, or the Company or its Subsidiaries fails to
pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this Section 5(i),
“Significant Indebtedness” means, with respect to each event mentioned above, one or more indebtedness with an aggregate amount of no less
than US$10,000,000 or its equivalent in any other currency or currencies.
(i) Unsatisfied Judgment. One or more judgment(s) or order(s) for the payment of an aggregate amount of no less than US$10,000,000 is
rendered against the Company or its Subsidiaries and continue(s) unappealed, unsatisfied and unstayed for a period of sixty (60) days after the
date(s) thereof or, if later, the date therein specified for payment.
(j) Security Enforced. A secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a
material part of the undertaking, assets and revenues of the Company and its Subsidiaries taken as a whole.
(k) Enforcement Proceedings. A distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued
out on or against any material part of the property, assets or revenue of the Company or its Significant Subsidiaries.
(l) Winding up, etc. An order is made by any Governmental Entity having jurisdiction or an effective resolution is passed for the winding
up, liquidation or dissolution of the Company or any of its Significant Subsidiaries (other than, in the case of a Significant Subsidiary of the
Company, for the purposes of or pursuant to an amalgamation, reorganization or restructuring whilst solvent).
6. Remedies. Upon the occurrence of an Event of Default under Section 5 hereof, at the option and upon the written declaration of the Purchaser at
the Purchaser’s sole discretion, the entire unpaid Principal Amount and unpaid interest accrued thereon shall become forthwith due and payable,
and the Purchaser may immediately enforce payment of all amounts due and owing under this Note and exercise any and all other remedies
granted to it at law, in equity or otherwise. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default under
Section 5(e) hereof, the Company shall, if so requested by the Purchaser, cooperate in good faith with the Purchaser with respect to the Purchaser’s
efforts to receive equity securities of the
A-5
surviving entity (if any) in lieu of the acceleration of the Principal Amount and unpaid interest accrued thereon.
7. Prepayment. The Principal Amount or interest accrued thereon may not be prepaid prior to the Maturity Date without the written consent of the
Purchaser.
8. No Rights as Shareholder Prior to Conversion. For the avoidance of doubt, the Purchaser has not been conferred with any of the rights of a
shareholder of the Company, including the right to vote as such, by any of the provisions hereof or any provisions under the Convertible Note
Purchase Agreement, or any right (a) to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
(b) to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of
par value, or change of shares to no par value, consolidation, merger, scheme of arrangement, conveyance, or otherwise), (c) to receive notice of
meetings or to receive in-kind dividends or subscription rights or otherwise, in each case until this Note shall have been converted in whole or in
part and all the Conversion Shares issuable upon such whole or partial conversion hereof shall have been issued, as provided for in this Note and
the Convertible Note Purchase Agreement. For the avoidance of doubt, the Purchaser shall be conferred with all rights of a shareholder of the
Company immediately upon any partial or full conversion of the Note with respect to such Conversion Shares.
10. Termination of Rights.All rights under this Note shall automatically terminate when (a) all amounts owing on this Note have been paid in full or
(b) this Note is converted in full pursuant to Section 4 hereof. Upon the termination of all rights under this Note, this Note shall be surrendered by
the Purchaser to the Company and this Note so surrendered shall be cancelled and shall not be reissued. For the avoidance of doubt, the
Convertible Note Purchase Agreement shall not be terminated merely due to a termination of all rights under this Note, and shall remain in force
and effect or terminate pursuant to the terms thereof.
11. Amendments and Waivers; Notice. The amendment or waiver of any term of this Note shall be subject to the written consent of the Company and
the Purchaser. The provision of notice shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.
12. Successors and Assigns. This Note applies to, inures to the benefit of, and binds, the successors and assigns of the parties hereto; provided,
however, that no party hereto may assign its obligations under this Note without the written consent of the other party hereto. Notwithstanding
anything to the contrary, the Purchaser may, subject to applicable laws, transfer this Note to any of its Affiliates. Any transfer of this Note may
take effect by surrender of this Note to the Company and reissuance of a new note to the transferee.
13. Governing Law; Dispute Resolution. This Note shall be governed by and construed under the laws of the State of New York without regards to
principles of conflict of laws. The resolution of any controversy or claim arising out of or relating to this Note shall be conducted pursuant to the
terms of the Convertible Note Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
A-6
IN WITNESS WHEREOF, the Company has executed this Note as of the date first above written.
Uxin Limited
By:
Name:
Title:
A-7
EXHIBIT B
FORM OF 11.0% NOTE
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER SECURITIES LAWS. THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
CONVERTIBLE PROMISSORY NOTE
[·], 2019 (“Date of Issuance”)
US$[·]
FOR VALUE RECEIVED, and subject to the terms and conditions of this convertible promissory note (this “Note”), Uxin Limited, an
exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), hereby promises to pay to the order of [•], a
[company incorporated under the laws of [•]](the “Purchaser”), or its assigns, in lawful money of the United States of America the principal amount of [•]
Dollars (US$[•]) (the “Principal Amount”), plus accrued interest thereon, on [·], 2020 (the “Maturity Date”), unless earlier duly converted in full into the
Conversion Shares pursuant to and in accordance with the terms of this Note.
This Note is issued pursuant to the Convertible Note Purchase Agreement, dated July 12, 2019, by and between the Company, the
Purchaser and certain other parties thereto (the “Convertible Note Purchase Agreement”), and is subject to the terms and conditions thereof. In case of any
conflict between this Note and the Convertible Note Purchase Agreement, the provisions of the Convertible Note Purchase Agreement shall control and
govern. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Convertible Note Purchase Agreement.
the acceptance of this Note, agrees:
The following is a statement of the rights of the Purchaser and the conditions to which this Note is subject, and to which the Purchaser, by
1. Interest Rate. This Note shall bear interest on the outstanding Principal Amount at a simple interest rate of eleven percent (11.0%) per annum
from the Date of Issuance until this Note is fully repaid or redeemed; provided, that if any portion of this Note is duly converted into the
Conversion Shares pursuant to and in accordance with Section 4 hereof, interest shall cease to accrue on the portion of the Principal Amount being
converted (and, for the avoidance of doubt, continue to accrue on any outstanding Principal Amount not being converted). Accrued interest on this
Note shall be computed on the basis of a 365-day year and actual days elapsed.
2. Repayment of this Note.
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(a) Unless to the extent earlier converted into Conversion Shares pursuant to Section 4 hereof, the outstanding Principal Amount (other than
any portion of the Principal Amount converted pursuant to Section 4 hereof) and the interest accrued thereon shall be due and payable by the
Company upon the earlier of (i) the Maturity Date, and (ii) the occurrence of an Event of Default set forth in Section 5 hereof (the “Due Date”).
Upon the due conversion in full of this Note pursuant to and in accordance with Section 4 hereof, any and all payment obligations of the Company
under this Note and the Convertible Note Purchase Agreement shall be fully discharged.
(b) All amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall be paid to the Purchaser in lawful money of
the United States of America within three (3) Business Days after the Due Date. The Company shall make such payments of the unpaid Principal
Amount (other than any portion of the Principal Amount converted pursuant to Section 4 hereof), together with accrued and unpaid interest
thereon, to the Purchaser by wire transfer of immediately available funds for the account of the Purchaser as the Purchaser may designate and
notify in writing to the Company at least five (5) Business Days prior to the payment date. Payment shall be credited first to accrued interest due
and payable, and any remainder shall be applied to the outstanding Principal Amount.
(c) All payments of principal and interest in respect of this Note by or on behalf of the Company shall be made free and clear of, and
without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or on behalf of the Cayman Islands or the PRC or any political subdivision thereof or any
authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is
required by law.
3. Seniority. This Note ranks senior in right of payment to any of the Company’s other indebtedness that is expressly subordinated in right of
payment to this Note, pari passu in right of payment to any of the Company’s other indebtedness and liabilities that are not so subordinated, junior
in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and
structurally junior to all indebtedness and liabilities incurred by the Company’s Subsidiaries.
4. Conversion.
(a) Conversion.
(i) During the period from and including the 181st day after the Date of Issuance to and including the Maturity Date, the Purchaser shall, by
written notice to the Company, have the right but not the obligation to convert all or any portion of the outstanding Principal Amount to a number
of Conversion Shares at the applicable Conversion Price, provided, however, that the Purchaser shall not exercise such right to convert more than
twice. As used in this Note, “Conversion Price” means US$1.663, as may be adjusted pursuant to Section 4(d) hereof.
(ii) The number of the Conversion Shares to be issued upon any conversion pursuant to this Section 4(a) shall be equal to the quotient obtained by
dividing the Principal Amount subject to such conversion by the Conversion Price.
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(b) No Fractional Shares. Upon the conversion of this Note into the Conversion Shares, in lieu of any fractional shares to which the
Purchaser would otherwise be entitled, the Company shall pay the holder of this Note cash equal to such fraction multiplied by the Conversion
Price.
(c) Mechanics of Conversion. In the event that the Purchaser has delivered to the Company a written notice in accordance with Section 4(a)
(i) hereof specifying that the Purchaser irrevocably elects to convert this Note (whether in part or in full), the Company shall at its expense take all
actions and execute all documents necessary to effect the issuance of all the Conversion Shares (including giving all necessary instructions to
update the register of members to effect such issuance) within two (2) weeks of delivery of the applicable written notice to convert, and deliver to
the Purchaser, upon surrender of this Note, a certificate or certificates for the number of fully paid Conversion Shares issuable upon such
conversion and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares. The
Company shall not be required to issue or deliver the Conversion Shares until the Purchaser has surrendered this Note to the Company.
(d) Adjustments to Conversion Price. The Conversion Price shall be adjusted according to the following items: When any of the Principal
Amount is outstanding at any time, (a) if the Company: (i) pays dividends in the form of securities or security equivalents of the Company;
(ii) splits the outstanding securities of the Company in order to increase the number of shares; or (iii) incorporates outstanding securities of the
Company (including in the form of a reverse share split) to decrease the number of shares, the then-existing Conversion Price shall be multiplied
by a fraction, whose numerator is the number of outstanding securities of the Company immediately before the occurrence of the matter, and
whose denominator is the number of outstanding securities of the Company immediately after the occurrence of the matter; (b) if the Company
issues Ordinary Shares to all or substantially all shareholders as a class by way of rights issue, or issue or grant to all or substantially all
shareholders as a class, by way of rights issue, of options, warrants or other rights to subscribe for or purchase any Ordinary Shares, in each case at
less than 95 per cent of the closing price of the ADSs divided by the ratio of ADS to share (the “Market Price Per Share”) on the last trading day
preceding the date of the announcement of the terms of the issue or grant, the Conversion Price shall be multiplied by a fraction, whose numerator
is the number of Ordinary Shares in issue immediately before such announcement plus the number of Ordinary Shares which the aggregate
amount (if any) payable for the Ordinary Shares issued by way of rights issue or for the options or warrants or other rights issued or granted by
way of rights issue and for the total number of Ordinary Shares comprised therein would subscribe, purchase or otherwise acquire at Market Price
Per Share, and the denominator is the number of Ordinary Shares in issue immediately before such announcement plus the aggregate number of
Ordinary Shares issued or, as the case may be, comprised in the issue or grant, or (c) if the Company makes (or fixes a record date for the
determination of holders of Ordinary Shares entitled to receive) a dividend or other distribution to the holders of Ordinary Shares payable in any
other asset or property (including cash, but excluding dividends by securities or security equivalents of the Company), then, and in each such
event, provision shall be made so that, upon conversion of the Note thereafter, the Purchaser shall receive, in addition to the number of Ordinary
Shares issuable thereon, such other asset or property which the holder of such Ordinary Shares would have received in connection with such event
had the
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outstanding Principal Amount been converted into Ordinary Shares immediately prior to each such event, all subject to further adjustment as
provided herein. Any adjustment made according to the aforesaid conditions shall come into effect immediately after the record date of deciding
the shareholders having rights to obtain dividends or allocations and, for the purpose of any share split, incorporation or reclassification, shall
come into effect immediately after such matters come into effect.
5. Events of Default. Each of the following events shall be considered an event of default (the “Event of Default”) with respect to this Note:
(a) Failure to Pay. The Company shall fail to pay when due (i) any principal payment or (ii) any interest payment or other payment required
under the terms of this Note on the date due, and such payment shall not have been made within ten (10) Business Days after the date due.
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company or any of its Significant Subsidiaries shall (i) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability
to pay its debts generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any action for the purpose
of effecting any of the foregoing. As used in this Note, “Significant Subsidiary” means any Subsidiary of the Company, the total assets (after
intercompany eliminations) of which exceeds twenty percent (20%) of the consolidated total assets of the Company and its subsidiaries as of the
end of the Company’s most recently completed fiscal year.
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the
Company or any of its Significant Subsidiaries, or of all or a substantial part of their property, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the Company or its Significant Subsidiaries, or the debts thereof, under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and either (i) an order for relief shall be entered or (ii) such
proceeding shall not be dismissed or discharged within 45 days of commencement.
(d) Cessation to be a Public Company. The Company’s securities shall cease to be publicly traded on the Nasdaq Global Select Market.
(e) Change of Control. Any Change of Control shall occur. For the purpose of this provision 5(e), a “Change of Control” occurs if any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than (i) Mr. Kun Dai, or any of his Affiliates,
(ii) any of Warburg Pincus, TPG Capital, 58.com Holdings Inc. or any of its respective Affiliates, or (iii) any “group” solely consisting of the
Persons set forth in clauses (i) and (ii) above, is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 of the Exchange Act),
directly or indirectly, of 50% or more voting power of the Company’s issued and outstanding securities.
B-4
(f) Breach of Other Obligations. The Company fails to perform or comply with one or more of its other obligations in this Note or the
Convertible Note Purchase Agreement in any material respect, or breach any representation or warranty of the Company contained in the
Convertible Note Purchase Agreement in any material respect, and in each case such failure is not capable of being cured or is not cured within
thirty (30) days.
(g) Material Adverse Effect. Any one or more events, facts, conditions, changes or developments shall have occurred that have caused or
constituted or could be reasonably expected to cause or constitute, either individually or in the aggregate, a Material Adverse Effect.
(h) Cross-Default. Any Significant Indebtedness (as defined below) of the Company or its Subsidiaries is not paid when due or (as the case
may be) within any originally applicable grace period, or any such Significant Indebtedness becomes (or becomes capable of being declared) due
and payable prior to its stated maturity otherwise than at the option of the Company or its Subsidiaries, or the Company or its Subsidiaries fails to
pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this Section 5(i),
“Significant Indebtedness” means, with respect to each event mentioned above, one or more indebtedness with an aggregate amount of no less
than US$10,000,000 or its equivalent in any other currency or currencies.
(i) Unsatisfied Judgment. One or more judgment(s) or order(s) for the payment of an aggregate amount of no less than US$10,000,000 is
rendered against the Company or its Subsidiaries and continue(s) unappealed, unsatisfied and unstayed for a period of sixty (60) days after the
date(s) thereof or, if later, the date therein specified for payment.
(j) Security Enforced. A secured party takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a
material part of the undertaking, assets and revenues of the Company and its Subsidiaries taken as a whole.
(k) Enforcement Proceedings. A distress, attachment, execution, seizure before judgment or other legal process is levied, enforced or sued
out on or against any material part of the property, assets or revenue of the Company or its Significant Subsidiaries.
(l) Winding up, etc. An order is made by any Governmental Entity having jurisdiction or an effective resolution is passed for the winding
up, liquidation or dissolution of the Company or any of its Significant Subsidiaries (other than, in the case of a Significant Subsidiary of the
Company, for the purposes of or pursuant to an amalgamation, reorganization or restructuring whilst solvent).
6. Remedies. Upon the occurrence of an Event of Default under Section 5 hereof, at the option and upon the written declaration of the Purchaser at
the Purchaser’s sole discretion, the entire unpaid Principal Amount and unpaid interest accrued thereon shall become forthwith due and payable,
and the Purchaser may immediately enforce payment of all amounts due and owing under this Note and exercise any and all other remedies
granted to it at law, in equity or otherwise. Without limiting the generality of the foregoing, upon the occurrence of an Event of Default under
Section 5(e) hereof, the Company shall, if so requested by the Purchaser, cooperate in good faith with the Purchaser with respect to the Purchaser’s
efforts to receive equity securities of the
B-5
surviving entity (if any) in lieu of the acceleration of the Principal Amount and unpaid interest accrued thereon.
7. Prepayment. The Principal Amount or interest accrued thereon may not be prepaid prior to the Maturity Date without the written consent of the
Purchaser.
8. No Rights as Shareholder Prior to Conversion. For the avoidance of doubt, the Purchaser has not been conferred with any of the rights of a
shareholder of the Company, including the right to vote as such, by any of the provisions hereof or any provisions under the Convertible Note
Purchase Agreement, or any right (a) to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
(b) to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of shares, reclassification of shares, change of
par value, or change of shares to no par value, consolidation, merger, scheme of arrangement, conveyance, or otherwise), (c) to receive notice of
meetings or to receive in-kind dividends or subscription rights or otherwise, in each case until this Note shall have been converted in whole or in
part and all the Conversion Shares issuable upon such whole or partial conversion hereof shall have been issued, as provided for in this Note and
the Convertible Note Purchase Agreement. For the avoidance of doubt, the Purchaser shall be conferred with all rights of a shareholder of the
Company immediately upon any partial or full conversion of the Note with respect to such Conversion Shares.
10. Termination of Rights.All rights under this Note shall automatically terminate when (a) all amounts owing on this Note have been paid in full or
(b) this Note is converted in full pursuant to Section 4 hereof. Upon the termination of all rights under this Note, this Note shall be surrendered by
the Purchaser to the Company and this Note so surrendered shall be cancelled and shall not be reissued. For the avoidance of doubt, the
Convertible Note Purchase Agreement shall not be terminated merely due to a termination of all rights under this Note, and shall remain in force
and effect or terminate pursuant to the terms thereof.
11. Amendments and Waivers; Notice. The amendment or waiver of any term of this Note shall be subject to the written consent of the Company and
the Purchaser. The provision of notice shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.
12. Successors and Assigns. This Note applies to, inures to the benefit of, and binds, the successors and assigns of the parties hereto; provided,
however, that no party hereto may assign its obligations under this Note without the written consent of the other party hereto. Notwithstanding
anything to the contrary, the Purchaser may, subject to applicable laws, transfer this Note to any of its Affiliates. Any transfer of this Note may
take effect by surrender of this Note to the Company and reissuance of a new note to the transferee.
13. Governing Law; Dispute Resolution. This Note shall be governed by and construed under the laws of the State of New York without regards to
principles of conflict of laws. The resolution of any controversy or claim arising out of or relating to this Note shall be conducted pursuant to the
terms of the Convertible Note Purchase Agreement.
[Remainder of Page Intentionally Left Blank]
B-6
IN WITNESS WHEREOF, the Company has executed this Note as of the date first above written.
By:
Name:
Title:
Uxin Limited
B-7
Exhibit 4.33
AMENDMENT TO THE CONVERTIBLE NOTE PURCHASE AGREEMENT
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
THIS AMENDMENT TO THE CONVERTIBLE NOTE PURCHASE AGREEMENT (this “Amendment”), dated August 13th, 2019, is made by and
between each of the undersigned parties.
Reference is made to that certain Convertible Note Purchase Agreement, dated July 12, 2019, by and between Uxin Limited (the “Company”) and
PacificBridge Asset Management, acting in its capacity as the fund manager of PacificBridge Global Mezzanine 1, PacificBridge Global Mezzanine 2,
PacificBridge Overseas Pioneer 1 and PacificBridge Overseas Pioneer 2 (“PacificBridge”) (the “Convertible Note Purchase Agreement”). Capitalized
terms used and not defined in this Amendment shall have the meanings given to them in the Convertible Note Purchase Agreement, unless the context
requires otherwise.
WHEREAS, each of the undersigned, being a party to the Convertible Note Purchase Agreement, desires to effect certain amendments to the Convertible
Note Purchase Agreement; and
WHEREAS, pursuant to Section 7.3 of the Convertible Note Purchase Agreement, the Convertible Note Purchase Agreement may be amended by
another agreement in writing executed by the Company and PacificBridge.
NOW, THEREFORE, each of the undersigned agrees to amend the Convertible Note Purchase Agreement as set forth below.
Section 1. Definition of “Conversion Price” in the 10.0% Note. The last sentence of Section 4(a)(i) of Exhibit A (Form of 10.0% Note) to the
Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the following sentence:
As used in this Note, “Conversion Price” means US$1.7, as may be adjusted pursuant to Section 4(d) hereof.
Section 2. Definition of “Conversion Price” in the 11.0% Note. The last sentence of Section 4(a)(i) of Exhibit B (Form of 11.0% Note) to the
Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the following sentence:
As used in this Note, “Conversion Price” means US$1.7, as may be adjusted pursuant to Section 4(d) hereof.
Section 3. Closing Date. The last sentence of Section 2.2 to the Convertible Note Purchase Agreement shall be deleted in its entirety and replaced
by the following sentence:
“The date of the Closing (the “Closing Date”) will be October 8, 2019 or such other date as the Company and the Fund Manager may mutually
agree in writing.”
Section 4. SCHEDULE 1. Schedule 1 to the Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the following:
SCHEDULE 1
PURCHASERS AND ALLOCATIONS
[*]
For the avoidance of doubt, the detailed allocations between the Purchasers may be adjusted by the Fund Manager at its sole discretion upon a 10-day
advance written notice to the Company, as long as the total principal amounts remain US$10,690,000.
Section 5. Effectiveness. This Amendment shall become effective immediately on the date hereof.
Section 6. Effect. Except as expressly amended by this Amendment, the Convertible Note Purchase Agreement shall remain in full force and
effect as the same was in effect immediately prior to the effectiveness of this Amendment. All references in the Convertible Note Purchase Agreement to
“this Agreement” shall be deemed to refer to the Convertible Note Purchase Agreement as amended by this Amendment.
Section 7. Further Assurance. Each of the undersigned hereby agrees to execute and deliver all such other and additional instruments and
documents and do all such other acts and things as may be necessary or appropriate to effect this Amendment.
Section 8. Miscellaneous. Section 7.2 (Governing Law; Dispute Resolution), Sections 7.6 (Notices), 7.8 (Severability), 7.10 (Confidentiality),
7.13 (Headings) and 7.14 (Counterparts) are hereby incorporated into this Amendment, mutatis mutandis.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above.
Uxin Limited
/s/ Kun Dai
By:
Name: Kun Dai
Title: Director and CEO
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the date first written above.
PacificBridge Asset Management, acting in its capacity
as the fund manager of each of the Purchasers
/s/ DK LEE
By:
Name: DK LEE
Title: CEO
SECOND AMENDMENT TO
THE CONVERTIBLE NOTE PURCHASE AGREEMENT
Exhibit 4.34
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
THIS SECOND AMENDMENT TO THE CONVERTIBLE NOTE PURCHASE AGREEMENT (this “Second Amendment”), dated October 10, 2019, is
made by and between each of the undersigned parties.
Reference is made to that certain Convertible Note Purchase Agreement, dated July 12, 2019, by and between Uxin Limited (the “Company”) and
PacificBridge Asset Management, acting in its capacity as the fund manager of PacificBridge Global Mezzanine 1, PacificBridge Global Mezzanine 2,
PacificBridge Overseas Pioneer 1 and PacificBridge Overseas Pioneer 2 (“PacificBridge”) (as amended by the Amendment to the Convertible Note
Purchase Agreement, dated August 13, 2019, by and between the Company and PacificBridge, the “Convertible Note Purchase Agreement”). Capitalized
terms used and not defined in this Second Amendment shall have the meanings given to them in the Convertible Note Purchase Agreement, unless the
context requires otherwise.
WHEREAS, each of the undersigned, being a party to the Convertible Note Purchase Agreement, desires to effect certain further amendments to the
Convertible Note Purchase Agreement; and
WHEREAS, pursuant to Section 7.3 of the Convertible Note Purchase Agreement, the Convertible Note Purchase Agreement may be amended by another
agreement in writing executed by the Company and PacificBridge.
NOW, THEREFORE, each of the undersigned agrees to further amend the Convertible Note Purchase Agreement as set forth below.
Section 1. Definition of “Closing”. The definition of “Closing” in the Convertible Note Purchase Agreement shall be deleted in its entirety
and replaced by the following sentence:
“Closing” with respect to the 10.0% Note or the 11.0% Note, as the case may be, shall have the meaning specified in Section 2.2 of this
Agreement.
Section 2. Definition of “Closing Date”. The definition of “Closing Date” in the Convertible Note Purchase Agreement shall be deleted in
its entirety and replaced by the following sentence:
“Closing Date” shall mean (a) with respect to the 10.0% Note, October 10, 2019 or such other date as the Company and the Fund Manager may
mutually agree in writing, or (b) with respect to the 11.0% Note, November 8, 2019 or such other date as the Company and the Fund Manager may
mutually agree in writing.
Section 3. Closing Date. The last sentence of Section 2.2 to the Convertible Note Purchase Agreement shall be deleted in its entirety and
replaced by the following sentence:
The date of the Closing of 10.0% Note will be October 10, 2019 or such other date as the Company and the Fund Manager may mutually agree in
writing. The date of the Closing of 11.0% Note will be November 8, 2019 or such other date as the Company and the Fund Manager may mutually
agree in writing.
Section 4. SCHEDULE 1. Schedule 1 to the Convertible Note Purchase Agreement shall be deleted in its entirety and replaced by the
following:
SCHEDULE 1
PURCHASERS AND ALLOCATIONS
[*]
For the avoidance of doubt, the detailed allocations between the Purchasers may be adjusted by the Fund Manager at its sole discretion upon a 10-day
advance written notice to the Company, as long as the total principal amounts remain US$10,690,000.
Section 5. Consequential Amendments. Necessary consequential amendments to the Convertible Note Purchase Agreement shall be deemed
to be made to account for the fact that two Closings rather than one single Closing are to occur pursuant to the Convertible Note Purchase Agreement.
Section 6. Effectiveness. This Second Amendment shall become effective immediately on the date hereof.
Section 7. Effect. Except as expressly amended by this Second Amendment, the Convertible Note Purchase Agreement shall remain in full
force and effect as the same was in effect immediately prior to the effectiveness of this Second Amendment. All references in the Convertible Note
Purchase Agreement to “this Agreement” shall be deemed to refer to the Convertible Note Purchase Agreement as amended by this Second Amendment.
Section 8. Further Assurance. Each of the undersigned hereby agrees to execute and deliver all such other and additional instruments and
documents and do all such other acts and things as may be necessary or appropriate to effect this Second Amendment.
Section 9. Miscellaneous. Section 7.2 (Governing Law; Dispute Resolution), Sections 7.6 (Notices), 7.8 (Severability), 7.10
(Confidentiality), 7.13 (Headings) and 7.14 (Counterparts) are hereby incorporated into this Second Amendment, mutatis mutandis.
[remainder of this page intentionally left blank]
2
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment on the date first written above.
Uxin Limited
By:
/s/ Kun Dai
Name: Kun Dai
Title: Director and CEO
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment on the date first written above.
PacificBridge Asset Management, acting in its capacity as the fund manager of each of the
Purchasers
By:
/s/ DK LEE
Name: DK LEE
Title: CEO
ASSETS TRANSFER AGREEMENT
September 30, 2019
Exhibit 4.35
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
1
This Assets Transfer Agreement (this “Agreement”) is made on September 30, 2019 by and between:
Assets Transfer Agreement
(1) Kai Feng Finance Lease (Hangzhou) Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic China, with its registered address at: Room 1814, Unit 1, Building 3, Wanda Commercial Center, Gongshu District, Zhejiang Province
(“Kai Feng”);
(2) Youqin (Shanxi) Finance Lease Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Block A-702, Midwest Lugang Finance Town, No.99 Gangwu Avenue, International Harbor
District, Xi’an, Shaanxi Province (“Youqin”);
(3) Youxin (Shanghai) Used Car Business Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Room D-09, Floor 2, Building 1, No.198 Huashen Road, China (Shanghai) Pilot Free Trade Zone
(“Youxin”);
(4) Boyu Finance Lease (Tianjin) Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s Republic
of China, with its registered address at: No. 565 Lanzhou Road (6-4-47 Haize Logistics Park), Tianjin Pilot Free Trade Zone (Dongjiang Bonded Port
Area) (“Boyu”);
(5) Shenzhen Youxin Pengda Used Car Broker Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Door 5, Youxin Pengcheng Used Car Transaction Market, at the intersection of Chaguang
Road and Shigu Road, Xili Street, Nanshan District, Shenzhen (“Pengda”);
(6) Chebole (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 323609, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing
(“Chebole”);
(7) Youfang (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 323609, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing
(“Youfang”);
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(8) Youxin (Shanxi) Information Technology Group Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of
the People’s Republic of China, with its registered address at: Block A-701, Midwest Lugang Finance Town, No.99 Gangwu Avenue, International
Harbor District, Xi’an (“Youxin Shanxi”, hereinafter referred to as “Transferor” individually or collectively with Kai Feng, Youqin, Youxin,
Pengda, Autobole and Youfang);
(9) Uxin Limited, a limited liability company incorporated and existing in accordance with the laws of the Cayman Islands, with its registered office at
the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“Uxin Cayman”);
(10) The entities listed in Exhibit I (“Uxin Affiliates”, and each a “Uxin Affiliate”; Uxin Affiliates, Uxin Cayman and the Transferors are referred to as
“Uxin Group Companies” and/or “Warrantors”, and each a “Uxin Group Company” and/or “Warrantor”);
(11) Tianjin Wuba Rongxin Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 1840-130, Floor 18, Baofeng Building, No. 3678, Xinhua Road, Tianjin Pilot Free
Trade Zone (CBD) (“Tianjin Wuba Rongxin” or “Transferee”);
(12) Tianjin Wuba Jinfu Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s Republic of China,
with its registered address at: Room 1902, Floor 19, Jinzuo Plaza, No.5 Meiyuan Road, Huayuan Industrial Zone, Binhai Hi-tech District, Tianjin
(“Tianjin Wuba Jinfu”); and
(13) Wuba (Shenzhen) Finance Lease Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Room 201, Building A, No.1 Qianwan Road (No. 1), Qianhai Shenzhen-Hong Kong Cooperation
Zone, Shenzhen (resided in Shenzhen Qianhai Business Secretary Co., Ltd.) (“Wuba Finance Lease”, hereinafter referred to as “Wuba Parties”
collectively with Tianjin Wuba Rongxin and Tianjin Wuba Jinfu).
For the purpose herein, each of the undersigned parties listed above is referred to herein individually as a “Party” and collectively as the “Parties”.
WHEREAS:
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(1) Each Transferor agrees to transfer or authorize all the Underlying Assets (as defined below) and all corresponding rights and interests related to such
Underlying Assets to the Transferee, and the Transferee agrees to pay corresponding consideration to the Transferor in accordance with this
Agreement.
(2) The Transferee agrees to accept all the Underlying Assets from the Transferor in accordance with this Agreement, and enter into this Agreement with
respect to such matters relating to the transfer of the Underlying Assets.
(3) The Transferee has set up a Red Chip and VIE structure (the “VIE structure”), and the shareholders of the Transferee have, whether through its
affiliate or not, set up a Cayman company, Golden Pacer (“Wuba Jinfu Cayman”, a limited liability company incorporated and existing under the
laws of the Cayman Islands, with its registered address at Harnees Fiduciary (Cayman) Limited, 4th Floor, Harbourplace, 103 South Church Street,
P.O. Box 10240, Grand Cayman KY 1-1002, Cayman Islands), which in turn set up a series of onshore and offshore companies and which entered
into a series control agreements in order to form the contractual control Tianjin Wuba Rongxin by Wuba Jinfu Cayman.
NOW, THEREFORE, the Parties hereto agree as follows:
1 Definitions
1.1 For the purpose herein, the following terms shall have the meaning assigned to them respectively hereunder, unless otherwise definition is given in
the text of this Agreement:
“this Transaction” shall mean the Transfer of Assets (as defined in Section 2.1 herein) as well as the Capital Increase of the Transferor (as defined
in Section 3.2.2 herein).
“Underlying Business” shall mean the loan facilitation business faced to C-end customers.
“Underlying Intellectual Property Rights” shall mean the intellectual property rights relating to the Underlying Business that the Transferor and/or
the corresponding Uxin Group Company purposes to transfer or authorize (as the case maybe) to the Transferee (or its designated Person) in
accordance with the terms and conditions provided herein, including but not limited to the Underlying Copyrights, the Underlying Patents and Other
Intellectual Property Rights.
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“Underlying Copyrights” shall mean the computer software copyrights that the Transferor and/or the corresponding Uxin Group Company
purposes to authorize to the Transferor (or its designated Person) in accordance with the terms and conditions provided herein, as listed in Appendix
II hereto.
“Underlying Patents” shall mean the patents or patent application rights that the Transferor and/or the corresponding Uxin Group Company
purposes to authorize to the Transferor (or its designated Person) in accordance with the terms and conditions provided herein, as listed in Appendix
III hereto.
“Other Underlying Intellectual Property Rights” shall mean other the Underlying Intellectual Property Rights that the Transferor and/or the
corresponding Uxin Group Company purposes to authorize to the Transferor (or its designated Person) in accordance with the terms and conditions
provided herein, (including but not limited to the Underlying Business related systems and its related programs, source codes, object codes,
executable codes and related files, as well as data and information therein; he Underlying Business related risk control data, blacklist, operation data
as well as other data and information).
“Underlying Prepayment” shall mean the expenses for advertising promotion of the Underlying Business prepaid by corresponding Uxin Group
Company, which amounts to RMB[*].
“Underlying Interest Income Payable to Banks” shall mean the interest income that is payable but has not yet been paid to the relevant banks in
relation to the Assets with Transferable Security Deposit and Assets with Non-Transferable Security Deposit.
“Underlying Assets” shall mean the Assets with Transferable Security Deposit, the Assets with Non-Transferable Security Deposit, the Underlying
Overdue Repurchased Assets, the Underlying Self-Held Assets, the Underlying Repurchased Assets Upon Repayment, the Underlying Re-
Transferred Assets, the Underlying ICBC Loan Facilitation Assets, the Underlying Intellectual Property Rights, the Underlying Prepayment and the
Underlying Interest Income from Interest Payable to Banks as set forth in Article 2 herein (the Assets with Transferable Security Deposit, the Assets
with Non-Transferable Security Deposit, the Underlying Overdue Repurchased Assets, the Underlying Self-Held Assets, Underlying Repurchased
Assets Upon Repayment, the Underlying Re-Transferred Assets and the Underlying ICBC Loan Facilitation Assets are subject to any adjustment (if
necessary) as agreed by the Transferor and the Transferee under the Financing Partner Contract (as defined hereunder)).
“Laws” shall mean laws, regulations, ordinances, provisions, detailed rules, standards, orders, provisions or regulatory documents of the PRC or
other jurisdictions.
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“Encumbrance” shall mean any security interest, pledge, mortgage, lien (including without limitation the right of cancellation and right of
subrogation), lease, license, encumbrance, preferential arrangement, restrictive covenant, condition or restriction of any kind, including without
limitation any restriction on the use, voting, transfer, receipt of income or exercise of any other attributes of ownership.
“Liabilities” shall mean any and all debts, liabilities and obligations, whether cumulative or fixed, absolute or contingent, due or not due, determined
or determinable, including but not limited to debts, liabilities and obligations arising from any laws, demands or government instructions and arising
from any contracts, agreements, arrangements or commitments.
“Business Day” shall mean a business day for banks in China or Hong Kong or the United States to open to the public (except Saturday, Sunday and
statutory holidays).
“Related Party” includes Related Enterprises and Related Persons. “Related Enterprise” shall mean, in respect of one party, any entity that, directly
or indirectly, Controls, is Controlled by, or is under common Control with such party; “Related Person” shall mean the close relatives of a natural
person, including parents, spouses, siblings and their spouses, adult children and their spouses.
“Transaction Document” shall mean this Agreement and its Exhibits, the Domestic Capital Increase Agreement of the Transferor (as defined in
Section 3.2.2) and other legal documents relating to this Transaction, as well as resolutions and other legal documents relating to this Transaction
executed at the request of the Transferee.
“Control”, with respect to the relationship between or among two or more persons or entities, means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the affairs, business, management or decisions of another Person, this Control may
be exercised through ownership of equity interest, voting or voting securities, as trustee or executor, by contract, agreement arrangement, trust
arrangement or otherwise.
“Accounting Standards” shall mean the laws, statues, rules, regulations, standards and systems on finance and accounting promulgated by any
Governmental Authority in China.
“Cut-Off Date” shall mean June 30, 2019 (the specific date of closing date is subject to the adjustment mechanism mentioned in Section 7.1.12
herein).
“U.S. Dollars” shall mean US$, or the official currency of the United States of America.
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“Claims” shall mean any actions, suits, petitions, appeals, arbitration applications, demands, claims, and notices on noncompliance, investigations,
settlement rulings or settlement agreements initiated by any Governmental Authority or initiated towards any Governmental Authority.
“Renminbi” (RMB) shall mean the legal currency of the People’s Republic of China.
“Trade Secret” shall mean commercial secret, know-how and other confidential or proprietary technologies, business and other materials, including
but not limited to the manufacturing or production process and know-how, research and development materials, technologies, drawings, standards,
designs, planning, proposals, technical specification, data for financial, marketing and business, pricing and cost materials, business and marketing
planning, list and materials of customers and suppliers, and all rights available in any jurisdiction to restrict the use or disclosure of each item above.
“Tax” or “Taxation” shall mean any and all taxes, fees, levies, duties, tariffs, and other similar charges of any kind (together with any and all
interests, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including,
without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use,
payroll, employment, social security, unemployment compensation; taxes or other charges in the nature of excise, withholding, transfer, value added,
or business taxes; and customs’ duties, tariffs, and similar charges. “Tax,” “Taxation,” as used in this Agreement shall, unless otherwise specified, be
construed as taxes and duties.
“Mall Business” shall mean all vehicle selling and trading business completed online through the online platform of Uxin Group Company only (for
avoidance of doubt, the above-mentioned online platform of Uxin Group Company shall refer to xin.com, Youxin second-hand vehicle APP and
other online platforms independently developed and used by Uxin Group Companies).
“Market Business” shall mean any vehicle selling and trading business and related businesses that are not conducted through the Mall Business.
“Financial Business of the Market Business” shall mean the financial businesses relating to the Market Business (including but not limited to
finance lease business, auto loan business and loan facilitation business).
“Action” shall mean any claim, suit, petition, arbitration, administrative proceeding, inquiry, investigation and other legal proceedings initiated by or
before any Governmental Authority.
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“Business License” shall mean the business license issued by the administrative department for industry and commerce.
“Liability” shall mean all payment obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, debts, liabilities and obligations arising under any Law, Action or Governmental Order and any contract,
agreement, arrangement, covenant or undertaking, including, without limitation, (i) amounts borrowed or raised, (ii) acceptance credit, documentary
letter of credit or commercial paper loan, (iii) any bond, paper, loan, draft or similar instruments, (iv) deferred payment as to the procured assets or
services, amount payable as to the performance of contractual obligations, any liquidated damages, (v) payment under the lease agreement with its
primary purpose to raise funds or to finance in order to purchase the leased property (whether the lease agreement is in relation to land, machinery,
equipment, or other items); (vi) guarantee, performance bond, stand-by letter of credit, or other documents to secure the performance of a contract,
and (vii) mortgage, security or other guaranty on financial losses in respect of the obligations of any Person.
“Governmental Authority” shall mean any central, local government, regulatory, approval or administrative agency, department or commission, or
any court, tribunal, judicial or arbitral institution of the PRC or of any country with competent jurisdiction other than the PRC.
“Governmental Order” shall mean any order, judgment, injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
“Intellectual Property Rights” shall mean all worldwide rights, regardless of if it is protected, created, and generated by PRC Law and any other
jurisdictions, arising out of or in connection with (i) inventions, creations, utility models, industrial designs, whether or not patentable or physically
used or patentable under PRC Laws and other foreign laws and regulations; (ii) patents, patent applications, invention registrations or any
improvements thereto, whether or not registered; (iii) trademarks, service marks, trade dress, logos, trade names or business names, whether or not
registered; (iv) copyrights (whether or not registered), copyright registrations or applications for copyright registrations; (v) software and systems,
including computer programs, source code, object code, executable code and related documentation, and the data and information contained therein;
(vi) trade secrets (including but not limited to manufacturing and production processes and know-how, research and development materials,
technology, drawings, designs, schemes, technical data, financial, marketing and business data, pricing and cost information, Business and marketing
plans, customer and supplier directories and information, and other confidential or proprietary information), commercial information (whether
confidential or not), proprietary or non-patent technology(vii) industrial designs, whether or not registered; (viii) databases and data; (ix) domain
names, web sites, and web pages (x) goodwill; (xi) accounts and account numbers on third-party platforms such as the Apple Store and Android
platforms, and new media platforms such as Weibo and WeChat; (xii) any medium in any form for any of the foregoing; (xi) any right to obtain or
apply for patent rights or register trademark rights, copyrights and domain names; (xiii) any right to claim damages, expenses or attorney’s fees for
infringement or misuse of any of the foregoing.
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“Material Adverse Impact” shall mean any of the following circumstances, changes or impacts that (i) may cause or have sufficient evidence to
show that they may cause adverse impacts on the existence, business, assets, intellectual property rights, liabilities, operating results or financial
status of any Underlying Assets, and such impacts reach or exceed RMB500,000; or (ii) may cause material adverse impact to the government
authorization of the Underlying Assets, or there is sufficient evidence to show that it may have a significant adverse impact; (iii) it has or has
sufficient evidence to show that it may have a significant adverse impact on the ability of the corresponding parties to perform this Agreement and
other transaction documents.
“China” shall mean the People’s Republic of China, for purpose of this Agreement only, excluding the Hong Kong Special Administrative Region,
Macau Special Administrative Region and Taiwan.
“Person” means any natural person, partnership, proprietorship, enterprise legal person (limited liability company or company limited by shares),
unincorporated enterprise (association or trust social organization), unincorporated organization or other Person and Governmental Authority.
1.2 Unless otherwise specified, any reference to a section, clause, list, exhibit or appendix of this Agreement is a reference to the section, clause, list,
exhibit or appendix of this Agreement.
1.3 Any reference to a statute, statute, regulation or ordinance shall be construed as a reference to such statute, statute, regulation or ordinance as from
time to time in force, as amended, replaced or re-enacted and shall include any subordinate legislation made under it.
1.4 Words such as “including” and other similar expressions are not intended to be restrictive and shall be construed as “including, without limitation.”
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1.5 Words importing the singular shall include the plural and vice versa; words importing a gender shall include all gender meanings.
1.6 The table of contents and headings for this Agreement are for convenience only and do not affect in any way the content or interpretation of any
term of this Agreement.
1.7 The appendices and schedules are integral parts of this Agreement and have the same effect as the main content of this Agreement. All references to
this Agreement include the Appendices and Schedules.
1.8 References to writing or written shall include any mode of reproducing words in a legible and non-transitory form.
2 Transfer of Assets
2.1 Subject to the terms and conditions contained herein, each Transferor hereby agrees to assign, authorize, transfer and deliver to the Transferee
prior to the Cut-Off Date (as defined below), and the Transferee agrees to accept the assignment, authorization of the Underlying Assets from each
Transferor prior to the Cut-Off Date.
The parties hereto further confirm and agree that, with respect to the aforesaid Underlying Assets accepted by the Transferee from the Transferor
or authorized by the Transferor, the Transferee will be the Person accepting the said Underlying Assets according to its own instruction or at its
own option; and the Transferor shall transfer, authorize, assign and deliver the Underlying Assets to the Person designated by the Transferee, and
the Transferee shall notify the Transferor of the information of the Person accepting the transfer of the Underlying Assets in a timely manner.
(hereinabove referred to as the “ Transfer of Assets”).
2.2 Underlying Assets Transfer Arrangement
(1) Assets with Transferable Security Deposit
Such assets as listed in Appendix V hereto, to the extent that the security deposit of which as of the Cut-off Date can be transferred to the bank
account of the Transferee or its designated Person (excluding the assets in the list of sued assets under Appendix XVII hereto) (the “Assets with
Transferable Security Deposit”), shall be transferred and related rights and obligations of which shall be carried on pursuant to the following
mechanism:
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(i) Prior to the Cut-Off Date, the Transferors and the corresponding Uxin Group Companies shall cause all of the security deposit of such the
Assets with Transferable Security Deposit (“Transferable Security Deposit”) to be wired to the bank account of the Transferee or its
designated Person opened at the corresponding bank to the Assets with Transferable Security Deposit in such way and mechanism
satisfactory to the Transferors and the Transferee;
The Transferors and the corresponding Uxin Group Companies hereby agree and undertake that, they shall ensure that the bank
corresponding to such Assets with Transferable Security Deposit shall confirm, acknowledge and agree under the corresponding
Financing Partner Contract (as defined below) that such Person that actually enjoys the ownership rights and accompanied rights (if any)
to such Transferable Security Deposit shall change from the Transferor to the Transferee or its designated Person from the date when the
corresponding Financing Partner Contract is executed, from which the Transferee or its designated Person shall be entitled to all rights
and accompanied rights (if any) to and in the Transferable Security Deposit, and it shall provide the Transferee with corresponding T/T
memo and bank statement affixed with the official stamp of the bank;
The Transferors and the corresponding Uxin Group Companies shall undertake that the balance of the Transferable Security Deposit as of
the Closing Date shall not be less than RMB[*], and the change of the Transferable Security Deposit beginning from the Cut-Off Date
shall comply with the principles stated in Section 7.10 herein, and shall be adjusted and settled accordingly pursuant to the
Supplementary Agreement described under Section 4.5.14.
(ii) At the same time when the agreement under paragraph (i) above is completed and subject to the following conditions, with respect to the
consumer overdue repayment generated from the Assets with Transferable Security Deposit in the future, the Transferee or its designated
Person agrees to assume guarantee obligation of repayment pursuant only to paragraph (b) below (the “Guarantee Obligation for Assets
with Transferable Security Deposit”); the Parties hereto further confirm and agree that, the Transferee and its designated Person shall
assume the aforesaid guarantee obligation subject to the following conditions:
(a) The Transferable Security Deposit of the Assets with Transferable Security Deposit has been transferred to the bank account of the
Transferee or its designated Person opened at the corresponding bank to the Assets with Transferable Security Deposit, and the
Transferee or its designated Person is entitled to the ownership rights and other accompanied rights to and in the Transferable
Security Deposit;
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(b) With respect to the Guarantee Obligation for Assets with Transferable Security Deposit, the Transferors will provide all scope and
details of the guarantee obligation to the Transferee and disclose the same in Appendix VI hereto; notwithstanding the forgoing,
particularly, the Transferors and Uxin Group Companies understand, acknowledge and agree that the Guarantee Obligation for
Assets with Transferable Security Deposit of the Transferee shall be subject to what is expressly specified under the corresponding
Financing Partner Contract then executed. The Transferee and its Related Parties will not assume any other guarantee or warranty
obligation and/or responsibility for the Assets with Transferable Security Deposit other than those expressly specified in the
corresponding Financing Partner Contracts;
(c) The Transferors and the corresponding Uxin Group Companies shall transfer and deliver the data and documents relating to the
Assets with Transferable Security Deposit (including but not limited to the contracts and agreements signed with debtors
(consumers), automobile mortgage data, automobile mortgage registration data, automobile registration ownership certificates, all
agreements and documents for repayment demand, risk control examination and approval records and supporting data and
information) to the Transferee and its designated Person in such way and mechanism satisfactory to the Transferee before the Cut-Off
Date;
(d) The Transferors and the corresponding Uxin Group Companies have taken the measures satisfactory to the Transferee (including but
not limited to the issuance of a power of attorney, etc.) to ensure the Transferee (or its designated Person) may in future make loan
collection from the corresponding consumers of the Assets with Transferable Security Deposit in the name of Uxin Group Company;
(e) The Transferors shall ensure the corresponding entity of the Transferors to the Assets with Transferable Security Deposit (i.e., the
corresponding entity of the Transferor corresponding to the Assets with Transferable Security Deposit listed in Appendix V) shall
maintain good operation and existence, and there has been no circumstances under which such Transferor and/or corresponding Uxin
Group Company are unable to collect payment and assets and/or to pay the aforesaid amounts and assets collected to the Transferee
(or its designated Person).
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(iii) From the Closing Date, the actual ownership rights and accompanied rights (if any) to and in the Assets with Transferable Security
Deposit (Transferable Security Deposit and its accompanied rights and property rights, the rights to collect loan, the vehicle or similar
assets from consumers corresponding to the Assets with Transferable Security Deposit) shall be entitled to the Transferee and its
designated Person; and subject to paragraph (ii) above, the Guarantee Obligation for the Assets with Transferable Security Deposit
expressly agreed in the corresponding Financing Partner Contract shall be assumed by the Transferee or its designated Person.
Notwithstanding the forgoing, the Transferors and Uxin Group Companies hereby understand, acknowledge and undertake that, in order
to ensure that the Transferee or its designated Person has the power to collect loan from consumers and receive the collected amount,
vehicle or similar assets from consumers corresponding to the Assets with Transferable Security Deposit in the future after it performs its
Guarantee Obligations for the Assets with Transferable Security Deposit, the Transferors and the corresponding Uxin Group Companies
shall provide cooperation, assistance and support pursuant to such method and mechanism reasonably requested by the Transferee
(including but not limited to notifying the consumers corresponding to the Assets with Transferable Security Deposit that the Transferee
or its designated Person is the lawful owner and collecting Person (if necessary), assisting in settling the lawsuits of the Assets with
Transferable Security Deposit and any other issues requiring the cooperation, assistance and support from the Transferors or the
corresponding Uxin Group Companies).
(2) Assets with Non-Transferable Security Deposit
Such assets as listed in Appendix V hereto, to the extent that the security deposit of which as of the Cut-off Date cannot be transferred to the
bank account of the Transferee or its designated Person (excluding the assets in the list of sued assets under Appendix XVII hereto) (the
“Assets with Non-Transferable Security Deposit”) shall be transferred and related rights and obligations shall be taken over pursuant to the
following mechanism:
(i) The Transferors hereby confirm and procures the bank corresponding to the Assets with Non-Transferable Security Deposit to confirm
and undertake before the Cut-Off Date, in such way and through such mechanism (including but not limited to through express
confirmation in the corresponding Financing Partner Contract) accepted by the Transferee, that: (a) such Person that actually enjoys the
ownership rights and accompanied rights (if any) to the security deposit of the Assets with Non-Transferable Security Deposit (the “Non-
Transferable Security Deposit”) shall change from the Transferor to the Transferee or its designated Person from the date when the
corresponding Financing Partner Contract is executed, from which the Transferee or its designated Person shall be entitled to all rights
and accompanied rights (if any) to and in the Non-Transferable Security Deposit; (b) if, after the execution date of the Financing Partner
Contract for the Assets with Non-Transferable Security Deposit any of Non-Transferable Security Deposit is released, all of such amount
shall be released to the settlement account of the Transferee or its designated Person opened in the corresponding bank to such Assets
with Non-Transferable Security Deposit.
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(ii) The Transferor and Uxin Group Company hereby irrevocably acknowledge, understand, undertake and ensure that: (a) as of the Cut-Off
Date, the balance of Non-Transferable Security Deposit shall not be less than RMB[*]; (b) the amount of Non-Transferable Security
Deposit released pursuant to forgoing Paragraph (i)(b) to the Transferee and its designated Person shall not be less than RMB[*], and if
the amount of Non-Transferable Security Deposit received by the Transferee or its designated Person pursuant to the forgoing Paragraph
(i)(b) after the release of the non-Transferable Security Deposit is lower than the aforesaid amount, then the Transferors and Uxin Group
Companies shall, jointly and severally and within three (3) days, compensate the gap to the Transferee or its designated Person in such a
way or through such a mechanism as accepted by the Transferee or its designated Person, except only when the amount of Non-
Transferable Security Deposit released to the Transferee or its designated Person pursuant to Paragraph (i)(b) which is lower than
RMB[*] is attributable to reasons accountable by the Person controlled Wuba Parties and Wuba Jinfu Cayman, in which case, the
Transferor and Uxin Group Company shall not be obligated to make the aforesaid compensation. In order to realize the undertaking
hereunder made by the Transferors and Uxin Group Companies, the Transferors and Uxin Group Companies shall agree to issue a letter
of guarantee satisfactory to the Transferee and its designated Person on the date hereof.
(iii) At the same time when the agreement under paragraph (i) and (ii) above is completed and subject to the following conditions, with
respect to the consumer overdue repayment generated from the Assets with Non-Transferable Security Deposit in the future, the
Transferee or its designated Person agrees to assume guarantee obligation of repayment pursuant only to paragraph (b) below (the
“Guarantee Obligation for Assets with Non-Transferable Security Deposit”); the Parties hereto further confirm and agree that, the
Transferee and its designated Person shall assume the aforesaid guarantee obligation subject to the following conditions:
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(a) The Non-Transferable Security Deposit has, pursuant to the mechanism under Paragraph (i) and (ii), been confirmed by the
Transferors and related banks that the corresponding rights has been transferred to the Transferee and its designated Person, and the
Transferors and the corresponding Uxin Group Companies have issued a letter of guarantee to the Transferee pursuant to the
mechanism under paragraph (ii) above.
(b) With respect to the Guarantee Obligation for Assets with Non-Transferable Security Deposit, the Transferors will provide all scope
and details of the guarantee obligation to the Transferee and disclose the same in Appendix VI hereto; notwithstanding the forgoing,
particularly, the Transferors and Uxin Group Companies understand, acknowledge and agree that the Guarantee Obligation for
Assets with Non-Transferable Security Deposit of the Transferee shall be subject to what is expressly specified under the
corresponding Financing Partner Contract then executed. The Transferee and its Related Parties will not assume any other guarantee
or warranty obligation and/or responsibility for the Assets with Non-Transferable Security Deposit other than those expressly
specified in the corresponding Financing Partner Contracts;
(c) The Transferors and the corresponding Uxin Group Companies shall transfer and deliver the data and documents relating to the
Assets with Transferable Security Deposit (including but not limited to the contracts and agreements signed with debtors
(consumers), automobile mortgage data, automobile mortgage registration data, automobile registration ownership certificates, all
agreements and documents for repayment demand, risk control examination and approval records and supporting data and
information) to the Transferee and its designated Person in such way and mechanism satisfactory to the Transferee before the Cut-Off
Date;
(d) The Transferors and the corresponding Uxin Group Companies have taken the measures satisfactory to the Transferee (including but
not limited to the issuance of a power of attorney, etc.) to ensure the Transferee (or its designated Person) may in future make loan
collection and receive the collected amount, assets or similar rights from the corresponding consumers of the Assets with Non-
Transferable Security Deposit in the name of Uxin Group Company;
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(e) The Transferors shall ensure the corresponding entity of the Transferors to the Assets with Non-Transferable Security Deposit (i.e.,
the corresponding entity of the Transferor corresponding to the Assets with Non-Transferable Security Deposit listed in Appendix V)
shall maintain good operation and existence, and there has been no circumstances under which such Transferor and/or corresponding
Uxin Group Company are unable to collect payment and assets and/or to pay the aforesaid amounts and assets collected to the
Transferee (or its designated Person).
(iv) From the Closing Date, the actual ownership rights and accompanied rights (if any) to and in the Assets with Non-Transferable Security
Deposit (Non-Transferable Security Deposit and its accompanied rights and property rights, the rights to collect loan, the vehicle or
similar assets from consumers corresponding to the Assets with Non-Transferable Security Deposit) shall be entitled to the Transferee and
its designated Person; and subject to paragraph (ii) above, the Guarantee Obligation for the Assets with Non-Transferable Security
Deposit expressly agreed in the corresponding Financing Partner Contract shall be assumed by the Transferee or its designated Person.
Notwithstanding the forgoing, the Transferors and Uxin Group Companies hereby understand, acknowledge and undertake that, in order
to ensure that the Transferee or its designated Person has the power to collect loan from customers and receive the collected amount,
vehicle or similar assets from consumers corresponding to the Assets with Transferable Security Deposit in the future after it performs its
Guarantee Obligations for the Assets with Transferable Security Deposit, the Transferors and the corresponding Uxin Group Companies
shall provide cooperation, assistance and support pursuant to such method and mechanism reasonably requested by the Transferee
(including but not limited to notifying the consumers corresponding to the Assets with Transferable Security Deposit that the Transferee
or its designated Person is the lawful owner and collecting Person (if necessary), assisting in settling the lawsuits of the Assets with
Transferable Security Deposit and any other issues requiring the cooperation, assistance and support from the Transferors or the
corresponding Uxin Group Companies).
(3) Underlying Overdue Repurchased Assets
(i) With respect to the Underlying Overdue Repurchased Assets listed in Appendix VII hereto (excluding the assets listed in Appendix
XVII hereto the list of sued assets), the Parties hereto shall transfer and settle such assets in accordance herewith:
16
(a) The Transferors and the corresponding Uxin Group Companies shall ensure that the book value of the Underlying Overdue
Repurchased Assets listed in Appendix VII hereto as of the Cut-Off Date shall be RMB[*];
In order to enable Wuba Parties to carry on the Underlying Overdue Repurchased Assets, the Transferors and corresponding Uxin
Group Companies shall pay in one installment before the Closing Date RMB[*] in cash to the bank account designated by the
Transferee;
(b) The Transferors and corresponding Uxin Group Companies shall complete before the Closing Date the repurchase of the
Underlying Overdue Repurchased Assets listed in Appendix VII hereto from corresponding financing partner in such way and
mechanism satisfactory to the Transferee, and further ensure that it has complete ownership right over the Underlying Overdue
Repurchased Assets after the repurchase (that is, the rights to collect debt from consumers and take back vehicles corresponding to
such Underlying Overdue Repurchased Assets, the charge over the vehicle and other related property rights), and further ensure
that such Underlying Overdue Repurchased Assets have not be transferred or assigned in any way (including but not limited to
asset securitization) to any third parties;
(c) The Transferors and the corresponding Uxin Group Companies shall, before the Closing Date, transfer and deliver the data and
documents relating to the Underlying Overdue Repurchased Assets (including but not limited to the contracts and agreements with
debtors (consumers) relating to the Underlying Overdue Repurchased Assets, the collateral data of the Underlying Overdue
Repurchased Assets, the collateral registration data of the Underlying Overdue Repurchased Assets, vehicle ownership certificates
relating to the of the Underlying Overdue Repurchased Assets, all agreements and documents with third parties for debt collection
relating to the of the Underlying Overdue Repurchased Assets, risk control approval and review records and supporting data and
information relating to the Underlying Overdue Repurchased Assets) to the Transferee and its designated Person in such way and
mechanism satisfactory to the Transferee;
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(d) The Transferors and the corresponding Uxin Group Companies have taken the measures satisfactory to the Transferee (including
but not limited to the issuance of a power of attorney, etc.) to ensure the Transferee (or its designated Person) may in future make
loan collection and receive the collected amount, assets or similar rights from the corresponding consumers of the Underlying
Overdue Repurchased Assets in the name of Uxin Group Company.
(ii) From the Cut-off date, the ownership of the Underlying Overdue Repurchased Assets (that is, the rights to collect money and vehicle
from consumers corresponding to such Underlying Overdue Repurchased Assets, and the collateral rights to corresponding vehicles and
other property rights) as well as accompanied rights (if any) shall be fully transferred to the Transferee or designated Person. On or prior
to the Closing Date, the Transferors shall deliver the Underlying Overdue Repurchased Assets and ownership document as well as all
related data (if any) to the Transferee or its designated Person.
The Transferors hereby undertake that, with respect to the Underlying Overdue Repurchased Assets legally owned by the Transferee or
its designated Person as well as any debt-collection issues relating to any Underlying Overdue Repurchased Assets (if any), the
Transferors and corresponding Uxin Group Companies shall cooperate in such time and way reasonably instructed by the Transferee
then. In order to realize the fund recovery and collection of the Underlying Overdue Repurchased Assets, the Transferors and
corresponding Uxin Group Companies shall provide cooperation, assistance and support in such way and mechanism reasonably
requested by the Transferee (including but not limited to informing the consumers of the Underlying Overdue Repurchased Assets that
the Transferee or its designated Person is the lawful owner and collection entity (if necessary), cooperating to settle lawsuits relating to
the Underlying Overdue Repurchased Assets and any other issues requiring cooperation, assistance and support from the Transferors and
corresponding Uxin Group Companies).
(4) Underlying Self-held Assets
(i) With respect to the Underlying Self-Held Assets listed in Appendix VIII hereto (excluding the assets listed in Appendix XVII hereto the
list of sued assets), the Parties hereto shall transfer and settle such assets in accordance herewith:
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(a) The Transferors and corresponding Uxin Group Companies shall ensure that the book value of the Underlying Self-Held Assets
listed in Appendix VIII hereto and the receivables from consumers as of the Cut-off Date shall be no less than RMB[*];
(b) The Transferors and corresponding Uxin Group Companies shall ensure complete ownership to the Underlying Self-Held Assets
listed in Appendix VIII (that is, the rights to collect debt and take back vehicles of such Underlying Self-Held Assets, the collateral
and ownership rights to the vehicles and other related property rights), and such Underlying Self-Held Assets has not been
transferred or assigned to any third parties in any form (including but not limited to asset securitization);
(c) The Transferors and the corresponding Uxin Group Companies shall, before the Closing Date, transfer and deliver the data and
documents relating to the Underlying Self-Held Assets (including but not limited to the contracts and agreements with debtors
(consumers) relating to the Underlying Self-Held Assets, the collateral data of the Underlying Self-Held Assets, the collateral
registration data of the Underlying Self-Held Assets, vehicle ownership certificates relating to the of the Underlying Self-Held
Assets, all agreements and documents with third parties for debt collection relating to the of the Underlying Self-Held Assets, risk
control approval and review records and supporting data and information relating to the Underlying Self-Held Assets) to the
Transferee and its designated Person in such way and mechanism satisfactory to the Transferee;
(d) The Transferors and the corresponding Uxin Group Companies have taken the measures satisfactory to the Transferee (including
but not limited to the issuance of a power of attorney, etc.) to ensure the Transferee (or its designated Person) may in future make
loan collection and receive the collected amount, assets or similar rights from the corresponding consumers of the Underlying Self-
Held Assets in the name of Uxin Group Company.
(ii) From the Cut-off date, the ownership of the Underlying Self-Held Assets (that is, the rights to collect money and vehicle from
consumers corresponding to such Underlying Self-Held Assets, and the collateral rights to corresponding vehicles and other property
rights) as well as accompanied rights (if any) shall be fully transferred to the Transferee or designated Person. On or prior to the Closing
Date, the Transferors shall deliver the Underlying Self-Held Assets and ownership document as well as all related data (if any) to the
Transferee or its designated Person.
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The Transferors and the corresponding Uxin Group Companies hereby undertake that, with respect to the Underlying Self-Held Assets
legally owned by the Transferee or its designated Person as well as any debt-collection issues relating to any Underlying Self-Held
Assets (if any), the Transferors and corresponding Uxin Group Companies shall cooperate in such time and way reasonably instructed by
the Transferee then. In order to realize the fund recovery and collection of the Underlying Self-Held Assets, the Transferors and
corresponding Uxin Group Companies shall provide cooperation, assistance and support in such way and mechanism reasonably
requested by the Transferee (including but not limited to informing the consumers of the Underlying Self-Held Assets that the Transferee
or its designated Person is the lawful owner and collection entity (if necessary), cooperating to settle lawsuits relating to the Underlying
Self-Held Assets and any other issues requiring cooperation, assistance and support from the Transferors and corresponding Uxin Group
Companies).
(5) Underlying Repurchased Assets Upon Repayment
(i) With respect to the Underlying Repurchased Assets Upon Repayment listed in Appendix IX hereto (excluding the assets listed in
Appendix XVII hereto the list of sued assets), the Parties hereto shall transfer and settle such assets in accordance herewith:
(a) The Transferors and corresponding Uxin Group Companies shall ensure that the book value of the Underlying Repurchased Assets
Upon Repayment listed in Appendix IX hereto and the receivables from consumers as of the Closing Date shall be no less than
RMB[*];
Notwithstanding the forgoing, the Transferors and corresponding Uxin Group Companies further undertake that, with respect to the
business cooperation between the Transferors and/or corresponding Uxin Group Companies with WeBank (the “Business
Cooperation”): (i) for all assets satisfying consumer overdue compensatory repurchase conditions under the Business Cooperation
before the Cut-off Date, the Transferors and corresponding Uxin Group Companies shall complete compensatory repurchase and/or
perform the guarantee obligation before the Closing Date; (ii) if all assets satisfying consumer overdue compensatory repurchase
conditions under the Business Cooperation before the Cut-off Date fail to complete compensatory repurchase or fail to perform
guarantee obligation due to whatsoever reasons before the Closing Date, the Transferors and corresponding Uxin Group Companies
shall complete compensatory repurchase and/or perform corresponding guarantee obligation within a period after the Closing Date
accepted by the Transferee. The assets subject to compensatory repurchase and/or guarantee obligation by the Transferor and
corresponding Uxin Group Company, as mentioned in the preceding paragraph, shall be deemed as a part of the Underlying
Repurchased Assets Upon Repayment, which are subject to the agreements and restrictions herein relating to the Underlying
Repurchased Assets Upon Repayment; in addition, the Transferors and corresponding Uxin Group Companies shall acknowledge and
undertake that the compensatory repurchase and/or guarantee obligation as mentioned in the preceding paragraph shall be completed
by its own, and Wuba Parties and its Related Parties shall not assume any costs and expenses, unless otherwise provided for in the
following paragraph (i)(b).
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(b) The Transferors and corresponding Uxin Group Companies shall ensure that the Underlying Repurchased Assets Upon Repayment
listed in Appendix IX shall be repurchased from the corresponding financing partner in such way and mechanism satisfactory to
the Transferee, and enable the Transferee the complete ownership and disposal rights to such Underlying Repurchased Assets
Upon Repayment before the Closing Date; in order to realize the repurchase of the aforesaid Underlying Repurchased Assets Upon
Repayment from the corresponding financing partner, the Transferee agrees to assume a sum of repurchase cost no greater than
RMB[*], i.e., the Transferors, corresponding Uxin Group Companies and the Transferee shall pay such repurchase cost to
corresponding financing partner pursuant to this section upon repurchase before the Closing.
(c) The Transferors and the corresponding Uxin Group Companies shall, before the Closing Date, transfer and deliver the data and
documents relating to the Underlying Repurchased Assets Upon Repayment listed in Appendix IX (including but not limited to the
contracts and agreements with debtors (consumers) relating to the Underlying Repurchased Assets Upon Repayment, the collateral
data of the Underlying Repurchased Assets Upon Repayment, the collateral registration data of the Underlying Repurchased
Assets Upon Repayment, vehicle ownership certificates relating to the of the Underlying Repurchased Assets Upon Repayment,
all agreements and documents with third parties for debt collection relating to the of the Underlying Repurchased Assets Upon
Repayment, risk control approval and review records and supporting data and information relating to the Underlying Repurchased
Assets Upon Repayment) to the Transferee and its designated Person in such way and mechanism satisfactory to the Transferee;
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(d) The Transferors and the corresponding Uxin Group Companies have taken the measures satisfactory to the Transferee (including
but not limited to the issuance of a power of attorney, etc.) to ensure the Transferee (or its designated Person) may in future make
loan collection and receive the collected amount, assets or similar rights from the corresponding consumers of the Underlying
Repurchased Assets Upon Repayment in the name of Uxin Group Company.
(ii) From the Cut-off date, the ownership of the Underlying Repurchased Assets Upon Repayment (that is, the rights to collect money and
vehicle from consumers corresponding to such Underlying Repurchased Assets Upon Repayment, and the collateral rights to
corresponding vehicles and other property rights) as well as accompanied rights (if any) shall be fully transferred to the Transferee or
designated Person. On or prior to the Closing Date, the Transferors shall deliver the Underlying Repurchased Assets Upon Repayment
and ownership document as well as all related data (if any) to the Transferee or its designated Person.
The Transferors hereby undertake that, with respect to the Underlying Repurchased Assets Upon Repayment legally owned by the
Transferee or its designated Person as well as any debt-collection issues relating to any Underlying Repurchased Assets Upon
Repayment (if any), the Transferors and corresponding Uxin Group Companies shall cooperate in such time and way reasonably
instructed by the Transferee then. In order to realize the fund recovery and collection of the Underlying Repurchased Assets Upon
Repayment, the Transferors and corresponding Uxin Group Companies shall provide cooperation, assistance and support in such way
and mechanism reasonably requested by the Transferee (including but not limited to informing the consumers of the Underlying
Repurchased Assets Upon Repayment that the Transferee or its designated Person is the lawful owner and collection entity (if
necessary), cooperating to settle lawsuits relating to the Underlying Repurchased Assets Upon Repayment and any other issues requiring
cooperation, assistance and support from the Transferors and corresponding Uxin Group Companies).
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(6) Underlying Re-transferred Assets
With respect to the Underlying Re-Transferred Assets listed in Appendix X hereto (excluding the assets listed in Appendix XVII the list of
sued assets), and subject to the corresponding Financing Partner Contract and its specific content, the rights and obligations originally
assumed by the Transferors under the contracts with financing partner and contracts with consumers for the Underlying Re-Transferred Assets
shall be transferred to the Transferee (or its designated Person), and the Transferee (or its designated Person) shall assumed such rights and
obligations. If it is impossible to implement the transfer of the Underlying Re-Transferred Assets according to the aforesaid mechanism, then
the Transferors and the Transferee shall otherwise negotiate and agree on the transfer mechanism for the Underlying Re-Transferred Assets.
From the Cut-off Date, the ownership and accompanied rights to and in the Underlying Re-Transferred Assets shall be transferred to the
Transferee or its designated Person. Prior to the Closing, the Transferors shall deliver the Underlying Re-Transferred Assets and their
ownership documents as well as all related data (if any) to the Transferee or its designated Person.
The Transferors hereby undertake that, with respect to the Underlying Re-Transferred Assets legally owned by the Transferee or its designated
Person as well as any debt-collection issues relating to anyUnderlying Re-Transferred Assets (if any), the Transferors and corresponding Uxin
Group Companies shall cooperate in such time and way reasonably instructed by the Transferee then. In order to realize the fund recovery and
collection of the Underlying Re-Transferred Assets, the Transferors and corresponding Uxin Group Companies shall provide cooperation,
assistance and support in such way and mechanism reasonably requested by the Transferee (including but not limited to informing the
consumers of the Underlying Re-Transferred Assets that the Transferee or its designated Person is the lawful owner and collection entity (if
necessary), cooperating to settle lawsuits relating to the Underlying Re-Transferred Assets and any other issues requiring cooperation,
assistance and support from the Transferors and corresponding Uxin Group Companies).
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(7) Underlying ICBC Loan Facilitation Assets
With respect to the Underlying ICBC Loan Facilitation Assets listed in Appendix XI hereto (excluding the assets in the list of sued assets
under Appendix XVII hereto), and subject to the corresponding Financing Partner Contract and its specific content, the Transferors and the
Transferee (or its designated Person) shall execute agreements with corresponding financing partner to specify the way and mechanism of
transfer of such Underlying ICBC Loan Facilitation Assets, and the Underlying ICBC Loan Facilitation Assets shall be transferred pursuant to
such agreement. If the Transferors and the Transferee (or its designated Person) are unable to reach an agreement with respect to the way and
mechanism of transfer for the Underlying ICBC Loan Facilitation Assets, then the Transferors and the Transferee shall otherwise negotiate
and agree on the transfer mechanism for the Underlying ICBC Loan Facilitation Assets.
From the Cut-off Date, the ownership and accompanied rights to and in the Underlying ICBC Loan Facilitation Assets shall be transferred to
the Transferee or its designated Person. Prior to the Closing, the Transferors shall deliver the Underlying ICBC Loan Facilitation Assets and
their ownership documents as well as all related data (if any) to the Transferee or its designated Person.
The Transferors hereby undertake that, with respect to the Underlying ICBC Loan Facilitation Assets legally owned by the Transferee or its
designated Person as well as any debt-collection issues relating to any Underlying ICBC Loan Facilitation Assets (if any), the Transferors and
corresponding Uxin Group Companies shall cooperate in such time and way reasonably instructed by the Transferee then. In order to realize
the fund recovery and collection of the Underlying ICBC Loan Facilitation Assets, the Transferors and corresponding Uxin Group Companies
shall provide cooperation, assistance and support in such way and mechanism reasonably requested by the Transferee (including but not
limited to informing the consumers of the Underlying ICBC Loan Facilitation Assets that the Transferee or its designated Person is the lawful
owner and collection entity (if necessary), cooperating to settle lawsuits relating to the Underlying ICBC Loan Facilitation Assets and any
other issues requiring cooperation, assistance and support from the Transferors and corresponding Uxin Group Companies).
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(8) With respect to the Assets with Transferable Security Deposit, the Assets with Non-Transferable Security Deposit, the Underlying Overdue
Repurchased Assets, the Underlying Self-Held Assets, the Underlying Repurchased Assets Upon Repayment, the Underlying Re-Transferred
Assets and the Underlying ICBC Loan Facilitation Assets under this Section 2.2, the Transferors and Uxin Group Companies shall cause the
corresponding Transferor, the Transferee (or its designated Person) and the financing partner for the aforesaid assets to execute legal and valid
corresponding agreements pursuant the transfer mechanism of the assets described in Section 2.2(1)-(7) in such way and mechanism
satisfactory to the Transferee (the “Financing Partner Contract”). The Parties hereto understand, confirm and acknowledge that the
ownership and liabilities for the assets described in Section 2.2(1)-(7) shall be allocated from the date when each Financing Partner Contract
is executed, and become effective and legally binding among the Transferors, the Transferee (or its designated Person) and such financing
partner corresponding to such assets.
(9) For the Underlying Interest Income Payable to Banks, the Transferors and corresponding Uxin Group Companies shall ensure:
(i) The book value of such Underlying Interest Income Payable to Banks shall be no greater than RMB[*];
(ii) For the amount of RMB[*] in the Underlying Interest Income Payable to Banks under above paragraph (i) (the “Interest Income
Payable to Banks in the Security Deposit”), the Parties hereto understand and acknowledge that the carrying-on of the Transferee for
such Underlying Interest Income Payable to Banks shall meet the following pre-conditions, if such conditions are not satisfied, the
Transferee and its affiliates shall not assume any obligation for the aforesaid RMB[*] Interest Income Payable to Banks in the Security
Deposit.
25
· The security deposit of the Interest Income Payable to Banks in the Security Deposit (no less than RMB[*]) has been transferred
to the bank account of the Transferee or its designated Person, and the Transferee or its designated Person shall enjoy the
ownership and other rights of over such security deposit, and provide the Transferee with the T/T bill and bank statement affixed
with official bank stamp; the Transferors and Uxin Group Companies shall cause the corresponding bank for Interest Income
Payable to Banks in the Security Deposit under paragraph (ii) to irrevocably confirm and agree that the right holder of the
ownership and accompanied rights (if any) of such security deposit shall be changed from the Transferors and Uxin Group
Companies to the Transferee or its designated Person; or
· If the corresponding bank for Interest Income Payable to Banks in the Security Deposit fails to perform the aforesaid obligation
and undertaking to transfer the security deposit, then Uxin Group Companies undertake to transfer such amount of the Interest
Income Payable to Banks in the Security Deposit (i.e., RMB[*]) to the corresponding bank; subject to the premise that Uxin
Group Companies have fulfilled the aforesaid undertaking, the security deposit released from the Interest Income Payable to
Banks in the Security Deposit shall belong to Uxin Group Companies;
(iii) With respect to the remaining balance of the Underlying Interest Income Payable to Banks deducting by the Interest Income Payable to
Banks in the Security Deposit under paragraph (i), the Transferors and corresponding Uxin Group Companies undertake that they shall
cause the corresponding bank to Underlying Interest Income Payable to Banks to execute agreement with the Transferee (or its
designated Person) and corresponding Transferor (or Uxin group Company) and agree on the matters relating to the transfer of the i
Underlying Interest Income Payable to Banks.
2.3 Licensing and Transfer of the Underlying Intellectual Property Rights
(1) Underlying Copyrights
The Transferors agree to execute the exclusive license agreement for the Underlying Copyrights as shown in Appendix XII hereto to license such
Underlying Copyrights for free, permanently and exclusively (that is, the Transferors shall not license such Underlying Copyrights to any entities
for their use to other than the Transferee (or its designated Person) and Uxin Group Companies) to the Transferee (or its designated Person) for its
use of such Underlying Copyrights. The Transferors and Uxin Group Companies shall ensure continually the good standing of the Underlying
Copyrights after execution of this Agreement, payments in due time for necessary expenses to maintain the good standing of such Underlying
Copyrights, and to take other necessary measures to ensure the continuous use of such Underlying Copyrights by the Transferee or its designated
Person.
26
(2) Underlying patents
The Transferors hereby agree that, prior to the Closing Date, it shall execute an exclusive license agreement as shown in Appendix XIII with the
Transferee (or its designated Person) for the underlying patents listed in Appendix XIII hereto to grant the Transferee (or its designated Person) a
permanent, free of charge and exclusive (that is, the Transferor shall not license the Underlying Patents to any entities other than the Transferee
(or its designated) and Uxin Group Company). The Transferors shall be responsible for completing the registration formalities with relevant
patent office for such Underlying Patents within six (6) months after the Closing Date, and the Transferee shall give necessary cooperation and
assistance, and all the expenses for the registration formalities shall be assumed solely by the Transferors. The Transferors and Uxin Group
Companies shall ensure continually the good standing of the Underlying Patents after the execution of this Agreement, payments in due time for
necessary expenses to maintain the good standing of such Underlying Patents, and to take other necessary measures to ensure the continuous use
of such Underlying Patents by the Transferee or its designated Person.
(3) Other Underlying Intellectual Property Rights
a. The Transferors agree to deliver Other Underlying Intellectual Property Rights to the Transferee or its designated Person in such way and
mechanism that is satisfactory to the Transferee; and at the time delivering Other Underlying Intellectual Property Rights, the
Transferors shall deliver the source codes, data, documentation and electronic files and other written documents and data to the
Transferee (or its designated Person) in such a way and mechanism that is satisfactory to the Transferee.
b. From the Cut-off Date, the ownership and accompanied rights to and in Other Underlying Intellectual Property Rights shall be
transferred to the Transferee or its designated Person.
2.4 Underlying Prepayment
With respect to the Underlying Prepayment of RMB [*], the Transferors shall cause the qualified Person to provide the Transferee (or its designated
Person) with the VAT special invoices with corresponding amount that is satisfactory to the Transferee as the voucher of the Transferee (or its
designated Person) to assume the Underlying Prepayment.
27
2.5 The Guarantors hereby jointly and severally confirm, guarantee and undertake that:
(1) Subject to Section 7.10 herein, the transfer of the Underlying Assets under Article 2 herein shall be made in such way and mechanism
satisfactory to the Transferee, and further ensure that the expenses arising from such transfer of the Underlying Assets from the Transferor or
corresponding Uxin Group Company to the Transferee or its designated Person shall be assumed solely by the Transferors and corresponding
Uxin Group Companies, unless otherwise agreed in writing between the Transferors (or its designated Person) and the Transferee (or its
designated Person).
(2) The Guarantors and Uxin Group Companies hereby irrevocably understand, confirm and undertake that, with respect to the representations,
warranties, covenants and obligations made by the Transferors and Uxin Group Companies hereunder, the Guarantors and other Uxin Group
Companies shall assume several and joint obligation for any liability for breach against such representations, warranties, commitments and
obligations.
(3) At any time after the Closing Date, each Transferor agrees to take all legitimate, reasonably necessary and reasonably required acts to ensure
that the Transferee is entitled to the relevant rights and interests of the Underlying Assets after the Closing Date. If the Transferee discovers
any discrepancy between the delivered Underlying Assets and the provisions of this Agreement after the Closing Date, then the Transferee
shall have the right to require the Transferors to rectify the aforesaid issues in such manner and mechanism satisfactory to the Transferee, but
such rectification shall not affect the Transferee’s right to claim compensation in accordance with this Agreement.
(4) On the premise that the normal operation of the Transferor will not be affected, the Transferee or its designated Person shall have the right to
inspect and check any materials, documents, data, information or any other relevant assets that need to be delivered, transferred and assigned
to the Transferee on or before the Closing Date for the transfer of the Underlying Assets under this Agreement in accordance with the
methods and mechanisms satisfactory to the Transferee. In case of any adjustment, change, reduction or impairment, the Transferors and the
Transferee shall negotiate and reach a mutual agreement on the complement, amendment, remedy and other adjustment methods and
mechanisms.
28
(5) Each Transferor shall continue to operate and exist in good condition, and there will be no circumstance where such Transferor and/or
corresponding Uxin Group Company cannot collect payment and assets from consumers and/or pay the aforesaid payment and assets to the
Transferee (or its designated Person).
Particularly, the collection account of the Transferor for the Underlying Assets towards consumers (the “Fund Collection Account”)
described in Section 2.2 shall be disclosed to the Transferee completely and truthfully (as listed in Appendix XIV); the Transferors and Uxin
Group Companies shall change the Fund Collection Account to an account jointly controlled by the Transferors and the Transferee in such
way and mechanism satisfactory to the Transferee, so that any payments, withdrawals and other payments for expenses from such Fund
Collection Account shall be made only upon the signature and authorization of the Transferee’s representative. Any fund collection and asset
recovery (including but not limited to the collection and disposal of vehicles) from consumers or relevant party corresponding to the
Underlying Assets mentioned in Article 2 shall be settled by month to the Transferee or its designated Person (unless otherwise agreed in
writing by the Transferee, such payment and/or assets (including but not limited to the collection and disposal of vehicles) collected and
recovered from consumers or related parties in each calendar month shall be paid to the Transferee or its designated Person within 15 days
after the end of each month in a manner satisfactory to the Transferee).
After the date hereof, the Transferors and the corresponding Uxin Group Companies shall cooperate, assist and support in such a way and
mechanism as required by the Transferee (including but not limited to informing consumers corresponding to the Underlying Assets described
under Section 2.2 that the Transferee or its designated Person is the legitimate owner of corresponding Underlying Assets and the collecting
entity (if necessary), and cooperate to settle any lawsuits relating to the Underlying Assets under Section 2.2 as well as any other issues
requiring cooperation, assistance and support from the Transferors and the corresponding Uxin Group Companies; upon the request of the
Transferee, the Transferors and the corresponding Uxin Group Companies shall transfer the collateral registration and the ownership of the
vehicles as well as accompanied rights corresponding to the Underlying Assets under Section 2.2 to the Transferee or its designated Person in
such way and at such time as required by the Transferee or its designated Person, and cooperate in completing required registration and filing
of change; upon the request of the Transferee, the Transferors and the corresponding Uxin Group Companies shall assist in providing other
necessary materials for debt collection relating to the Underlying Assets (such as the business license, other certificates and license, company
stamp and legal representative stamp of the Transferors and the corresponding Uxin Group Companies).
29
3 Transfer Consideration and Payment and Transferee Restructuring
3.1 Transfer Consideration. The Parties agree that the following provisions shall apply to the total amount of consideration for the purchase and
transfer by the Transferee of the Underlying Assets in accordance with this Agreement (the “Transfer Consideration”):
Subject to Section 7.10 hereof, except for the Transfer Consideration, the Transferee and any of its Related Parties shall not be required to pay to
the Transferors or their shareholders or their Related Parties and any third party any other purchase price or any other expenses in connection with
this Transfer of Asset, unless otherwise determined by the Transferors (or its designated Person) and Transferee (or its designated Person) through
consultation in writing.
3.2 Payment of Transfer Consideration. The Parties acknowledge that the above Transfer Consideration will be paid in the following manner:
3.2.1 The Renminbi equivalent to US$100,000,000 in the Transfer Consideration (the “Cash Consideration”) shall be paid by the Transferee
to the Transferors in cash according to the following payment schedule and arrangements:
(1) 20% of the Cash Consideration (i.e. RMB equivalent to US$[*] (calculated based on the middle price between the US Dollars and
Renminbi published by the People’s Bank of China on the actual payment date of the first Cash Consideration) (the “First Cash
Consideration”, subject to the adjustment mechanism set forth in Section 3.2.1 (1) (iii) below) shall be paid by the Transferee at the
following mechanism and time to the Transferor’s Designated Bank Account (as defined below):
(i) If the business integration (as defined in Section 7.3 hereof) is completed within three (3) months after the Closing Date and
based on the mechanism set forth in Section 7.3 hereof, the First Cash Consideration shall be paid within fifteen (15) Business
Days after the expiration of three (3) months after the Closing Date;
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(ii) If the business integration does not completed in accordance with the mechanism set forth in Section 7.3 hereof within three
(3) months after the Closing Date, the First Cash Consideration shall be paid within fifteen (15) Business Days after the
business integration is completed in accordance with the mechanism set forth in Section 7.3 hereof;
(iii) For the avoidance of doubt, the Transferors and Uxin Group Companies hereby understand, acknowledge and agree that the
First Cash Consideration shall be subject to the following adjustment mechanism:
(x) With respect to the cooperation agreement entered into among Kai Feng, Youyuan (Beijing) Information Technology Co., Ltd.
and Wuba Finance Lease on August 1, 2019, if there are relevant fees and amounts payable by Kai Feng and Youyuan (Beijing)
Information Technology Co., Ltd. to Wuba Finance Lease which have not been paid (the “Outstanding Cooperation Agreement
Amount”) under such cooperation agreement, the amount of all outstanding Cooperation Agreement Amounts payable as of the date
of payment of the First Cash Consideration shall be deducted from the amount of the First Cash Consideration;
(y) As of the payment date of the First Cash Consideration, if there are funds and/or assets (including, without limitation, vehicles
and disposal proceeds of such assets) received by any Transferor and/or the Uxin Group Company from consumers but fail to be
settled into the bank account designated by the Transferee in accordance with Section 2.2 (the “Unsettled Assets Amount”) with
respect to the Underlying Assets set forth in Section 2.2 hereof, all Unsettled Assets Amount as of the payment date of the First
Cash Consideration shall be deducted from the First Cash Consideration;
(z) as of the payment date of the First Cash Consideration, the amount of the security deposit on the Underlying Assets which shall
be released or transferred to Transferee or its designated Person in accordance with Section 2.2 hereof but fails to be released or
transferred to Transferee or its designated Person;
(xx) other expenses which the Parties agree to deduct from the First Cash Consideration;
(2) Within twelve (12) months after the payment date of the First Cash Consideration, the Transferee shall pay 80% of the Cash Transfer
Consideration (i.e. an amount in RMB equivalent to US$[*] (converted at the middle price between the US Dollars and Renminbi
published by the People’s Bank of China on the actual payment date of the second Cash Consideration) (the “Second Cash
Consideration”) to the bank account designated by the Transferors according to the following mechanism and time. Each of the
Transferors hereby irrevocably acknowledges and agrees that it shall jointly designate the following bank account and acknowledge
and undertake that the Transferee shall pay the Second Cash Consideration to the following bank account information and its
obligation hereunder to pay the Second Cash Consideration to the Transferors shall be deemed to have been fulfilled.
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For the avoidance of doubt, the Transferors and Uxin Group Companies hereby understand, acknowledge and agree that the Second
Cash Consideration shall be subject to the following adjustment mechanism:
(x) The amount of Outstanding Cooperation Agreement Amount accrued during from the payment date of the First Cash
Consideration to the payment date of the Second Cash Consideration shall be deducted from the amount of the Second Cash
Consideration;
(y) All unsettled amounts regarding the assets accrued during the period from the payment date of the First Cash Consideration to the
payment date of the Second Cash Consideration shall be deducted from the Second Cash Consideration;
(z) the amount of the security deposits on the Underlying Assets which shall be released or transferred to Transferee or its designated
Person in accordance with Section 2.2 hereof but fails to be released or transferred to Transferee or its designated Person during the
period from the payment date of the First Cash Consideration to the payment date of the Second Cash Consideration;
(xx) other expenses the Parties agree to deduct from the Second Cash Consideration.
The Transferors hereby irrevocably acknowledge and agree that they shall jointly designate the following account as its account to
receive the Cash Consideration (the “Transferor Designated Account”), and that its obligation to pay the corresponding Cash
Consideration to the Transferors hereunder shall be deemed to have been fulfilled after the Transferee pays the Cash Consideration to
the following bank account information.
Account Name: Youxin (Shanghai) Used Car Operation Co., Ltd.
Beneficiary Bank: Beijing Guangqumen Sub-branch of GF Bank Co., Ltd.
Beneficiary Bank Address: 1/F, Dingxin Building, No. 27 Guangqumennei Avenue, Dongcheng District, Beijing
Beneficiary Bank Account Number: *
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3.2.2 The RMB amount equivalent to US$[*] in the Transfer Consideration (converted at the middle price between US Dollars and Renminbi
published by Renminbi Bank of China on the Closing Date) (the “Equity Consideration”) shall be paid by Tianjin Wuba Rongxin by
way of issuance of additional equity interests to Kai Feng on the Closing Date; such Equity Consideration shall be calculated based on the
overall valuation of the Wuba Parties and its related group companies under the VIE structure (the “Wuba Group Companies”) of
US$[*]. Kai Feng shall subscribe the increased capital of Tianjin Wuba Rongxin and therefore obtain [*]% of equity interests in Tianjin
Wuba Rongxin immediately after this Transaction (the “Capital Increase of the Transferor”; the equity interests in Tianjin Wuba
Rongxin obtained by the Transferor through the Transferor’s Capital Increase of the Transferor shall be referred to as the “Transferor’s
Increased Capital”). Unless otherwise provided for in Section 2 hereof, Kai Feng shall not be required to pay any additional
consideration for the Capital Increase of the Transferor.
For the purpose of effecting the Capital Increase of the Transferor, the Parties agree that:
(i) The Transferors and Tianjin Wuba Rongxin shall execute at the date hereof the capital increase agreement as set forth in
Appendix XV hereto regarding the Capital Increase of the Transferor (the “Domestic Capital Increase Agreement”);
(ii) The Transferor and the Guarantors hereby understand, acknowledge and agree that the governmental registration may not be
completed temporarily with respect to the Transferor’s Increased Capital acquired by the Transferor for now. Such governmental
registration shall completed within the time limit as agreed upon by the Transferors and the Transferee if the Transferors so
request after the Closing Date.
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3.2.3 Tianjin Wuba Jinfu and Wuba Finance Lease shall assume joint and several liability for the Transferee’s obligation to pay the
consideration hereunder.
3.3 Restructuring of the Transferee.
3.3.1 Considering that the Transferee has implemented the restructuring and established the red-chip and VIE structures, that the holding
company and the subsequent offshore financing and listing entity under the red-chip and VIE structures of the Transferee shall be Wuba
Jinfu Cayman, and that as part of such Restructuring, the shareholders of Tianjin Wuba Rongxin have held, directly or through their
Related Parties or overseas entities wholly owned by them, shares of Wuba Jinfu Cayman and pledged their equity interest in Tianjin
Wuba Rongxin to the wholly foreign-owned enterprises under the VIE structures through the VIE agreements (the “Wuba Jinfu
WFOE”); the Transferor’s Increased Capital acquired by Kai Feng through the Capital Increase of the Transferor will also be
restructured, and Uxin Cayman shall hold the shares in Wuba Jinfu Cayman and execute a share subscription agreement with Wuba Jinfu
Cayman on the date hereof (the “Offshore Share Subscription Agreement”) and subscribe for and acquire [*] Series Angel Preferred
Shares (equivalent to [*]% of the equity interest in Wuba Jinfu Cayman on the Closing Date) (such transactions, the “Transferor
Offshore Shares”, and each, the “Offshore Share Subscription”).
3.3.2 With respect to the Transferor’s Offshore Shares, on the Closing Date or any other date acknowledged by Uxin Cayman, Wuba Jinfu
Cayman, the relevant shareholders of Wuba Jinfu Cayman and other relevant parties shall execute the Amended and Restated
Shareholders Agreement (“SHA”);
3.3.3 With respect to the Transferor’s Offshore Shares, Uxin Cayman, Wuba Jinfu Cayman, the relevant shareholders of Wuba Jinfu Cayman
and other relevant parties shall approve the Second Amended and Restated Memorandum and Sections of Association (“MA”) on the
Closing Date or any other date acknowledged by Uxin Cayman.
3.3.4 At the same time as Uxin Cayman obtains shares in Wuba Jinfu Cayman in accordance with this Agreement, with respect to the
Transferor’s Increased Capital acquired by Kai Feng through the Capital Increase of the Transferor, Wuba Jinfu WFOE, Kai Feng, Tianjin
Wuba Rongxin and their respective shareholders shall enter into control agreements (the “Control Agreements”) in order to realize the
consolidation of the equity interest held by the Transferor in Tianjin Wuba Rongxin in the Capital Increase of the Transferor into Wuba
Jinfu WFOE. Kai Feng as a Transferor undertakes to cooperate with Tianjin Wuba Rongxin in completing the registration of pledge of the
equity interest held by Kai Feng in Tianjin Wuba Rongxin to Wuba Jinfu WFOE at such time and in such manner as requested by the
Transferee after the Closing Date, provided that Kai Feng has become a registered shareholder of Tianjin Wuba Rongxin under the
SAMR registration.
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3.3.5 Wuba Parties agree that the calculation of the investment amount of the Transferor’s Offshore Shares may be based on the same
mechanism as the Series Angel Preferred Shares held by 58.com Inc., a shareholder of Wuba Jinfu Cayman on or prior to the Closing
Date.
4 Closing
4.1 After the satisfaction or written waiver by the Transferee of all the conditions precedent set forth in Section 4.4 hereof, the closing of this
Transaction (the “Closing”), i.e., the acts set out in Section 4.3 and Section 4.4, shall take place within ten (10) Business Days. The date on which
the Closing takes place shall be referred to as the “Closing Date”). For the avoidance of doubt, the Parties agree and confirm that the Transferors
shall have the right to waive the Offshore Share Subscription as a condition to the Closing of this Transaction. And if the Transferors so agree, the
Offshore Share Subscription shall become a matter after the Closing and be completed at the time requested by the Transferors.
4.2 If the Closing of this Transaction fails to be completed within ninety (90) days after the date hereof or other time limit acknowledged by the
Transferors and the Transferee, this Transaction may be terminated and no longer be implemented upon mutual written acknowledgement by the
Transferor and the Transferees. If this Transaction is so terminated pursuant to the foregoing mechanism, the Parties shall then negotiate and
determine the arrangement after the termination of this Agreement.
4.3 On or prior to the Closing Date, each Transferor and Uxin Group Company shall deliver and deliver to the Transferee or its designated Person:
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a. With respect to the Underlying Intellectual Property, provide, in the form of scanned copies or photocopies, all competent authorities’
registration and/or application materials corresponding to such Underlying Intellectual Property, ownership certificates of such Underlying
Intellectual Property and technical materials corresponding to such Underlying Intellectual Property (including, without limitation,
underlying code, domain name migration code, coding, software source code, software communication agreements, technical information,
technical solutions and brands);
b. Resolutions of the shareholders’ meeting/board of directors, as the case may be, approving and of each of the Transferors and Uxin Cayman;
c. The assets, cash, documents and materials required to be submitted or delivered to Transferee or its designated Person in accordance with
Section 2 hereof.
4.4 At the Closing Date, the Transferee shall submit and deliver to the Transferors and Uxin Cayman the following documents. To avoid any
discrepancy, the Parties agree and acknowledge that the Transferors shall have the right to waive the provision of the following documents (b) -
(d):
a. The register of shareholder affixed with the seal of Tianjin Wuba Rongxin, indicating that Kai Feng has become a shareholder of Tianjin
Wuba Rongxin and holds such amount of equity interest set forth herein;
b. The updated register of members of Wuba Jinfu Cayman, reflecting that Uxin Cayman holds the Transferor Offshore Shares in Wuba Jinfu
Cayman;
c. The share certificate of Wuba Jinfu Cayman, showing that Wuba Jinfu Cayman’s issuance of the Transferor Offshore Shares to Uxin
Cayman;
d. The updated register of directors of Wuba Jinfu Cayman shall reflect the director appointed by Uxin Cayman as the director of Wuba Jinfu
Cayman.
4.5 Unless waived by the Transferee in writing, the Closing under Clause 4.1 shall be subject to the satisfaction on or before the Closing Date of all of
the following conditions:
4.5.1 The representations and warranties made by the Warrantors in Section 6.2 below shall be true, accurate, complete and not misleading in
any respect as of the Cut-off Date, the date of this Agreement and the Closing Date;
4.5.2 The covenants required to be complied with by the Warrantors under this Agreement and the other Transaction Documents prior to the
Closing Date and the obligations required to be performed by the Warrantors prior to the Closing Date have been complied with and
performed, and the Warrantors have not committed any breach of the Transaction Documents;
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4.5.3 As of the date hereof and the Closing Date, there is no occurrence of any event or circumstance (including, without limitation, any
litigation, arbitration, tax inspection, tax penalty, or any investigation or penalty procedures conducted by Governmental Authority with
respect to the Underlying Assets or the Underlying Business relating thereto) that shall or may have any Material Adverse Effect on the
Underlying Assets and/or this Transaction;
4.5.4 As of the date hereof and the Closing Date, there is no judgment, ruling, decree or injunction of any law, court, arbitral body or competent
governmental authority restraining, prohibiting or cancelling this Transaction;
4.5.5 The Transferors, Uxin Cayman and other Uxin Group Companies that have entered into this Agreement have obtained all approvals and
permits necessary for the execution of relevant Transaction Documents and the completion of this Transaction, including, without
limitation, approval of shareholders/shareholders’ meeting and executive director/board of directors;
4.5.6 All Transaction Documents relating to this Transaction have been duly executed and delivered by the relevant parties, and have become
effective in accordance with their terms;
4.5.7 The transfer of the Underlying Assets set forth in Section 2 hereof that shall have been completed prior to the Closing Date shall have
been completed in accordance with the manner and mechanism set forth herein, and the Transferee shall have been provided with
satisfactory evidence;
4.5.8 The Transferee’s due diligence on the Underlying Business and the Underlying Assets is satisfactory to the Transferee;
4.5.9 The Transferee has obtained the necessary internal approvals for this Transaction;
4.5.10 The Transferors have delivered the documents set forth in Section 4.3 hereof to the Transferee;
4.5.11 The counsel of the Transferors shall have issued a legal opinion to the satisfaction of the Transferee in connection with the Transfer of
Assets;
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4.5.12 The Transferors and Uxin Group Companies shall have issued the letter of guarantee under Section 2.2 (2) (ii) to the Transferee, the form
and substance of which shall be reasonably satisfactory to the Transferee;
4.5.13 The Financing Partner Contract has been executed and become effective in the manner and mechanism set forth in Section 2.2(8);
4.5.14 The Transferors, the relevant Uxin Group Company, Wuba Parties and their respective Related Parties shall have entered into a
supplementary agreement (the “Supplementary Agreement”) to the satisfaction of the Transferee, which shall provide for the rights and
obligations relating to the Underlying Business during the period from the Cut-off Date to the Closing Date and settlement of payment;
4.5.15 The Warrantor has executed closing certificate, confirming to the Transferee in writing that each of the above closing conditions has been
satisfied and provided the Transferee with relevant supporting documents.
5 Taxes
Each Transferor shall jointly and severally bear any taxes relating to the transaction hereunder, while Wuba Parties and its designated entities shall
not assume any taxes relating to this Transaction. Wuba Parties shall make reasonable commercial efforts to actively cooperate with the
Transferors and Uxin Group Company in paying taxes relating to this Transaction, including but not limited to executing format documents
required by Governmental Authorities and assisting in handling procedures of Governmental Authorities.
6 REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of the Parties. Each Party hereto represents and warrants to the other Parties as of the date hereof and the Closing
Date as follows:
6.1.1 Such Party is a company duly registered and validly existing under relevant laws;
6.1.2 The execution and delivery, performance of all obligations under the Transaction Documents and consummation of the Transaction
Documents and other actions by such Party have been made by all necessary actions and have obtained full and necessary authorization;
such Party has full capacity for civil conduct and capacity for civil rights to execute the Transaction Documents, perform all obligations
thereunder and consummate the Transaction Documents; upon execution, the Transaction Documents shall be legally binding upon such
Party;
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6.1.3 The execution of this Agreement and other Transaction Documents by such Party does not conflict with its articles of association or any
contracts or documents to which it is a party, nor does it violate any court judgments, arbitration awards or decisions of any administrative
authorities;
6.2 Representations and Warranties of the Warrantors. Except for matters listed in Appendix XVI (Disclosure Schedule), the Warrantors hereby jointly
and severally make the following representations and warranties to the Transferee and ensure that the following representations and warranties are
true, accurate, complete and not misleading or omitted as of the Cut-off Date, the date hereof and the Closing Date:
6.2.1 All reports, documents and information with respect to the Underlying Assets provided by each Transferor and Uxin Group Company to
the Transferee are true, accurate, complete, not misleading and not omitted in all aspects;
6.2.2 Except for the security deposit arrangement with the corresponding bank, what is provided under Section 2.2 and other provisions in the
Financing Partner Contracts, all Transferors have the entire ownership of the Assets with Transferable Security Deposit, the Assets with
Non-Transferable Security Deposit.
6.2.3 Unless otherwise expressly provided for in Section 2.2, each of the Transferors and Uxin Group Company shall have the ownership and
the right to dispose of the Underlying Self-Held Assets, and except as disclosed in the Disclosure Schedule, the Underlying Self-Held
Assets are free and clear of any Encumbrance, Liabilities or other Encumbrance or any other defect or problem, including, without
limitation, granting to any third party any license of, pledge of, or purchase right or any other security interest in the Underlying Assets,
except where failure to comply with this Section would not have a Material Adverse Effect on the Underlying Assets;
Unless otherwise expressly provided for in Section 2.2, each of the Transferors and Uxin Group Companies shall have the ownership and
mortgage of the vehicles corresponding to the Underlying Repurchased Assets Upon Repayment, and except as disclosed in the
Disclosure Schedule, the Underlying Repurchased Assets Upon Repayment are free and clear of any Encumbrance, liability or other
Encumbrance or any other Liabilities or problem, including, without limitation, granting of license to any third party with respect to the
Underlying Assets, pledge of the Underlying Assets or purchase right or any other security interest over the Underlying Assets by any
third party, except that failure to comply with this Section will not have Material Adverse Effect on the Underlying Assets, For the
avoidance of doubt, the Warrantors make the representations and warranties hereunder only with respect to the circumstances as of the
Closing Date;
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Unless otherwise expressly stipulated under Section 6.2.2, the above Section 6.2.3, Section 2.2 and the Financing Partner Contracts, none
of the Transferors and Uxin Group Companies has imposed any Encumbrance, Liabilities or other restrictions on any of the Underlying
Assets, including, without limitation, grant of license of use or pledge of the Underlying Assets to any third party or purchase right or any
other security interest of any third party in respect of the Underlying Assets;
All of the Underlying Assets are not and are not involved in any arbitration, litigation, claim, dispute or dispute, or any seizure,
attachment, freezing, penalty and restrictions imposed by other governmental actions;
6.2.4 None of the Underlying Assets contains any state-owned or collective assets; none of such Underlying Assets is subject to any disclosable
factual or legal defects;
6.2.5 The transfer by the Transferors of the Underlying Assets to the Transferee in accordance with this Agreement is not subject to the
approval by, registration or filing with, or license of, any relevant Governmental Authorities (if applicable), except for the approval,
registration, filing or license provided for herein;
6.2.6 Unless otherwise expressly stipulated by the Financing Partner Contracts required to be executed under Section 2.2, the Transferor has
obtained the written consent of the Transferors’ bank creditors and other third party written consents (if any) in connection with its
transfer of the Underlying Assets to the Transferee in accordance with this Agreement;
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6.2.7 To the knowledge of the Warrantors, there is no adverse effect, delay, restriction or hindrance caused or likely to be caused by any
obligations and liabilities of the Transferors and each Uxin Group Company in performing this Agreement and the other Transaction
Documents, and no pending, or threatened, litigation, claim, litigation, prosecution, arbitration, administrative proceeding or other legal
proceedings are pending or threatened;
6.2.8 All records, documents and materials submitted by each of the Transferors and/or Uxin Group Company to the Transferee or its
designated person in accordance with the Transaction Documents are true and complete and truthfully reflect the current status of all the
Underlying Business and Underlying Assets transferred by the Transferors and/or Uxin Group Company to the Transferee or its
designated Person in accordance with this Agreement;
6.2.9 The Underlying Assets do not constitute any interference with, infringement upon or misappropriation of, or otherwise conflict with, the
intellectual property of any third party, and each Transferor and each Uxin Group Company has taken all necessary actions to preserve
and protect all Underlying Assets;
6.2.10 All of the Underlying Assets are duly registered or filed for registration (if applicable) in accordance with the PRC Laws, and the
registrations or applications that have been obtained or filed have not been cancelled, rejected or declared invalid (if applicable), each
Transferor and each Uxin Group Company has paid relevant registration fees and the overdue fine, if applicable, for annual fee in a timely
manner;
6.2.11 Each of the Transferors and Uxin Group Companies has maintained the Underlying Assets in accordance with market practice and all
applicable Laws in order to ensure that the Underlying Assets are valid and can be used for the operation of the Underlying Business in a
lawful manner.
The Underlying Assets are free of any tax-related violations or irregularities, or involve in any disputes or lawsuits in respect of taxes and
fees; Each Transferor and Uxin Group Company has submitted information required to any requesting taxation authority with respect to
the Underlying Assets, and no dispute over the taxation liability or potential taxation liability or taxation preference concerning the
Underlying Assets shall exist between the Underlying Assets and the taxation authority; and Each Uxin group company shall keep in
possession such financial information as is used for normal tax recording and payment in respect of the Underlying Assets.
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(i) Each Uxin Group Company has completed all tax registrations required by applicable Laws with respect to the Underlying
Assets, has timely and fully declared and paid all taxes (including the taxes which shall be withheld and remitted by it) in
accordance with applicable laws and regulations, and is not required to pay any penalty, surcharge, fine or interest payable in
connection with such taxes;
(ii) No Uxin Group Company has entered into, or entered into, any contract with respect to the Underlying Assets for the purpose of
illegal tax avoidance;
(iii) There is no tax-related violation or irregularity by any Uxin Group Company with respect to the Underlying Assets, no notice
has been received from any tax authority in respect of calls for payment or retrospective payment of taxes or request for
inspection or audit of any tax returns, and there is no pending dispute or litigation relating to taxes. There is no pending litigation
or legal proceedings or dispute on tax preference between the Underlying Assets and tax authority in connection with
assessment, adjustment, penalty or recovery of taxes.
Except that any failure to comply with this Section will not have a Material Adverse Effect on the Underlying Assets.
6.2.12 The Warrantors will not take any action which may cause damage to the Underlying Assets. From the date hereof to the Closing Date,
without the prior written consent of the Transferee, the Warrantors shall:
(a) Not dispose of, or cause to be disposed of, any of the Underlying Assets;
(b) Not enter into any agreement in conflict with this Agreement; and
(c) Not to engage in any transaction or action that may have any Material Adverse Effect on the Underlying Assets.
6.2.13 The use, operation and transfer of any Underlying Assets will not violate any PRC laws or the articles of association of each Transferor
and each Uxin Group Company and the relevant agreements or documents executed by them;
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6.2.14 To the knowledge of the Warrantors, there are no pending or, to the knowledge of the Transferors, threatened litigation, arbitration,
administrative proceedings or disputes against the Transferors or the Underlying Assets (for the purpose of this clause only, excluding the
Underlying Intellectual Property); there is no pending or, to the knowledge of the Transferors, threatened objection, dispute, request for
revocation or request for declaration of invalidity proposed by governmental authorities or any third party with respect to the Underlying
Assets; no event or circumstance has occurred or is reasonably expected to occur which has Material Adverse Effect on the transfer of the
Underlying Assets or any part of the transactions contemplated hereby;
6.2.15 The Transferors are not insolvent or unable to pay its debts as they fall due, nor have the Transferors filed any liquidation application or
appointed a receiver for all or part of the Transferors’ Underlying Assets; and
6.2.16 The Transferors have provided the Transferee with the financial statements of entities relating to the Underlying Business as of June 30,
2019 (including, without limitation, balance sheet, income statement, cash flow statement, consolidated financial reports, etc., the same
hereinafter), and such financial statements (together with the notes thereto) have completely, accurately and fairly reflected the financial
status, operating results and cash flow of such companies and are consistent with the books, vouchers and financial records of Uxin
Group Companies, except that any failure to be in compliance with this provision will not have any Material Adverse Effect on the
Underlying Assets. Since the issuance of such financial statements, no event has occurred which has had or may have Material Adverse
Effect on the financial or operation status of such Underlying Assets. The Underlying Assets do not contain any Liabilities and contingent
Liabilities that shall be disclosed in accordance with the PRC GAAP and the U.S. GAAP but have not been disclosed in its financial
statements (or notes thereto). There are no Liabilities and contingent Liabilities that are not required to be disclosed in accordance with
the PRC GAAP and the U.S. GAAP but that have or may have Material Adverse Effect on the financial condition or operation of such
Underlying Assets.
6.2.17 Representations and Warranties with Respect to Underlying Intellectual Property
(1) The Underlying Patent and the Underlying Copyright referred to in Appendix III and Appendix II are all patents and copyrights
owned and/or used exclusively by the Transferors and Uxin Group Companies in the Underlying Business, except where failure
to comply with this provision would not have a Material Adverse Effect on the Underlying Assets;
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(2) The owners of the Underlying Intellectual Property hereunder have full ownership and the right of disposal of all the Underlying
Intellectual Property, and all the Underlying Intellectual Property is free and clear of any Encumbrance, indebtedness or other
Encumbrances, including, without limitation, license to use or pledge the Underlying Intellectual Property granted to any third
party or purchase right or any other security interest granted to any third party with respect to the Underlying Intellectual
Property;
(3) The Underlying Intellectual Property does not constitute any interference, infringement, misappropriation or otherwise conflict
with the Intellectual Property of any third party, and the owner of the Underlying Intellectual Property has taken all necessary
actions to retain and protect all Underlying Intellectual Property;
(4) The Underlying Intellectual Property is legally registered or applies for registration in accordance with PRC laws, and has been
registered or applied for registration which has not been cancelled, rejected or declared invalid; the right holders of each
Underlying Intellectual Property have paid the corresponding registration fees and annual fee overdue fine on time;
(5) No litigation, arbitration, administrative proceedings or dispute is pending or, to the knowledge of the Transferors, threatened
against the Underlying Intellectual Property; no objection, dispute, request for revocation or declaration of invalidity is pending
or, to the knowledge of the Transferors, threatened against the Underlying Intellectual Property, nor is there any event or
circumstance that has occurred or is reasonably expected to occur and has a Material Adverse Effect on the Underlying
Intellectual Property;
(6) Each Underlying Intellectual Property is valid and enforceable in accordance with Laws and nothing has occurred which might
render any Underlying Intellectual Property invalid or unenforceable. Each right holder of the Underlying Intellectual Property
has not infringed upon, or illegally used, any Intellectual Property in respect of the Underlying Intellectual Property in respect of
which any third party has any right, ownership or interest, and has not licensed or allowed any third party to use any Underlying
Intellectual Property; neither the Underlying Intellectual Property holders have infringed upon others’ Intellectual Property, trade
secrets, proprietary information or other similar rights in respect of which they have obtained or enjoyed, and there is no pending
or foreseeable claim, dispute or litigation proceeding requiring the Underlying Intellectual Property holder to claim for
infringement upon any third party’s Intellectual Property, trade secrets, proprietary information or other similar rights in respect
of the Underlying Intellectual Property, and no known third party has infringed upon the Underlying Intellectual Property;
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6.2.18 Representations and Warranties regarding the Underlying Prepayment
To the knowledge of the Warrantor, the Underlying Prepayment shall be payment realized in connection with the Underlying Business
and paid to relevant parties at reasonable price generally determined based on the market value, and the transactions and expenses
underlying the Underlying Prepayment shall have reasonable and fair market pricing and reasonable and fair commercial purposes.
6.2.19 From the Cut-off Date until the Closing Date, except for acts acknowledged by the Transferee in writing or otherwise provided for herein
or which would not have any adverse effect on this Transaction and the Warrantors’ performance of any obligations under the Transaction
Documents, none of Uxin Group Companies has committed or omitted the following acts in connection with the Underlying Assets:
(i) Suffered material losses;
(ii) Transfer or license others to use the Underlying Intellectual Property;
(iii) Material adverse change shall have occurred to the financial status of the Underlying Assets, or transactions or activities outside
the ordinary course of business shall have occurred, which have a Material Adverse Effect on the Underlying Assets;
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(iv) Except for the ordinary course of business, (a) the sale, mortgage, pledge, lease, transfer and other disposal of any assets in the
aggregate transaction amount exceeding RMB 200,000, (b) disposal of any Underlying Assets with an original value exceeding
RMB 200,000 or consent to the disposal or acquisition of any Underlying Assets with an original value exceeding RMB
200,000, and waiver of the possession of any Underlying Assets; (c) any expenditure exceeding RMB 200,000 in the aggregate,
or purchase of any tangible or intangible assets;
(v) Breach of the representations and warranties under this Agreement by way of action or omission; and
(vi) Any act or omission that may cause any of the foregoing to occur.
6.2.20 The Assets with Transferable Security Deposit, the Assets with Non-Transferable Security Deposit, the Underlying Overdue Repurchased
Assets, the Underlying Self-Held Assets, the Underlying Repurchased Assets Upon Repayment, the Underlying Re-Transferred Assets
and the Underlying ICBC Loan Facilitation Assets listed in the appendixes are true and accurate with respect to the Underlying Assets,
and there is no omission, misleading or inaccurate statement.
6.2.21 All facts in material respect relating to the Warrantors and the Underlying Assets have been fully disclosed to the Transferee. All
documents, materials and information provided by the Warrantors to the Transferee or its Related Parties before and after the execution of
this Agreement are true, accurate, without any omission or misleading.
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6.3 Representations and Warranties of Wuba Parties.
As of the Closing Date, Wuba Parties hereby jointly and severally represent and warrant to each Transferor and each Uxin Group Company that
the financial statements provided by Wuba Parties to the Transferors pursuant to Section 7.11 have completely, accurately and fairly reflected the
financial status, operation results and cash flow of the relevant entity in material respects and are consistent with the books, vouchers and financial
records of the relevant entity, except that failure to comply with this provision will not have any Material Adverse Effect on the valuation of the
Underlying Assets and/or this Transaction conducted by the Transferors and/or the overall operation and financial status of Wuba Group
Companies. The other materials provided by Wuba Parties to the Transferors pursuant to Section 7.11 are true and accurate in material respects,
except where failure to comply with this section would not have a Material Adverse Effect on the Underlying Assets and/or the valuation of this
Transaction and/or the overall operation and financial status of Wuba Group Company.
7 Covenants
7.1 From the date hereof to the Cut-Off Date, the Guarantors jointly and severally undertake the following matters to Wuba Parties:
7.1.1 The Transferors shall and Uxin Cayman shall cause Uxin Group Companies to conduct the Underlying Business in the ordinary course of
business, preserve intact the business organization of the entities relating to the operation of the Underlying Business, maintain
relationships with third parties, retain existing officers and employees, and preserve current status, except for normal wear and tear, of all
assets and properties owned or used by the entities relating to the operation of the Underlying Business, except for the acts carried out
strictly in accordance with this Agreement for the purpose of this Transfer of Assets;
7.1.2 The Transferor shall and Uxin Cayman shall cause Uxin Group Companies to ensure that the Underlying Business is operated in the
manner prior to the date hereof and to maintain business cooperation relationships with consumers, suppliers, banks and other entities
involved in the Underlying Business; to ensure that the operation of the Underlying Business complies with all applicable laws and
regulations in all aspects, except for the behavior strictly in accordance with this Agreement for the purpose of this Transfer of Assets;
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7.1.3 To ensure the normal operation of the Underlying Business, safeguard and maintain the good condition and stability of the Underlying
Assets, not engage in or permit any acts or omissions that may violate any representations, warranties or covenants set forth herein, and
maintain the validity of the Underlying Assets, including, without limitation, timely and fully payment of annual fees, and diligently and
diligently handling relevant administrative proceedings, disputes, lawsuits, arbitration or other legal proceedings;
7.1.4 Contact and discuss with the its partner so as to cause the partner to agree to transfer the relevant Underlying Assets in such manner as
specified by this Agreement so as to transfer the Underlying Assets to the Transferee or its designated Person. With respect to the
Underlying Assets that the Partners agree to transfer and the Transferee acknowledges in writing, the Transferor shall arrange the
execution of relevant agreements, contracts and/or other documents by the Parties respectively within the practicable time.
7.1.5 Take all necessary actions and reasonable efforts to cause the ownership or relevant rights of the Underlying Assets to be fully vested or
transferred in accordance with this Agreement, take all necessary actions and execute all necessary documents to cause the ownership of
the Underlying Assets and any rights with respect thereto to be fully vested in the Transferee in accordance with this Agreement and
successfully complete the Closing;
7.1.6 Maintain the operation of the Underlying Business in the same manner prior to the date hereof and keep the Underlying Assets in good
condition;
7.1.7 Upon becoming aware of any act or omission in breach of any representation or warranty contained in this Agreement, it shall
immediately disclose the same in writing to the Transferee. In particular, once the Transferors become aware of any assets which should
be included in the scope of the Underlying Assets set forth herein but are not included therein, the Transferors shall immediately transfer
such assets to the Transferee in accordance with this Agreement for free and complete the relevant amendment registration (if necessary);
7.1.8 Prepare financial statements relating to the Underlying Assets in accordance with applicable general accounting standards, and provide
the financial statements to the Transferee at such time and in such manner required by the Transferee, and the financial statements are
true, accurate and complete;
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7.1.9 The Transferors and Uxin Group Company shall provide the Transferee and their representatives with such information relating to the
Underlying Assets as they reasonably require, including but not limited to providing all accounts, records, contracts, technical data,
personnel data, management information and other documents relating to the Underlying Assets to their counsels, accountants and other
representatives. In addition, the Transferors, the Warrantors and Uxin Group Companies shall notify the Transferee in writing once any
breach of this Agreement has taken place or is expected to take place;
7.1.10 The Transferors, the Warrantors and Uxin Cayman shall cause Uxin Group Companies, and the aforementioned parties shall cause their
respective Related Parties and consultants, as well as their respective directors, officers and representatives to, (i) on an exclusive basis,
deal with the matters relating to this Transaction together with Transferee, Wuba Jinfu Cayman and its respective Related Parties, (ii) not
enter into any similar transaction or any other transaction in conflict with the transactions contemplated in the Transaction Documents
(any of such transactions being referred to as the “Third Party Transaction”), (iii) immediately terminate any discussions or
negotiations with any Person in respect of the Third Party Transaction, and thereafter refrain from entering into any discussions or
negotiations with any Person in respect of the Third Party Transaction or providing any information to any Person in respect of the Third
Party Transaction; and (iv) not encourage or take any other action to make, or facilitate any inquiry or proposal with respect to the
possible Third Party Transaction. The Transferors, the Warrantors or Uxin Group Companies shall promptly notify the Transferee of any
enquiry it receives from any other party in respect of a possible Third Party Transaction;
7.1.11 Without the prior written consent of the Transferee, the Transferors and Uxin Group Company in connection with the operation of the
Underlying Business shall not take the following actions with respect to the underlying assets (if applicable), except for such actions that
will not cause any adverse effect on the execution and performance of this Agreement and the implementation of this Transfer of Assets
by the Transferor and the relevant Uxin Group Company or the normal operation of Uxin Group Company in connection with the
operation of the Underlying Business (provided that such normal operation by Uxin Group Company will not cause any adverse effect on
the execution and performance of this Agreement and the implementation of this Transfer of Assets by the Transferors and Uxin Group
Company):
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a. Increase, decrease, allot, issue, acquire, repay, assign, pledge or redeem any registered capital or equity;
b. Sell, lease, transfer, authorise or assign any of the assets other than in the ordinary course of business consistent with the terms prior
to the date of this Agreement;
c. Assumed or incurred any Liabilities, liabilities, obligations or expenses in excess of RMB 100,000 (or the equivalent thereof in
another currency) in the aggregate except in the ordinary course of business;
d. Made any capital expenditure in excess of RMB 100,000 (or the equivalent thereof in other currencies) other than in the ordinary
course of business;
e. Creation of any Encumbrance on any assets;
f. Grant any license to any Underlying Intellectual Property, allow any Underlying Intellectual Property to expire or be forfeited,
donated or waived, or disclose any material trade secrets, formulas, processes, know-how or other Underlying Intellectual Property
in relation to the Underlying Business that are not pubic information prior to such disclosure, except as disclosed in accordance with
legal requirements or confidentiality agreements;
g. Declare, pay and make any declaration or distribution of dividends;
h. Effect or become a party to any acquisition;
i. Sell, transfer, lease or in any other manner dispose of any Underlying Assets;
j. Cause the termination, expiration, invalidity, suspension or non-renewal of any authorization necessary for the operation of the
Underlying Business or any adverse effect;
k. Release or waive any liability with respect to the Underlying Business;
l. Waive or transfer any rights or claims in connection with the Underlying Business;
m. Take other actions that may have actual or potential adverse effect on this Transaction hereunder;
n. Conduct or conduct any related party transaction with other Uxin Group Companies or their affiliates in connection with the
Underlying Assets among the corresponding entities operating the Underlying Business on Uxin Group Companies.
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7.1.12 Cut-off Date Adjustment Mechanism
For the avoidance of doubt, it is understood, acknowledged and agreed that the determination of the Cut-off Date as June 30, 2019 is
conditional upon that the Transferors and Uxin Cayman procure the relevant Uxin Group Company to have the following matters be
completed, satisfied, fulfilled and fully complied with in any respect. If any of the following has in any aspect fails to be completed,
satisfied, fulfilled and fully complied with, the Cut-off Date will be adjusted to another date accepted and acknowledged by the
Transferee based on the then request of the Transferee.
a. As of the date hereof, the lists and lists corresponding to the Underlying Assets have been provided to and acknowledged by the
Transferee on or prior to the date hereof in the manner and mechanism set forth herein;
b. The lists and breakdown corresponding to the Underlying Assets as of the Closing Date have been provided to and acknowledged by
the Transferee on or prior to the Closing Date in accordance with the manner and mechanism set forth herein;
c. From July 12, 2019 to the Closing Date, Uxin Group Company shall obtain the prior written consent of Transferee’s designated
representative (including the prior written consent and/or the prior email confirmation) for any expenditure and costs relating to the
operation of the Underlying Assets in excess of RMB200,000 individually or in the aggregate;
d. The representations and warranties made by the Warrantors under Section 6.2 hereof are complete, true, accurate, without any
omission and not misleading in any respect.
7.2 The Warrantors jointly and severally covenant to the Transferee as follows:
7.2.1 From the date hereof until the Closing Date, unless for the purpose of performing the obligations contemplated by this Agreement or
obtaining the prior written consent of Transferee, the Transferors and each Uxin Group Company shall not (except for the circumstance
that the Underlying Intellectual Property complies with and is in strict compliance with the provisions of this Agreement, where the
Underlying Intellectual Property involves the Underlying Intellectual Property): (1) use, license, sell, lease, reproduce, pledge or dispose
of the Underlying Assets or any part thereof; (2) claim the ownership or Intellectual Property of the Underlying Assets (or any update,
upgrade or development part); (3) apply to register the name, similar name, or any Intellectual Property contained in the Underlying
Assets (including, without limitation, any update, upgrade or development part) as a trademark, domain name, trade name, etc. or make
copyright registration, or use the same without authorization; (4) disclose to a third party the trade secrets relating to the Underlying
Assets; (5) cancel any application for the Underlying Assets under application, or require the Transferors to modify or take action for
such application within a specified period of time as required by relevant Governmental Authorities, the Transferors shall not respond
within the specified period;
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7.2.2 After the Closing Date, the Transferors shall, and Uxin Cayman shall cause the relevant Uxin Group Company to, complete the matters
set forth in Section 2 hereof which shall be completed after the Closing Date in accordance with the methods and mechanisms set forth
herein and provide the Transferee with satisfactory evidence at the time and in the manner requested by the Transferee;
7.2.3 The Warrantors undertake that from the date hereof to the Closing Date, it shall operate the Underlying Assets in the ordinary course and
will not create or permit the existence of any security or other debt Encumbrance which may affect the rights and interests of the
Underlying Assets;
7.2.4 After the Closing Date, if the Underlying Assets hereunder are transferred to the Transferee, the Transferors shall not, and Uxin Cayman
shall cause Uxin Group Company not to, do anything detrimental to the legality, validity and value of such Underlying Assets or impede
the Transferee’s full use of the Underlying Assets;
7.2.5 After the Closing Date, the Warrantors shall assist the Transferee in the operation of the business with respect to the Underlying Assets in
accordance with this Agreement and give necessary support and cooperation to the Transferee to ensure the successful implementation of
such business;
7.2.6 After the Closing Date, each of the Transferors shall, and Uxin Cayman shall cause Uxin Group Company to, assist the Transferee and the
Transferors in conducting the transfer of the Underlying Assets in accordance with this Agreement and give support and cooperation to
the Transferee or its designated Person or their respective Related Parties (in terms of business, technology, finance and personnel) for a
long term and free of charge so as to cause the successful implementation of the transfer of the Underlying Assets. Specifically:
a. With respect to technology, the Transferors shall use reasonable efforts to provide the Transferee and its Related Parties with
necessary technical support for the technology required by the Assets;
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b. With respect to Intellectual Property, the Transferors shall complete the authorization and filing of the relevant Intellectual Property
in accordance with this Agreement;
c. With respect to personnel, the Transferors shall arrange for designated person to communicate promptly and fully with the
Transferee and its Related Parties with respect to the details of the performance of this Agreement;
d. After the transfer of the Underlying Assets hereunder to the Transferee, except for any matters arising in accordance with this
Agreement or other Transaction Documents, the Transferors or their Related Parties will not take any action detrimental to the
smooth operation of such Underlying Assets or impede the smooth operation of such Underlying Assets by the Transferee.
7.3 Within three (3) months after the Closing Date, with respect to the Transfer of Assets contemplated hereby, the Transferors and the relevant group
companies, together with the Transferee and their designated entities, shall complete the integration of the relevant Underlying Assets and
Underlying Business through mutual consultations.
7.4 After the Closing Date, without the prior written consent of the Transferee or Wuba Jinfu Cayman, the Guarantors shall not, and shall cause their
respective Related Parties not to, individually or jointly with, through any other person (including using the rights to directly or indirectly own an
interest) or on behalf of any other person (whether as a director, partner, consultant, manager, employee, agent or otherwise), directly or indirectly:
7.4.1 Carry on, be engaged or concerned in any business in any manner which competes with or is in any way interested (economic or
otherwise) in the Financial Business of the Market Business ;
7.4.2 Purchase any interest in, or form or merge with, any business which competes with the Financial Business of the Market Business ;
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7.4.3 Assist or license in any manner any third party in competition with the Financial Business of the Market Business to engage in the
business which is the same as, or similar to or competes with, the Financial Business of the Market Business (including, without
limitation, transfer or license of any assets and personnel of Uxin Group Company relating to the Financial Business of the Market
Business and/or the business cooperation conducted under the business cooperation agreements to a third party, or assist any third party to
carry out the business which is the same as, or similar to, or competes with, the Financial Business of the Market Business);
7.4.4 Interfere in any way with the relations of Transferee or its Related Parties with their customers, customers, employees or suppliers
engaged in the Financial Business of the Market Business;
7.4.5 Contact any supplier or service provider who engages in the Financial Business of the Market Business in the way of competition.
7.5 The Parties acknowledge that, after the date hereof, in respect of the Financial Business of the Market Business conducted by Uxin Group
Company, Wuba Parties or their affiliated group companies shall have the right of priority to cooperate in respect of such Financial Business of the
Market Business under identical or substantially equivalent conditions and each Guarantor shall have the obligation to realize such right of priority
to cooperate in respect of such Wuba Parties or their affiliated group companies.
7.6 Each of the Warrantors and Uxin Group Company understands, acknowledges and agrees that, in order to complete in such manner and
mechanism as set forth herein the business integration set forth in Section 7.3, the obligations to assist with the collection of the Underlying Assets
set forth in Section 2, and other matters required to be carried out by the Transferors and/or relevant Uxin Group Company after the Closing as set
forth in this Agreement (the “Post-Closing Covenants”), the Warrantors shall, and Uxin Cayman shall cause Uxin Group Company to, maintain
the good existence and operation of its relevant assets and business and shall not commit any event or act that may have adverse effect on the
Transferors and/or the relevant Uxin Group Company in their performance of Post-Closing Covenants.
7.7 Each Guarantor and Uxin Group Company acknowledges and agrees that, after the Closing Date, the Transferors and/or the relevant Uxin Group
Company shall complete the post-closing matters required to be completed after the Closing in accordance with Section 2 hereof.
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7.8 The Parties agree and acknowledge that, unless otherwise provided in this Agreement, the Transfer Consideration shall constitute reasonable and
sufficient consideration for the Transfer of Assets hereunder. If a separate transfer agreement is required for the Transfer of Assets by relevant
parties for the purpose of registration procedures for the transfer, the Transferee shall not be required to pay any amount to the Transferors or the
other Parties in accordance with such agreement. In addition, if there is any discrepancy between such separately executed agreement and this
Agreement, this Agreement shall prevail.
7.9 The Guarantors hereby undertake to bear joint and several liability for the liabilities and obligations of the Transferors and Uxin Group Companies
hereunder. Each of the Wuba Parties hereby undertakes that the liabilities and obligations they bear hereunder shall be on a joint and several basis.
7.10 If the Closing of the Transaction is completed in accordance with this Agreement,
(1) Subject to other provisions and arrangements of the supplementary agreements, from the Cut-off Date to the Closing Date, with respect to any
payment incurred by Uxin Group Company for the operation of the Underlying Assets (the “Amount Payable of Transferee”), the
Transferors or its designated Person shall provide documents satisfactory to the Transferee, and after the acknowledgement and confirmation
by the Transferee (which acknowledgement or confirmation shall not be unreasonably withheld by the Transferee), the Transferee or its
designated Person shall pay such amount acknowledged by the Transferee to the Transferors or its designated Person to the satisfaction of the
Transferee within one hundred and twenty (120) days after the Closing Date or such longer period as agreed upon by Uxin Cayman and the
Transferee;
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(2) From the Cut-off Date, the assets, income, proceeds and attached interests corresponding to the Underlying Business of the Transferors and
the relevant Uxin Group Company shall belong to Transferee or its designated Person and the costs and expenses corresponding to such
assets, income, proceeds and attached interests shall be borne by Transferee or its designated Person (for the avoidance of doubt, the
liabilities, costs, expenses, etc. corresponding to the litigation arising from the matters prior to the Cut-off Date and arising after the Cut-off
Date shall still be borne by the Transferors and the relevant Uxin Group Company); the aforesaid allocation and settlement of interests shall
be subject to the results of the audit and settlement conducted by Price Waterhouse Coopers, Deloitte Touche Tohmatsu, Klynveld Peat
Marwick Goerdeler and Ernst & Young in accordance with the applicable Accounting Standards, and be subject to the adjustment made prior
to the Closing as set forth in Section 4.5.14.
7.11 From the date hereof and prior to the Closing Date, solely for the purpose of the appraisal by the Transferors of this Transaction, Wuba Group
Companies shall provide the Transferors with the following information of the Wuba Group Companies: (i) the financial statements as of June 30,
2019; (ii) the future financial model; (iii) key operation figures used to support the aforesaid financial model; and (iv) the financial data
corresponding to this Transaction as reasonably requested by the other Transferors and solely for the purpose of the valuation by the Transferors of
this Transaction.
8 Liabilities for Breach
8.1 The Warrantors jointly and severally agree to indemnify the Wuba Parties and the applicable Indemnitees (as defined below), defend and hold
harmless Wuba Parties and their respective Related Parties, for any damages, losses, claims, lawsuits, payment demands, judgments, settlements,
taxes, interest, expenses and costs (including but not limited to reasonable attorney fees) directly or indirectly relating to the following matters or
actually suffered, sustained or occurred due to the following matters or brought against Wuba Parties and their respective Related Parties (the
“Indemnitees”), and Wuba Parties and their respective Related Parties shall act on their own behalf or on behalf of the other Indemnitees, so that
such party and each other Indemnitees shall receive compensation, whether or not they are parties hereto:
a. Breach by any Warrantor of any representations, warranties, covenants, agreements or obligations made by it under this Agreement,
including, without limitation, that any representation or warranty made by any Party under this Agreement is untrue;
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b. Failure of the Transferors and/or Uxin Group Companies to pay any due taxes in full (including, without limitation, any penalties,
surcharges, fines and interest relating to taxes) payable or to be withheld by the Transferors with respect to the Assets on or prior to the
Cut-off Date in accordance with the PRC Laws;
c. Penalty or liability imposed by the Transferee or its Related Parties and any other losses suffered by the Transferee or its Related Parties in
connection with or relating to the Underlying Intellectual Property arising from the claim that the Transferee or its Related Parties’ use of
the Underlying Intellectual Property infringes upon its Intellectual Property Rights;
d. Any losses suffered by the Transferee or its Related Parties resulting from any litigation, claim, dispute, administrative penalty or other
legal proceedings, damages, losses, judgments, legal actions and arbitration initiated against the Transferee or its Related Parties arising
from the Underlying Assets and the actions taken by the Underlying Business on or prior to the Cut-off Date;
e. Any liabilities arising from non-compliance relating to the Underlying Assets of the Transferors and/or Uxin Group Companies prior to
the Cut-off Date.
8.2 Wuba Parties jointly and jointly to indemnify Uxin Group Companies and their applicable Indemnitees (as defined below), defend and hold
harmless Uxin Group Companies, for any damages, losses, claims, lawsuits, payment demands, judgments, settlements, taxes, interest, expenses
and costs (including but not limited to reasonable attorney fees) directly or indirectly relating to the following matters or actually suffered,
sustained or occurred due to the following matters or brought against Uxin Group Companies and their respective Related Parties (the
“Indemnitees”):
a. Breach by any Wuba Party of any representations, warranties, covenants, agreements or obligations made by it under this Agreement,
including, without limitation, that any representation or warranty made by any Wuba Party under this Agreement is untrue;
b. Failure by the Transferee to pay the Transferors the consideration for this Transfer of Assets (including Cash Consideration and Equity
Consideration) in accordance with the Agreement.
9 Amendment and Termination
9.1 This Agreement may be amended or modified by the Parties through mutual consultation. Any amendment or modification shall be made in
writing and become effective upon execution by the Parties hereto.
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9.2 This Agreement may be terminated under any of the following circumstances:
9.2.1 Upon unanimous written consent by all parties hereto;
9.2.2 In case of any of the following circumstances, the Transferee shall have the right to notify the other Parties in writing at least ten
(10) Business Days in advance to terminate this Agreement, and the effective date of termination shall be specified in the notice:
a. The Warrantors’ representation, warranties or covenants hereunder contains material misrepresentation or omissions; or
b. The Warrantors’ breach of the agreement, commitment and obligation hereunder in material aspects and fail to completely rectify
within ten (10) Business Days after its receipt of the written notice from the Transferee.
9.3 In the event that this Agreement is terminated pursuant to Section 9.2 above, each party hereto shall refund the consideration or the Underlying
Assets hereunder received from the other Parties hereto based on the principles of fairness, reasonableness, honesty and credibility and try to
restore to the status when this Agreement is executed.
9.4 In the event the Transferee terminates this Agreement pursuant to Section 9.2.2 above, the Transferors shall refund all the Transfer Consideration
to the Transferee if the Transferee has paid the Transferor the Transfer Consideration by then; Kai Feng, as a Transferor, shall transfer back the
Transferor’s Increased Capital and bear the corresponding tax and expenses arising therefrom at such time and in such manner satisfactory to the
Transferee if Kai Feng has been transferred the Transferor’s Increased Capital by then; Uxin Cayman shall transfer back the Transferor’s Offshore
Shares at such time and in such manner satisfactory to the Transferee and bear the corresponding tax and expenses arising therefrom if it has been
transferred the Transferor’s Offshore Shares by then; if the person designated by the Transferors has been appointed as director or holds any
position in Wuba Jinfu Cayman or other Person designated by the Transferee by then, such person shall immediately resign from such position at
such time and in such manner satisfactory to the Transferee.
9.5 After termination of this Agreement, all rights and obligations of the Parties hereunder shall terminate. Any Party shall have no other right of claim
against the other Parties under this Agreement or for the termination of this Agreement, except for the liabilities assumed in accordance with
Sections 8 and 9 hereof.
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9.6 After termination of this Agreement, this Agreement (except for Article 8 (Liabilities for Breach), Article 9 (Amendment and Termination),
Article 10 (Confidentiality), Article 11 (Governing Law and Dispute Resolution) and Article 12.6 (Expenses) hereof) shall lapse and cease to be
binding and effective and there shall be no liability and obligation on the part of either Party hereunder. For the avoidance of doubt,
notwithstanding the termination of this Agreement, any Party shall remain liable for any losses suffered by other Parties due to its breach of this
Agreement prior to the rescission hereof
10 Confidentiality
10.1 The Parties shall keep the existence and contents of this Agreement (the “Confidential Information”) confidential and without the prior written
consent of the Parties, shall not disclose the Confidential Information to any third party other than the professional advisors of the Parties, and the
directors, officers and employees of the Parties who actively participate in this Transfer of Assets (collectively the “Authorized Persons”). The
Parties must cause and ensure their respective authorized persons to receive the Confidential Information to comply with the same confidentiality
obligations as the Parties.
10.2 None of the Parties shall disclose the Confidential Information to any third party through press conference, industry or professional media,
marketing materials or otherwise without the prior written consent of the Parties.
10.1 The restrictions set out in this Article 10 shall not apply to the disclosure of any information which:
10.1.1 The disclosure or use is required by the regulatory authorities;
10.1.2 The disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreements
entered into pursuant to this Agreement or the reasonable disclosure of relevant matters to tax authorities;
10.1.3 The information has come into the public domain not due to any reason attributable to any Party hereto.
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If information is disclosed for any of the above reasons, the disclosing party shall discuss such disclosed matter with the other Parties within
reasonable time before its disclosure or submission of information and shall give confidential treatment to the information disclosed or submitted
by the Disclosing Party to the extent possible under the circumstance that other Party requests such disclosure or submission.
11 Governing Laws and Dispute Resolution
11.1 The conclusion, validity, interpretation and performance of this Agreement shall be governed by and bound by the PRC Laws.
11.2 All disputes arising out of or in connection with this Agreement shall be settled by the Parties through friendly consultations; if such dispute
cannot be settled through consultation within thirty (30) days from the date on which any Party gives notice to the other Parties, such dispute shall
be submitted to the Beijing Arbitration Commission for arbitration in Beijing in accordance with the Commission’s arbitration rules in effect at the
time of applying for arbitration. The arbitration tribunal shall consist of three arbitrators, and the arbitration proceedings shall be conducted in
Chinese. The arbitral award shall be final and binding upon the Parties.
11.3 During the course of arbitration, the Parties shall continue to perform the other parts of this Agreement, except for the part in dispute.
12 Miscellaneous
12.1 This Agreement shall become effective upon signature or seal by the Parties.
For matters not covered by this Agreement, the Parties shall enter into a supplementary agreement through consultations. The supplementary
agreement shall have the same legal effect as this Agreement. Modification of this Agreement shall be made in writing through consultations and
become effective on the date when the Parties affix their signatures or seals to this Agreement.
12.2 None of the Parties shall assign their respective rights and obligations under this Agreement to any third party without the prior written consent
from the other Parties.
12.3 This Agreement represents the entire agreement of the Parties with respect to the subject matter hereof and supersedes and replaces any other
written or oral agreement or document executed by the Parties with respect to the subject matter hereof. All Parties hereto agree and shall cause
their applicable affiliates to agree that, all terms and conditions contained in the INDICATIVE TERM SHEET by and between Uxin Cayman and
Wuba Jinfu Cayman dated July 12, 2019 shall automatically become void and null and with no legal effect upon the relevant parties from the date
hereof, except for the terms under the section of “Business Cooperation (ii)”.
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12.4 If any term of this Agreement is void or unenforceable due to any applicable Law, such term shall be deemed to have never existed and the validity
of other terms of this Agreement shall not be affected. The Parties hereto shall negotiate and agree upon the new provisions to the extent
compliance with the Laws so as to ensure that the original provisions are fulfilled to the greatest extent possible.
12.5 No delay or omission by any Party to exercise any right, power or remedy accruing to any other Party upon any breach or default of this
Agreement, shall impair such right, power or remedy of such Party nor shall it be construed to be a waiver of such breach or default, or an
acquiescence therein, or of or in any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, approval of breach or
default of any nature or character of this Agreement, or any waiver of any terms or conditions of this Agreement, must be in writing and shall be
effective only to the extent set forth in such writing. Any remedies provided for in this Agreement or by Law or otherwise to any party, shall be
cumulative, and not alternative but exclusive.
12.6 Expense. Unless otherwise agreed in this Agreement, each Party shall bear its own expenses (including but not limited to professional service fees
such as auditing, finance and legal and other expenses) arising from or in connection with the transaction contemplated herein.
12.7 All notices served hereunder shall be written in Chinese and shall be delivered by hand, registered mail or e-mail to the following addresses and e-
mail boxes unless otherwise specified in this Agreement:
If to Wuba Parties:
Address: Building 101, No.10A Yard, Jiuxianqiao Road North, Chaoyang District, Beijing
Attn: Li Xiaoyang:
Email: *
If to the Warrantors:
Address: Floor 3rd, Tower E, LSHM Center, NO.8 Guangshun South Avenue, Chaoyang District, Beijing
Attn: ZENG Zhen
Tel: *
Email: *
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If to the Transferors or the Uxin Group Companies
Address : Floor 3rd, Tower E, LSHM Center, NO.8 Guangshun South Avenue, Chaoyang District, Beijing
Attn: ZENG Zhen
Tel: *
Email: *
For any notices served or issued hereunder:
(1) If a notice is sent by person and a written receipt is received, and such notice is delivered at the destination before 17:00 in a Business Day,
then such written receipt shall be the evidence that such notice is effectively delivered on that Business Day; if delivered later than 17:00 to
the destination or any time in a non-Business Day, then it shall be deemed being delivered at 09:00 of the following day;
(2) If a notice is a domestic mail within the PRC and is delivered by prepaid postal express, it shall be deemed to be delivered five (5) Business
Days after the mailing date;
(3) If mailed from or to any place outside the PRC by prepaid international courier service, it shall be deemed to have been delivered ten
(10) Business Days after the mailing date; or in the case of postage prepaid postal express delivery, it shall be deemed to be delivered five
Business Days after the mailing date;
(4) Any notice sent by e-mail shall be deemed to have been delivered on the day the e-mail is successfully transmitted, provided that the sender
receives the system information indicating that the message was sent successfully or no system information has been delivered within 24
hours indicating that the e-mail has not been delivered or has been returned.
(5) During the term of this Agreement, either Party has the right to change its address or fax number for receiving the notice after giving
written notice to the other Parties 15 days before the change.
12.8 In the event that a separate agreement is executed in accordance with the forms of the governmental authorities is required for the purpose of
requesting performance of a specific act from any Governmental Authority in connection with the transactions contemplated by this Agreement,
this Agreement shall have full priority over such separate agreement and such agreement may only be used to request performance of such specific
act from the Governmental Authority and shall not be used to establish and prove the rights and obligations of relevant Parties with respect to the
matters stipulated hereunder.
62
12.9 This Agreement is written in Chinese and executed in ten counterparts, five of which shall be held by the Transferors and Uxin Group Companies
and five of which shall be held by Wuba Parties, all of which shall have the same effect.
[The remainder of this page is intentionally left blank]
63
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Kai Feng Finance Lease (Hangzhou) Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Youqin (Shaanxi) Finance Lease Co., Ltd. (company stamp)
Signature:
Name: Xia Gao
/s/ Xia Gao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Youxin (Shanghai) Used Car Business Co., Ltd. (company stamp)
Signature:
Name: Xia Gao
/s/ Xia Gao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Boyu Finance Lease (Tianjin) Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Shenzhen Youxin Pengda Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yong Liu
/s/ Yong Liu
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Uxin Limited
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
UcarEase Holding Limited
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
GloryFin International Group Holding Company Limited
(錦融國際控股集團有限公司)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
HONGKONG QUEEN’S TECHNOLOGY CO., LIMITED
(香港皇后科技有限公司)
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Shenzhen Chunxinboye Co., Ltd.
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Assets Transfer Agreement]
Minrui Finance Lease (Shenzhen) Co., Ltd. (official stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Xi’an Youxin Pengjia Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yukai Ren
/s/ Yukai Ren
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Xi’an Youxin Pengxin Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yukai Ren
/s/ Yukai Ren
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youyuan (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxinpai (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxin Hulian (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Yougu (Shanghai) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Chebole (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youfang (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxin (Shaanxi) Information Technology Group Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Tianjin Wuba Rongxin Information Technology Co., Ltd. (company stamp)
/s/ Ligang Chang
Signature:
Name: Ligang Chang
Title: Legal Representative
Wuba (Shenzhen) Finance Lease Co., Ltd.
/s/ Fudong Zhou
Signature:
Name: Fudong Zhou
Title: Legal Representative
Tianjin Wuba Jinfu Co., Ltd. (company stamp)
/s/ Jinbo Yao
Signature:
Name: Jinbo Yao
Title: Legal Representative
SUPPLEMENTARY AGREEMENT TO
ASSETS TRANSFER AGREEMENT
April 23, 2020
Exhibit 4.36
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
1
Supplementary Agreement to Assets Transfer Agreement
This Supplementary Agreement to Assets Transfer Agreement (this “Agreement” or this “Supplementary Agreement”) is made on April 23, 2020 by and
between:
(1) Kai Feng Finance Lease (Hangzhou) Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic China, with its registered address at: Room 1814, Unit 1, Building 3, Wanda Commercial Center, Gongshu District, Zhejiang Province
(“Kai Feng”);
(2) Youqin (Shanxi) Finance Lease Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Block A-702, Midwest Lugang Finance Town, No.99 Gangwu Avenue, International Harbor
District, Xi’an, Shaanxi Province (“Youqin”);
(3) Youxin (Shanghai) Used Car Business Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Room D-09, Floor 2, Building 1, No.198 Huashen Road, China (Shanghai) Pilot Free Trade Zone
(“Youxin”);
(4) Boyu Finance Lease (Tianjin) Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s Republic
of China, with its registered address at: No. 565 Lanzhou Road (6-4-47 Haize Logistics Park), Tianjin Pilot Free Trade Zone (Dongjiang Bonded Port
Area) (“Boyu”);
(5) Shenzhen Youxin Pengda Used Car Broker Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Door 5, Youxin Pengcheng Used Car Transaction Market, at the intersection of Chaguang
Road and Shigu Road, Xili Street, Nanshan District, Shenzhen (“Pengda”);
(6) Chebole (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 323609, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing
(“Chebole”);
(7) Youfang (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 323609, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing
(“Youfang”);
(8) Youxin (Shanxi) Information Technology Group Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of
the People’s Republic of China, with its registered address at: Block A-701, Midwest Lugang Finance Town, No.99 Gangwu Avenue, International
Harbor District, Xi’an (“Youxin Shanxi”, hereinafter referred to as “Transferor” individually or collectively with Kai Feng, Youqin, Youxin,
Pengda, Autobole and Youfang);
(9) Uxin Limited, a limited liability company incorporated and existing in accordance with the laws of the Cayman Islands, with its registered office at
the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“Uxin Cayman”);
(10) The entities listed in Exhibit I (“Uxin Affiliates”, and each a “Uxin Affiliate”; Uxin Affiliates, Uxin Cayman and the Transferors are referred to as
“Uxin Group Companies” and/or “Guarantors”, and each a “Uxin Group Company” and/or “Guarantor”);
(11) Tianjin Wuba Rongxin Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 1840-130, Floor 18, Baofeng Building, No. 3678, Xinhua Road, Tianjin Pilot Free
Trade Zone (CBD) (“Tianjin Wuba Rongxin” or “Transferee”);
(12) Tianjin Wuba Jinfu Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s Republic of China,
with its registered address at: Room 1902, Floor 19, Jinzuo Plaza, No.5 Meiyuan Road, Huayuan Industrial Zone, Binhai Hi-tech District, Tianjin
(“Tianjin Wuba Jinfu”); and
(13) Wuba (Shenzhen) Finance Lease Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Room 201, Building A, No.1 Qianwan Road (No. 1), Qianhai Shenzhen-Hong Kong Cooperation
Zone, Shenzhen (resided in Shenzhen Qianhai Business Secretary Co., Ltd.) (“Wuba Finance Lease”, hereinafter referred to as “Wuba Parties”
collectively with Tianjin Wuba Rongxin and Tianjin Wuba Jinfu).
For the purpose herein, each of the undersigned parties listed above is referred to herein individually as a “Party” and collectively as the “Parties”.
WHEREAS:
(1) The Parties hereto have entered into the Assets Transfer Agreement (the “Assets Transfer Agreement” as set forth in in Exhibit II) on September 30,
2019. In accordance with such Assets Transfer Agreement, the Transferors agree to transfer the Underlying Assets (as defined in the Assets Transfer
Agreement), as well as all corresponding rights and interests attached to such Underlying Assets, to the Transferee or its designated Persons.
(2) With respect to the assets transfer and closing under the Assets Transfer Agreement, the Parties agree, through friendly consultations, to amend and
supplement the Assets Transfer Agreement accordingly and agree as follows.
Upon mutual agreement, the Parties hereby agree as follows:
1 Definitions Clause
1.1 In this Agreement, in addition to the terms defined in the text hereof, the following terms shall have the following meanings. For the avoidance of
doubt, capitalized terms used in this Agreement shall have the meanings ascribed to them in the Assets Transfer Agreement unless otherwise stated
in writing.
“Vehicle Finance Business” shall mean the used vehicle finance and leasing business for consumer users operated by Golden Pacer, a company
incorporated under the Laws of the Cayman Islands (“Wuba Jinfu Cayman”) and group companies under the VIE structure Controlled by Wuba
Jinfu Cayman (collectively, “Wuba Group Companies”) (for the avoidance of doubt, excluding the consumer finance business between Wuba
Group Companies and consumers).
“Audited Net Profit Before Tax” shall mean the net profit that is determined by one of the Big Four accounting firms (PricewaterhouseCoopers,
Deloitte, Ernst & Young, KPMG) appointed by Wuba Parties (the “Auditor”) in accordance with the recognition principle of net profit before tax of
the U.S. GAAP. For the purpose of this Section, the Audited Net Profit Before Tax does not include the net profit arising from the following acts:
wrongful transfer of losses, costs or expenses, or wrongful transfer of income, profits or gains.
1.2 Unless otherwise specified, any reference to a section, clause, list, exhibit or schedule of this Agreement is a reference to the section, clause, list,
exhibit or schedule of this Agreement.
1.3 Any reference to a decree, statute, regulation or ordinance shall be construed as a reference to such decree, statute, regulation or ordinance as from
time to time in force, as amended, replaced or re-enacted and shall include any subordinate legislation made under it.
1.4 Words such as “including” and other similar expressions are not intended to be restrictive and shall be construed as “including, without limitation.”
1.5 Words importing the singular shall include the plural and vice versa; words importing a gender shall include all gender meanings.
1.6 The table of contents and headings for this Agreement are for convenience only and do not affect in any way the content or interpretation of any
term of this Agreement.
1.7 The appendices and schedules are integral parts of this Agreement and have the same effect as the main content of this Agreement. All references to
this Agreement include the appendices and schedules.
1.8 References to writing or written shall include any mode of reproducing words in a legible and non-transitory form.
2 Supplementary Agreement
2.1 Adjustment and Supplementary Agreement of Equity Transfer Consideration in Transfer Consideration
(1) From the date hereof, Section 3.2.1 of the Assets Transfer Agreement is deleted in its entirety and shall no longer be legally binding. The
payment in cash to be made by the Transferee to the Transferors with respect to the transfer of the Underlying Assets shall be made by the
Transferee in accordance with Section 2.3 of the Supplementary Agreement to the Assets Transfer Agreement (for the avoidance of doubt, if
pursuant to Section 2.3 hereof, the Transferee is not obliged to make payment to the Transferors and Uxin Group Companies, then the
Transferee shall not be obliged to make any payment in cash to the Transferors and Uxin Group Companies in respect of the transfer of the
Underlying Assets).
(2) Upon the execution of this Agreement, Section 3.2.2 of the Assets Transfer Agreement is amended and replaced in its entirety as follows:
After the satisfaction of the following conditions, Uxin Cayman shall have the right to subscribe for the corresponding number of
Series Angel Preferred Shares of Wuba Jinfu Cayman in accordance with this Agreement.
(i) Upon the completion of this Transaction (as defined in the Assets Transfer Agreement), Wuba Group Companies shall, within 120
days after the end of the fiscal year 2020 (such period shall be reasonably extended if the Transaction cannot be consummated
within such period for reasons attributable to Uxin Group Companies or other reasons not attributable to Wuba Group
Companies), provide Uxin Group Companies with the audited financial report of the Vehicle Finance Business of Wuba Group
Companies for the fiscal year 2020 (i.e. January 1, 2020 to December 31, 2020) (the “2020 Audited Financial Report”), and
subscribe for the shares in accordance with the following:
a) If the Audited Net Profit Before Tax determined in the 2020 Audited Financial Report exceeds RMB600,000,000 (the “2020
Net Profit Indicator”), Uxin Cayman shall have the right, within ten (10) Business Days after the issuance of the 2020
Audited Financial Report (the “Type I 2020 Share Subscription Period”), to subscribe for up to [*] Series Angel Preferred
Shares in the aggregate of Wuba Jinfu Cayman at the purchase price of US $0.00001 per share in accordance with this
Agreement (the “2020 Share Subscription”).
b) If the Audited Net Profit Before Tax determined in the 2020 Audited Financial Report fails to reach the 2020 Net Profit
Indicator, Uxin Group Company shall determine whether it will exercise the following objection review right within ten
(10) Business Days after the receipt of the 2020 Audited Financial Report provided by Wuba Group Companies (the “2020
Statements Verification Period”);
If Uxin Group Companies raise an objection during the 2020 Statements Verification Period, Uxin Group Companies and the
Wuba Group Companies shall jointly appoint an accounting firm to review the 2020 Audited Financial Reports or, if the
accounting firm cannot be selected within ten (10) Business Days after the end of the 2020 Statement Verification Period, one
of PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young shall be selected to conduct such review, the review results
shall be binding upon the Parties and the review costs shall be borne by Uxin Group Companies. If, according to the
aforesaid review results, the actual 2020 net profit before tax of the Vehicle Finance Business of Wuba Group Companies
exceeds the 2020 Net Profit Indicator, the Uxin Group Companies shall be entitled to complete the 2020 Share Subscription
within ten (10) Business Days after receiving such review results (the “Type II 2020 Share Subscription Period”, and any
Type I 2020 Share Subscription Period, Type II 2020 Share Subscription Period are referred to as the “2020 Share
Subscription Period”).
For the avoidance of doubt,
(x) If Uxin Group Company fails to propose in writing to exercise the aforesaid objection review process during the 2020 Statements
Verification Period or acknowledges the 2020 Audited Financial Report during the 2020 Statements Verification Period, or the review
results of the accounting firm selected by the Parties in accordance with Section 2.1(2)(i)b) above show that the Audited Net Profit
Before Tax of Vehicle Finance Business of Wuba Group Companies for the fiscal year 2020 fails to reach the 2020 Net Profit Indicator,
the rights corresponding to the 2020 Share Subscription will automatically terminate, respectively at the end of the 2020 Statement
Verification Period or on the date acknowledged by Uxin Group Company or on the date on which the review results by the accounting
firm selected according to Section 2.1(2)(i)b) are issued, as the case may be;
(y) If the Audited Net Profit Before Tax of the Vehicle Finance Business of WuBa Group Companies in the fiscal year 2020 reaches the
2020 Net Profit Indicator while Uxin Cayman fails to complete the 2020 Share Subscription within the 2020 Share Subscription Period,
the right corresponding to the 2020 Share Subscription shall automatically terminate on the date of expiration of the 2020 Share
Subscription Period;
(z) If the Audited Net Profit Before Tax of the Vehicle Finance Business of Wuba Group Companies in the fiscal year 2020 reaches the
2020 Net Profit Indicator, Unix Cayman may only subscribe for the corresponding Series Angel Preferred Shares of Wuba Jinfu Cayman
once during the 2020 Share Subscription Period, and the part of unsubscribed shares shall automatically terminate upon the expiration of
the 2020 Share Subscription Period;
(yy) The Series Angel Preferred Shares of Wuba Jinfu Cayman acquired by Uxin Cayman through the 2020 Share Subscription pursuant
to this Agreement shall have substantially the same rights as the class of rights of the Series Angel Preferred Shares of Wuba Jinfu
Cayman acquired by 58.com Inc. as of or immediately following the Closing of the Transaction (except for the right to appoint directors
and the rights difference arising from different shareholding percentages), and shall perform the obligations for the Series Angel Preferred
Shares of Wuba Jinfu Cayman acquired by 58.com Inc.as of or immediately following the Closing of the Transaction (for the avoidance
of doubt, the foregoing obligations exclude the non-competition obligations by Wuba group companies (i.e., 58.com Inc. and its
subsidiaries and Controlled entities); provided that Uxin Cayman shall perform its non-competition obligations in accordance with the
Assets Transfer Agreement);
(ii) Upon the consummation of the Transaction, Wuba Group Companies shall, within 120 days after the end of the fiscal year 2021
(such period shall be reasonably extended if the Transaction cannot be consummated within such period for reasons attributable to
Uxin Group Companies or other reasons not attributable to Wuba Group Companies), provide Uxin Group Companies with the
audited financial report of the Vehicle Finance Business of Wuba Group Companies of the Vehicle Finance Business for the fiscal
year 2021 (i.e. January 1, 2021 to December 31, 2021) (the “2021 Audited Financial Report”), and subscribe for the shares
based on the following:
a) If the Audited Net Profit Before Tax determined in the 2021 Audited Financial Report exceeds RMB1,200,000,000 (the
“2021 Net Profit Indicator”), Uxin Cayman shall have the right, within ten (10) Business Days after the issuance of the
2020 Audited Financial Report (“Type I 2021 Share Subscription Period”), to subscribe for up to [*] Series Angel
Preferred Shares in the aggregate of Wuba Jinfu Cayman at the purchase price of US$0.00001 per share in accordance with
this Agreement (the “2021 Share Subscription”).
b) If the Audited Net Profit Before Tax as determined in the 2021 Audited Financial Report fails to reach the 2021 Net Profit
Indicator, Uxin Group Companies shall determine whether it will exercise the following objection review right within ten
(10) Business Days after the receipt of the 2021 Audited Financial Report provided by Wuba Group Companies (the “2021
Statements Verification Period”);
If Uxin Group Companies raise an objection during the 2021 Statements Verification Period, Uxin Group Companies and the
Wuba Group Companies shall jointly appoint an accounting firm to review the 2021 Audited Financial Reports or, if the
accounting firm cannot be selected within ten (10) Business Days after the end of the 2021 Statements Verification Period,
one of PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young shall be selected to conduct such review, the review
results shall be binding upon the Parties and the review costs shall be borne by Uxin Group Companies. If, according to the
aforesaid review results, the actual 2021 net profit before tax of the Vehicle Finance Business of Wuba Group Companies
exceeds the 2021 Net Profit Indicator, the Uxin Group Companies shall be entitled to complete the 2021 Share Subscription
within ten (10) Business Days after receiving such review results (the “Type II 2021 Share Subscription Period”, and any
Type I 2021 Share Subscription Period, Type II 2021 Share Subscription Period are referred to as the “2021 Share
Subscription Period”)
For the avoidance of doubt,
(x) If Uxin Group Company fails to purpose in writing to exercise the aforesaid objection review process during the 2021 Statements
Verification Period or acknowledges the 2021 Audited Financial Report during the 2021 Statements Verification Period, or the review
results of the accounting firm selected by the Parties in accordance with Section 2.1(2)(ii)b) above show that the Audited Net Profit
Before Tax of the Vehicle Finance Business of Wuba Group Companies for the fiscal year 2021 fails to reach the 2021 Net Profit
Indicator, the rights corresponding to the 2021 Share Subscription will automatically terminate, respectively, at the end of the 2021
Statement Verification Period or on the date acknowledged by Uxin Group Company or on the date on which the review results by the
accounting firm selected in Section 2.1(2)(ii)b) are issued, as the case may be;
(y) If the Audited Net Profit Before of the Vehicle Finance Business of Wuba Group Companies in the fiscal year 2021 reaches the 2021
Net Profit Indicator while Uxin Cayman fails to complete the 2021 Share Subscription during the 2021 Share Subscription Period, the
right corresponding to the 2021 Share Subscription shall automatically terminate on the expiration date of the 2021 Share Subscription
Period;
(z) If the Audited Net Profit Before Tax of the Vehicle Finance Business of Wuba Group Companies in the fiscal year 2021 reaches the
2021 Net Profit Indicator, the Uxin Cayman may only subscribe for the corresponding Series Angel Preferred Shares of Wuba Jinfu
Cayman for once during the 2021 Share Subscription Period, and the part of unsubscribed shares shall automatically terminate upon
expiration of the 2021 Share Subscription Period;
(yy) the Series Angel Preferred Shares of Wuba Jinfu Cayman acquired by Uxin Cayman through the 2021 Share Subscription pursuant to
this Agreement shall have substantially the same rights as the class of rights of the Series Angel Preferred Shares of Wuba Jinfu Cayman
acquired by 58.com Inc.as of or immediately following the Closing of the Transaction (except for the right to appoint directors and the
rights difference arising from different shareholding percentages), and shall perform the obligations for the Series Angel Preferred Shares
of Wuba Jinfu Cayman acquired by 58.com Inc. as of or immediately following the Closing of the Transaction (for the avoidance of
doubt, the foregoing obligations exclude the non-competition obligations by Wuba group companies (i.e., 58.com Inc. and its subsidiaries
and Controlled entities), provided that Uxin Cayman shall perform its non-competition obligations in accordance with the Assets Transfer
Agreement);
(3) From the date hereof, Section 3.2.2 and 3.3 of the Assets Transfer Agreement shall automatically terminate and cease to have any legal
binding effect on the Parties.
(4) From the date hereof, the Domestic Capital Increase Agreement of the Transferor (as defined in the Assets Transfer Agreement) and the
Offshore Capital Increase Agreement of the Transferor (as defined in the Assets Transfer Agreement) executed at the execution of the Assets
Transfer Agreement shall terminate by execution of the corresponding termination agreement at the same time.
(5) From the date hereof, the terms of the Assets Transfer Agreement and other Transaction Documents relating to this Transaction in respect of
SHA (as defined in the Assets Transfer Agreement) and MA (as defined in the Assets Transfer Agreement) shall terminate and not be legally
binding upon the Transferor and relevant Uxin Group Companies; for the avoidance of doubt, the Share Purchase Agreement entered into by
and among 58.com Inc., Wuba Jinfu Cayman and other relevant parties as of September 30, 2019 shall continue to be effective, and 58.com
Inc. shall continue to be entitled to subscribe for [*] Series Angel Preferred Shares of Wuba Jinfu Cayman simultaneously with the Closing of
this Transaction in accordance with the aforesaid Share Purchase Agreement.
2.2 Execution Arrangement of the XW Bank Contract and Disposal of the Underlying Assets
(1) The Parties acknowledge and agree that, with respect to the Underlying Assets listed in the Appendix V Row B to the Assets Transfer
Agreement of the Assets of the Transferable Security Deposit, the relevant parties of the Transferors, relevant parties of the Transferee and the
corresponding funding parties have entered into the financing parties agreement (i.e., the Rights and Obligations Transfer Agreement, the
“XW Bank Assets Transfer Agreement”) on November 6, 2019 in accordance with the Assets Transfer Agreement so as to satisfy the
closing conditions in Section 4.5.13 of the Assets Transfer Agreement and the Underlying Assets listed in Appendix V Row B to the Assets
Transfer Agreement shall be the “Underlying Assets” referred to in the XW Bank Assets Transfer Agreement (the “XW Bank Underlying
Assets”).
(2) For the avoidance of doubt, notwithstanding any other provisions to the contrary in the Assets Transfer Agreement, with respect to the XW
Bank Assets Transfer Agreement and the corresponding succeeding XW Bank Underlying Assets, the cut-off date of such XW Bank
Underlying Assets shall be the date on which the XW Bank Assets Transfer Agreement is actually executed. I.e., with respect to the XW Bank
Underlying Assets which are assumed by the Transferee through the execution of the XW Bank Assets Transfer Agreement, the date when
such XW Bank Underlying Assets are transferred shall be the actual execution date of the XW Bank Assets Transfer Agreement, and the cut-
off date of such XW Bank Underlying Assets under the Assets Transfer Agreement and other relevant provisions under the Assets Transfer
Agreement and other Transaction Documents shall be adjusted to the date when the XW Bank Assets Transfer Agreement is actually
executed.
2.3 Subsequent Arrangements for the XW Bank Underlying Assets
(i) With respect to the XW Bank Underlying Assets, during the period from the date hereof to April 30, 2021, the Wuba Party shall:
(x) within fifteen (15) Business Days after the end of June 30, 2020, provide or update to Uxin Group Companies the cumulative
cash flow and relevant details corresponding to the XW Bank Underlying Assets from the date of signing the XW Bank Assets
Transfer Agreement to June 30, 2020, and cooperate with Uxin Group to complete the verification of such cumulative cash flow of
the XW Bank Underlying Assets; and (y) within fifteen (15) Business Days after the end of each quarter from July 1, 2020 to
April 30, 2021, provide or update to Unix Group Companies the cumulative cash flow and relevant details corresponding to the XW
Bank Underlying Assets from the date of signing the XW Bank Assets Transfer Agreement to the end of such quarter, and cooperate
with Uxin Group Companies to complete the verification of such cumulative cash flow of the XW Bank Underlying Assets.
(ii) With respect to the XW Bank Underlying Assets, starting from May 1, 2021, the Wuba Party shall, within fifteen (15) Business Days
after the end of each calendar month (for the avoidance of doubt, including April 2021) (“Provision Period for NW Cash Flow”),
provide or update to Uxin Group Companies the accumulated cash flow and the relevant details corresponding to the XW Bank
Underlying Assets from the date of signing the XW Bank Assets Transfer Agreement to the end of such calendar month.
(iii) Uxin Group Companies shall, within five (5) Business Days after the end of Provision Period for NW Cash Flow of each calendar
month, complete the verification of the information on the accumulated cash flow of the XW Bank Underlying Assets. Any disputes
between Wuba Group Companies and Uxin Group Companies over the amount of accumulated cash flow from the the XW Bank
Underlying Assets shall be resolved through friendly consultation.
(iv) With respect to the XW Bank Underlying Assets, commencing from May 1, 2021 (for the avoidance of doubt, including April 2021),
if, in a calendar month the accumulated cash flow corresponding to the XW Bank Underlying Assets as confirmed by Uxin Group
Company and Wuba Party based on the above mechanism is greater than 0, within two (2) Business Days after the verification and
confirmation based on the above mechanism of the accumulated cash flow of the XW Bank Underlying Assets of such calendar
month, the Wuba Party shall pay 85% of: (i) the accumulated positive cash flow of such XW Bank Underlying Assets as of such
calendar month, minus (ii) the corresponding amount of estimated bad debt cash flow mismatch adjustment to the XW Bank
Underlying Assets as confirmed by the Uxin Group Companies and Wuba Group Companies, to the bank account designated by the
Transferor.
For the avoidance of doubt, for the purposes of this Agreement, the following definitions or calculation standards shall apply to the
cash flow described in the XW Bank Underlying Assets: Accumulated cash flow corresponding to a natural month = X-Y-Z ÷ 85%
Specifically, X refers to the total amount of cash reflow of the XW Bank Underlying Assets generated from the date of signing the
XW Bank Assets Transfer Agreement to the end of such calendar month (release of deposits corresponding to the XW Bank
Underlying Assets, refund by consumers after Wuba Parties’ repurchasing XW Bank Underlying Assets upon repayment, the
collection of payment from disposal of finance vehicle’s including consumers’ returning vehicles and post-loan collecting vehicles
and other cash income generated from XW Bank Underlying Assets (if any));
Y refers to the accumulative costs and expenses and the repurchase obligations (compensation expenditure, repurchase expenditure,
consumer collection expenditure, vehicle disposal expenditure and other post-loan service costs and expenses corresponding to the
XW Bank Underlying Assets), interest income payable to banks and other costs, expenses and expenditure arising from XW Bank
Underlying Assets (if any), incurred from the date of signing the XW Bank Assets Transfer Agreement to the end of such calendar
month;
Z refers to the amount of positive cash flow already paid by Wuba Parties to the bank account designated by the Transferors in
accordance with this section as of such calendar month.
(v) For the avoidance of doubt, the Parties understand and confirm that, unless otherwise agreed to by the Parties:
(a) From the execution of this Agreement to April 30, 2021, regardless of the monthly cash flow corresponding to the XW Bank
Underlying Assets, Wuba Parties shall have no obligation to pay any costs and expenses to the Transferor;
(b) From May 1, 2021, if the monthly cash flow of the XW Bank Underlying Assets is 0 or negative in a calendar month, Wuba
Parties shall have no obligation to pay any costs or expenses to the Transferor;
(c) With respect to the XW Bank Underlying Assets, except for the settlement arrangement set forth in Section 2.3 (iv) above and
otherwise agreed herein, Wuba Parties shall have no obligation to pay any fees to the Transferor and its Affiliates and all settlement
arrangements shall be made only with respect to the XW Bank Underlying Assets.
(vi) The Parties understand and acknowledge that, the abovementioned arrangement of this Section 2.3 shall not affect the acquisition of
the complete ownership and the corresponding full rights and interests attached of the relative Underlying Assets by the Transferee
and/or its designated entity prior to or on the Closing Date or the Cut-Off Date (subject to the Assets Transfer Agreement and the
Supplementary Agreement to the Assets Transfer Agreement) in accordance with the provisions of the Assets Transfer Agreement
and the Supplementary Agreement to the Assets Transfer Agreement.
2.4 Account Arrangement
(1) As of the date hereof, Uxin Group Companies shall completely and truthfully disclose to the Transferee all the bank accounts, receipt
accounts, payment accounts and similar receipt and payment instruments (the “Receipt Accounts”) relating to the XW Bank Underlying
Assets of Transferor and relevant Uxin Group Companies (as set forth in Exhibit III hereto for details). Transferors and relevant Uxin Group
Companies shall ensure that such Receipt Accounts are all the bank accounts, payment accounts and receipt accounts and similar receipt and
payment instruments of the Transferors and relevant Uxin Group Companies relating to the XW Bank Underlying Assets.
(2) With respect to such Receipt Accounts, the Parties shall continue to complete corresponding co-management arrangement and settle on a
monthly or weekly basis according to the settlement amount, pursuant to Section 2.5(5)(ii) of the Assets Transfer Agreement. For the
avoidance of any doubt, the “Fund Collection Account” involved in Paragraph 2 of Article 2.5(5) of the Assets Transfer Agreement shall be
updated as an entirety to the accounts listed in Exhibit III hereof, and the “Underlying Assets” involved in Article 2.5(5) of the Assets
Transfer Agreement shall only refer to the XW Bank Underlying Assets.
3 Taxes and Fees
Unless otherwise provided for herein, the Transferors shall jointly and severally bear any taxes and fees arising out of this Transaction and in
connection with the arrangements contemplated hereby, while Wuba Parties and their designated person shall not bear any taxes and fees arising
out of this Transaction and the arrangements contemplated hereby.
4 Representations and warranties
Representations and Warranties of the Parties. Each Party hereto represents and warrants to the other Parties as of the execution date and the
Closing Date as follows:
4.1.1 Such Party is a company duly registered and validly existing under applicable Laws;
4.1.2 The execution and delivery of the Transaction Documents, performance of all obligations under the Transaction Documents and
consummation of the Transaction Documents and other actions by such Party have been made by all necessary actions and have obtained
full and necessary authorization; such Party has full capacity for civil conduct and civil rights to execute the Transaction Documents,
perform all obligations thereunder and consummate the Transaction Documents; upon execution, the Transaction Documents shall be
legally binding upon such Party;
4.1.3 The execution of this Agreement and other Transaction Documents by such Party does not conflict with its articles of association or any
contracts or documents to which it is a party, nor does it violate any court judgments, arbitration awards or decisions of any administrative
authorities.
5 Modification and Termination
5.1 This Agreement may be amended or modified by the Parties through mutual consultation. Any amendment or modification shall be made in
writing and become effective upon execution by the Parties hereto.
5.2 This Agreement may be terminated in any of the following circumstances:
5.2.1 By mutual written consent of the Parties;
5.2.2 Upon termination or rescission of the Assets Transfer Agreement.
5.3 After termination of this Agreement, all rights and obligations of the Parties hereunder shall terminate. A Party shall have no other right of claim
against the other Parties under this Agreement or for the rescission of this Agreement, except for the liabilities arising from breach of this
Agreement.
6 Miscellaneous
6.1 This Agreement shall become effective upon signature or seal by the Parties.
For matters not covered by this Agreement, the Parties shall enter into a supplementary agreement through consultations. Such supplementary
agreement shall have the same legal effect as this Agreement. Modification of this Agreement shall be made in writing through consultations and
become effective on the date when the Parties affix their signatures or seals to this Agreement.
6.2 None of the Parties shall assign their respective rights and obligations under this Agreement to any third party without the prior written consent
from the other Parties.
6.3 This Agreement represents the entire agreement of the Parties with respect to the subject matter hereof and supersedes and replaces any other
written or oral agreement or document executed by the Parties with respect to the subject matter hereof. The Parties acknowledge and agree that,
in the event of any conflict or discrepancy between the Assets Transfer Agreement and this Agreement, this Agreement shall prevail with respect
to the rights and obligations of the Parties. Except for the supplement, amendment and update to the Assets Transfer Agreement as provided in
Section 2 hereof, the other terms of the Assets Transfer Agreement shall remain effective and legally binding upon the parties hereto.
6.4 If any term of this Agreement is void or unenforceable due to any applicable Law, such term shall be deemed to have never existed and the validity
of other terms of this Agreement shall not be affected. The Parties hereto shall negotiate and agree upon the new provisions to the extent
compliance with the Laws so as to ensure that the original provisions are fulfilled to the greatest extent possible.
6.5 No delay or omission by any Party to exercise any right, power or remedy accruing to any other Party upon any breach or default of this
Agreement, shall impair such right, power or remedy of such Party nor shall it be construed to be a waiver of such breach or default, or an
acquiescence therein, or of or in any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, approval of breach or
default of any nature or character of this Agreement, or any waiver of any terms or conditions of this Agreement, must be in writing and shall be
effective only to the extent set forth in such writing. Any remedies provided for in this Agreement or by Law or otherwise to any party, shall be
cumulative, and not alternative but exclusive.
6.6 Expense. Unless otherwise agreed in this Agreement, each Party shall bear its own expenses (including but not limited to professional service fees
such as auditing, finance and legal and other expenses) arising from or in connection with the transaction contemplated herein.
6.7 “Section 8 Liabilities for Breach”, “Section 10 Confidentiality”, “Section 11 Governing Laws and Dispute Resolution” and “Section 12.7 Notice
and Service” of the Assets Transfer Agreement shall be applicable to this Agreement in the same manner.
6.8 In the event that a separate agreement is executed in accordance with the forms of the governmental authorities is required for the purpose of
requesting performance of a specific act from any Governmental Authority in connection with the transactions contemplated by this Agreement,
this Agreement shall have full priority over such separate agreement and such agreement may only be used to request performance of such specific
act from the Governmental Authority and shall not be used to establish and prove the rights and obligations of relevant Parties with respect to the
matters stipulated hereunder.
6.9 This Agreement is written in Chinese and executed in ten counterparts, five of which shall be held by the Transferors and Uxin Group Companies
and five of which shall be held by Wuba Parties, all of which shall have the same effect.
[The remainder of this page is intentionally left blank]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Kai Feng Finance Lease (Hangzhou) Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youqin (Shaanxi) Finance Lease Co., Ltd. (company stamp)
Signature:
Name: Xia Gao
/s/ Xia Gao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youxin (Shanghai) Used Car Business Co., Ltd. (company stamp)
Signature:
Name: Xia Gao
/s/ Xia Gao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Boyu Finance Lease (Tianjin) Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Shenzhen Youxin Pengda Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yong Liu
/s/ Yong Liu
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Uxin Limited
Signature
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
UcarEase Holding Limited
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
GloryFin International Group Holding Company Limited
(錦融國際控股集團有限公司)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
HONGKONG QUEEN’S TECHNOLOGY CO., LIMITED
(香港皇后科技有限公司)
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Shenzhen Chunxinboye Co., Ltd.
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Minrui Finance Lease (Shenzhen) Co., Ltd. (official stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Xi’an Youxin Pengjia Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yukai Ren
/s/ Yukai Ren
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Xi’an Youxin Pengxin Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yukai Ren
/s/ Yukai Ren
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youyuan (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youxinpai (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxin Hulian (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Yougu (Shanghai) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Chebole (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youfang (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxin (Shaanxi) Information Technology Group Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Tianjin Wuba Rongxin Information Technology Co., Ltd. (company stamp)
/s/ Ligang Chang
Signature:
Name: Ligang Chang
Position:
Wuba (Shenzhen) Finance Lease Co., Ltd.
/s/ Fudong Zhou
Signature:
Name: Fudong Zhou
Position:
Tianjin Wuba Jinfu Co., Ltd. (company stamp)
/s/ Jinbo Yao
Signature:
Name: Jinbo Yao
Position:
SUPPLEMENTAL AGREEMENT TO
ASSETS TRANSFER AGREEMENT
April 23, 2020
39
Supplemental Agreement to Assets Transfer Agreement
This Supplemental Agreement to Assets Transfer Agreement (this “Agreement” or this “Supplemental Agreement”) is made on April 23, 2020 by and
between:
(14) Kai Feng Finance Lease (Hangzhou) Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic China, with its registered address at: Room 1814, Unit 1, Building 3, Wanda Commercial Center, Gongshu District, Zhejiang Province
(“Kai Feng”);
(15) Youqin (Shanxi) Finance Lease Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Block A-702, Midwest Lugang Finance Town, No.99 Gangwu Avenue, International Harbor
District, Xi’an, Shaanxi Province (“Youqin”);
(16) Youxin (Shanghai) Used Car Business Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Room D-09, Floor 2, Building 1, No.198 Huashen Road, China (Shanghai) Pilot Free Trade Zone
(“Youxin”);
(17) Boyu Finance Lease (Tianjin) Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s Republic
of China, with its registered address at: No. 565 Lanzhou Road (6-4-47 Haize Logistics Park), Tianjin Pilot Free Trade Zone (Dongjiang Bonded Port
Area) (“Boyu”);
(18) Shenzhen Youxin Pengda Used Car Broker Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Door 5, Youxin Pengcheng Used Car Transaction Market, at the intersection of Chaguang
Road and Shigu Road, Xili Street, Nanshan District, Shenzhen (“Pengda”);
(19) Chebole (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 323609, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing
(“Chebole”);
(20) Youfang (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at: Room 323609, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing
(“Youfang”);
(21) Youxin (Shanxi) Information Technology Group Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of
the People’s Republic of China, with its registered address at: Block A-701, Midwest Lugang Finance Town, No.99 Gangwu Avenue, International
Harbor District, Xi’an (“Youxin Shanxi”, hereinafter referred to as “Transferor” individually or collectively with Kai Feng, Youqin, Youxin,
Pengda, Autobole and Youfang);
(22) Uxin Limited, a limited liability company incorporated and existing in accordance with the laws of the Cayman Islands, with its registered office at
the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“Uxin Cayman”);
(23) The entities listed in Exhibit I (“Uxin Affiliates”, and each a “Uxin Affiliate”; Uxin Affiliates, Uxin Cayman and the Transferors are referred to as
“Uxin Group Companies” and/or “Guarantors”, and each a “Uxin Group Company” and/or “Guarantor”);
(24) Tianjin Wuba Rongxin Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of
the People’s Republic of China, with its registered address at: Room 1840-130, Floor 18, Baofeng Building, No. 3678, Xinhua Road, Tianjin Pilot
Free Trade Zone (CBD) (“Tianjin Wuba Rongxin” or “Transferee”);
(25) Tianjin Wuba Jinfu Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s Republic of China,
with its registered address at: Room 1902, Floor 19, Jinzuo Plaza, No.5 Meiyuan Road, Huayuan Industrial Zone, Binhai Hi-tech District, Tianjin
(“Tianjin Wuba Jinfu”); and
(26) Wuba (Shenzhen) Finance Lease Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at: Room 201, Building A, No.1 Qianwan Road (No. 1), Qianhai Shenzhen-Hong Kong Cooperation
Zone, Shenzhen (resided in Shenzhen Qianhai Business Secretary Co., Ltd.) (“Wuba Finance Lease”, hereinafter referred to as “Wuba Parties”
collectively with Tianjin Wuba Rongxin and Tianjin Wuba Jinfu).
For the purpose herein, each of the undersigned parties listed above is referred to herein individually as a “Party” and collectively as the “Parties”.
WHEREAS:
(3) The Parties hereto have entered into the Assets Transfer Agreement (the “Assets Transfer Agreement” as set forth in in Appendix II) on
September 30, 2019. In accordance with such Assets Transfer Agreement, the Transferors agree to transfer the Underlying Assets (as defined in the
Assets Transfer Agreement), as well as all corresponding rights and interests attached to such Underlying Assets, to the Transferee or its designated
Persons.
(4) With respect to the assets transfer and closing under the Assets Transfer Agreement, the Parties agree, through friendly consultations, to amend and
supplement the Assets Transfer Agreement accordingly and agree as follows.
Upon mutual agreement, the Parties hereby agree as follows:
7 Definitions Clause
1.9 Unless otherwise specified, any reference to a section, clause, list, exhibit or schedule of this Agreement is a reference to the section, clause, list,
exhibit or schedule of this Agreement.
1.10 Any reference to a decree, statute, regulation or ordinance shall be construed as a reference to such decree, statute, regulation or ordinance as from
time to time in force, as amended, replaced or re-enacted and shall include any subordinate legislation made under it.
1.11 Words such as “including” and other similar expressions are not intended to be restrictive and shall be construed as “including, without limitation.”
1.12 Words importing the singular shall include the plural and vice versa; words importing a gender shall include all gender meanings.
1.13 The table of contents and headings for this Agreement are for convenience only and do not affect in any way the content or interpretation of any
term of this Agreement.
1.14 The appendices and schedules are integral parts of this Agreement and have the same effect as the main content of this Agreement. All references to
this Agreement include the appendices and schedules.
1.15 References to writing or written shall include any mode of reproducing words in a legible and non-transitory form.
8 Supplementary Agreement
8.1 Execution Arrangement of the XW Bank Contract and Disposal of the Underlying Assets
(3) The Parties acknowledge and agree that, with respect to the Underlying Assets listed in the Appendix V Row B to the Assets Transfer
Agreement of the Assets with Transferable Security Deposit, the relevant parties of the Transferors, relevant parties of the Transferee and the
corresponding funding parties have entered into the financing parties agreement (i.e., the Rights and Obligations Transfer Agreement, the
“XW Bank Assets Transfer Agreement”) on November 6, 2019 in accordance with the Assets Transfer Agreement so as to satisfy the
closing conditions in Article 4.5.13 of the Assets Transfer Agreement, and the Underlying Assets listed in Appendix V Row B to the Assets
Transfer Agreement shall be the “Underlying Assets” referred to in the XW Bank Assets Transfer Agreement (the “XW Bank Underlying
Assets”).
(4) For the avoidance of doubt, notwithstanding any other provisions to the contrary in the Assets Transfer Agreement, with respect to the XW
Bank Assets Transfer Agreement and the corresponding succeeding XW Bank Underlying Assets, the cut-off date of such XW Bank
Underlying Assets shall be the date on which the XW Bank Assets Transfer Agreement is actually executed. I.e., with respect to the XW Bank
Underlying Assets which are assumed by the Transferee through the execution of the XW Bank Assets Transfer Agreement, the date when
such XW Bank Underlying Assets are transferred shall be the actual execution date of the XW Bank Assets Transfer Agreement, and the cut-
off date of such XW Bank Underlying Assets under the Assets Transfer Agreement and other relevant provisions under the Assets Transfer
Agreement and other Transaction Documents shall be adjusted to the date when the XW Bank Assets Transfer Agreement is actually
executed.
8.2 Disposal of Other Underlying Assets
(1) The Parties acknowledge and agree to adjust the scope of the Assets with Transferable Security Deposit under the Assets Transfer Agreement
and delete the assets corresponding to WeBank and Chouzhou Bank, i.e. the assets corresponding to all order numbers as listed in Appendix A
to the Assets Transfer Agreement (the “WeBank Assets”) and the assets corresponding to all order numbers as listed in Appendix VC to the
Assets Transfer Agreement (the “Chouzhou Assets”) will not be transferred as the Underlying Assets. The Parties acknowledge and agree
that the scope of the Assets with Transferable Security Deposit shall only refer to the XW Bank Underlying Assets.
(2) Upon the execution of this Agreement, Article 2.2(9) of the Assets Transfer Agreement is amended and replaced in its entirety as follows:
The Underlying Interest Income Payable to Banks shall only include the interest income payable to banks with respect to the XW Bank
Underlying Assets, and shall be implemented according to the way and mechanism for carrying on such Underlying Interest Income Payable
to Banks as agreed in the XW Bank Assets Transfer Agreement.
(3) From the date hereof, provisions of Articles 2.2(2) to 2.2(7), Articles 2.2(8) (to the extent not applicable to the XW Bank Underlying Assets)
and Article 2.4 of the Assets Transfer Agreement shall automatically terminate and be no longer legally binding upon the Parties.
For the avoidance of doubt, from the date hereof, the definition of “Underlying Assets” under Article 1.1 of the Assets Transfer Agreement
shall be adjusted to: “‘Underlying Assets’ shall mean the XW Bank Underlying Assets and the Underlying Intellectual Property Rights.” The
terms relating to the Underlying Assets under the Assets Transfer Agreement shall only be understood, agreed upon, observed and enforced
with respect to the XW Bank Underlying Assets and the Underlying Intellectual Property Rights.
(4) In consideration of the adjustments made in this Agreement to the scope of the “Underlying Assets” under the Assets Transfer Agreement, the
Parties acknowledge and confirm that, after the Closing Date, the Transferors and Uxin Group Companies will continue to hold, dispose of
and operate the WeBank Assets (as defined herein), the Chouzhou Assets (as defined herein), the Underlying Overdue Repurchased Assets (as
defined in the Assets Transfer Agreement), the Underlying Self-Held Assets (as defined in the Assets Transfer Agreement), the Underlying
Repurchased Assets Upon Repayment (as defined in the Asset Transfer Agreement), the Underlying Repurchased Assets (as defined in the
Asset Transfer Agreement), the Underlying Re-Transferred Assets (as defined in the Asset Transfer Agreement), the Underlying ICBC Loan
Facilitation Assets (as defined in the Assets Transfer Agreement) and the Underlying Prepayment.
9 Taxes and Fees
Unless otherwise provided for herein, the Transferors shall jointly and severally bear any taxes and fees arising out of this Transaction and in
connection with the arrangements contemplated hereby, while Wuba Parties and their designated person shall not bear any taxes and fees arising
out of this Transaction and the arrangements contemplated hereby.
10 Representations and warranties
Representations and Warranties of the Parties. Each Party hereto represents and warrants to the other Parties as of the execution date and the
Closing Date as follows:
10.1.1 Such Party is a company duly registered and validly existing under applicable Laws;
10.1.2 The execution and delivery of the Transaction Documents, performance of all obligations under the Transaction Documents and
consummation of the Transaction Documents and other actions by such Party have been made by all necessary actions and have obtained
full and necessary authorization; such Party has full capacity for civil conduct and civil rights to execute the Transaction Documents,
perform all obligations thereunder and consummate the Transaction Documents; upon execution, the Transaction Documents shall be
legally binding upon such Party;
10.1.3 The execution of this Agreement and other Transaction Documents by such Party does not conflict with its articles of association or any
contracts or documents to which it is a party, nor does it violate any court judgments, arbitration awards or decisions of any administrative
authorities.
11 Modification and Termination
11.1 This Agreement may be amended or modified by the Parties through mutual consultation. Any amendment or modification shall be made in
writing and become effective upon execution by the Parties hereto.
11.2 This Agreement may be terminated in any of the following circumstances:
11.2.1 By mutual written consent of the Parties;
11.2.2 Upon termination or rescission of the Assets Transfer Agreement.
11.3 After termination of this Agreement, all rights and obligations of the Parties hereunder shall terminate. A Party shall have no other right of claim
against the other Parties under this Agreement or for the rescission of this Agreement, except for the liabilities arising from breach of this
Agreement.
12 Miscellaneous
12.1 This Agreement shall become effective upon signature or seal by the Parties.
For matters not covered by this Agreement, the Parties shall enter into a supplementary agreement through consultations. Such supplementary
agreement shall have the same legal effect as this Agreement. Modification of this Agreement shall be made in writing through consultations and
become effective on the date when the Parties affix their signatures or seals to this Agreement.
12.2 None of the Parties shall assign their respective rights and obligations under this Agreement to any third party without the prior written consent
from the other Parties.
12.3 This Agreement represents the entire agreement of the Parties with respect to the subject matter hereof and supersedes and replaces any other
written or oral agreement or document executed by the Parties with respect to the subject matter hereof. The Parties acknowledge and agree that,
in the event of any conflict or discrepancy between the Assets Transfer Agreement and this Agreement, this Agreement shall prevail with respect
to the rights and obligations of the Parties. Except for the supplement, amendment and update to the Assets Transfer Agreement as provided in
Section 2 hereof, the other terms of the Assets Transfer Agreement shall remain effective and legally binding upon the parties hereto.
12.4 If any term of this Agreement is void or unenforceable due to any applicable Law, such term shall be deemed to have never existed and the validity
of other terms of this Agreement shall not be affected. The Parties hereto shall negotiate and agree upon the new provisions to the extent
compliance with the Laws so as to ensure that the original provisions are fulfilled to the greatest extent possible.
12.5 No delay or omission by any Party to exercise any right, power or remedy accruing to any other Party upon any breach or default of this
Agreement, shall impair such right, power or remedy of such Party nor shall it be construed to be a waiver of such breach or default, or an
acquiescence therein, or of or in any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, approval of breach or
default of any nature or character of this Agreement, or any waiver of any terms or conditions of this Agreement, must be in writing and shall be
effective only to the extent set forth in such writing. Any remedies provided for in this Agreement or by Law or otherwise to any party, shall be
cumulative, and not alternative but exclusive.
12.6 Expense. Unless otherwise agreed in this Agreement, each Party shall bear its own expenses (including but not limited to professional service fees
such as auditing, finance and legal and other expenses) arising from or in connection with the transaction contemplated herein.
12.7 “Section 8 Liabilities for Breach”, “Section 10 Confidentiality”, “Section 11 Governing Laws and Dispute Resolution” and “Section 12.7 Notice
and Service” of the Assets Transfer Agreement shall be applicable to this Agreement in the same manner.
12.8 In the event that a separate agreement is executed in accordance with the forms of the governmental authorities is required for the purpose of
requesting performance of a specific act from any Governmental Authority in connection with the transactions contemplated by this Agreement,
this Agreement shall have full priority over such separate agreement and such agreement may only be used to request performance of such specific
act from the Governmental Authority and shall not be used to establish and prove the rights and obligations of relevant Parties with respect to the
matters stipulated hereunder.
12.9 This Agreement is written in Chinese and executed in ten counterparts, five of which shall be held by the Transferors and Uxin Group Companies
and five of which shall be held by Wuba Parties, all of which shall have the same effect.
[The remainder of this page is intentionally left blank]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Kai Feng Finance Lease (Hangzhou) Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youqin (Shaanxi) Finance Lease Co., Ltd. (company stamp)
Signature:
Name: Xia Gao
/s/ Xia Gao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youxin (Shanghai) Used Car Business Co., Ltd. (company stamp)
Signature:
Name: Xia Gao
/s/ Xia Gao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Boyu Finance Lease (Tianjin) Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Shenzhen Youxin Pengda Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yong Liu
/s/ Yong Liu
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Uxin Limited
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
UcarEase Holding Limited
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
GloryFin International Group Holding Company Limited
(錦融國際控股集團有限公司)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
HONGKONG QUEEN’S TECHNOLOGY CO., LIMITED
(香港皇后科技有限公司)
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Shenzhen Chunxinboye Co., Ltd.
Signature:
Name: Kun Dai
/s/ Kun Dai
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Minrui Finance Lease (Shenzhen) Co., Ltd. (official stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Xi’an Youxin Pengjia Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yukai Ren
/s/ Yukai Ren
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Xi’an Youxin Pengxin Used Car Broker Co., Ltd. (company stamp)
Signature:
Name: Yukai Ren
/s/ Yukai Ren
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youyuan (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youxinpai (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxin Hulian (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Yougu (Shanghai) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Chebole (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Youfang (Beijing) Information Technology Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
Youxin (Shaanxi) Information Technology Group Co., Ltd. (company stamp)
Signature:
Name: Zhen Zeng
/s/ Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date first above written:
[Signature Page to the Supplementary Agreement to Assets Transfer Agreement]
Tianjin Wuba Rongxin Information Technology Co., Ltd. (company stamp)
/s/ Ligang Chang
Signature:
Name: Ligang Chang
Position: Legal Representative
Wuba (Shenzhen) Finance Lease Co., Ltd.
/s/ Fudong Zhou
Signature:
Name: Fudong Zhou
Position: Legal Representative
Tianjin Wuba Jinfu Co., Ltd. (company stamp)
/s/ Jinbo Yao
Signature:
Name: Jinbo Yao
Position: Legal Representative
Beijing Youxin Fengshun Lubao Vehicle Auction Co., Ltd.
Beijing Fengshun Lubao Vehicle Auction Co., Ltd.
Zhejiang Dongwang Internet Technology Co., Ltd.
Equity Acquisition Agreement
January 15, 2020
Exhibit 4.37
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
This Equity Acquisition Agreement (hereinafter referred to as this “Agreement”) enters into on the date of January 15, 2020 (the “Execution Date”) in
Chaoyang District, Beijing, by and among:
1. Fairlubo Auction HK Company Limited (“Fairlubo HK”), a company duly incorporated and existing in accordance with the laws of Hong Kong
SAR of the People’s Republic of China, with its company registration number of 2165173;
2. Youxin Yishouche (Beijing) Information Technology Co., Ltd. (“Yishouche”), a limited company incorporated and existing in accordance with
the laws of the People’s Republic of China (“PRC”, for the purpose of this Agreement only, excluding Hong Kong SAR, Macao SPR and Taiwan),
with its registered office at Room 323602, Floor 36, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing;
3. Chebole (Beijing) Information Technology Co., Ltd. (“Chebole”, together with Fairlubo HK and Yishouche, the “Sellers”), a limited liability
company incorporated and existing in accordance with laws of PRC, with its registered office at Room 323609, Building 5, Yard 1, Futong East
Street, Chaoyang District, Beijing;
4. Beijing Hengtai Boche Auction Co., Ltd. (the “Purchaser”), a limited liability company incorporated and existing in accordance with Chinese
laws, with its registered office at Room 311601, Building 5, Yard 1, Futong East Street, Chaoyang District, Beijing;
5. Beijing Youxin Fengshun Lubao Vehicle Auction Co., Ltd. (“Youxin Lubao”), a limited liability company incorporated and existing in
accordance with Chinese laws, with its registered office at Room A51, Floor 4, No.26 Jia, East 3rd Ring North Road, Chaoyang District, Beijing; and
6. Beijing Fengshun Lubao Vehicle Auction Co., Ltd. (“Fairlubo”) a limited liability company incorporated and existing in accordance with Chinese
laws, with its registered office at Room 1416, Floor 14, Fengkai Wangyuan Technology Incubation Center (Wangyuan Building), No. 56 West 4th
Ring South Road, Fengtai District, Beijing.
WHEREAS:
1. Uxin Limited (NASDAQ: UXIN, hereinafter referred to as “Uxin Limited”), a company registered in the Cayman Islands and a NASDAQ listed
company. The Purchaser intends to acquire all of Uxin Limited’s salvage car auction business and 100% equity interests in its entities in the PRC.
2. The Sellers disclose and warrant to the Purchaser that the relevant entities of Uxin Limited engaged in “salvage car auction business” in the PRC are
the following three (3) companies (the “Target Companies”, collectively) and their subsidiaries:
(1) Youxin Lubao, with its registered capital of US$35,000,000, and with Fairlubo HK being its sole shareholder holding 100% of its equity
interests;
(2) Fengshun Lubao, with its registered capital of RMB20,000,000, and with Yishouche being its sale shareholder holding 100% of its equity
interests;
(3) Zhejiang Dongwang Internet Technology Co., Ltd. (“Dongwang Network”), with its registered capital of RMB15,000,000, and with Chebole
being its sole shareholder holding 100% of its equity interests.
1
3. The Purchaser intends to acquire 100% equity in the Target Companies (this “Transaction”).
NOW, THEREFORE, the parties hereto reach this Agreement for binding, as follows:
Artile I Subject of the Transaction
1.1 The Purchaser agrees to acquire 100% equity interests of Youxin Lubao, Dongwang Network and Fengshun Lubao in accordance with this
Agreement.
1.2 The Seller discloses and warrants to the Purchaser that:
(1) Youxin Lubao, Fengshun Lubao, Dongwang Network and their subsidiaries Zhejiang Dongchi Auction Co., Ltd. and their respective
subsidiaries are all relevant entities directly or indirectly controlled by Uxin Limited to engage in the salvage car auction in the PRC.
The foregoing principal business of the Target Companies has remained basically unchanged From the Execution Date to the Handover
Date and the date of completion of the SAMR re-registration.
1.3 The Sellers undertake that, except as disclosed in the disclosure letter (See Appendix 3), as of the Closing Date:
(1) The Sellers lawfully hold 100% of the equity interest in the Target Companies;
(2) The Sellers undertake that the Target Companies shall be transferred to the Purchaser in accordance with the provisions hereof;
(3) To the knowledge of the Sellers, there is no other circumstance that affects or may affect the Purchaser’s ownership, exercise or disposal of
all or part of equity interest and corresponding interest in the Target Companies;
(4) Except for equity pledge or encumbrance created in the VIE structure (which shall be released on or prior to the Closing Date), the Sellers
have not carried out any mortgage, pledge, lien and other circumstances over the equity interest of the Target Companies restricting the
transfer of any equity interest in such Target Company;
(5) Any document restricting this Transaction shall have been rescinded or terminated (including, without limitation, the termination of the
VIE agreements entered into by and among the Target Companies, the Parties hereto and other parties thereto);
(6) To the knowledge of the Sellers, there is no pending litigation, arbitration and/or dispute, which materially affects or may materially affect
this Transaction.
2
1.4 The Sellers covenant and warrant to the Purchaser that:
(1) Within five (5) years after the Execution Date, Uxin Limited, the Sellers and the de facto controller of Uxin Limited, Kun Dai (citizen of
the People’s Republic of China, ID card No.: * hereinafter referred to as “Mr. DAI Kun”) shall not establish or entrust, directly or
indirectly, any other entity to engage in the salvage car auction business in the PRC. However, the foregoing party shall not be deemed to
breach the foregoing provision if the revenue generated in any calendar year from such entity that conducts salvage car auction business in
the PRC resulting from occasional and undetected business activities by any of Uxin Limited, the Sellers or Mr. DAI Kun itself/himself, or
by any entity that the foregoing person directly or indirectly establishes or entrusts , does not exceed 5% of the total revenue of such Person
in any calendar year.
(2) If, within five (5) years after after the Execution Date of this Agreement, the Purchaser discovers that the revenue generated from the
salvage car auction business in the PRC by Uxin Limited, the Seller and/or Mr. DAI Kun, or by any entity directly or indirectly established
or engaged by the foregoing parties exceeds 5% of the total annual revenue of such person or entity in any calendar year, such entity shall
be deemed as a Target Company hereunder. And the Purchaser may acquire such entity or business from the Sellers unconditionally and
without paying any consideration or costs..
Artile II Total Transaction Price
2.1 The total price to acquire 100% equity interest in Dongwang Network, Youxin Lubao and Fengshun Lubao held by the Sellers shall be RMB [*]
(the “Total Transfer Price”, in words: Renminbi Three Hundred Thirty Million). The total transaction price to be allocated to each of the Target
Companies is shown as follows:
Target company
YOUXIN LUBAO
Fengshun Lubao
Dongwang network
Total:
Amount Allocated under the Total
Transfer Price
(RMB/Yuan)
[*]
[*]
[*]
[*]
The Sellers shall have the right to adjust the Total Transfer Price allocated among Dongwang Network, YoYouxin Lubao and Fengshun
Lubao, and the Purchaser shall cooperate with the Sellers in case the Sellers request the Purchaser to execute relevant legal instrument with respect
to the adjustment to the price allocation.
2.2 The above Total Transfer Price is based on the following conditions:
3
(1) As of the date hereof, the Sellers has provided the Purchaser with true and complete basic information and financial statements of the
Target Companies as of November 30, 2019 (the “Statement Date”) (See details in Appendix I: Basic Information of the Target
Companies and Appendix II: Financial Statements of the Target Companies);
The abovementioned financial statements shall include balance sheet, income statement and cash flow statement (collectively, the “Financial
Statements upon Execution”).
2.3 All taxes and expenses arising out of or in connection with this Transaction (the “Taxes”) shall be borne by the Purchaser and the Seller
respectively.
3.1 Payment of First Installment of Transaction Price
Artile III Transaction Procedures
(1) Within ten (10) Business Days after the Execution Date, the Purchaser shall pay the first installment of the transfer price, which amounts
to 50% of the Total Transfer Price, i.e. RMB [*] (the “First Installment”, in words: Renminbi [*] Million Yuan), to the bank account
designated by the Sellers. The day on which the Purchaser pays the First Installment shall be the date of closing (the “Closing Date”).
The First Installment shall be allocated to each of the Target Companies as follows:
Target company
Fengshun Lubao
Dongwang Network
Total:
First Installment Allocation Amount
(RMB/Yuan)
[*]
[*]
[*]
(2) The bank account information designated by the Sellers is as follows:
Account Name: [*]
Bank: [*]
Account No.: *
3.2 Handover of the Target Company
(1) Within ten (10) Business Days after the Purchaser pays the First Installment, the Parties shall complete the handover of the Target
Companies to the Purchaser, which shall include without limitation the handover of all assets and documents of the Target Companies
including seals (company seal, contract seal and financial seal), licenses, certificates and accounting books (including the details of the
balance sheet) and documents of the Target Companies (the “Handover”).
4
(2) On the day when the Handover is completed, the Parties acknowledge that respective Seller and the Purchaser of each Target Company
shall jointly execute a Handover List, the date of which shall be the “Handover Date”.
3.3 SAMR Re-Registration of the Target Company
3.3.1 Within three (3) months after the Purchaser makes the First Installment, the Parties shall complete the re-registration with the State
Administration for market Regulation (SAMR) for the transfer of 100% equity interests in Youxin Lubao and Fengshun Lubao to the
Purchaser, change in the name of Youxin Lubao and Fengshun Lubao, and file the change of legal representative, directors, supervisors
and senior management.
Within three (3) months after the Purchaser makes the First Installment, the Parties shall complete the re-registration with the SAMR for
the transfer of 100% equity interests in Dongwang Network to the Purchaser and file the change of legal representative, directors,
supervisors and senior management.
For the avoidance of doubt, the Sellers shall not be liable for breach of contract if the SAMR re-registration is delayed due to reasons
attributable to one or both of the Purchaser and/or governmental authorities.
3.3.2 The Parties shall complete the procedures to change the company name of Youxin Lubao so that its company name does not contain the
word “优信 (in Chinese)” and obtain the newly issued business license in accordance with the time requirements set forth in Article 3.3.1
hereof. As of the Closing Date, neither the Purchaser nor the Target Companies shall (and shall cause their affiliates not to) use, reproduce
or disseminate any name, tradename, logo or logo containing the words “优信”, “优信拍”, “Uxin” and “Youxinpai” (including any part
thereof) or confusing or misleading names, tradenames, logos and symbols relating to the Sellers for the purposes of publicity, marketing,
operation or otherwise. Neither the Purchaser nor the Target Companies shall (and shall cause their Affiliates not to), directly or
indirectly, represent that any Target Company or its Subsidiaries is the agent, representative, group member or affiliate of the Sellers or
their Affiliates.
3.3.3 If the Purchaser fails to pay the Second Installment on schedule in accordance with Article 3.5 hereof, or this Transaction is terminated
due to reasons attributable to the Purchaser, the Parties shall complete the SAMR re-registration for the Target Companies within thirty
(30) days after the expiration of the payment period for the Second Installment or the termination of this Transaction (whichever occurs
earlier), so as to restore the SAMR registration status of the Target Companies to the status before this Transaction. If this Agreement is
rescinded or terminated solely due to reasons solely attributable to the Purchaser, the Purchaser shall bear the taxes and other
governmental costs paid by the Sellers in connection therewith and fully compensate the Seller.
5
3.4 Verification of Accounts
The Purchaser shall complete the due diligence on the Target Companies and the verification of Financial Statements upon Execution before the
payment of the Second Installment and within six (6) months after the date hereof (the “Statement Verification Period”).
3.5 Payment of the Second Installment
The Second Installment shall be subject to the completion of the SAMR re-registration under Article 3.3.1 hereof. Subject to the satisfaction
of completion of such SAMR re-registration, the Purchaser shall pay the second installment of the Total Transfer Price (the “Second
Installment”) within sixty (60) days after the completion of the SAMR re-registration or six (6) months after payment of the First Installment
(whichever occurs earlier), i.e. RMB [*] (in words: Renminbi [*] Million) of the Total Transfer Price minus the aggregate amount of “Liabilities
Assumed by the Seller” and “Untrue Assets and Creditor’s Rights” as set forth in Article 5.4 hereof (if any). The Second Installment shall be
allocated to each of the Target Companies as follows:
Target company
Youxin Lubao
Dongwang Network
Total:
Second Installment Allocation Amount
(RMB/Yuan)
[*]
[*]
[*]
3.6 Foreign Exchange Registration and Purchase and Payment
The Purchaser shall, within thirty (30) days after the SAMR re-registration of Youxin Lubao, handle the procedures for cancellation of
foreign exchange registration for the foreign-invested enterprise at the Foreign Exchange Bureau, purchase foreign currency at the bank and pay
the transfer price of Youxin Lubao to the overseas account designated by Fairlubo HK within the time period stipulated in Article 3.5;
The other Parties hereto shall cooperate with the Purchaser to go through the formalities of cancellation of foreign exchange registration and
purchase and payment of foreign exchange. If the foreign exchange registration cancellation procedures, purchase of and/or payment of foreign
exchange are delayed due to reasons attributable to governmental authorities (such as process time), policies and/or the non-cooperation of the
Parties hereto and without fault of the Purchaser, the Purchaser shall not be deemed to breach this Agreement. However, the Purchaser shall
complete the procedures as soon as practicable, the other Parties shall assist him/her/it within their respective capacity.
3.7 Adjustment to Transaction Structure
If the Sellers desire to adjust the structure of this Transaction from the perspective of tax planning or other reasonable perspectives, the
Purchaser shall give understanding and shall cooperate in proceeding with the adjusted structure in order for realization of the purpose of this
Transaction (i.e. the completion of direct or indirect acquisition of the interests in the Target Companies).
6
4.1 Assets and Claims
Artile IV Assumption of Interests in the Target Companies
(1) As of the Handover Date, the assets, claims of the Target Companies since the establishment are assumed by the Purchaser;
(2) The Sellers must ensure the truthfulness and completeness of the assets and claims set forth in the Financial Statements upon Execution.
4.2 Debts
(3) The debts of the Target Companies arising after the Handover Date and debts arising before the Handover Date but disclosed in the
Financial Statements upon Execution or disclosure letters shall be inherited by the Target Companies; provided that the matters expressly
listed under items (a) and (b) of Article 4.2 (2) hereof shall be handled in accordance with Items (a) and (b) of Article 4.2 (2) hereof;
(4) Debts incurred prior to the Statement Date but not disclosed in the Financial Statements upon Execution or the disclosure letter shall be
borne by the Sellers on a joint and several basis, except for the circumstances as expressly listed below: (a) any paid or outstanding debts
arising from any litigation or arbitration to which any Target Company is a defendant or respondent from its date of incorporation to the
date on which the Purchaser shall pay the Second Installment (inclusive) shall be borne by the Sellers on a joint and several basis (the
amount of such debt shall be determined by an effective judgment/award issued by a court or arbitration tribunal, provided that such
effective judgment/award could be rendered after the Payment Date of the Second Installment). The Target Companies shall act actively
to protect their own rights and interests in the litigation and arbitration; and (b) if the Target Companies and their subsidiaries and branch
offices are required by governmental authorities to make supplementary payment of social insurance and housing fund contributions and
pay overdue fine and penalty before the “date on which the Purchaser shall pay the Second Installment” (inclusive) due to the reason that
the Target Companies and their subsidiaries and branch offices fail to pay social insurance and housing fund contributions for their
employees based on the actual salary level of employees, such costs shall be borne by the Sellers on a joint and several basis.
(5) Debts arising from the ordinary course of business after the Statement Date and prior to the Handover Date (including, without limitation,
actual or estimated losses arising from the disposal of vehicles) and other debts that the Purchaser has agreed to waive (i.e. the debts listed
in the disclosure letter in Appendix III) shall be borne by the Purchaser. Any debt in excess of RMB[*] (in words: Renminbi [*] million)
incurred in the ordinary course of business shall be borne by the Sellers on a joint and several basis;
7
(6) Except for the secured indebtedness disclosed in this disclosure letter (if any), all undisclosed secured indebtedness of the Target
Companies arising prior to the Statement Date shall be borne by the Seller on a joint and several basis.
Artile V Verification and Adjustment of Financial Data
5.1 The Purchaser shall complete verification and confirmation of the Financial Statements upon Execution within the Statement Verification Period,
and any dispute shall be settled as follows.
5.2 If the Purchaser does not raise written objection within the Statement Verification Period, it shall pay all the remaining Total Transaction Price in
accordance with Article 3.5 herein.
5.3 Variation Treatment
5.3.1 If, in the opinion of the Purchaser, there is a discrepancy between the Financial Statements upon Execution and the actual
circumstances (such “Discrepancy” means that the Target Companies have “Liabilities Assumed by the Seller” and “Untrue Assets
and Creditor’s Rights” as described in Article 5.4 hereof), the Purchaser shall raise written objections to Yishouche among the Sellers
during the Statement Verification Period (Yishouche acknowledges that the Purchaser is not required to raise any objection to all other
Sellers and the other Sellers acknowledge the feedback from Yishouche on the written objection) with reasonable evidence (if it is a
question of fact) or explanation attached. For the avoidance of doubt, the debts disclosed in this Disclosure letter and the matters
relating to the conversion of debt to equity shall not be taken into account of the above difference amount; provided that the matters
expressly listed in items (a) and (b) of Article 4.2(2) hereof shall be handled and taken into account of the above difference amount in
accordance with items (a) and (b) of Article 4.2 (2) hereof.
5.3.2 If the Purchaser raises any difference amount to Yishouche, then:
(1) Yishouche shall reply in writing whether it acknowledges such difference or not after receiving the written objection issued by
the Purchaser;
(2) If Yishouche acknowledges such difference in whole or in part in its written reply, the Purchaser shall have the right to deduct
such amount of difference from the Second Installment and pay the balance of the Total Price after deduction to such bank
account as designated by the Sellers herein or other bank account as designated by the Seller then;
(3) If Yishouchen replies in writing not to accept such difference in whole or in part within the foregoing period, the recognized
difference shall be implemented according to Article 5.3.2(2) above and the non-recognized difference shall be reviewed by an
accounting firm jointly selected by Yishouche and the Purchaser.
8
If Yishouche and the Purchaser fail to select an accounting firm within twenty (20) business days after the written objection is
raised, they shall select one frim from PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young to conduct the review.
The expenses for such review shall be borne by the Party against whom the review results are negative. The review results
made by the firm selected in accordance with the aforesaid methods shall be binding upon the Sellers and the Purchaser.
5.3.3 If the difference acknowledged by the Parties is more than RMB [*] (in words: Renminbi [*] million), the Purchaser shall have the
right to deduct up to RMB [*] from the Second Installment as full compensation.
5.3.4 The actions and expressions made by Yishouche in accordance with this Article 5.3 shall be deemed as unanimously agreed by all the
Sellers, and shall be acknowledged by each of the Sellers.
5.4 The definitions of “Liabilities Assumed by the Seller” and “Untrue Assets and Creditor’s Rights” are as follows:
(1) “Debts Assumed by the Seller” means the debts to be assumed by the Seller in accordance with Article 4.2(2) hereof;
(2) “Untrue Assets and Creditor’s Rights” means the assets and creditor’s rights disclosed in the Financial Statements upon Execution but do
not actually not exist.
Artile VI Breach and Termination
6.1 If the Purchaser fails to pay one or more installments of transfer price due to reasons solely attributable to the Purchaser, the Purchaser shall be
deemed to commit a breach of contract and shall pay the liquidated damages equivalent to 1% of the outstanding amount to one payee designated
by all Sellers for each day of delay. If the First Installment or the Second Installment is overdue for five (5) days or more, the Sellers shall have the
right to immediately terminate this Agreement and this Transaction (such termination shall not affect the claim of liabilities for breach by the
Sellers against the Purchaser), and the Purchaser shall pay the Sellers liquidated damages in the amount of 10% of the Total Transfer Price.
6.2 The Seller shall be deemed to breach this Agreement in the event of the occurrence of one or more of the following circumstances and shall pay the
Purchaser joint and several liquidated damages in the amount of 1% of the Total Transfer Price actually paid by the Purchaser for each day of
delay. If the payment is overdue for more than five (5) days, the Sellers shall, jointly and severally, pay the Purchaser liquidated damages in the
amount of 10% of the Total Transfer Price:
9
(1) if the Handover fails to complete within the time limit stipulated by Article 3.2 hereof due to reasons solely attributable to the Sellers; for
the avoidance of doubt, it shall not be deemed as breach of contract under this Article if the Sellers have delivered the assets and documents
set forth in Article 3.2 hereof but the Handover is overdue due to further communication, confirmation or supplement made by the Parties
with respect to such assets and documents;
(2) if the Sellers fail to complete the SAMR re-registration of any one or more Target Companies (including Dongwang Network) within the
time limit set forth in Article 3.3 hereof due to unilateral reason of the Sellers; and
(3) except for the equity pledge or encumbrance created for the VIE structure (which shall be released on or prior to the Closing Date), if the
equity interests of any one or more Target Companies (including Dongwang Network) are subject to seizure, pledge, litigation, arbitration
and other circumstances restricting the transfer and this Transaction and such circumstance fails to be rectified 30 days after the Purchaser’s
written notice.
Notwithstanding the foregoing, in the occurrence of one or more of the above circumstances, if the Purchaser confirms that such circumstance
does not constitute breach by the Sellers, the Sellers shall not be liable for any such circumstance to the Purchaser, and the Purchaser shall not
claim for rescission or termination of this Agreement.
6.3 The Sellers shall be jointly and severally liable to the Purchaser for its respective obligations hereunder.
6.4 Discharge or Termination
(1) After the termination of this Agreement, unless otherwise agreed upon by the Parties, each Party hereto shall refund the transfer price or
equity interest in the Target Companies received from the other Party hereunder based on the principles of fairness, reasonableness, honesty
and credibility and try to restore to the status when this Agreement is executed.
(2) If this Agreement is rescinded or terminated due to reasons attributable to the Sellers, the Sellers shall refund all amounts paid by the
Purchaser, and the Purchaser shall transfer back the equity interests in the Target Companies (if the equity interests in the Target Companies
have been transferred to the Purchaser) to the Seller and complete transfer rescission/reversal procedures only after the Sellers have paid
liquidated damages or other fees payable.
(3) If this Agreement is rescinded or terminated due to reasons attributable to the Purchaser, the Purchaser shall first transfer back the equity
interests in the Target Company (if the equity interests in the Target Companies have been transferred to the Purchaser) to the Seller and
complete the transfer rescission/reverse procedures (and bear taxes and fees arising therefrom), and shall refund the full price paid by the
Purchaser only after the Sellers have paid liquidated damages and other fees payable.
10
7.1 This Agreement and the documents attached hereto are governed by PRC law.
Artile VII Governing Law and Dispute Resolution
7.2 All disputes arising from the implementation of this Agreement or in connection with this Agreement shall be settled by the Parties through
friendly consultation. If such consultation fails, any Party shall submit the dispute to the China International Economic and Trade Arbitration
Commission for arbitration in Beijing in accordance with the Commission’s arbitration rules in effect at the time of applying for arbitration. The
arbitral award is final and shall be binding upon both parties.
7.3 During the period when a dispute is being resolved, the Parties shall continue to respectively have the remaining rights and perform the remaining
obligations under this Agreement.
Artile VIII NOTICES AND DELIVERY
8.1 Any notice or other communication in connection with this Agreement from one Party to the other Parties (“Notice”, including litigation or
arbitration proceedings or judicial documents of other nature, shall be in writing and served on the Party to be notified at the following mailing
address or mailing number or e-mail address. No notice shall be effective unless it contains the name of any of the following contact persons.
If to the Target Companies (prior to the Handover Date) or the Sellers:
Address: 4/F, Zone E, Lixingxing Center, No. 8 Wangjing Guangshun South Street, Chaoyang District, Beijing
Postal code: 100102
Phone: *
E-mail: *
Attention: ZENG Zhen
If to the Target Companies (after the Handover Date) or the Purchaser:
Address: Wangjing SOHO Center, No. 10 Wangjing Street, Chaoyang District, Beijing (1-16/F, Tower 3-A)
Postal code: 100102
Telephone: *
E-mail: *
Attention: HE Yaling
11
8.2 The delivery times for the various communication methods described in this Article 8 shall be determined in the following ways:
(4) If delivered in person, when received and signed by the person to be notified;
(5) All the notices by mailing shall be given by registered mail or express mail. The notices by registered express mail shall be deemed to have
been given to the senders on the seventh (7th) day after the notices are posted, and notices by express mail shall be deemed to have been
given when the receivers sign the same.
(6) Notices given by mail shall be deemed delivered when the email system shows that the party to be notified actually receives the notice.
8.3 If either Party changes the above mailing address or contact information (the “Changing Party”), it shall notify the other Party within seven
(7) days after the occurrence of such change. If the Changing Party fails to notify the other Party of the same in a timely manner, it shall bear the
losses arising from such failure.
8.4 The scope of communication for any Party includes all notices, agreements and other documents made during the performance of this Agreement,
as well as the service of relevant legal documents in the first instance, second instance, retrial and enforcement procedure after the occurrence of a
dispute relating to this Agreement.
Artile IX Information Disclosure
9.1 The terms and detailed rules regarding this Agreement and its exhibits and schedules (including all terms and provisions and the existence of this
Agreement as well as any relevant share transfer documents) shall be treated as confidential information and shall not be disclosed by the Parties
to any third party unless otherwise specified.
9.2 After the Execution Date, if any Party intends to disclose the content and relevant matters of this Agreement to the public at press conference,
industry or professional media or marketing materials or by other means, such Party shall negotiate with the other Parties in advance to confirm
the publicity plan of unified publicity (including without limitation the scope of information disclosable and the contents of press release). Without
the prior written consent of the other Parties, no Party shall disclose the information beyond the propaganda plan confirmed by the other Parties.
9.3 The restrictions above shall not apply to the information disclosed when the following circumstances occur:
(1) the information is required to be disclosed or used according to applicable laws or any regulatory authorities;
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(2) the disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreements entered
into pursuant to this Agreement or the relevant matters reasonably disclosed to taxation authorities;
(3) the disclosure is made to professional advisors of the Parties, provided that the Parties shall require such professional advisors to comply
with provisions of this Article IX regarding such confidential information as if they were a Party to this Agreement;
(4) the information falls into the public domain not due to reasons attributable to each Party hereto;
(5) the disclosure or use has been approved in advance and in writing by the other Parties.
If information is disclosed for the reasons (1) and (2) above, the disclosing Party shall discuss with other Parties about the relevant disclosure and
submission at a reasonable time before the disclosure or submission of information and shall give confidential treatment to the part of the
information disclosed or submitted by the receiving Party to the extent possible under the circumstance that other Parties request the disclosure or
submission of information.
Artile X SUPPLEMENTARY PROVISIONS
10.1 Headings used in this Agreement are inserted for reference purposes only and shall not affect the meaning or interpretation of any term of this
Agreement.
10.2 This Agreement, the other transaction documents and their schedules and exhibits constitute the entire agreement of the Parties with respect to this
Transaction and supersede any prior agreement, letter of intent, framework agreement, memorandum of understanding, representation or other
obligation of the Parties with respect to this Transaction, whether written or oral (including all forms of communication), and this Agreement
(including any amendments or modifications thereto and the other transaction documents) constitutes the sole and entire agreement of the Parties
with respect to the subject matters hereunder.
10.3 If any term or provision of this Agreement shall be invalid or unenforceable under applicable PRC Law, such term or provision shall be deemed to
have never existed and shall not affect the validity of any other term or provisions of this Agreement. The Parties shall negotiate and agree on the
new provisions within the scope of lawfulness so as to ensure that the original provisions are fulfilled to the greatest extent possible.
10.4 None of the Parties may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other
Parties.
10.5 Unless otherwise provided for by this Agreement, failure or delay on any Party to exercise any rights, powers or privileges under this Agreement
shall not operate as a waiver thereof, nor shall any single or partial exercise of such rights, powers or privileges preclude exercise of any other
rights, powers and privileges.
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10.6 This Agreement may be amended or modified by the Parties through mutual consultation. Any amendment or modification shall be made in
writing and become effective upon due execution by the Parties hereto.
10.7 The Parties agree that, for the purpose of smooth registration of equity change in the Target Companies, this Agreement shall prevail if the filing
documents recommended by the SAMR or other authorities fail to reflect the rights and obligations of the Parties
hereto truly, accurately and completely. In the event of any conflict between such filing documents and this Agreement, this Agreement shall prevail. The
Parties hereto shall continue to be bound by this Agreement, and may not refuse to perform their obligations hereunder due to the reason that this
Agreement has not been filed.
10.8 This Agreement may be executed in more than one counterpart and each counterpart shall be of the same legal effect.
10.9 The schedules and appendixes of this Agreement are integral parts of this Agreement and are complementary to and have the same legal effect as
the text of this Agreement.
10.10 This Agreement shall be effective upon due signing or sealing by the Parties hereto.
[Remainder of this page is intentionally left blank/Signature page to follow]
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[The signature page of Equity Acquisition Agreement only]
Fairlubo Auction HK Company Limited
/s/ Kun Dai
Signature:
Name: Kun Dai
Title: Legal Representative
/s/ Chebole (Beijing) Information Technology Co., Ltd.
Chebole (Beijing) Information Technology Co., Ltd. (company stamp)
/s/ Youxin Yishouche (Beijing) Information Technology Co., Ltd.
Youxin Yishouche (Beijing) Information Technology Co., Ltd. (company stamp)
SIGNATURE PAGE
[The signature page of Equity Acquisition Agreement only]
/s/ Beijing Hengtai Boche Auction Co., Ltd.
Beijing Hengtai Boche Auction Co., Ltd. (company stamp)
SIGNATURE PAGE
[The signature page of Equity Acquisition Agreement only]
/s/ Beijing Youxin Fengshun Lubao Vehicle Auction Co., Ltd.
Beijing Youxin Fengshun Lubao Vehicle Auction Co., Ltd. (company stamp)
/s/ Beijing Fengshun Lubao Vehicle Auction Co., Ltd.
Beijing Fengshun Lubao Vehicle Auction Co., Ltd. (company stamp)
SIGNATURE PAGE
Assets and Business Transfer Agreement
March 24, 2020
Exhibit 4.38
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
1
Article 1
Article 2
Article 3
Article 4
Article 5
Article 6
Article 7
Article 8
Article 9
Article 10
Article 11
Article 12
Appendix I：
Appendix II:
Appendix III
Appendix VI:
Appendix V：
Appendix VI:
Appendix VII:
Appendix VIII:
Appendix IX:
Appendix X:
Appendix XI:
Appendix XII:
Appendix XIII:
Appendix XIV:
Appendix XV:
Appendix XVII:
Appendix XVIII:
Appendix XIX
Appendix XX:
Appendix XXI:
Appendix XXIII:
Appendix XXIV:
Table of Contents
Definitions
Transfer of Assets and Businesses
Transfer Consideration and Payment
Closing
Taxes
Representations and Warranties
Covenants
Liability for Breach
Modification and Termination
Confidentiality
Governing Law and Dispute Resolution
Others
Affiliates of Uxin Group Company
List of Underlying Contracts
List of Underlying Copyrights
List of Underlying Patents
List of Underlying Domain Names
List of Underlying Trademarks
List of Underlying Platform Accounts
List of Underlying Wechat Accounts
List of Underlying Technologies and Systems
List of Underlying Deposites
Agreements relating to the Underlying Copyrights
Agreements relating to the Underlying Patents
Agreements relating to the Underlying Trademarks
Agreements relating to the Underlying Domain Names
[Reserved]
Receiving and Payment Accounts and Escrow Arrangement
Time Schedule for the Transfer of the Underlying Contracts
Leased Properties by the Transferors and the relevant Uxin Group Company for the operation of Underlying
Business
Issues of Intellectual Property Rights in Business Cooperation with Key Customers
Receipt Logic and Net Working Capital as of November 30, 2019
List of Documentary Request for the Underlying Assets Review
Payment Mechanism for the First Installment of Transfer Consideration
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5
12
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53
60
60
72
85
86
87
88
88
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
113
114
115
116
117
119
120
Assets and Business Transfer Agreement
This Assets and Business Transfer Agreement (this “Agreement”) entered into on March 24, 2020 in Beijing by and between:
(1) Youxinpai (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at Room 323610, Floor 36, Building 5, Yard 1, Futong East Avenue, Chaoyang District,
Beijing (“Youxinpai IT”);
(2) Youxin Internet (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of
the People’s Republic of China, with its registered address at Room 532, Floor 5, Southern Building, Block C, No.2 Kexueyuan South Road, Haidian
District, Beijing (“Uxin Network”);
(3) Youhan (Shanghai) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at Room 105-37, Floor 1, Building 2, No.38 Debao Road, China (Shanghai) Pilot Free Trade
Zone (“Youhan”);
(4) Shenzhen Uxin Pengcheng Used Car Trading Market Co., Ltd., a limited liability company incorporated and existing in accordance with the laws
of the People’s Republic of China, with its registered address at the intersection of Chaguang Road and Shigu Road, Xili Street, Nanshan District,
Shenzhen (within the vehicle exhibition space of Youxinpai) (“Uxin Pengcheng”);
(5) Uxin Data-sharing (Beijing) Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws
of the People’s Republic of China, with its registered address at Unit 1501, Floor 15, Building 3, Chengying Center, No.5 Laiguangying West Road,
Chaoyang District, Beijing (“Uxin Data-sharing”);
(6) Yougu (Shanghai) Information Technology Co., Ltd, a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at Room 368, Part 302, No.211 Fute North Road, China (Shanghai) Pilot Free Trade Zone
(“Yougu”);
(The entities listed in (1) to (6) above are referred to as the “Transferor” individually and the “Transferors” collectively)
(7) Uxin Limited, a company incorporated and existing under the laws of the Cayman Islands, with its registered address at the offices of Maples
Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (“Uxin Cayman”);
3
(8) The entities listed in Appendix I (these entities, the Transferors and Uxin Cayman are referred to as the “Warrantor” individually and the
“Warrantors” collectively);
(9) Kun Dai, a Chinese citizen, whose ID card number is *;
(10) Beijing 58 Paipai Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the
People’s Republic of China, with its registered address at Room 406, Floor 4, College Park, Dongsheng Science & Technology Park, Zhongguancun,
No.A18, Xueqing Road, Haidian District, Beijing (the “Transferee”).
(11) Beijing 58 Information Technology Co., Ltd., a limited liability company incorporated and existing in accordance with the laws of the People’s
Republic of China, with its registered address at Room 301, Floor 3, Colledge Park, Dongsheng Science & Technology Park, Zhongguancun,
No.A18, Xueqing Road, Haidian District, Beijing (“58 Information”).
In this Agreement, each of the Parties is referred to as a “Party” and collectively, the “Parties”.
WHEREAS:
(1) Each Transferor intends to transfer all the Underlying Assets (as defined below) and Underlying Business which are in its name or to which it has
title and all corresponding rights and interests attached to such Underlying Assets and Underlying Business to the Transferee pursuant to the
Agreement.
(2) The Transferee and/or other Persons designated by the Transferee intend to purchase from the Transferors the Underlying Assets and the Underlying
Business which are owned by such Transferors and which shall be accepted by the Transferee in accordance with this Agreement, and enter into this
Agreement with the other Parties with respect to such matters.
NOW THEREFORE, the Parties hereby agree as follows:
4
Article 1 . Definitions
1.1 For the purpose herein, the following terms shall have the meaning assigned to them respectively hereunder, unless otherwise definition is given in
the text of this Agreement:
“Underlying Business” shall mean the business which provides B-end customers with channels to dispose used cars and/or provides B-end
customers with channels to purchase used cars by the method of auction, and other business which provides services to B-end customers by the same
method. For the avoidance of doubt, the Underlying Business does not include the salvage car business, new car business, C2B Business and the
nationwide purchase of used cars business operated by Uxin Group Company.
“C2B Business” shall mean the business of car service platforms which provide C-end customers with convenient channels to sell cars and B-end
sellers with channels to purchase cars.
“Underlying Contracts” shall mean a series of contracts in connection with the Underlying Business entered into by the Transferors and the
counterparties of such contracts for the purpose of the operation of the Underlying Business and acknowledged by the Transferors and the Transferee
as within the scope of the Underlying Assets, which shall include the contracts entered into offline and/or online by e-signatures as listed in
Appendix II and the online user contracts not listed in Appendix II but relate to the Underlying Business. The Appendix II shall be updated before
the Second Installment of the Transfer Consideration to include the contracts executed after the execution date of this Agreement which relate to the
Underlying Business and which are acknowledged by the Transferors and the Transferee as within the scope of the Underlying Assets and to reflect
the updates of the contracts listed in the Appendix since the execution date of this Agreement. For the avoidance of doubt, in any event, the scope of
the Underlying Contracts shall be mutually agreed by the Transferors and the Transferee.
“Underlying Customer Relationships” shall mean the customer relationships which without any written agreement developed during the operation
of the Underlying Business between the Transferors and the relevant upstream or downstream customers, as listed in Appendix XXII.
5
“Underlying Intellectual Property Rights” shall mean the Intellectual Property Rights owned by the Transferors for the purpose of operating the
Underlying Business, including without limitation, Underlying Trademarks, Underlying Domain Names, Underlying WeChat Accounts, Underlying
Copyrights, Underlying Patents, Underlying Platform Accounts and other Underlying Intellectual Property Rights as mutually agreed by the
Transferors and the Transferee.
“Underlying Copyrights” shall mean the copyright owned by the Transferors for the purpose of operating the Underlying Business, as listed in
Appendix III of this Agreement.
“Underlying Patents” shall mean the patents and patent application right owned by the Transferors for the purpose of operating the Underlying
Business, as listed in Appendix IV of this Agreement.
“Underlying Domain Names” shall mean the domain names owned by the Transferors for the purpose of operating the Underlying Business, as
listed in Appendix V of this Agreement.
“Underlying Trademarks” shall mean the trademarks and trademark application rights owned by the Transferors for the purpose of operating the
Underlying Business, as listed in Appendix VI of this Agreement.
“Underlying Platform Accounts” shall mean the platform accounts in relation to the Underlying Business as listed on Appendix VII of this
Agreement.
“Underlying WeChat Accounts” shall mean the WeChat accounts owned by the Transferors for the purpose of operating the Underlying Business,
as listed in Appendix VIII of this Agreement.
“Underlying Technologies and Systems” shall mean the technologies and systems owned by the Transferors for the purpose of operating the
Underlying Business, as listed in Appendix IX.
“Other Underlying Intellectual Property Rights” shall mean other Intellectual Property Rights owned by the Transferors for the purpose of
operating the Underlying Business as mutually agreed by the Transferors and the Transferee (including, without limitation, the data and information
relating to the Underlying Business, risk control data, blacklist and operating data relating to the operation of the Underlying Business and other data
and information relating to the Underlying Business).
“Underlying Deposits” shall mean the deposits in connection with the Underlying Business, as listed in Appendix X of this Agreement.
6
“Underlying Assets” shall mean the Underlying Contracts, Underlying Intellectual Property Rights, Underlying Technologies and Systems,
Underlying Deposits and Underlying Customer Relationships. For the avoidance of doubt, the Underlying Assets accepted by the Transferee in
accordance with the Agreement shall be in compliance with the receiving logic and principle set forth in Appendix XI of this Agreement, and the list
of such accepted Underlying Assets shall be confirmed by the Transferors and the Transferee on or prior to the payment date of the Second
Installment of the Transfer Consideration.
“Laws” shall mean laws, regulations, ordinances, provisions, detailed rules, standards, orders, provisions or regulatory documents of the PRC or
other jurisdictions.
“Encumbrance” shall mean any security interest, pledge, mortgage, lien (including without limitation the right of cancellation and right of
subrogation), lease, license, encumbrance, preferential arrangement, restrictive covenant, condition or restriction of any kind, including without
limitation any restriction on the use, voting, transfer, receipt of income or exercise of any other attributes of ownership.
“Business Day” shall mean a day other than a Saturday, Sunday or statutory holiday on which banks in China, Hong Kong or the United States are
open to the public.
“Affiliates” shall mean Affiliate Enterprises and Affiliate Individuals. “Affiliated Enterprises” shall mean any Person that directly or indirectly
Controls a party, are Controlled by a party, or are under the common Control of another party with other parties. “Affiliated Individual” shall mean
close relatives of natural persons, including parents, spouses, siblings and their spouses, adult children and their spouses. For the avoidance of doubt,
the Affiliate of the Transferee shall include, without limitation, 58.com Inc. and its directly or indirectly controlling Persons within and outside the
PRC.
“Transaction Documents” shall mean this Agreement and the Appendixes attached of this Agreement, the Business Cooperation Agreement (as
defined in Article 4.3.13) and other legal documents relating to this Transaction and other resolutions and other legal documents relating to this
Transaction.
“Control”, with respect to the relationship between or among two or more Persons, shall mean the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs, business, management or decisions of another Person, this Control may be
exercised through ownership of equity interest, voting or voting securities, as trustee or executor, by contract, agreement arrangement, trust
arrangement or otherwise.
7
“Big Four” shall mean PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG.
“U.S. Dollars” shall mean US$, or the official currency of the United States of America.
“GAAP” shall mean the laws, regulations, rules, provisions, standards and systems promulgated by the relevant Governmental Authorities of the
United States concerning finance and accounting.
“Claims” mean any actions, suits, petitions, appeals, arbitration applications, demands, claims, and notices on noncompliance, investigations,
settlement rulings or settlement agreements.
“Renminbi” shall mean Renminbi Yuan (RMB), the official currency of the PRC.
“Trade Secret” shall mean commercial secret, know-how and other confidential or proprietary technologies, business and other materials, including
but not limited to the manufacturing or production process and know-how, research and development materials, technologies, drawings, standards,
designs, planning, proposals, technical specification, data for financial, marketing and business, pricing and cost materials, business and marketing
planning, list and materials of customers and suppliers, and all rights available in any jurisdiction to restrict the use or disclosure of each item above.
“Tax” or “Taxation” shall mean any and all taxes, fees, levies, duties, tariffs, and other similar charges of any kind (together with any and all
interests, penalties, additions to tax and additional amounts imposed with respect tof this Agreement) imposed by any government or taxing
authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, payroll, employment, social security, unemployment compensation; taxes or other charges in the nature of excise, withholding,
transfer, value added, or business taxes; and customs’ duties, tariffs, and similar charges. “Tax,” “Taxation,” as used in this Agreement shall, unless
otherwise specified, be construed as taxes and duties.
“Action” shall mean any claim, suit, petition, arbitration, administrative proceeding, inquiry, investigation and other legal proceedings initiated by or
before any Governmental Authority.
“Business License” shall mean the business license issued by the administrative department for industry and commerce.
8
“Liabilities” shall mean all payment obligations, whether accrued or fixed, absolute or contingent, due or unexpired or determined or determinable,
including, without limitation, debts, liabilities and obligations arising under any Law, Action or Governmental Order and any contract, agreement,
arrangement, covenant or undertaking, including, without limitation, (i) funds borrowed or raised, (ii) acceptance credit, documentary letter of credit
or commercial paper loan, (iii) any bond, paper, loan, draft or similar instruments, (iv) deferred payment as to the procured assets or services, amount
payable as to the performance of contractual obligations, any liquidated damages, (v) payment under the lease agreement with its primary purpose to
raise funds or to finance in order to purchase the leased property (whether the lease agreement is in relation to land, machinery, equipment, or other
items); (vi) guarantee, letter of guarantee, stand-by letter of credit, or other documents to secure the performance of a contract, and (vii) mortgage,
security or other guaranty on financial losses in respect of the obligations of any Person.
“Government Authority” shall mean any central, local government, regulatory, approval or administrative agency, department or commission, or
any court, tribunal, judicial or arbitral institution of the PRC or of any country with competent jurisdiction other than the PRC.
“Governmental Order” shall mean any order, judgment, injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
“Intellectual Property Rights” shall mean all worldwide rights, regardless of if it is protected, created, and generated by PRC Law and any other
jurisdictions, arising out of or in connection with (i) inventions, creations, utility models, industrial designs, whether or not patentable or physically
used or patentable under PRC Law and other foreign laws and regulations; (ii) patents, patent applications, invention registrations or any
improvements tof this Agreement, whether or not registered; (iii) trademarks, service marks, trade dress, logos, trade names or business names,
whether or not registered; (iv) copyrights (whether or not registered), copyright registrations or applications for copyright registrations; (v) software
and systems, including computer programs, source code, object code, executable code and related documentation, and the data and information
contained therein; (vi) trade secrets; (vii) industrial designs, whether or not registered; (viii) databases and data; (ix) domain names, web sites, and
web pages; (x) any medium in any form for any of the foregoing; (xi) any right to obtain or apply for patent rights or register trademark rights,
copyrights and domain names; (xiii) any right to claim damages, expenses or attorney’s fees for infringement or misuse of any of the foregoing.
9
“Material Adverse Effect” shall mean any of the following circumstances, changes or effect that (i) is, or there is sufficient evidence to prove,
likely to have a Material Adverse Effect on the existence, business, assets, Intellectual Property, liabilities, results of operations or financial condition
of any Underlying Asset or Underlying Business; or (ii) is, or there is sufficient evidence to prove, likely to have a Material Adverse Effect on the
Underlying Assets or the Underlying Business; or (iii) is, or there is sufficient evidence to prove, likely to have a Material Adverse Effect on the
ability of the relevant Transferors and/or the Warrantors to perform this Agreement and other Transaction Documents.
“Annual Fee” shall mean the annual maintenance fee for the relevant Intellectual Property paid with the Governmental Authority in respect of the
relevant Intellectual Property.
“Net Working Capital” shall mean the amount calculated in accordance with the following formula and mechanisms. For the avoidance of doubt,
the amount of the Underlying Deposits shall be taken into account according to their respective account titles when calculating the Net Working
Capital.
The Net Working Capital of the Underlying Assets at a certain point in time shall equal to X, X = a + b-c-d.
Where:
a shall be the accounts receivable of the Underlying Assets at such point in time in accordance with U.S. GAAP (provided that such accounts
receivable shall comply with the receipt logic set forth in Appendix XXI); (for the avoidance of doubt, the amount of such accounts receivable shall
be 0 when calculating the Benchmark Net Working Capital (as defined below))
b shall be the other accounts receivables of the Underlying Assets as at such point in time in accordance with U.S. GAAP (provided that such other
accounts receivables shall comply with the logic of receipt set forth in Appendix XXI); (for the avoidance of doubt, the amount of such other
accounts receivable shall be 0 when calculating the Benchmark Net Working Capital (as defined below))
c shall be the accounts payable of the Underlying Assets at such point of time in accordance with the US GAAP (provided that such accounts payable
shall conform to the receipt logic set out in Appendix XXI);
d shall be the other accounts payable of the Underlying Assets at such point of time in accordance with the US GAAP (provided that such other
accounts payable shall comply with the receipt logic set out in Appendix XXI).
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“Uxin Group Company” shall mean, collectively or individually, Uxin Cayman, each of the Warrantors and the onshore and offshore Persons
directly or indirectly Controlled by Uxin Cayman.
“Overdue Fine” shall mean a method whereby the competent Governmental Authority imposes additional monetary payment obligations upon a
Person who fails to duly perform its payment obligation.
“PRC GAAP” shall mean the laws, regulations, rules, provisions, standards and systems promulgated by the applicable Governmental Authorities of
the PRC relating to finance and accounting.
“Person” shall mean any natural person, partnership, proprietorship, enterprise legal person (limited liability company or company limited by
shares), unincorporated enterprise (association or trust social organization), unincorporated organization or other Person and governmental
institutions.
1.2 Unless otherwise specified, any reference to a section, article, list, exhibit or appendix of this Agreement is a reference to the section, article, list,
exhibit or appendix of this Agreement.
1.3 Any reference to a law, statute, regulation or ordinance shall be construed as a reference to such law, statute, regulation or ordinance at that time in
force, as amended, replaced or re-enacted from time to time and shall include any subordinate legislation made under it.
1.4 Words such as “including” and other similar expressions are not intending to be restrictive and shall be construed as “including, without limitation.”
1.5 Words importing the singular shall include the plural and vice versa; words importing a gender shall include all gender meanings.
1.6 The table of contents and headings for this Agreement are for convenience only and do not affect in any way the content or interpretation of any
term of this Agreement.
1.7 The Appendices and schedules are integral parts of this Agreement and have the same effect as the main content of this Agreement. All references to
this Agreement include the Appendices and Schedules.
1.8 References to writing or written forms shall include any mode of reproducing words in a legible and perpetual form.
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Article 2 Transfer of Assets and Businesses
2.1 Subject to the terms and conditions of this Agreement, each Transferor hereby agrees to assign, transfer, deliver or license to the Transferee (or its
designated related party), and the Transferee (or its designated related party) agrees to receive, acquire or accept from each Transferor the
ownership of or the right to use (as specified hereunder) the Underlying Assets (as specified hereunder) free from any encumbrance, liability,
defect of rights and any security interest (except for those disclosed in this Agreement or in the letter of disclosure attached hereto).
Along with the transfer of the aforesaid Underlying Assets, the Transferors transfer the Underlying Businesses to the Transferee. The Transferors
shall transfer to the Transferee the Underlying Assets and Underlying Businesses in their entirety as accepted by the Transferee, and any
adjustment to the Transfer Consideration or each installment of Transfer Consideration under this Agreement shall not affect the completion of
transfer of the Underlying Assets and Underlying Businesses to the Transferee in accordance with this Agreement.
The Parties hereto further confirm and agree that, with respect to the aforesaid Underlying Assets and Underlying Businesses transferred to the
Transferee from the Transferor, the Transferee shall designate at its own discretion its own or its designated Affiliates as the Person receiving the
corresponding Underlying Assets and Underlying Businesses; and the Transferors shall transfer and deliver the corresponding Underlying Assets
and Underlying Businesses to such receiving Person following the instruction of the Transferee. For the avoidance of doubt, for the purpose of
understanding and interpreting this Agreement, the Transferee shall be understood and interpreted as the “Transferee and/or its designated
Affiliates”.
(hereinafter referred to as the “Transfer” or the “Transaction”)
2.2 On or before the Closing Date, the Transferors shall bear all risks related to the Underlying Assets and Underlying Business; since the Closing
Date, notwithstanding the transfer arrangements as agreed in this Agreement, the Transferee shall be entitled to all rights and interests in the
Underlying Assets and the Underlying Business it ultimately accepts, and shall also bear the risks, costs and payment responsibilities arising from
the Transferee’s operation of such Underlying Assets and the Underlying Business. For the avoidance of doubt, the Transferee shall be liable for
the payment obligations arising from the Transferee’s operation of the Underlying Assets and Underlying Businesses accepted by the Transferee
after the Closing Date. If the Transferors (or its Affiliates) fulfill the above-mentioned payment obligations on behalf of the Transferee, the
Transferee agrees to settle and pay back to the Transferors in accordance with this Agreement and/or the supplementary agreements entered by the
Parties. Further, the Parties understand and agree that the commission fees, service fees and car payments relating to the Underlying Business and
the Underlying Assets which accrue before the Closing Date shall belong to the Transferors (regardless of whether such accounts were actually
received before, on or after the Closing Date), and the costs, expenses and fees relating to the Underlying Assets and the Underlying Business
before the Closing Date (regardless of whether such costs, expenses and fees were accrued before, on or after the Closing Date) shall be borne by
the Transferor. If settlement needs to be made between the Transferors and the Transferee due to the bank account arrangement corresponding to
the Underlying Business as agreed in this Agreement, the Transferors and the Transferee shall arrange such settlement accordingly.
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Notwithstanding the foregoing, before and after the Closing Date, each Transferor shall fulfill its responsibilities and obligations relating to the
Underlying Assets and Underlying Businesses within such time and in such method prescribed hereunder, including but not limited to,
(i) complete the transfer registration, license registration and pledge registration (including but not limited to the transfer registration, license
registration and pledge registration of the application and ownership) of the relevant Underlying Intellectual Property Rights with the relevant
department of authority; and (ii)complete other obligations and responsibilities agreed herein that shall be performed by the relevant Transferors,
pursuant to the method and mechanism agreed herein.
2.3 Notwithstanding the provisions in Article 2.2 and other provisions herein, the Transferee and/or its designated Affiliates shall not assume any
obligations, risks, debts and responsibilities of the Underlying Assets and/or the Underlying Businesses existing or arising prior to the Closing
Date, whenever the Underlying Assets and/or the Underlying Businesses are transferred and delivered. Each of the Transferors shall continue to
assume any obligations, risks, Liabilities and responsibilities related to the Underlying Assets and/or the Underlying Businesses existing or arising
prior to the Closing Date, including but not limited to:
(1) Any responsibilities, Liabilities, fees payable (including but not limited to Annual Fees and Overdue Fines) and Taxes and Taxation
payable (excluding the Accounts Payable Assumed by the Transferee in accordance with this Agreement (as defined below) and the
Other Accounts Payable Assumed by the Transferee (as defined below)) existing or arising prior to or at the Closing Date in connection
with the Underlying Asset and/or Underlying Business;
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(2) Any pending litigation, claim, arbitration, administrative penalty or other legal proceedings related to Underlying Assets and/or
Underlying Business before or at the Closing Date;
(3) Claims, liabilities, obligations, damages, losses, judgments, legal actions, lawsuits, procedures, arbitration, etc. brought by any third party
on or before the Closing Date in respect of Underlying Assets and/or Underlying Business;
(4) Claims filed by the Transferors before or at the Closing Date in respect of the products sold or services provided by Underlying
Businesses and/or Underlying Assets;
(5) Any claim, lawsuit, arbitration, administrative penalty, any dispute, claim or legal procedure arising from the Transferor’s performance of
any Underlying Contracts before the Closing Date (whether the aforesaid acts occurred before, at or after the Closing Date); and
(6) Any liability, obligation, damages, loss, judgment, legal action, lawsuit, procedure, arbitration, etc. arising from the Underlying Asset
and/or Underlying Business after the Closing Date and any previous acts or reasons.
For the avoidance of doubt,
(1) If the Transferee and/or its Affiliates incur any Liabilities, responsibilities, obligations and Encumbrance due to the above circumstances set
forth in this Article for any reason, the Transferors and the Warrantor shall jointly and severally compensate and indemnify the Transferee
and/or its Affiliates according to the time, methods and mechanisms required by the Transferee and/or its Affiliates.
(2) The Transferee and/or its Affiliates shall be responsible for responding to or handling relevant procedures and claims (but the Transferee shall
actively and reasonably cooperate) and compensate the Transferee and/or its Affiliates for all expenses incurred and all losses suffered as a
result of any duties, obligations, damages, losses, judgments, legal actions, lawsuits, procedures, arbitration, etc. arising from the above
matters. For the avoidance of doubt, before the Transfer of the Underlying Assets and Underlying Business is completed in accordance with
this Agreement, if the Transferors brings a lawsuit and/or arbitration and/or other dispute procedures against the customers of the Underlying
Assets and Underlying Business that have not completed the Transfer, based on issues occurring before the Closing Date and previous issues,
the prior written consent of the Transferee shall be obtained.
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(3) Notwithstanding the above provisions and other agreements in the Transaction Documents, if by the date of payment of the Second
Installment of the Transfer Consideration, the corresponding Underlying Assets listed in the annex to this Agreement are ultimately not
transferred to the Transferee in the manner agreed in this Agreement, and the Transferee agrees that such Underlying Assets shall be excluded
from the final Underlying Asset scope (if requested by the Transferee that such Underlying Assets shall be within the Underlying Asset scope,
they shall be treated in the manner and mechanism required by the Transferee), then the Transferors shall continue to be responsible for the
Underlying Assets, the Transferors shall have the right to continually hold the Underlying Assets or choose to terminate the corresponding
business contract (provided that it does not affect the normal development and operation of the Underlying Business from the Closing Date),
and the responsibilities and obligations related to the Underlying Assets shall be borne by the Transferor.
(4) For the matters in Article 2.2 and 2.3, if the Transferors has made corresponding claims, litigation, defense or indemnification in accordanxe
with this Agreement, the Transferors has the right to retain the income actually attributable to the Transferors from the claims, litigation,
defense or indemnification (including but not limited to the amount payable by the disputing counterparty as determined by judgment or
arbitration) provided that such shall not affect the normal development and operation of Underlying Business and the amount of
compensation, compensation and expenses that the Transferee shall receive and obtain.
2.4 Transfer and License of Underlying Intellectual Property Rights
(1) Copyright
a. The Transferred Underlying Copyrights
(i) The Transferors agree to and procure other relevant parties to transfer and deliver to the Transferee the underlying copyrights as
set forth in Part I of Appendix III (the “Transferred Underlying Copyright”) in accordance with the terms and conditions of
this Agreement, and the Transferee agrees to accept, acquire and receive the Transferred Underlying Copyrights and execute the
copyright transfer agreement as shown in Part I of Appendix XI prior to the closing and provide the Transferee with the
originals of the ownership certificate materials corresponding to the Transferred Underlying Copyrights prior to the closing;
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(ii) Prior to the Closing Date, the Transferors shall hand over to the designated personnel of the Transferee all source code, source
program, CDs, underlying technical data, technical abstracts and specifications and other necessary materials in connection with
the Transferred Underlying Copyrights (except for the items missing which are listed in the Disclosure Letter);
(iii) The Transferors shall provide prompt cooperation for the completion of relevant procedures and execute relevant documents
(providing the Underlying Contracts and the business license of the relevant Transferors affixed with the company seal,
providing the original registration certificate of the Underlying Copyrights (including the original registration certificate of
computer software copyright and the original registration certificate of works copyright) and providing the relevant query
results (including the query results of computer software copyright and the query results of works copyright)) before the
closing, and shall submit an application for change registration in connection with the transfer of the Transferred Underlying
Copyrights to the National Copyright Administration and provide the Transferee with the evidence of completion of such
application submission before the closing; the Transferors shall complete the registration and filing of the Copyright relating to
the transfer of the Transferred Underlying Copyright from the Transferors to the Transferee before the Transferee actually pays
the Second Installment of Transfer Consideration in accordance with this Agreement;
(iv) For the avoidance of doubt, if the change registration of copyright fails to be made or completed due to the reason that the
National Copyright Administration does not agree to the transfer of the word pattern of “Youxinpai” in Part I of Appendix XI
by dividing the word pattern from the work of “Youxin font”, Transferors shall not be deemed to default or fail to satisfy the
conditions precedent of the First Installment of the Transfer Consideration or the conditions precedent of the Second Installment
of the Transfer Consideration due to such failure. However, the Transferors shall, at the request of the Transferee, exclusively
license the Transferee to use of the word pattern of “Youxinpai” at a time and in a manner reasonably satisfactory to the
Transferee (but the Transferors shall still have the right to use the work of “Youxin font” and the work pattern of “Youxin” in
the work of “Youxinpai”) and complete the relevant license and filing at such time and in such manner as requested by the
Transferee.
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(v) Any costs arising from the transfer of the Transferred Underlying Copyrights in accordance with the above mechanism shall be
borne by the Transferor;
(vi) With effect from the Closing Date, the Transferred Underlying Copyrights and all rights arising therefrom shall be transferred
in their entirety to the Transferee. Unless approved by the Transferee in writing in advance, as from the Closing Date, neither
the Transferors nor any other Uxin Group Company shall use and/or authorize a third party to use any of the Transferred
Underlying Copyrights or re-register the relevant works in its own name or in the name of a third party.
b. Licensed Underlying Copyright
(i) The Transferors agree to and procure other relevant parties to provide the licensed underlying copyrights in Part II of Appendix
III (the “Licensed Underlying Copyrights”) to the Transferee in accordance with the terms and conditions of this Agreement,
and the Transferee agree to accept the Licensed Underlying Copyrights and execute the copyright license agreement as shown
in Part II of Appendix XI prior to the closing;
(ii) Prior to the Closing Date, the Transferors shall provide the Transferee with a copy of all source code, source program, CDs,
underlying technical data, technical abstracts, specifications and other necessary materials in connection with the Licensed
Underlying Copyright;
(iii) Any fees arising from the licensing of the Licensed Underlying Copyright in accordance with the above mechanism shall be
borne by the Transferors;
(iv) The Transferors hereby acknowledge and undertake that the license arrangement with respect to the Licensed Underlying
Copyrights shall be permanent and free of charge, and the Transferee shall have the right to carry out internal sublicense and
sublicense arrangements within the Transferee and/or its Affiliates and conduct reasonable sublicense and sublicense
arrangements with third parties with respect to such Licensed Underlying Copyrights to the extent reasonably necessary for the
conduct of the Underlying Business. The Transferors further covenant that, with respect to the Licensed Underlying Copyrights,
they shall continuously ensure the stable and good existence of such Licensed Underlying Copyrights and pay corresponding
fees in a timely manner and deal with relevant issues relating to such Licensed Underlying Copyrights in their sole discretion. If
any Transferor transfers, guarantees, licenses, disposes of or encumber such Licensed Underlying Copyrights, it shall obtain
prior written consent of the Transferee. The Transferors and relevant Uxin Group Company shall take all necessary measures to
ensure that the Transferee can keep good use of such Licensed Underlying Copyrights.
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(v) For the avoidance of doubt, in case where the Transferors and Uxin Group Company perform any update and novation and re-
development or research with respect to the Licensed Underlying Copyright after the execution of this Agreement, such update
and novation and re-development or research shall also be defined as the Licensed Underlying Copyrights. The Transferors and
Uxin Group Company shall license to the Transferee pursuant to the provisions regarding the Licensed Underlying Copyrights
under Articles (i) to (iv) above and complete such license at the time and in the manner requested by the Transferee.
(2) Underlying Patents
a. Transferred Underlying Patents
(i) The Transferors agree to transfer and deliver to the Transferee, and the Transferee agree to accept, acquire and receive the
transfer from the Transferors, the Underlying Patents mentioned in Part I of Appendix IV (the “Transferred Underlying
Patents”) in accordance with the terms and subject to the conditions of this Agreement; the Transferors shall be responsible for
the transfer of the Underlying Patents and any cost arising from the transfer of the Transferred Underlying Patents shall be
borne by the Transferors.
Before the closing, the Transferors shall deliver to the Transferee the materials relevant to the Transferred Underlying Patents,
execute the forms, documents or agreements necessary for the transfer of the Transferred Underlying Patents, and execute the
patent transfer agreement and/or the patent application right transfer agreement as shown in Part I of Appendix XII.
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Prior to the closing, the Transferors shall hand over to the designated personnel of the Transferee all source code, source
program, CDs, underlying technical data, technical abstracts, specifications and other necessary materials in connection with the
Transferred Underlying Patent.
The transfer of the Transferred Underlying Patents shall take effect from the date on which the change registration with the
State Intellectual Property Office (the “SIPO”) is completed.
(ii) Change procedures. The Transferors shall be responsible for, and the Transferee shall cooperate with the Transferors, the
procedures required for the change of the Transferred Underlying Patents (change registration with the SIPO). The Parties shall
submit application for change registration of the transfer of the Transferred Underlying Patents prior to the Closing Date and
provide the Transferee with materials evidencing the completion of such change registration, and shall complete such change
registration within six (6) months after the Closing Date (if the change registration procedures fail to be completed within the
aforesaid 6-month period due to reasons solely attributable to the Transferee or the SIPO, the Transferors shall not be deemed as
in breach of this Agreement).
The Transferors shall eliminate or resolve any obstacle or problem raised by the SIPO within ten Business Days (if such cannot
be achieved within the above time limit due to objective reasons, the above time limit shall be reasonably extended).
For the avoidance of doubt, if, after exhaustion of all statutory remedies, there are still some Transferred Underlying Patents
registered under the name of the Transferors due to the reason that the transfer of the Transferred Underlying Patents fails to be
approved by the SIPO, then (i) if the transfer of the Transferred Underlying Patents has not been announced, the Transferee
shall have the right to elect to (x) continue such transfer until the transfer is completed; or (y) require the Transferors to
withdraw the corresponding application for the Transfer Underlying Patents and re-apply for the registration of the Transferred
Underlying Patents directly by the Transferee; (ii) the Transferors shall enter into an exclusive license agreement with the
Transferee before the Closing Date as shown in Part II of Appendix XII, under which the Transferors shall license the
Transferred Underlying Patents permanently to the Transferee free of charge until such transfer of the Transferred Underlying
Patents is registered under the name of the Transferee.
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(iii) The Parties acknowledge and agree that the patent right or the patent application right of the Transferred Underlying Patents
shall become effective as of the date on which the SIPO approves the transfer application and registers the same.
The Transferors hereby agree that prior to the Closing Date, the Transferors and the Transferee shall execute an exclusive
license agreement as shown in Part II of Appendix XII with respect to the Transferred Underlying Patents, and grant a perpetual
and exclusive license to the Transferee without compensation until the date on which the transfer registration of the Transferred
Underlying Patents is completed (the “Patent Transition Period”). If the Transferee requests to file the above patent licensing
with the SIPO, the Transferors shall be responsible for completing the relevant filing procedures at the time and in the manner
reasonably requested by the Transferee, and the Transferee shall provide necessary cooperation. All costs arising from the filing
procedures shall be borne by the Transferors. During the Patent Transition Period, the Transferors shall ensure that it shall not
license or dispose of the Transferred Underlying Patents, create interests for a third party or transfer the Transferred Underlying
Patents to a third party. After the Closing Date, the patent registration fee, patent renewal fee, agency fee and other relevant fees
of the Transferred Underlying Patents incurred after the Closing Date shall be borne by the Transferee; provided that such fees
incurred before the Closing Date or incurred after the Closing Date as a result of actions taken before the Closing Date shall still
be borne by the Transferors.
(iv) The Transferors shall be responsible for the transfer of the Transferred Underlying Patents (i.e. the transfer of the registration
right of the registered Transferred Underlying Patents from the Transferors to the Transferee and the transfer of the application
right of the patent under application to the Transferee), and shall assist and cooperate with the Transferee in obtaining the patent
registration in connection with the Transferred Underlying Patents which are still in the process of patent application.
(v) In the meantime, with respect to the Transferred Underlying Patents that are still in the process of patent application as of the
Closing Date, after the Closing Date but before the Transferee obtains the patent registration of such Transferred Underlying
Patents, the Transferors shall indemnify the Transferee for any losses caused by any issues relating to such Transferred
Underlying Patents.
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(vi) As of the Closing Date, all rights arising from the transfer of the Transferred Underlying Patents and all rights arising therefrom
shall be transferred to the Transferee. Unless approved by the Transferee in writing in advance, as from the Closing Date, the
Transferors and other Uxin Group Company shall not use and/or authorize a third party to use any of the Transferred
Underlying Patents, shall not seek patent rights or other interests in its own name or a third party with respect to any technical
solutions of the same or substantially the same or equivalent to the Transferred Underlying Patents, and shall not publish or
disclose any technical solutions of any of the Underlying Technology Patents that have not been made public.
b. Licensed Underlying Patents
(i) The Transferors agree to and procure other relevant parties to license to the Transferee, and the Transferee agrees to accept, the
Licensed Underlying Patents in Part II of Appendix IV (the “Licensed Underlying Patents”) in accordance with the terms and
conditions of this Agreement and enter into the patent license agreement as shown in Part III of Appendix XII and the patent
application and technology license agreement as shown in Part IV of Appendix XII prior to the closing;
(ii) Prior to the Closing Date, the Transferors shall provide the Transferee with a copy of all source code, source program, CDs,
underlying technical data, technical abstracts, specifications and other necessary materials in connection with the Licensed
Underlying Patents;
(iii) The Transferors shall submit the relevant application to the SIPO and provide the Transferee with materials to evidence that the
relevant completion is completed before the closing, complete the relevant procedures and execute the relevant documents, and
complete the filing and license involved in such licensed Underlying Patents before the payment of the Second Installment of
the Transfer Consideration;
(iv) Any expenses arising from the licensing of the Licensed Underlying Patent in accordance with the above mechanism shall be
borne by the Transferors;
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(v) The Transferors hereby acknowledge and undertake that the license arrangement with respect to the Licensed Underlying
Patents shall be permanent and free of charge, and the Transferee shall have the right to carry out internal sublicense and
sublicense arrangements within the Transferee and its Affiliates and shall have the right to conduct reasonable sublicense and
sublicense arrangements with third parties with respect to such Licensed Underlying Patents for the purpose reasonably
necessary for the conduct of the Underlying Business. The Transferors further covenant that, with respect to the Licensed
Underlying Patents, it shall continuously ensure the stable and good existence of such Licensed Underlying Patents, pay
corresponding fees (including, without limitation, patent registration fee, patent renewal fee and agency fee) in a timely manner,
and promptly and deal with relevant issues involved in such Licensed Underlying Patents on its own. If any Transferors
transfer, license, dispose of or encumber the Licensed Underlying Patent, prior written consent of the Transferee shall be
obtained. The Transferors and the relevant Uxin Group Company shall take all necessary measures to ensure that the Transferee
can use such Licensed Underlying Patents in a sustainable and good manner.
(vi) For the avoidance of doubt, in case where any update and novation, redevelopment or research is made by the Transferors and
Uxin Group Company after the execution of this Agreement in respect of the Licensed Underlying Patent, the patent so
developed and updated or re-developed or researched shall also be defined as the Licensed Underlying Patents. The Licensed
Underlying Patents shall be licensed to the Transferee in accordance with and subject to the provisions regarding the Licensed
Underlying Patents set forth in Articles (i) to (v) above and shall be completed in a time and manner requested by the
Transferee.
(3) Underlying Domain Names
a. Transferred Underlying Domain Names
(i) The Transferors agree to cause and procure the domain names listed in Part I of Appendix V (the “Transferred Underlying
Domain Names”) to be transferred and delivered to the Transferee, and the Transferee agrees to acquire, accept and receive the
Transferred Underlying Domain Names from the Transferors, subject to the terms and conditions of this Agreement.
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The Transferors shall deliver the materials, codes and procedures in relation to the Transferred Underlying Domain Names to
the Transferee prior to the closing, and execute forms, documents or agreements necessary for the completion of the transfer of
the transferred domain names and provide the Transferee with the domain name transfer code.
The Transferors shall be responsible for the procedures required for the registration of the change of the domain name (change
registration of domain name). Any expenses arising from the transfer of the Transferred Underlying Domain Names shall be
borne by the Transferors. The Transferors shall complete the change registration of the Transferred Underlying Domain Names
prior to the Closing Date, such that the registrant of the Transferred Underlying Domain Names shall be the Transferee, and
obtain the certificate of domain name issued after the change registration; the Transferee shall cooperate with the Transferors in
this respect.
With respect to the changes of the ICP filing information of the Transferred Underlying Domain Names, the Transferors agree
to complete the cancellation of such changes in the original ICP filing information of the Transferred Underlying Domain
Names before the payment of the Second Installment of the Transfer Consideration and cooperate with the Transferee in
changing the host company of the ICP filing information of the Transferred Underlying Domain Name to be the Transferee.
(ii) If any of Transferred Underlying Domain Names is registered on any qualification or license of the Transferors or other Uxin
Group Company (including but not limitation the Value-added Telecommunication Business Operation Permit), the Transferors
shall remove Transferred Underlying Domain Names from such qualification or license prior to the payment of the Second
Installment of the Transfer Consideration and ensure that the Transferee could use the Transferred Underlying Domain Names
for the application of the relevant qualification or licenses.
(iii) Without the prior written consent of the Transferee, the Transferors and other Uxin Group Company shall not use the
Transferred Underlying Domain Names in any manner. With respect to the pages, entrances or links that are displayed on the
webpage corresponding to the Transferred Underlying Domain Names that are unrelated to the Underlying Business (the
“Unrelated Business”), if requested by the Transferee, the Transferors shall cooperate with the Transferee to close the
Unrelated Business within a reasonable period of time requested by the Transferee, before the payment of the Second
Installment of the Transfer Consideration.
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b. Licensed Underlying Domain Names
(i) The Transferors agree to and procure other relevant parties to license to the Transferee, in accordance with the terms and
conditions of this Agreement, the domain names (including sub-domain names of such domain names) set forth in Part II of
Appendix V (the “Licensed Underlying Domain Names”) and the Transferee agrees to accept the Licensed Underlying
Domain Names and execute the domain name license agreement set forth in Appendix XIV prior to the closing;
(ii) Prior to the Closing Date, the Transferors shall provide the Transferee with a copy of all source code, source code, CDs,
underlying technical data, technical abstracts, specifications and other necessary materials in connection with the Licensed
Underlying Domain Names;
(iii) The Transferors hereby acknowledge and undertake that the Licensed Underlying Domain Names shall be perpetual and free of
charge licensing arrangements, and the Transferee shall have the right to carry out internal sub-licensing and sublicense
arrangements within the Transferee and its Affiliates and conduct reasonable sub-licensing and sublicense arrangements with
third parties to the extent reasonably necessary for the conduct of the Underlying Business. Prior written consent of the
Transferors. The Transferors further covenant that, with respect to the Licensed Underlying Domain Names, it shall
continuously ensure the stability and good existence of such Licensed Underlying Domain Names and pay relevant fees in due
course, promptly and deal with relevant issues concerning such Licensed Underlying Domain Names on its own. The
Transferors shall obtain prior written consent of the Transferee if they transfer, license, dispose of or encumber the Licensed
Underlying Domain Names. The Transferors and the relevant Uxin Group Company shall take all necessary measures to ensure
that the Transferee can keep good use of such Licensed Underlying Domain Names.
(4) Underlying Trademark
a. Transferred Underlying Trademarks
(i) The Transferors agree to transfer and deliver to the Transferee, and the Transferee agrees to acquire, acquire and receive, the
transferred Underlying Trademarks as set forth in Part I of Appendix VI (the “Transferred Underlying Trademarks”) in
accordance with the terms and subject to the conditions of this Agreement; the Transferors shall be responsible for the transfer
of the Transferred Underlying Trademarks and any cost arising from such transfer shall be borne by the Transferors.
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The Transferors shall deliver to the Transferee the materials relating to the Transferred Underlying Trademarks prior to the
closing, execute forms, documents or agreements necessary for the completion of the transfer of the Underlying Trademarks,
and execute the trademark transfer agreement as shown in Part I of Appendix XIII.
Prior to the closing, the Transferors shall transfer to the designated personnel of the Transferee all certificates, specifications
and other necessary materials in respect of the Transferred Underlying Trademarks.
The transfer of the Transferred Underlying Trademarks shall take effect from the date on which the change registration with the
Trademark Office of State Intellectual Property Office (the “Trademark Office”) is completed.
(ii) Change procedures. The Transferors shall be responsible for and the Transferee shall cooperate with the Transferors for the
necessary procedures for the change of the Transferred Underlying Trademarks (change registration with the Trademark
Office). The Parties shall submit the application for change registration of the transfer of the Transferred Underlying
Trademarks and provide the Transferee with materials evidencing the completion of such change registration prior to the
Closing Date, and shall complete such change registration within six (6) months after the Closing Date (if the change
registration procedures fail to be completed within the aforesaid six (6) month period due to reasons solely attributable to the
Transferee or the Trademark Office, the Transferors shall not be deemed to be in breach of this Agreement).
The Transferors shall eliminate or resolve any obstacle or problem raised by the Trademark Office within ten Business Days (if
such cannot be achieved within the above time limit due to objective reasons, the above time limit shall be reasonably
extended).
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For the avoidance of doubt, if after exhaustion of all statutory remedies, there are still certain Transferred Underlying
Trademarks registered under the name of the Transferors due to the reason that the transfer of the Transferred Underlying
Trademarks has not been approved by the Trademark Office, then (i) if the relevant Transferred Underlying Trademarks have
not been registered, the Transferee shall have the right to choose to (x) continue such transfer until the completion of the
transfer; or (y) request the Transferors to withdraw the corresponding application for the Transferred Underlying Trademarks
and apply for re-registration by the Transferee; (ii) the Transferors shall enter into an exclusive license agreement with the
Transferee as shown in Part II of Appendix XIII prior to the Closing Date, under which the Transferors shall grant the
Transferee the permanent and exclusive license of the Transferred Underlying Trademarks without compensation until such
transfer registration of the Transferred Underlying Trademarks under the name of the Transferee.
(iii) The Parties acknowledge and agree that the Transferred Underlying Trademarks shall become effective on the date on which
the transfer application is approved and registered by the Trademark Office.
The Transferors hereby agree that prior to the Closing Date, the Transferors and the Transferee shall execute an exclusive
license agreement as shown in Part II of Appendix XIII in respect of the Transferred Underlying Trademarks and grant a
permanent and exclusive license to the Transferee without compensation until the date on which the transfer registration of the
Transferred Underlying Trademarks is fully completed (the “Trademark Transitional Period”). If the Transferee requests to
file the above trademark authorization and licensing with the Trademark Office, the Transferors shall be responsible for
completing such filing procedures at the time and in the manner reasonably requested by the Transferee, and the Transferee
shall provide necessary cooperation. All costs arising from the filing procedures shall be borne by the Transferors. During the
Trademark Transition Period, the Transferors shall ensure that it shall not license or dispose of the Transferred Underlying
Trademarks, create interests for a third party or transfer the Transferred Underlying Trademarks to a third party. After the
Closing Date, the patent registration fee, patent renewal fee, agency fee and other relevant fees arising from the transfer of the
Transferred Underlying Trademarks after the Closing Date shall be borne by the Transferee; provided that such fees incurred
before the Closing Date or arising from any action taken before the Closing Date shall still be borne by the Transferors.
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(iv) The Transferors shall be responsible for the transfer of the Transferred Underlying Trademarks and assist and cooperate with
the Transferee in obtaining the patent registration of the Underlying Trademarks which are still in the process of application.
(v) In the meantime, with respect to the Transferred Underlying Trademarks that are still in the process of the Trademark
Application as of the Closing Date, before the Transferee obtain registration of such Transferred Underlying Trademarks after
the Closing Date, the Transferors shall indemnify the Transferee for relevant losses caused by any problems in such Transferred
Underlying Trademarks.
(vi) With effect from the Closing Date, all rights arising from the transfer of the Transferred Underlying Trademarks and all rights
arising therefrom shall be transferred to the Transferee. Unless approved by the Transferee in writing in advance, from the
Closing Date, the Transferors and other Uxin Group Company shall not use and/or authorize a third party to use any of the
Transferred Underlying Trademarks or seek interests in their own name or a third party’s name with respect to technical
solutions that are identical or substantially identical or equivalent to the Underlying Trademarks.
b. With respect to the trademarks listed in Part II of Appendix VI (the “Exclusive Licensed Trademarks”), the Transferors agree to
transfer all interest in such trademarks to the Transferee; provided, however, that due to the examination and approval of Governmental
Authorities, the Parties understand and acknowledge that the transfer of such interest may only be achieved through exclusive license. In
the future, if laws and regulations permit the separate transfer of Exclusive Licensed Trademarks to the Transferee, the Transferors shall
transfer such Exclusive Licensed Trademarks to the Transferee. However, such transfer shall be limited to Exclusive Licensed
Trademarks, and does not involve any other “优信” “Uxin” “
Group Company and similar to the Exclusive Licensed Trademarks as determined by the Trademark Office.
” and “youxin” trademarks held by the Transferors or any other Uxin
The relevant Transferors and Transferee shall have entered into the exclusive license agreement as shown in Part II of Appendix XIII
prior to the closing, pursuant to which the relevant Transferors shall grant to the Transferee a permanent, gratuitous and exclusive
license. The Transferors shall be responsible for making relevant filings in connection with such exclusive license prior to the closing
and providing the Transferee with evidence of completion of such filing at the time and in the manner reasonably requested by the
Transferee and shall complete the filing with respect to the exclusive license trademark as soon as practicable after the Closing Date but
no later than the payment of the Second Installment of the Transfer Consideration, and the Transferee shall provide necessary assistance.
The Transferee shall provide necessary cooperation and all expenses arising from the filing procedure shall be borne by the Transferors.
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For the avoidance of doubt, the Transferors shall be obliged to ensure the timely renewal of Exclusive Licensed Trademarks and take all
other actions to maintain the continuous validity of Exclusive Licensed Trademarks and take all necessary actions in accordance with the
instructions and requirements of the Transferee with respect to such Exclusive Licensed Trademarks so as to maintain the continuous
validity of Exclusive Licensed Trademarks. After the Closing Date, the trademark registration fee, renewal fee and agency fee of the
Exclusive Licensed Trademarks incurred after the Closing Date shall be borne by the Transferee. Transferee shall be entitled to sub-
license and sublicense such exclusive Licensed Marks and the use of such exclusive Licensed Marks shall not be subject to any
restrictions. The parties further agree that the Transferors shall only take necessary actions for the good existence of the Exclusive
Licensed Trademarks and with the consent of the Transferees. Without the prior written consent of the Transferees, the Transferors shall
not assign, authorize, pledge, transfer or otherwise dispose of the Exclusive Licensed Trademarks or use the Exclusive Licensed
Trademarks in any manner.
c. For the trademarks listed in Part III of Appendix VI (the “General Licensed Trademarks”, together with the Exclusive Licensed
Trademarks, the “Licensed Trademarks”), the relevant Transferors and the Transferee shall enter into the general license agreement as
shown in Part III of Appendix XIII prior to the closing, pursuant to which the relevant Transferors shall grant to the Transferee a
perpetual and free general license. The Transferors shall be responsible for submitting the relevant filings relating to such general license
at the time and in the manner reasonably requested by the Transferee prior to the closing, providing the Transferee with the evidence
materials to prove the completion of such submission and completing the filing of the general license of the Underlying Trademarks as
soon as practicable after the Closing Date but no later than the payment of the Second Installment of the Transfer Consideration, and the
Transferee shall provide necessary assistance. All expenses arising from the filing procedure shall be borne by the Transferors.
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The Transferors hereby acknowledge and undertake that the license arrangements with respect to the General Licensed Trademarks shall
be perpetual and free of charge, and the Transferee shall have the right to carry out internal sub-license and sublicense arrangements
within the Transferee and its Affiliates and conduct reasonable sub-license and sublicense arrangements with respect to such General
Licensed Trademarks to the extent reasonably necessary for the conduct of the Underlying Business. The Transferors and relevant Uxin
Group Company further covenant that, with respect to the General Licensed Trademarks, they shall continuously ensure the stability and
good existence of such trademarks and pay relevant fees (including but not limited to registration fee, renewal fee and agency fee) in a
timely manner, and deal with relevant issues relating to such trademarks in a timely manner and on their own. The Transferors shall
obtain prior written consent of the Transferee if they transfer, license, dispose or encumber the Trademarks. The Transferors and the
relevant Uxin Group Company shall take all necessary measures to ensure that the Transferee can keep good use of such General
Licensed Trademarks.
d. For the avoidance of doubt, with respect to the trademarks containing words and/or designs of the Transferred Underlying Trademarks
and the varied trademark forms of the Transferred Underlying Trademarks (including, without limitation, words in both case and/or
pinyin and/or other words), after the execution of this Agreement, such trademarks shall also be defined as the Transferred Underlying
Trademarks, and shall be transferred to the Transferee in accordance with and subject to the provisions regarding the Transferred
Underlying Trademarks in Article (a) above and shall be completed at such time and in such manner as requested by the Transferee.
With respect to the trademarks containing words and/or drawings of the Licensed Trademarks and the varied trademarks forms of the
Licensed Trademarks (including, without limitation, capitalized and/or pinyin and/or other words), the Transferors and Uxin Group
Company shall also be defined as the Licensed Trademarks after the execution of this Agreement, shall license and/or pledge, as the case
may be, the Licensed Trademarks to the Transferee in accordance with and subject to the Articles (b), (c) and (e) above on the Licensed
Trademarks and shall complete such license and/or pledge, as the case may be, at such time and in such manner as requested by the
Transferee.
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e. In particular, without prejudice to the generality of the provisions under paragraph a, b, c and d above, Transferors and relevant Uxin
Group Company hereby understand, acknowledge and agree that, to secure the performance by Transferors and relevant Uxin Group
Company of all obligations of Transferee under the Transaction Documents, Transferors and relevant Uxin Group Company shall pledge
to Transferee all the Exclusive Licensed Trademarks and the accompanying interests therein and execute a pledge agreement as set forth
in Part IV of Appendix XIII with Transferee prior to the closing, provided that such pledge shall be limited to the Exclusive Licensed
Trademarks and shall exclude “优信” “Uxin” “
Company and similar to the Exclusive Licensed Trademarks as determined by the Trademark Office. The Transferors further understand,
acknowledge and agree that, regardless of whether such registration of pledge of the Underlying Trademarks is made or not, the
Transferee shall be deemed as the sole and primary right holder of the exclusive licensing trademarks in terms of facts and substance.
” and “youxin” related trademarks held by Transferors or other Uxin Group
With respect to the above pledge, the Parties understand and acknowledge that, in consideration of applicable laws, it is impossible to
make trademark pledge registration of the above Exclusive Licensed Trademarks separately when this Agreement is executed. However,
the Transferors hereby understand, acknowledge and confirm that, if, after the execution date of this Agreement, the Transferors is
permitted by applicable laws to separately pledge the Exclusive Licensed Trademarks to the Transferee (provided, however, that such
pledge registration is limited to the Exclusive Licensed Trademarks, and does not involve “优信”“Uxin” “
”, and “Youxin”
trademarks held by the Transferors or any other Uxin Group Company and deemed by the Trademark Office to be similar to the
Exclusive Licensed Trademarks), the Transferee shall have the right to request the Transferors to complete the pledge registration of
such Underlying Trademarks with the Trademark Office at such time and in such manner as reasonably requested by the Transferee and
provide the Transferee with evidence of the completion of the pledge registration of the Underlying Trademarks. (including, without
limitation, the registration certificate of trademark pledge)
For the avoidance of doubt, notwithstanding any provisions to the contrary in this Agreement or in the trademark pledge agreement, the
Transferors or any other Uxin Group Company has not disposed of and is not obligated to pledge or transfer to the Transferee any other
“优信” “Uxin” “
determined by the Trademark Office. The Transferee shall have no right to request the Transferors or any other Uxin Group Company to
” and “youxin” trademarks held by Uxin Group Company and similar to the Exclusive Licensed Trademarks as
pledge or transfer together with relevant trademarks of “优信”“Uxin” “
Licensed Trademarks as determined by the Trademark Office to the Transferee.
” and “youxin” held by it and similar to the Exclusive
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(5) Underlying Platform Accounts.
a. The Transferors agree, and shall cause its Affiliates as the owner of the Underlying Platform Accounts to fully transfer and deliver to the
Transferee the Underlying Platform Accounts and the Transferor’s rights, title and interests in and to the Underlying Platform Accounts
together with all related Intellectual Property Rights (including all rights obtained by the Transferors through application and/or
registration of the Underlying Platform Accounts, but excluding relevant patents and trademarks which shall be subject to the
arrangements under other terms of this Agreement).
In order to achieve the foregoing purpose, the Transferors shall, prior to the Closing Date, (i) deliver and transfer to the Transferee a
complete copy of the source code and/or source program decryption password, object code, software technology documents and relevant
information and materials (including electronic materials) corresponding to the Underlying Platform Accounts; (ii) execute necessary
forms, documents or agreements; (iii) deliver and transfer all operation and user’s authorities corresponding to the Underlying Platform
Accounts to the Transferee so as to ensure that the Transferee can obtain all accesses corresponding to the Underlying Platform Accounts
and all relevant systems and contents corresponding to the Underlying Platform Accounts independently.
The Transferor shall submit the transfer application to the registration centers of the Underlying Platform Accounts before closing, and
launch thereon the online compulsory transfer with the method and mechanism satisfactory to the Transferee. The Transferor shall also
complete all procedures related to the transfer of the Underlying Platform Accounts before the payment of the First Installment of the
Transfer Consideration. The Transferors shall be responsible for the transfer of Underlying Platform Accounts with the cooperation of
the Transferee. The costs arising from the relevant formalities for the transfer of Underlying Platform Accounts shall be borne by the
Transferor.
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b. In the meantime with the transfer of the Underlying Platform Accounts, the Transferors and the Transferee shall jointly irrevocably
change the payment system connected to the Underlying Platform Accounts (other than the WeChat Accounts) to the payment system of
the Transferee or its Affiliate and the bank account thereof to an Affiliate designated by the Transferee, and the Transferors shall assist in
completing change procedures in respect of the Underlying Platform Accounts (other than the WeChat Accounts) payment system and
bank account to ensure that the Person owning the bank account corresponding to the Underlying Platform Accounts (other than the
WeChat Accounts) shall be irrevocably changed to the Affiliate designated by the Transferee, and the payment system corresponding to
the Underlying Platform Accounts shall be changed to the payment system of the Transferee or its Affiliates upon the Closing Date.
c. For the purpose of smoothing the transfer of the Underlying Platform Accounts, the personnel of the Transferors responsible for the
operation and management of the Underlying Platform Accounts shall deliver the operation account and password of the Underlying
Platform Accounts to the designated personnel of the Transferee before the closing, and the Transferors shall ensure that such personnel
shall not, in any manner, steal, alter, fraudulently use or retrieve such account and password.
d. In particular, for the avoidance of doubt, the Parties understand and confirm that, with respect to the Underlying Platform Accounts of
“Chake Glory” (as updated and amended from time to time) and the Underlying Platform Accounts of Member Adviser (RN) (as
updated and amended from time to time, together with the Underlying Platform Accounts of “Chake Glory” the “Authorized
Underlying Platform Accounts”), such Authorized Underlying Platform Accounts shall be authorized to the Transferee by the
Transferors in accordance with Articles a, b and c above without prejudice to the delivery by the Transferors of corresponding materials,
codes, programs and documents to the Transferee within the corresponding time limit. Transferors and the relevant Uxin Group
Company hereby acknowledge and undertake that: The aforesaid license shall be perpetual and free of any charge, and Transferee shall
have the right to undertake internal sub-licensing and sublicense arrangements within Transferee and its Affiliates and conduct
reasonable sub-licensing and sublicense arrangements for authorized Underlying Platform Accounts to third parties to the extent
reasonably necessary for the conduct of the Underlying Business as reasonably necessary. The Transferors and relevant Uxin Group
Company further covenant that, with respect to the Authorized Underlying Platform Accounts, they shall continuously ensure the
stability and good existence of such Authorized Underlying Platform Accounts, pay relevant fees on time, timely and deal with relevant
issues on their own and shall not transfer, guarantee, create any encumbrance, restriction or any third party’s rights. Transferors and the
relevant Uxin Group Company shall take all necessary measures to ensure that the Transferee can make continuous good use of the
Authorized Underlying Platform Accounts.
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(6) Underlying WeChat Accounts
The Transferors agree to transfer and deliver to the Transferee the rights, ownership and interests in and to the Underlying WeChat
Accounts listed in Part I of Appendix VIII in its entirety prior to the Closing Date, together with all related Intellectual Property Rights,
including, without limitation, the copyright of the articles published on the Underlying WeChat Accounts of which the Transferors or its
Affiliates have interests.
To achieve the above purpose, the Transferors shall execute necessary forms, documents or agreements and complete necessary
procedures prior to the Closing Date. Prior to the closing, Transferee shall submit application for change and transfer of the accounts,
fans, all article materials and WeChat account numbers of the Underlying WeChat Account to the relevant administrative department,
and complete such transfer before the payment of the Second Installment of the Transfer Consideration.
The Transferors shall be responsible for the transfer of the Underlying WeChat Accounts, and the Transferee shall provide cooperation.
The costs arising from handling formalities for transfer of the Underlying WeChat Accounts shall be borne by the Transferors.
With respect to the WeChat accounts other than the WeChat account listed in Part II of Appendix VIII, the Transferors hereby
acknowledge and covenant that they shall submit the cancellation application of such WeChat accounts prior to the Closing Date and
complete the cancellation procedures for such WeChat accounts before the payment of the Second Installment of the Transfer
Consideration; the Transferors covenant not to operate such WeChat accounts before the completion of such cancellation without the
prior written consent of Transferee.
(7) Other Underlying Intellectual Property Rights
a. For the other Underlying Intellectual Property Rights, the Transferors shall deliver and transfer to the designated personnel of the
Transferee, prior to the closing, the data, information, code, procedures, CDs, materials and other necessary materials and documents in
connection with such other Underlying Intellectual Property Rights.
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b. As of the Closing Date, the ownership of other Underlying Intellectual Property Rights and all rights and interests attached thereto shall
be vested in the Transferee.
(8) With respect to the transfer or assignment of the Underlying Intellectual Property Rights under this Article 2, the Transferors shall ensure that
all contact persons retained in the relevant customers, agencies (if any and applicable), filing website (if any and applicable) or competent
Governmental Authorities (if any and applicable) shall be changed to the persons designated by the Transferee.
(9) The Transferors hereby acknowledge and agree that, either before or after the closing, with respect to the Underlying Intellectual Property
Rights that is in the process of rejection, objection, announcement of objection and any objection raised by other Governmental Authorities or
a third party (if applicable), the Transferors shall continuously take corresponding remedial measures and proceedings during the period
required by applicable Laws and governmental authorities with respect to such Underlying Intellectual Property Rights.
(10) Each of the Transferors and relevant Uxin Group Company hereby acknowledges and agrees that, with respect to the Underlying Intellectual
Property Rights which can only be authorized or licensed in accordance with the above provisions and cannot be transferred, the Transferors
and relevant Uxin Group Company agree and covenant that, without the prior written consent of the Transferee, it shall not transfer, dispose
of, pledge or encumber such Underlying Intellectual Property Rights; regardless of any change in or change to the equity and assets of the
Transferors and Uxin Group Company (including, without limitation, liquidation, dissolution, bankruptcy, merger, consolidation, division,
material reorganization, listing, change of Control, etc.), each of the Transferors shall ensure that, in a manner and by a mechanism requested
by the Transferee, the above Underlying Intellectual Property Rights so licensed shall remain in effect and that such change in or change to
the equity and assets of the Transferors and Uxin Group Company shall not affect the continuing validity of the above authorizations and they
shall take a manner and mechanism requested by the Transferee to realize the actual benefits and interests in the Transferee’s continuous
obtainment of such license in a corresponding manner.
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2.5 Transfer of the Underlying Contracts and Transfer of the Underlying Customer Relationships
(1) Transfer of the Underlying Contracts
The Transferors agree to transfer and deliver to the Transferee, and the Transferee agrees to accept, acquire and receive the Underlying
Contracts from the corresponding Transferors, at the time and in the manner provided for herein and subject to the terms and conditions
hereof.
The Parties agree that regardless of when the transfer of the Underlying Contracts is completed, the Transferee shall be entitled to the rights
and obligations under the Underlying Contracts as from the Closing Date (and the apportionment of relevant risks and liabilities shall be
subject to Article 2.5 (3) hereof). Notwithstanding anything to the contrary contained herein, the transfer of the Underlying Contracts shall be
subject to the rights and obligations transfer provisions (or similar provisions) of the Parties thereto (including, without limitation, satisfaction
of requirements on notice or consent given by the counterparty thereto); provided that in any event, the Transferors shall complete the transfer
and execution of the Underlying Contracts upon the time set forth herein.
(2) Negotiation with Contract Counterparts
With respect to the Underlying Contracts to be transferred in accordance with Article 2.5 hereof, the Transferors hereby acknowledge and
undertake (i) to contact and negotiate with the other party to the Underlying Contracts (including, without limitation, telephone or online or
offline notice) to notify the transfer of the Underlying Contracts, or to request the other party to the Underlying Contracts to enter into a
replacement contract with the Transferee (the content of such contract shall be consulted and determined by the Transferee and the other party
to the Underlying Contracts); (ii) to arrange the relevant parties to the Underlying Contracts to execute relevant agreements, contracts and
other documents with respect to the transfer of the Underlying Contracts within the time limit set forth in Appendix XVIII hereto. Without the
prior written consent of the assignee, the substance, terms and conditions of the Underlying Contracts shall not be adversely changed due to
such transfer.
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(3) Division Of Rights and Liabilities of the Underlying Contracts
The Parties hereby acknowledge and agree that: in respect of the Underlying Contracts, all rights and obligations under the Underlying Contracts
shall be transferred to the Transferee or the Affiliate designated by the Transferee as of the Closing Date. All risks and liabilities under the
Underlying Contracts shall be transferred to the Transferee or the Affiliate designated by the Transferee. Regardless of when the Underlying
Contracts is transferred and assigned, the Transferors shall fully assume any Liabilities, obligations or responsibilities under the Underlying
Contracts arising on or prior to the Closing Date (including, without limitation, the circumstances set forth below), and none of the Transferee or
its Affiliate and their respective designated Persons shall assume the corresponding Liabilities, obligations or responsibilities:
a. Any responsibilities, Liabilities, taxes payable and other obligations in connection with the Underlying Contracts on or prior to the
Closing Date (excluding the Underpayment Assumed by the Transferee (as defined below) that the Transferee agrees to and actually
assume in accordance with this Agreement and any other Underpayment Assumed by the Transferee (as defined below));
b. Any pending litigation, claim, arbitration, administrative penalty or other legal proceedings relating to the Underlying Contracts on and
before the Closing Date;
c. Claims, liabilities, obligations, damages, losses, judgments, legal actions, lawsuits, proceedings, arbitrations, etc. initiated by any third
party in accordance with the Underlying Contracts on and prior to the Closing Date;
d. Claims made by any of the Transferors for the products sold or services provided in connection with the Underlying Contracts on and
before the Closing Date; and
e. Any liabilities, obligations, damages, losses, judgments, legal actions, lawsuits, proceedings, arbitrations, etc. arising under the
Underlying Contracts after the Closing Date arising out of any action or reason relating to the Underlying Contracts on and before the
Closing Date.
(4) Transfer Method of the Underlying Contracts
(i) Online Electronic User Agreement
With respect to the online electronic user registration agreement relating to the Underlying Business in the Underlying Platform Accounts and
the Underlying Domain Names (and the corresponding website) (the “Online User Agreement”), the Transferors shall amend all online
electronic agreement templates corresponding to the Underlying Business prior to the Closing Date and change the service provider relating to
the Underlying Business thereunder from the corresponding Transferors to the Transferee. Meanwhile, the Transferee shall notify the
customers by online pop-up window or other means deemed reasonable by the Transferee that the provider of the user services of the
Underlying Business in the Underlying Platform Accounts and of the Underlying Domain Names has been be changed to the Transferee (the
“Online Switch”).
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(ii) Online Electronic Signature Agreements
In connection with the online electronic executed agreements regarding the Underlying Business in the Underlying Platform Accounts and
Underlying Domain Names (the Uxin Auction used car trading service agreement for the seller and Uxin Auction used car trading service
agreement for the buyer) (the “Online Electronic Execution Agreement”), the Transferors shall: (x) amend the service provider regarding
the Underlying Business under such agreements from the corresponding Transferors to the Transferee and obtain the consent and confirmation
from the counterparty to the Online Electronic Execution Agreement in respect of such change and amendment; or (y) complete the online
electronic execution agreement transfer in any other manner acknowledged by the Transferee in advance (the foregoing (x) and (y) are
referred to as the “Online Transfer”).
(iii) Offline Agreements
The Underlying Contracts executed offline corresponding to the Underlying Business shall be handled in the following three ways depending
on the actual circumstances of the Underlying Contracts, by the specific methods listed in the table in Article 2.5 (5) hereof:
a. Renewal upon Expiration: in respect of the Underlying Contracts which has expired as of the date of transfer of the Underlying
Contracts but the Transferee decides to renew, the Transferee and the counterparty to the Underlying Contracts shall enter into a new
business contract; The Transferors shall cause the counterparty to the Underlying Contracts to re-enter into an agreement with the
Transferee with respect to the contents of such Underlying Contracts in such manner and mechanism as reasonably requested by the
Transferee and according to such manner and time stipulated under this Agreement.
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b. Termination and Re-execution: The Transferors and the counterparty to such Underlying Contracts shall execute a termination
agreement reasonably satisfactory to the Transferee at the time set forth herein to terminate the Underlying Contracts between the
Transferors and the counterparty; at the time set out in this Agreement, the Transferors shall procure and ensure that such counterparties
shall, in such manner and on such mechanism as the Transferee may reasonably request, enter into a new agreement with the Transferee
with respect to the contents of such Underlying Contracts at the time stipulated under this Agreement.
c. Internal Transfer: With respect to the Underlying Contracts without any separate written or oral agreement with the counterparty, and
with respect to the Underlying Contracts of which the transfer is not completed on the Closing Date and shall be completed before, on or
after the payment of the Second Installment of the Transfer Consideration, the rights and obligations under such Underlying Contracts
shall be actually performed by the Transferee,. (i) the Transferors shall continue to collect revenues under the relevant Underlying
Contracts from the counterparty, and the Transferee shall issue relevant invoice to the Transferors. Such revenues will be paid and settled
by the Transferors to the Transferee on a weekly basis (within 2 days of the end of each week). (ii) The Transferors shall issue invoices
to the Transferee for all payments made under the relevant Underlying Contracts, and the Transferee shall pay such invoices to the
corresponding Transferors and the Transferors shall pay to the counterparty to such Underlying Contracts.
(5) Transfer Method of the Underlying Contracts
The Parties understand and confirm that with respect to the Underlying Contracts set forth in the list set forth in Appendix II, the Parties shall
complete the transfer of the corresponding Underlying Contracts in the manner set forth in the following table at the time set forth in
Appendix XVIII and in such manner and mechanism as mutually agreed by the Transferee and the relevant Transferor:
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Contract Category
Part I of Appendix II
Online User Agreement
Part II of Appendix II
Online Electronic Signature Agreements
(buyer-end online electronic signature agreement, seller-end online
electronic signature agreement)
Part III of Appendix II
Big client agreement
Part IV of Appendix II
Used car trading service agreement for offline sellers (ordinary
sellers)
Part V of Appendix II
The supplier agreement (including suppliers exclusively related to
the Underlying Business and the Underlying Business shared by the
Transferors);
Part VI of Appendix II
Property lease agreement
Method of Transfer
Online Switch
Online Transfer
Termination and Re-execution or Renewal upon expiration or other
methods acknowledged by the Transferee
Termination and Re-execution or Renewal upon Expiration or other
methods acknowledged by the Transferee
Termination and Re-execution or Renewal upon Expiration or other
methods acknowledged by the Transferee
Termination and Re-execution or Renewal upon Expiration or other
methods acknowledged by the Transferee
(6) The Parties agree that the income and expenses arising from the Underlying Contracts shall be allocated between the Transferors and the
Transferee or the Affiliates designated by the Transferee as follows (whether or not the transfer of the Underlying Contracts has been actually
completed and whether or not such transfer and delivery occurs prior to, on or after the Closing Date):
a. Prior to the Closing Date (including the Closing Date), any revenue/expenditure under the Underlying Contracts (whether or not the
transfer is completed) shall be owned/assumed by the relevant Transferors or its Affiliates as the signing party. After the Closing Date
(excluding the Closing Date), any income/expenditure/costs newly generated under the Underlying Contracts shall be owned/borne by
the Transferee or the Affiliates designated by the Transferee;
b. The provisions of Articles 2.2, 2.3 and 2.5 (3) shall apply to the assumption and allocation of the expenses/costs incurred by the
Underlying Contracts after the Closing Date arising out of the circumstances that have arisen and/or facts that exist on and before the
Closing Date;
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c. Without prejudice to the generality of the foregoing, in particular.
(i) In respect of the amounts payable by the Transferors under the Underlying Contracts that has accrued but not been actually paid
on and before the Closing Date (the “Accounts Payable”), any accounts payable thereof relating to the Underlying Business in
compliance with the receipt logic of Appendix XXI hereto and is acknowledged by the Transferee shall be vested in the Transferee
(the “Accounts Payable Assumed by the Transferee”, subject to the results of Underlying Assets Review (as defined below) and
adjustments made in accordance with other terms of this Agreement) and shall be transferred to the Transferee in such manner and
mechanism as reasonably requested by the Transferee. ,
(ii) In respect of other amounts payable by the Transferors under the Underlying Contracts that has accrued but not been actually paid
on and before the Closing Date (the “Other Accounts Payable”), any accounts payable thereof relating to the Underlying
Business in compliance with the receipt logic of Appendix XXI hereto and is acknowledged by the Transferee shall be vested in
the Transferee (the “Other Accounts Payable Assumed by the Transferee”, subject to the results of Underlying Assets Review
(as defined below) and adjustments made in accordance with other terms of this Agreement) and shall be transferred to the
Transferee in such manner and mechanism as reasonably requested by the Transferee.
(iii) In particular, in order to ensure the normal transfer of the Underlying Contracts and the continuous conduct of the Underlying
Business, the Transferors hereby agree that, with respect to the Underlying Contracts, in addition to the amounts to be assumed by
the Transferee in accordance with the above provisions, the Transferors shall properly settle or properly settle any other amounts
due but unpaid as of the Closing Date (including the Closing Date) in a manner and mechanism satisfactory to the Transferee so as
to ensure no adverse effect on the normal conduct of the Underlying Business from the Closing Date.
(iv) Unless otherwise agreed or arranged in this Agreement, any amounts receivable under the Underlying Contracts that have accrued
but have not been actually received on and before the Closing Date shall be vested in the Transferors and shall be collected by the
Transferors after the closing.
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(v) The Accounts Payable Assumed by the Transferee and Other Accounts Payable Assumed by the Transferee actually assumed by
the Transferee according to this Article shall be included in the calculation of the Net Working Capital of this Agreement.
(7) Newly Signed Contract and Updates to the List of the Underlying Contracts.
(i) Starting from the execution date of this Agreement, if requested by Transferee, Transferee shall have the right to request to enter into
any newly signed contract directly in the name of Transferee or its designated Affiliate in connection with the Underlying Business
after the execution date of this Agreement; provided that the execution arrangement of such contract shall not affect the division of
rights and liabilities under the contract as set forth in Article 2.5 (3) hereof;
(ii) From the Closing Date, unless otherwise agreed upon by the Parties in writing, none of the Transferors and Uxin Group Company
shall conduct the Underlying Business directly or indirectly in any way and shall not enter into any relevant contract. All contracts
relating to the Underlying Business (whether online or offline) shall be executed in the name of the Transferee, and the Transferors
agree to provide necessary assistance in the manner reasonably requested by the Transferee;
(iii) If the Transferors are required to execute any contract based on the reasonable request of the Transferee for the purpose of smoothing
transition of the Underlying Business, the Parties shall otherwise determine through friendly consultation based on actual conditions
whether the Transferors shall execute such contract. If the Transferors is required to execute any contract, the Transferors shall
provide necessary assistance in the manner reasonably requested by the Transferee;
(iv) On or prior to the Closing Date, the list of the Underlying Contracts shall be updated and replace the original list attached hereto
based on the then actual conditions; provided, however, that such update and modification shall be subject to the prior written consent
of the Transferors and the Transferee and the updated list of Underlying Contracts shall be an integral appendix to this Agreement.
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(8) Underlying Customer Relationships
If, as of the Closing Date, the Transferors have not signed any contract with respect to the Underlying Customer Relationships listed in
Appendix XXII, the Transferors agree to give a written notice, before the Closing Date, to such customer who has not signed the relevant
contract, notifying that the operator of the Underlying Business will be changed to the Transferee and the Underlying Business will be
operated by the Transferee in the future. With respect to such Underlying Customer Relationships without signing contracts, the Transferors
shall use its best efforts to complete the execution of the relevant contracts before the payment of the Second Installment of the Transfer
Consideration to the satisfaction of the Transferee, and such contracts shall be transferred and assigned as part of the Underlying Contracts in
the manner and mechanisms set forth in Article 2.5 hereof.
(9) Handover
The Transferors shall cause the counterparty of the Underlying Contracts and ensure the completion of transfer of all the Underlying Contracts
prior to the Closing Date or prior to the payment of the Second Installment of the Transfer Consideration in accordance with the methods set
forth in this Article and deliver all the original copies of the Underlying Contracts that actually retained by the Transferors and disclosed in
the Disclosure Letter (except for e-copies according to the nature of the Underlying Contracts) to the Transferee prior to the closing.
2.6 Transfer and License of the Underlying Technologies and Systems
(1) Transferred Underlying Technologies and Systems
The Transferors agree to transfer, free of charge, all right, ownership and interests in the Underlying Technologies and Systems as listed in
Part I of Appendix IX hereto (the “Underlying Technologies and Systems”) together with the Intellectual Property, ownership and interests
relating to the Underlying Technology to the Transferee.
To achieve the foregoing purpose, on or prior to the Closing Date, the Transferors shall deliver and hand over to the designated personnel of
the Transferee all source code, source program, CDs, basic technical materials, technical abstracts, specifications and other necessary
materials relating to the Underlying Technologies and Systems to ensure that the Transferee may independently use and operate the
Underlying Technologies and Systems after the receipt of the technical materials delivered by the Transferors.
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Without the prior written consent of the Transferee, the Transferors shall not use the Underlying Technologies and Systems.
After the closing, if the Transferee needs the assistance of the Transferors or its personnel in handling matters in relation to the Underlying
Technology during the Transferee’s use of the Underlying Technology, the Transferors shall provide cooperation.
(2) Licensed Underlying Technologies and Systems
The Transferors agree to and procure other relevant parties to license to the Transferee, and the Transferee agrees to accept, the Underlying
Technologies and Systems as described in Article II of Appendix IX (the “Licensed Underlying Technologies and Systems”) in accordance
with the terms and conditions of this Agreement.
Prior to the Closing Date, the Transferors shall copy and provide the Transferee with all source code, source code, CDs, underlying technical
data, abstracts, specifications and other necessary materials in connection with the Licensed Underlying Technologies and Systems.
The Transferors hereby acknowledges and covenants that with respect to the Licensed Underlying Technologies and Systems, the license shall
be free of charge (for the avoidance of doubt, if such Licensed Underlying Technologies and Systems involve the Transferor’s purchase of
corresponding services from a third party at its expenses, the Transferee shall settle with the Transferors based on its actual use) and the
license term shall start from the Closing Date and expire on the 12th month after the payment date of the Second Installment of the Transfer
Consideration (the “Technology and System License Term”). Within the Technology and System License Term, the Transferee shall have
the right to conduct internal sub-licensing and sublicense arrangements within the Transferee and its Affiliates and shall have the right to
conduct reasonable sub-licensing and sublicense arrangements with third parties for such Licensed Underlying Technologies and Systems for
the purpose of reasonably necessary for the conduct of the Underlying Business. The Transferors and relevant Uxin Group Company further
covenant that, with respect to Underlying Technologies and Systems, they shall continuously ensure that such Underlying Technologies and
Systems are stable and in good standing and timely pay relevant fees and deal with relevant issues relating to such Underlying Technologies
and Systems on their own in a timely manner during Technology and System License Term. The Transferors shall obtain prior written consent
of the Transferee if they transfer, dispose of or create encumbrance on the Licensed Underlying Technologies and Systems. The Transferors
and relevant Uxin Group Company shall take all necessary measures to ensure that the Transferee can use such Licensed Underlying
Technologies and Systems in a continuous and good manner.
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The Transferors hereby acknowledge and agree that, with respect to the Underlying Technologies and Systems that can only be licensed but
cannot be transferred pursuant to the foregoing provisions hereunder, the Transferors agree and covenant that, during the term of technology
and system license, regardless of any change in or change in the equity and assets of the Transferors (including, without limitation,
liquidation, dissolution, bankruptcy, merger, consolidation, division, material reorganization, listing, change of Control, etc.), each Transferor
shall ensure that the above Underlying Technologies and Systems shall remain effective by taking all methods and mechanisms required by
the Transferee and ensure that such change in or change in the equity and assets of the Transferors and Uxin Group Company shall not affect
the continuous validity of the above license and shall take all methods and mechanisms requested by the Transferee so that the Transferee may
continue to enjoy the actual benefits and interests of such license in the corresponding manner.
2.7 Underlying Deposits
(1) With respect to the amount of the Underlying Deposits corresponding to the Underlying Business as of the Closing Date (the specific amount
shall be subject to the review of the Underlying Assets (as defined below)) (the “Underlying Deposits Amount on the Closing Date”), the
Transferee shall deduct the amount of the Underlying Deposits on the Closing Date from the payment of the Second Installment of the
Transfer Consideration to the Transferors.
(2) Prior to the Closing Date, the Transferors shall deliver the Underlying Deposits and title documents thereof and all corresponding materials (if
any) to the Transferee or its designated Affiliate. In the meantime, the Transferors undertake that, after the Closing Date, with respect to the
handling by the Transferee or its designated Affiliate of any matters (if any) relating to the Underlying Deposits, the Transferors shall provide
necessary cooperation upon request of the Transferee.
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2.8 The Warrantors hereby jointly and severally acknowledge, warrant and covenant that:
(1) With respect to the transfer of the Underlying Assets under this Article 2, they shall be transferred in a manner and mechanism mutually
agreed by the Transferee and the relevant Transferors, and the Transferors shall ensure that the costs arising from the relevant transfer of the
Underlying Assets by the relevant Transferors to the Transferee or its designated Affiliate in accordance with this Agreement shall be borne
by the Transferors.
(2) The Warrantors hereby irrevocably acknowledge, confirm and undertake that with respect to the representations, warranties and undertakings
made by the Transferors in this Article and other provisions hereunder and the obligations to be performed by the Transferors, the Warrantors
shall bear joint and several obligations and assume joint and several liability for breaching such obligations.
(3) Each of the Transferors agrees to take all lawful, reasonably necessary and reasonably necessary actions to ensure that the Transferee will be
entitled to all relevant interests in the Underlying Assets from the Closing Date. If, after the Closing Date, the Transferee finds that the
Underlying Assets delivered are inconsistent with the provisions hereof, the Transferee shall have the right to request the Transferors to
remedy such issue in accordance with the methods and mechanisms mutually agreed by the Transferee and the relevant Transferors; provided
that such remedies shall not affect the right of the Transferee to request damages in accordance with the provisions hereof.
(4) With respect to any materials, documents, data, information or any other relevant assets required to be delivered, transferred to the Transferee
on or prior to the Closing Date or upon the payment of the Second Installment of the Transfer Consideration, the Transferee or their
designated Affiliates shall have the right to inspect and check such assets at any time on or prior to the Closing Date or at any time before the
payment of the Second Installment of the Transfer Consideration in a manner and mechanism mutually agreed by the Transferee and the
corresponding Transferors. In the case of any adjustment, change, reduction or impairment, the Transferee shall have the right to request the
Transferors to make supplement, correction, remedy and other adjustment in the manner and mechanism requested by the Transferee.
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(5) With respect to the Underlying Contracts and the Underlying Customer Relationships thereof, subject to Articles 2.2 and 2.3 hereof,
regardless of whether the Underlying Contracts and the Underlying Customer Relationships thereof have been transferred to the Transferee by
contract transfer and/or re-execution in accordance with this Agreement, the Transferors and Uxin Group Company acknowledge, agree and
ensure that the Underlying Business, the Underlying Assets, aforesaid benefits, rights and interests with respect to such Underlying Contracts
and Underlying Costumer Relationship shall be actually owned and acquired by the Transferee free of charge from the Closing Date.
(6) In particular, upon the reasonable request of the Transferee and with the prior consent of the Transferee, the relevant Transferors may collect
the relevant amounts and amounts attributable to the Transferee on behalf of the Transferee while transferring the Underlying Business and
the Underlying Assets (the “Collection by the Transferors on behalf of the Transferee”).
The Transferors hereby covenant and warrant that, on or prior to the execution date of this Agreement, the Transferors shall fully and truly
disclose to the Transferee (as listed in Appendix XVII in details) all of their bank accounts (including online and offline accounts) necessary
for the Underlying Business and the operation of the Underlying Assets and corresponding bank accounts (“Receiving and Payment
Accounts”) necessary for the Collection by the Transferors on behalf of the Transferee. The Transferors acknowledge that the Accounts for
Receipt and Payment as listed in Appendix XVII are all bank accounts involved in the Underlying Business and the operation of the
Underlying Assets, and there is no other bank account necessary for or used for sake of the Underlying Assets and Underlying Assets that is
missing or undisclosed.
Meanwhile:
(i) Commencing from the execution date of this Agreement and completing no later than the closing: the Transferors shall change the
Receiving and Payment Accounts to the account arrangement fully escrowed to the Transferee in accordance with the method and
mechanism agreed by the Transferee and the corresponding Transferors (the specific escrow account arrangement mechanism is set
forth in Appendix XVII), that is, starting from the execution date of this Agreement, the signature and authorization of the
representative designated by the Transferee is required (without the need to obtain the signature and authorization of the representative
designated by the Transferor) for any amount received or paid by the Receiving and Payment Accounts, and shall ensure that the
Transferee may directly have the right to transfer the funds in the above Receiving and Payment Accounts and the corresponding
amount on its own at any time; the Transferors and the relevant Uxin Group Company hereby acknowledge and agree, and irrevocably
authorize and agree to provide the Transferee or its designated representative with the foregoing escrow arrangement. For the avoidance
of doubt, with respect to the escrow account upon the completion of the escrow according to the escrow mechanism set forth in
Appendix XVII, the Transferee agrees to grant the Transferors access for reasonable inquiry (for the avoidance of doubt, the Transferee
shall not be deemed as breaching the contract if such inquiry of the Transferors fails due to reasons not attributable to the Transferee);
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(ii) Prior to the Closing Date, with respect to various bank accounts involved in the operation of the Underlying Business on the
Underlying Platform Accounts and in online and offline channel business, during the process of the transfer of the Underlying Business,
the Transferors shall, in the manner and mechanism satisfactory to the Transferee, irrevocably change the payment system to the
payment system of the Transferee or its Affiliate and irrevocably change all bank accounts to the account designated by the Transferee
so as to ensure that any new income, expenditure and settlement of the Underlying Business accruing after the Closing Date shall be
conducted through the payment system of the Transferee or its Affiliate and by the account designated by the Transferee.
2.9 The Parties agree that regardless of when the change registrations and filings with Governmental Authorities (if applicable) of the Underlying
Assets set forth in this Article 2 are completed and whether the Underlying Assets are transferred before the closing, or before or after the payment
of the Second Installment of the Transfer Consideration in accordance with this Agreement, the Transferee or its designated Affiliate shall have all
of the title to and interests in the Underlying Assets and the relevant Underlying Assets as of the Closing Date.
3.1 Transfer Consideration
Article 3 Transfer Consideration and Payment
(1) The Parties agree and acknowledge that on the basis that the Net Working Capital of the Underlying Assets and the Underlying Business
accepted by the Transferee as of November 30, 2019 (the “Benchmark Date”) is no less than 0, the initial transfer consideration for the
Underlying Assets shall be US$[*] million equivalent in RMB; if the Net Wording Capital of the Underlying Assets and the Underlying
Business accepted by the Transferee as of the Benchmark Date (the “Benchmark Net Working Capital”) is less than 0, the Transfer
Consideration actually paid by the Transferee shall deduct such Benchmark Net Working Capital from the aforesaid US$[*] million
equivalent in RMB (taking into account that such Benchmark Net Working Capital is negative, such Benchmark Net Working Capital will be
deducted from the RMB equivalent of US$[*] million).
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The Benchmark Net Working Capital is set forth in Appendix XXI. The corresponding Underlying Assets and Underlying Business to the
Benchmark Net Working Capital as well as the calculation logic of the Benchmark Net Working Capital are also set forth in Appendix XXI.
(2) Except for the First Installment of the Transfer Consideration and the Second Installment of the Transfer Consideration actually paid by
Transferee under Article 3.3 (2) of this Agreement, the Transferee and any of its Affiliates shall not be required to pay any other purchase
price or any other fees or taxes in connection with this Transaction to the Transferors or its shareholders or its Affiliates or any third party.
3.2 Underlying Asset Review.
After the Closing Date, a Big Four accounting firm (the “Auditor”) designated by the Transferee shall review the Net Working Capital
corresponding to the Underlying Assets as of the Closing Date (the “Underlying Assets Review”). The Underlying Assets Review shall be
conducted in accordance with the following mechanism and principles:
(1) Within thirty (30) Business Days after the Transferors and the relevant Uxin Group Company providing the Transferee with complete
materials in accordance with Article 7.2.9 of this Agreement (the “Audit Period”; provided, however, that the Transferors and Uxin Group
Company shall provide all necessary cooperation with respect to the review of the Underlying Assets, and if they fail to provide such
cooperation, the aforesaid period shall be reasonably extended), the Transferee shall designate an auditor to review the Underlying Assets as
of the Closing Date and prepare corresponding financial reports (the “Underlying Assets Review Financial Reports”). For the avoidance of
doubt, the Transferors are not required to repeatedly provide the materials that have been provided by the Transferors during the financial due
diligence of the Underlying Business and the Underlying Assets conducted by the Transferee prior to the execution of this Agreement. Further
for the avoidance of doubt, all Parties understand and recognize the calculation logic of the Net Working Capital corresponding to the
Underlying Assets on the Closing Date and the consideration and receipt logic of the calculation factor of the corresponding Net Working
Capital shall be consistent with the calculation logic of the Benchmark Net Working Capital, and the consideration and receipt logic of the
corresponding Net Working Capital calculation factor, that is, shall remain consistent with the principles set out in Appendix XXI.
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(2) Within five (5) Business Days after receiving the results of the Underlying Assets Review Financial Report and the notice of adjusting the
Second Installment of the Transfer Consideration (as defined below), the Transferors shall notify the Transferee in writing whether they agree
or disagree with such results and adjustment, and in the event of disagree, the Transferors shall specify in the notice the disagreeing items and
reasons. If the Transferors fails to notify the Transferee in writing within five (5) Business Days after the receipt of such report and adjustment
notice or the Transferors fails to specify the disagreeing items in the notice, the Transferors shall be deemed to have agreed the adjustment
notice, and the results of the Underlying Assets Review Financial Report delivered by the Transferee to the Transferors shall be final. The
Second Installment of the Transfer Consideration adjusted in accordance with this Agreement shall be deemed as final, and shall be legally
binding upon the Transferors and the Transferee.
(3) The Parties shall use all reasonable efforts to promptly resolve any matters in dispute.
(4) If the Parties fail to agree upon the adjustment notice and all the matters contained therein within ten(10) Business Days after receiving the
results of the Underlying Assets Review Financial Report and the adjustment notice, the Parties agree to jointly designate another Big Four
firm (the “Re-examination Independent Auditor”) within five (5) Business Days to carry out the following works within twenty (20)
Business Days thereafter, (i) determination of the matters in dispute, (ii) re-preparation of the Underlying Assets Review Financial Report and
(iii) calculation of the amount of the Second Installment of the Transfer Consideration actually payable based on the Underlying Assets
Review Financial Report prepared by the Re-examination Independent Auditor and this Agreement. The Transferors and the Transferee shall
make every effort to provide all materials necessary for the work of the Re-examination Independent Auditor and the Re-examination
Independent Auditor shall, as soon as possible, notify the Transferors and the Transferee of its decision. The decision of the Re-examination
Independent Auditor shall be binding upon the Transferors and Transferee and if any Party disputes the re-examination results of the Re-
examination Independent Auditor, it may seek arbitration pursuant to Article 11. The cost of the re-examination conducted by the Re-
examination Independent Auditor shall be borne by the Transferors.
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3.3 Payment of Transfer Consideration
(1) First Installment of the Transfer Consideration
Within ten (10) Business Days after the execution of this Agreement or other time as agreed between the Transferors and the Transferee, the
Transferee shall arrange the payment of the First Installment of the Transfer Consideration equivalent to US$75 million (the “First Installment of
Transfer Consideration”) in accordance with the mechanism set forth in Appendix XXIV hereto (for the avoidance of doubt, if the conditions
precedent set forth in Article 4.3 fail to be satisfied within ten (10) Business Days after the execution of this Agreement or other periods otherwise
agreed by the Transferors and the Transferee, the time for the First Installment of the Transfer Consideration paid by the Transferee in accordance
with this Agreement shall be extended accordingly).
(2) Second Installment of the Transfer Consideration
On (x) completion of the Underlying Assets Review and the Underlying Assets Review Financial Report and determination of the amount of the
Second Installment of the Transfer Consideration which is final and binding upon both the Transferors and the Transferee in accordance with
Article 3.2 above; and (y) within ten (10) Business Days after the satisfaction of all the conditions precedent set forth in Article 4.4, the Transferee
shall pay the Second Installment of the Transfer Consideration in cash, i.e. the RMB equivalent of US$[*] million (the “Second Installment of
the Transfer Consideration”). The aforesaid RMB equivalent of US$[*] million shall be subject to the condition that neither the Benchmark Net
Working Capital nor the Underlying Assets Review Net Working Capital (as hereinafter defined) shall be lower than 0; failing which, the aforesaid
amount shall be adjusted in accordance with Article 3.4 and be paid to the bank account designated by the Transferors.
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3.4 Net Working Capital and Relevant Adjustments
(1) For the avoidance of doubt, it is understood, acknowledged and agreed that, notwithstanding the provisions of Article 3.3 above, in
consideration of the fact that the initial Transfer Consideration and the determination of the Second Installment of the Transfer Consideration
equivalent to US$[*] million above are based on a Benchmark Net Working Capital of no less than 0, and in further consideration of the
amount of the Benchmark Net Working Capital acknowledged by the Parties as set forth in Appendix XXI , the Parties agree that the Second
Installment of the Transfer Consideration shall be adjusted to the following amount (the “Second Installment of Transfer Consideration
after Adjustment”): the equivalent of US$[*] million in RMB minus the Benchmark Net Working Capital (taking into account that such
Benchmark Net Working Capital is negative, the Second Installment of the Transfer Consideration will be reduced from the RMB equivalent
of US$[*] million).
(2) For the avoidance of doubt, upon the payment of the Second Installment of the Transfer Consideration by the Transferee to the Transferors,
the Second Installment of the Transfer Consideration actually paid (the “Second Installment of the Transfer Consideration Actually
Payable”) shall be subject to adjustment in accordance with the following mechanism:
(i) Where the Net Working Capital corresponding to the Underlying Assets Review Financial Report (the “Underlying Assets Review Net
Working Capital”) is more than the Benchmark Net Working Capital, the Second Installment of the Transfer Consideration Actually
Payable = the Second Installment of the Transfer Consideration after adjustment + (Underlying Assets Review Net Working Capital —
Benchmark Net Working Capital);
(ii) Where the Underlying Assets Review Net Working Capital is less than the Benchmark Net Working Capital, the Second Installment of
the Transfer Consideration Actually Payable = the Second Installment of the Transfer Consideration after adjustment — (Benchmark Net
Working Capital —Underlying Assets Review Net Working Capital).
(3) The Warrantors hereby understand, acknowledge and agree that:
If (i) the Underlying Assets Review Net Working Capital is equal to or less than RMB equivalent of US$[*] million and/or (ii) the Transferors
and the Transferee otherwise agree upon, the Transferee shall be entitled to, at its sole discretion, reasonably adjust and change the the
Underlying Assets, the Accounts Payable Assumed by the Transferee, and the other Accounts Payable Assumed by the Transferee and the
Transferee shall have the right, at its sole discretion, to decide whether to assume the receivables and other receivables corresponding to the
Underlying Assets and the specific amount of such receivables and other outstanding amounts receivable.
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(4) Notwithstanding the foregoing, the Parties understand, acknowledge and agree that when Transferee actually pays the Second Installment of
the Transfer Consideration, it shall have the right to deduct the amounts corresponding to the following matters and pay the amounts after the
deduction to Transferors:
(a) With respect to any order placed by the method of auction on the Uxin Auction platform 14 days prior to the Closing Date, if any
vehicle is returned after the Closing Date, and as a result, Uxin Auction platform and/or the Transferee is obliged to pay and/or bear
any costs, the Transferee may deduct such costs and expenses when paying the corresponding Second Installment of the Transfer
Consideration to the Transferors (without prejudice to the Transferee’s operation of the Underlying Business, the compensations and
expenses that entitled to the Transferee, and the customer relationship between the Transferee and its upstream and downstream
customers of the Underlying Business, the amounts distributable to the Transferors in the corresponding refund vehicles shall be vested
in the Transferors); (for the avoidance of doubt, this Article shall not affect the division of liabilities under Article 2.3 of this
Agreement and shall not affect the Transferors’ obligation to handle and settle such pre-closing issues);
(b) The amounts which have been collected by the Transferors on behalf of the Transferee but have not been settled to the Transferee as of
the payment of the Second Installment of the Transfer Consideration (after deducting the amount which has been advanced by the
Transferors (or its Affiliate) for the Transferee but has not been settled by the Transferee to the Transferors in accordance with this
Agreement);
(c) Other deductibles as agreed herein and/or agreed upon by the Transferors and the Transferee.
(5) The Second Installment of the Transfer Consideration paid by Transferee to Transferors referred to herein shall mean the final actual amount
paid upon completion of a series of adjustments in accordance with this Article 3.4, unless otherwise specified.
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3.5 Exchange Rate
The exchange rate between the U.S. Dollars and Renminbi applicable to the First Installment of the Transfer Consideration and the Second
Installment of the Transfer Consideration shall be the exchange rate between the U.S. Dollars and Renminbi published by the People’s Bank of
China on the date on which the Transferee actually pays such Transfer Consideration.
Article 4 Closing
4.1 The date on which the Transferee arranges the payment of the First Installment of the Transfer Consideration pursuant to Article 3 above shall be
the “Closing Date”.
4.2 Prior to the Closing Date, unless otherwise agreed in Article 2 of this Agreement in respect of the Underlying Assets, each Transferor shall submit
and deliver to the Transferee or its designated Affiliate the following documents:
4.2.1 With respect to the Underlying Intellectual Property Rights, provide all governmental registration and/or application materials
corresponding to such Underlying Intellectual Property Rights, ownership certificates of such Underlying Intellectual Property Rights and
technical materials corresponding to such Underlying Intellectual Property Rights (including, without limitation, underlying code, domain
name transfer code, coding, software source code, software communication protocol, technical materials and technical plans);
4.2.2 Materials evidencing the transfer of the Underlying Intellectual Property Rights to the Transferee or their Persons and submission of
change filing to the governmental authorities in connection with the Underlying Intellectual Property Rights in accordance with relevant
provisions under Article 2 hereof;
4.2.3 Relevant materials and/or documents evidencing the completion of the transfer of the Underlying Assets from the relevant Transferors to
the Transferee or their designated Affiliates and the ownership of the Transferee of the title to such Underlying Assets and the rights and
interests attached thereto;
4.2.4 The bank account, password, merchant code, etc involved in all online and offline payment channels of the Underlying Assets and
Underlying Business, to enable the Transferee to inspect and verify the Underlying Business and Underlying Assets transactions and
payments independently/at any time;
4.2.5 Contact persons and contact information of all the agencies of the Underlying Intellectual Property corresponding to the Underlying
Assets;
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4.2.6 Authority, account and password of Underlying Technologies and Systems;
4.2.7 The access that shall be granted by the Transferors and the relevant Uxin Group Company in order to effect the delivery and transfer of
the Underlying Platform Accounts to the Transferee;
4.2.8 The access of the Licensed Underlying Technologies and Systems corresponding to the materials and access to be delivered or granted to
the Transferee;
4.2.9 All account numbers, passwords, password protection questions and corresponding details on the social and promotion platforms
corresponding to the Underlying Assets and the Underlying Business;
4.2.10 The shareholders resolutions and/or the board resolutions (as the case may be) adopting and approving this Transaction by each of the
Transferors and the Uxin Group Company as signing parties of this Agreement.
4.3 Unless waived by the Transferee in writing, the closing under Article 4.1, i.e., payment of the First Installment of the Transfer Consideration, shall
be subject to the satisfaction on or before the Closing Date of all of the following conditions precedent:
4.3.1 The representations and warranties made by the Warrantors in Article 6.1 hereof are true, accurate, complete and without omission and
not misleading from the execution date hereof (including the execution date hereof) to the Closing Date (including the Closing Date);
4.3.2 The covenants required to be complied with by the Warrantors under this Agreement and the other Transaction Documents prior to the
Closing Date and the obligations required to be performed by the Warrantors prior to the Closing Date have been complied with and
performed, and the Warrantor has not committed any breach of the Transaction Documents;
4.3.3 As of the execution date hereof and the Closing Date, no event or circumstance (including, without limitation, any litigation, arbitration
proceedings, tax inspection, tax punishment, or any investigation or punishment proceedings conducted by governmental authorities)
shall have occurred or be likely to occur which have any Material Adverse Effect on the Underlying Assets and/or the Underlying
Business and/or this Transaction;
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4.3.4 As of the execution date hereof and the Closing Date, there is no judgment, ruling, decree or injunction of any Law, court, arbitral body or
applicable Governmental Authority restraining, prohibiting or cancelling the transaction;
4.3.5 Transferors and Uxin Group Company have obtained all approvals and permits necessary for the execution of relevant Transaction
Documents and the consummation of this Transaction;
4.3.6 All Transaction Documents relating to this Transaction have been duly executed and delivered by the relevant parties other than the
Transferee and its Affiliates and have become effective in accordance with their terms;
4.3.7 The transfer of the Underlying Assets set forth in Article 2 hereof and the Appendices hereto that shall be completed on and/or prior to the
Closing Date shall have been completed in accordance with the methods and mechanisms set forth herein and evidence thereof shall have
been provided to the Transferee to their satisfaction;
4.3.8 The Transferee has completed due diligence on the Underlying Business and the Underlying Assets and the results of such due diligence
are satisfactory to the Transferee;
4.3.9 The Transferee has obtained the necessary internal approvals for the Transaction;
4.3.10 All consents, approvals, notices, filings or registrations necessary for the execution or performance of this Agreement or the
consummation of this Transaction by each of the Transferors and the Warrantors shall have been obtained or made from any
Governmental Authority or other Person;
4.3.11 The Underlying Assets and the Underlying Business shall be fully maintained, sustained and operated as a normal in the manner and by
the mechanism reasonably required by the Transferee;
4.3.12 The Transferors have handed over the documents set forth in Article 4.2 hereof to the Transferee in a manner agreed by the Transferee;
4.3.13 The Transferor, the Transferee and other relevant parties shall have entered into the business cooperation agreement (the “Business
Cooperation Agreement”) to the reasonable satisfaction of the Transferee;
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4.3.14 The attorneys of the Transferors shall have issued a legal opinion to the satisfaction of the Transferee in connection with the execution of
this Agreement and the relevant agreements attached hereto and the transactions contemplated hereby and thereby;
4.3.15 The relevant process that shall be completed before the payment of the First Installment of the Transfer Consideration regarding the
Underlying Contracts and the Underlying Customer Relationships shall have completed in the manner and time schedule as set forth in
Appendix XVIII;
4.3.16 All access of all business operation systems and any other systems corresponding to the Underlying Business have been granted and
handed over to the Transferee in a way in accordance with Article 2 hereof and as requested by the Transferee;
4.3.17 The Transferors have provided to the Transferee on the day before the Closing Date and in the manner to the satisfactory of the
Transferee, the actual end-of-period financial data of the Net Working Capital (details agreed in the Appendix XXI) to be received by the
Transferee corresponding to the Underlying Assets and the Underlying Business during the period from December 1, 2019 to the date two
days prior to the Closing Date and estimated financial data of the same as of the Closing Date, as well as the transaction flow information
(full field) in the business systems (including longmen) as of the day two days prior to the Closing Date, and the list of upstream and
downstream deposits payable, list of downstream vehicle accounts payable and list of upstream vehicle amounts payable in business
systems;
4.3.18 The payment system corresponding to the Underlying Business has been irrevocably changed to the payment system of the Transferee or
its Affiliates, all bank accounts corresponding to the Underlying Business and the beneficiary account have been irrevocably changed to
the bank account designated by the Transferee or adjusted to accounts receiving mechanism as requested by the Transferee;
4.3.19 With respect to the mobile application/accounts/system of the Underlying Assets registered or filed under the name of Beijing Youxin
Fengshun Lubao Vehicle Auction Co., Ltd. or its Affiliate (the “Fengshun Lubao”) including the “Agent”, “Transformer” “Shan Ban”
“Designated Driver” “Chake2017” “Purple Gold Red Hulu” “Member Advisor (RN)” “Yi Cheng Cha Ding” “Chake 3.0 Mercedes-Benz
Star Edition”, Fengshun Lubao and Beijing Hengtai Boche Auction Co. Ltd. have jointly irrevocably confirmed and warranted in writing
that the Transferors has complete Intellectual Property and ownership of the aforesaid mobile application/accounts/system and of which
the Transferors shall complete the corresponding transfer or license set forth in Article 2of this Agreement;
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4.3.20 The Transferors shall provide the preliminary solution prior to the Closing Date in respect of the leased buildings and premises
corresponding to the Transferor’s operation of the Underlying Business as listed in Appendix XXIII hereto;
4.3.21 With respect to the Weibo verified account of “Uxin Auction”, Transferors shall have submitted the cancellation application in a manner
and by mechanism reasonably satisfactory to Transferee;
4.3.22 Upon reasonable request by Transferee, Transferors and Transferee shall enter into a relevant supplementary agreement to agree upon
arrangement for entrusted collection, payment and settlement between Transferors and Transferee in connection with the entrusted
collection, payment and settlement under this Transaction;
4.3.23 The Underlying Assets and the Underlying Business continue to be in good operation, and the Transferors shall ensure that: (i) the
amounts of the Accounts Payable and other Accounts Payable arising from the Underlying Assets and the Underlying Business as of the
Closing Date shall not be higher than the amounts of the accounts payable and other accounts payable corresponding to the Underlying
Assets and the Underlying Business as of November 30, 2019, which conform to the calculation basis of the Net Working Capital as of
November 30, 2019; and (ii) the following indicator percentage (i.e. the total amount of the vehicles accounts payable arising from the
Underlying Assets and the Underlying Business during the 30 days prior to the Closing Date ÷ the amount of all successful transaction
orders corresponding to the Underlying Assets and the Underlying Business during the 30 days prior to the Closing Date) shall not be
higher than the corresponding indicator percentage as of November 30, 2019 (i.e. the total amount of the vehicles accounts payable
arising from the Underlying Assets and the Underlying Business during the 30 days prior to November 30, 2019 ÷ the amount of the
current accounts relating to the Underlying Business and all successful transaction orders corresponding to the Underlying Assets during
the 30 days prior to November 30, 2019);
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4.3.24 The Transferors shall have fully handled and settled the withdrawal, settlement and relevant arrangements of the deposits relating to the
Underlying Business and the Underlying Assets arising on or before the Closing Date;
4.3.25 Transferors and the relevant Uxin Group Company have issued a power of attorney to Transferee to its satisfaction, irrevocably agreeing
that Transferee shall be entitled to transfer and withdraw the funds in the Receiving and Payment Accounts in accordance with Article 2.8
(6) hereof;
4.3.26 Transferors and the relevant Uxin Group Company have issued a power of attorney to Transferee in accordance with the mechanism set
out in Appendix XXIV;
4.3.27 The Transferors have confirmed to the Transferee in writing that each of the above conditions precedent of the closing has been satisfied
and provided the Transferee with relevant supporting documents.
4.4 Unless waived by Transferee in writing, the payment of the Second Installment of the Transfer Consideration by Transferee to Transferors shall be
subject to the full satisfaction of the following conditions precedent:
4.4.1 The covenants required to be complied with by the Transferors under this Agreement and the other Transaction Documents prior to the
payment of the Second Installment of the Transfer Consideration and the obligations required to be performed prior to the payment of the
Second Installment of the Transfer Consideration have been complied with and performed, and the Transferors do not have any breach of
the Transaction Documents;
4.4.2 As of the execution date of this Agreement and the Second Installment of the Transfer Consideration Payment Date, no event or
circumstance (including, without limitation, any litigation, arbitration proceedings, tax inspection, tax punishment, or any investigation or
punishment proceedings conducted by governmental authorities) has occurred or is likely to occur which has any Material Adverse Effect
on the Underlying Assets and/or the Underlying Business and/or this Transaction;
4.4.3 As of the execution date and the payment date of the Second Installment of the Transfer Consideration, there is no judgment, ruling,
decree or injunction of any Law, court, arbitral body or competent governmental authority restricting, prohibiting or cancelling this
Transaction;
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4.4.4 The transfer of the Underlying Assets set forth in Article 2 hereof and the Appendices hereto that shall be completed prior to the payment
date of Second Installment of the Transfer Consideration and/or the payment date of Second Installment of the Transfer Consideration
shall have been completed in accordance with the methods and mechanisms set forth herein and Transferee shall have been provided with
satisfactory evidence;
4.4.5 With respect to the buildings and premises corresponding to the Underlying Business as listed in Appendix XIX which the Transferee
elects to continue to use, the Transferors and relevant Uxin Group Company shall ensure that the registered address of such Transferors
and Uxin Group Company (or their branches) shall have been relocated from their current addresses;
4.4.6 With respect to the issues and defects involved in the lease agreements set forth in Part VI of Appendix II, the Transferors have properly
resolved such issues and defects in accordance with the manner and mechanism agreed by the Transferors and the Transferors;
4.4.7 Except for the Underlying Contracts of which the transfer is completed prior to the Closing Date as set forth in Article 4.3.15, the
remaining Underlying Contracts have been transferred to the Transferee in accordance with the manners and mechanisms set forth in
Article 2.5 hereof;
4.4.8 In accordance with the provisions of tax policies, if the transfer of the Underlying Assets are determined by tax authorities as items not
subject to VAT, and that VAT invoices may be issued in accordance with the provisions, then VAT invoices of no levy obligations shall be
issued; if the transfer of the Underlying Assets are determined by tax authorities as being subject to VAT, then special VAT invoices with
applicable tax rate/levy rate shall be issued in accordance with the provisions;
4.4.9 The Transferors shall have completed cancellation of Weibo verified account of “Uxin Auction” to the reasonable satisfaction of the
Transferee;
4.4.10 The registration of the Exclusive Licensed Trademarks, the General Licensed Trademarks and the Licensed Underlying Patents in
accordance with Article 2 hereof shall have been completed, and evidence thereof shall have been provided to the satisfaction of the
Transferee;
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4.4.11 Transferors confirms to Transferee in writing that each of the foregoing conditions precedent has been satisfied and has provided
Transferee with relevant supporting documents.
4.5 Each of the Transferors shall take all necessary actions to cause the above conditions precedent under Articles 4.3 and 4.4 to be satisfied as soon
as practicable, and the Transferee shall provide reasonable and necessary cooperation. If the Transferors are aware that any of the conditions
precedent under Articles 4.3 and 4.4 has been fulfilled, it shall immediately notify the Transferee in writing (with relevant documentary evidence
attached). If, at any time, the Transferors become aware of any fact or circumstance which may hinder the satisfaction of a conditions precedent
under Articles 4.3 and 4.4, it shall also promptly notify the Transferee in writing (with relevant documentary evidence).
Article 5 Taxes
The Transferors shall be jointly and severally liable for any Tax in connection with this Transaction, and the Transferee shall not bear any Tax arising from
this Transaction.
Article 6 Representations and Warranties
6.1 Except for matters listed in Appendix XVI Disclosure Schedule, the Warrantors hereby jointly and severally make the following representations
and warranties to the Transferee and ensure that such representations and warranties shall be true, accurate, complete and without omission and not
misleading in any respect as of the execution date of this Agreement and the Closing Date of this Transaction:
6.1.1 Each of the Transferors and the Warrantors is an entity duly registered and validly existing under applicable laws;
6.1.2 Each of the Transferors and the Warrantors has obtained all approvals and third party permits necessary for the consummation of this
Agreement and the transactions contemplated hereby, including but not limited to the approvals of the shareholder/shareholders’ meeting
and the approval of the executive director/board of directors of each of the Transferors and the Warrantors;
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6.1.3 The execution and delivery of the Transaction Documents, performance of all obligations thereunder and consummation of the
Transaction Documents by the Transferors and the Warrantors have been duly and fully authorized by all requisite or necessary actions
for the execution and delivery of the Transaction Documents, performance of all obligations thereunder and consummation of the
transactions contemplated under the Transaction Documents; each of the Transferors and the Warrantors has full capacity for civil
conducts and civil rights for the execution and delivery of the Transaction Documents, performance of all obligations thereunder and
consummation of the Transaction Documents; the Transaction Documents shall be legally binding upon the Transferors and the
Warrantors upon their execution; no notice to any third party (including, without limitation, the creditors of the Transferors and the
Warrantors or other third parties) or consent of third party shall be required for the execution and delivery of this Agreement and the
consummation of the transactions contemplated under this Agreement by the Transferors and the Warrantors;
6.1.4 The execution of this Agreement and other Transaction Documents by the Transferors and the Warrantors does not conflict with the
articles of association of the Transferors and the Warrantors and any contract or document to which the Transferors and the Warrantors are
a party or which is binding on the Underlying Assets, nor does it violate any judgment of any court, any award of arbitration authority and
any decision of any Governmental Authority. If the execution of this Agreement and other Transaction Documents or performance of
their obligations hereunder or thereunder by any Transferors and the Warrantors requires authorization or approval of any Governmental
Authority in accordance with any laws and regulations, the Transferors undertake to obtain such authorization or approval and, if such
authorization or approval cannot be obtained, the Parties shall consult with each other for the solution;
6.1.5 Each of the Transferors and the Warrantors has taken or will take all measures and actions prior to the Closing Date to obtain all
applicable governmental, statutory, regulatory or other consents, approvals, licenses, waivers or waivers necessary for its execution and
performance of, and for the binding effect of the terms and conditions of, this Agreement and other Transaction Documents. No other
consent or approval of any individual, corporation, entity or Governmental Authority is required under any Law or pursuant to the terms
of any agreement or arrangement to which the Warrantors are a party. Each of the Transferors owns the corresponding Underlying Assets
for its own account and not as an agent or trustee of any other beneficiary;
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6.1.6 Each of the Transferors and Warrantor is duly incorporated and organized, and validly existing. Each of the Transferors and the
Warrantors has the corporate power and governmental approval to own and operate the Underlying Assets and to operate the Underlying
Business in the manner it is being operated;
6.1.7 All reports, documents and information provided by the Transferors to the Transferee in connection with the Underlying Assets, the
business relating to the Underlying Assets and all matters required by this Agreement are true, accurate, complete, not misleading and
without omission in all respects;
6.1.8 Each of the Transferors shall have complete ownership and the right to dispose of all of its Underlying Assets, and no Encumbrance, debt
or other encumbrance is established on any Underlying Assets, including, without limitation, license granted to any third party with
respect to the Underlying Assets, pledge of the Underlying Assets or purchase right or any other security interest granted to any third
party with respect to the Underlying Assets;
6.1.9 Each of the Transferors shall have full and exclusive ownership and disposal right of the Underlying Assets, and none of the Underlying
Assets shall contain any state-owned or collective assets. None of the Underlying Assets is subject to or involves (i) any liabilities and
Encumbrances, (ii) mortgage, pledge, lien or other contingent liabilities, (iii) arbitration, litigation, claim, dispute or dispute,
(iv) attachment, seizure, freezing, penalty and restrictions imposed by other Governmental Authorities, (v) factual or legal defects which
should be disclosed;
6.1.10 The transfer by the Transferors of the Underlying Assets to the Transferee in accordance with this Agreement is not subject to the
approval by any relevant Governmental Authority, other than the approval, registration or filing and license provided in this Agreement;
6.1.11 There is no outstanding or threatened litigation, claim, action, arbitration, administrative procedure or other legal proceedings which may
adversely affect, delay, restrict or hinder the performance of the Transferors and Warrantor of the obligations and liabilities under this
Agreement;
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6.1.12 All records, documents and materials submitted by each Transferor to the Transferee or its designated Affiliate in accordance with the
Transaction Documents are true and complete and truthfully reflect the status of all the Underlying Business and the Underlying Assets
transferred by the Transferors to the Transferee to its designated Affiliate in accordance with this Agreement. Each of the Transferors
further represents and warrants that no change in the Underlying Assets reflected in the records provided by each of the Transferors to the
Transferee or its designated Affiliate in connection with the Underlying Assets will cause Material Adverse Effect to the Transferee or its
designated Affiliate;
6.1.13 The Underlying Assets do not constitute any interference with, infringement upon, misappropriation of or otherwise conflict with the
Intellectual Property of any third party and each of the Transferors has taken all necessary actions to preserve and protect all the
Underlying Assets;
6.1.14 Each of the Underlying Intellectual Property Rights which has been registered or is in the process of registration application is duly
registered or applied for registration (if applicable) in accordance with the PRC Laws, and the registration obtained or the registration
application submitted has not been cancelled, rejected or declared as invalid (if applicable), each of the Transferors has duly paid up
relevant registration fees, Annual Fees and Overdue Fines, if applicable;
6.1.15 The Transferors have maintained the Underlying Assets in accordance with market practice and all applicable Laws in order to ensure that
the Underlying Assets are valid and can be used for the purpose of operating the Underlying Business in a lawful manner. All of the
Transferors which operate the Underlying Business have filed all applicable tax returns in accordance with relevant Laws, and such tax
returns are true, accurate and complete. Such Transferors have paid up all taxes payable without any penalty, surcharge, fine or interest
payable in connection with such taxes and has not committed any breach or violation of tax laws or regulations and has not been involved
in any dispute and litigation relating to taxes or fees. Such Transferors have submitted the requested information to any requesting tax
authority, and there is no dispute between such Transferors and the tax authority in relation to the tax liabilities or potential tax liabilities
or tax benefits of the company.
6.1.16 The Underlying Assets are free of any tax-related non-compliance or unlawful conducts, and do not involve in any disputes or lawsuits in
respect of taxes and fees; Each Transferor has submitted the requested information to any requesting taxation authority with respect to the
Underlying Assets, and there is no dispute over the taxation liability or potential taxation liability or taxation preference concerning the
Underlying Assets with the taxation authority; and each Transferor keep the financial information of the Underlying Assets required for
normal tax recording and tax payment. With respect to this Transaction, none of the Transferors has conducted any transaction or entered
into any contract for the purpose of illegal tax avoidance.
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6.1.17 The Warrantors will not take any action which may damage the Underlying Assets, and from the date hereof, without the prior written
consent of the Transferee, shall:
(i) Not dispose of, or cause the disposal of, any of the Underlying Assets (except for the disposals which occur during the normal
production and operation of the Transferors and the Warrantors provided that such disposals shall not have any adverse effect on
the execution and performance of this Agreement and other Transaction Documents or the implementation of this Transfer by
the Transferors and the Warrantors);
(ii) Not enter into any agreement in conflict with this Agreement; and
(iii) Not enter into any transaction or action that may have any adverse effect on the Underlying Assets (except for such transactions
or actions which occur during the normal production and operation of the Transferors and the Warrantors provided that such
transactions or actions shall not have any adverse effect the execution and performance of this Agreement and other Transaction
Documents or the implementation of this Transfer by the Transferors and the Warrantors).
6.1.18 The use, operation and transfer of any of the Underlying Assets do not conflict with any PRC Laws or the articles of association of the
Transferors and the relevant agreements or documents executed by them;
6.1.19 There are no pending litigation, arbitration, administrative proceedings or disputes against the Underlying Assets; there is no ongoing or
pending objection, dispute, revocation request or request for declaration of invalidity proposed by Governmental Authorities or any third
party with respect to the Underlying Assets; no event or circumstance has occurred or is reasonably expected to occur which has a
Material Adverse Effect on the transfer of the Underlying Assets or any part of the transactions contemplated hereby;
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6.1.20 The Transferors have not submitted any application for liquidation, nor has the Transferors appointed a Person to take over all or part of
the Underlying Assets of the Transferor;
6.1.21 With respect to the Underlying Business and the Underlying Assets, the Transferors do not own any land, building or house. The
buildings and their addresses (including without limitation, details of property lease agreements set forth in Article VI of Appendix II)
used for the Underlying Business and the Underlying Assets are the real property owned by third party and leased in accordance with
laws, the Person which lease directly and indirectly such buildings to the Transferors shall have the lawful right to lease such buildings,
the Transferors are in compliance with such lease agreements, and own valid and enforceable leasehold interests in such buildings, free of
any Encumbrance. (i) the Transferors have not leased, subleased or sublet any land, building or premises to any third party; (ii) there are
no property defect of the land, building or premises leased by the Transferors; (iii) the leased addresses set forth in Part VI of Appendix II
have not been used by the Transferors and any other third party for purpose other than the conducting and operation of the Underlying
Business (including, without limitation, that such leased addresses have been used by the Transferors for the purpose of AIC registration
of the registered address of the company);
6.1.22 With respect to the services corresponding to the Underlying Business, the products sold and/or services provided by the Transferors with
respect to the Underlying Business are in conformity with, and have at all times been in conformity with, all applicable laws and
warranties, covenants or factual acknowledgements in respect of all such products and/or services;
6.1.23 With respect to the Underlying Intellectual Property Rights, the Transferors have lawful ownership of or have lawful right to use the
Underlying Intellectual Property Rights and have taken appropriate measures to protect the legality, validity, completeness and safety of
such Underlying Intellectual Property Rights (including completion of relevant registration, filing or renewal formalities in due course in
accordance with laws). Each of the Underlying Intellectual Property Rights is valid and enforceable in accordance with law and nothing
has occurred which might render any Underlying Intellectual Property Rights invalid or unenforceable. To the knowledge of the
Warrantors, the corresponding Transferors have not infringed upon, or illegally used, any Intellectual Property which any third party has
any right, title or interest in respect of the Underlying Intellectual Property Rights, and have not licensed or allowed any third party to use
any Underlying Intellectual Property Rights; neither the Transferors have infringed upon others’ Intellectual Property, trade secrets,
proprietary information or other similar rights in respect of the Underlying Intellectual Property Rights, and there is no pending or
foreseeable claim, dispute or litigation proceeding requiring the Transferors to indemnify for infringement upon any third party’s
Intellectual Property, trade secrets, proprietary information or other similar rights in respect of the Underlying Intellectual Property
Rights, and there is no known third party has infringed upon the Underlying Intellectual Property Rights.
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The Transferors have not granted any license or other rights to any third party with respect of the Underlying Intellectual Property Rights.
The Transferors has taken reasonable measures in accordance with normal industry practice to keep confidential the trade secrets and
other confidential Intellectual Property used for the Underlying Business.
Transferors do not have any Intellectual Property that is authorized or licensed or co-used with third party for the purpose of conducting
the Underlying Business.
Except for Weibo account of Uxin Auction, the Transferors have not operated other promotion platforms and social networking platform
accounts in respect of conducting the Underlying Business. The Transferors undertake that it will not operate the Weibo account of Uxin
Auction from the date of this Agreement until the completion of its cancellation.
6.1.24 Each of the Underlying Contracts is entered into during the ordinary course of the Underlying Business, shall constitute legal, valid and
binding obligation of the parties thereto, and shall be enforceable by the parties thereunder in accordance with its terms, and there is no
Underlying Contracts which restricts the relevant Transferor’s business activities or resources, restricts the Transferor’s business activities
or business freedom, imposes competition restrictions to the Transferors, or obligates the Transferors to share any Underlying Intellectual
Property Rights with a third party or grants any third party the license to use the Underlying Intellectual Property Rights. The Underlying
Contracts have been duly performed and have not been breached by the Transferors or any other party thereto.
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Each of the Transferors has not received any notice of termination, rescission or breach of any of the Underlying Contracts. The mere
performance of this Transaction will not result in the termination of the Underlying Contracts or have adverse effect on the rights under
the Underlying Contracts, nor will the correspondent customers or suppliers of the Underlying Contracts cease to be the customers or
suppliers to the same degree and of the same nature as they were prior to the date thereof.
The Transferors shall have the right to transfer all rights and obligations under the Underlying Contracts (subject to the notices or the
consent of the counterparty as provided in relevant contract terms).
6.1.25 The Transferors have provided the Transferee with the underlying financial statements corresponding to the Underlying Assets as of
November 30, 2019 (the “Financial Statement Date”) (including, without limitation, balance sheet, income statement, cash flow
statement, consolidated financial reports, etc., the same below), such financial statements (together with the notes thereto) have provide a
complete, accurate and fair view of the financial conditions, results of operations and cash flows of such companies and are consistent
with the books, vouchers and financial records of the Transferors. Since the issuance of such financial statements, no event has occurred
which has had or may have Material Adverse Effect on the financial or operation status of such Underlying Assets. The Underlying
Assets do not contain any liabilities and contingent liabilities that shall be disclosed in accordance with the PRC GAAP and the U.S.
GAAP but have not been disclosed in its financial statements (or notes thereto). There are no liabilities and contingent liabilities that are
not required to be disclosed in accordance with the PRC GAAP and the U.S. GAAP but that have or may have Material Adverse Effect
on the financial conditions or operation of such Underlying Assets.
6.1.26 Since the Financial Statement Date, there has not been any material adverse change in the Underlying Business and the Underlying
Assets, and no event, fact or matter has occurred which might give rise to any such change. Since such date, the Transferors has
conducted the Underlying Business in the ordinary and usual course, and in the course of such operations, consistent with past practice
and prudent commercial practices. The group companies have sufficient funds and ability to carry out regular business operation and have
not done or conducted any act set forth under Article 6.1.30 of this Agreement other than in general and day-to-day business.
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6.1.27 With respect to the Underlying Business and the Underlying Assets,
(i) Neither the Transferors nor any of the respective Uxin Group Company or any of its directors, officers, employees or other
persons acting for or on behalf of such Uxin Group Company has: (x) made, offered to make, promised to make, or authorized
any direct or indirect unlawful bribe, rebate, payoff, influence payment, kickback, or other unlawful payment or gift, whether in
the form of money or anything of value, to any foreign or domestic governmental official, employee of any governmental
agency, any political official or candidate for political office, or official or employee of any public international organization; or
(y) established or maintained any unlawful or unrecorded fund or maintained any fraudulent or fictitious entry in the books and
records of such Uxin Group Company;
(ii) None of Uxin Group Company or any of its directors, officers, employees or other persons acting for or on behalf of Uxin
Group Company has directly or indirectly given or agreed to give any gift or similar benefit to any customer, supplier,
government employee or other person who has or may have the right to assist or obstruct Uxin Group Company’s Relevant
Business that (a) constitutes a bribe, kickback or illegal payment under applicable laws or (b) could expose Uxin Group
Company to damage or penalty in any litigation, indictment, arbitration or investigation or audit by any government authority, or
(c) if it has not given a gift before, or if it will not continue to give a gift in the future, that could have an adverse effect on the
relevant assets, properties, business, operations or prospects of Uxin Group Company or could expose Uxin Group Company to
prosecution or penalty in any litigation, indictment, arbitration or investigation or audit by any government authority.
Furthermore, none of Uxin Group Company or any of its directors, officers, employees or other persons acting for or on behalf
of such Group Company, has directly or indirectly accepted or agreed to accept any gift or similar benefit from any customer,
supplier, government employee or other person which constitutes a bribe, kickback or illegal payment under applicable laws or
which may expose the Uxin Group Company to damages or penalties in any litigation, prosecution, arbitration or investigation
or audit by any government agency;
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(iii) None of foreign or domestic government officials, employees of any governmental agency, any political official or candidate for
political office, or officials or employees of any public international organization or any government agency currently has a
direct or indirect interest in Uxin Group Company or any legal or beneficial interest in the consideration paid by Uxin Group
Company or the Transferee to the Transferors hereunder;
(iv) Uxin Group Company has not used any funds or assets to pay any kickback, or established any off-balance sheet funds or assets
for any illegal purpose. Not have been aware by or on behalf of Uxin Group Company that any part of the payment would be
used for those purposes.
6.1.28 With respect to the Underlying Business and the Underlying Assets, the Transferors have taken adequate and appropriate measures to
protect the security of customer information in accordance with applicable laws, There is no serious malfunction on the corresponding IT
system of the Transferor, there is no improper password on the data processed by the Transferor, the internal IT system of the Transferors
does not allow unauthorized login, and the Transferors will not shut down without the consent from the internal IT system operator. The
Transferors has taken precautions in accordance with industry practice to preserve the applicability, security and completeness of the
internal IT system and its memory data and information. All user data retained by the Transferor has been explicitly authorized by the
user in writing, and there is no use of the personal information of the user without the express authorization of the user (including but not
limited to the user’s name, address, telephone number and identity card); and there is no data divulgence, theft or falsification occurred to
the Underlying Assets.
6.1.29 Except for the technical support and authorization provided by Uxin Group Company for the Underlying Assets and the Underlying
Business which have been fully disclosed in Part II of Appendix IX, there is no any other undisclosed information, omission or
concealment.
6.1.30 From the date of this Agreement until the Closing Date, unless agreed by the Transferee in writing or otherwise specified herein, none of
the Transferors and the applicable Uxin Group Company has committed any of the following acts with respect to the Underlying Assets
(except for such circumstances that will not cause any adverse effect on the execution and performance of this Agreement and other
Transaction Documents by the Transferors and the relevant Uxin Group Company or the implementation of this Transfer, nor will the
normal production and operation by the Transferors and Uxin Group Company relating to the operation of the Underlying Business
(provided that such normal production and operation by Uxin Group Company will not cause any adverse effect on the execution and
performance of this Agreement and other Transaction Documents by the Transferors and the relevant Uxin Group Company and the
implementation of this Transfer):
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(i) Liabilities fulfilled in advance;
(i) Guarantee, or mortgage, pledge and other security rights established on its property provided to other Persons;
(ii) Waiver of any debts or right of claiming indemnification;
(ii) Amendment of any Underlying Contracts or agreement which are adverse to the Transferors;
(iii) Increase of the remunerations and benefits of the employees corresponding to the Underlying Business and the Underlying
Assets, or amendment to the employment contracts, confidentiality agreements, Intellectual Property agreements and non-
compete agreements of the employees corresponding to the Underlying Business and the Underlying Assets, unless required by
Laws;
(iv) Any loss or any change in its relationship with the suppliers, customers or employees;
(v) Transfer or license other Person to use the Underlying Intellectual Property Rights;
(vi) Material change in the employee policies and rules;
(vii) Material adverse change to the financial status of the Underlying Assets, or transactions or activities occurring outside the
ordinary course of business which have Material Adverse Effect on the Underlying Assets;
(viii) Any dividend, bonus or other form of distribution to the shareholders that has been declared, paid, ready to be declared, or ready
to be paid;
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(iii) (a) sale, mortgage, pledge, lease, transfer and other disposal of any assets the aggregate transaction amount of which exceeds
RMB 100,000 (b) disposal of any Underlying Assets with the original value exceeding RMB 100,000 or consent to the disposal
or acquisition or waiver of the possession of any Underlying Assets with the original value exceeding RMB 100,000; (c) any
expenditure exceeding RMB 100,000 in aggregate or purchase of any tangible or intangible assets;
(iv) Any breach of the representations and warranties under this Agreement by way of act or omission; and
(v) Any act or omission that may cause any of the foregoing to occur.
6.1.31 The list of the Underlying Assets set forth in the Appendix hereto shall be all and complete assets necessary for the purpose of operating
the Underlying Business by the Transferors and relevant Uxin Group Company on and prior to the Closing Date (except for those
excluded from this Transaction as agreed in advance in writing by the Transferee), and there is no asset necessary for the purpose of
operating the Underlying Business which has not been disclosed to the Transferee. All the facts regarding the Warrantors and the
Underlying Assets have been fully disclosed to the Transferee. All documents, materials and information provided by the Warrantors to
the Transferee or its Affiliates before and after the execution of this Agreement are true, accurate, without any omission or misleading.
6.2 The Transferee hereby makes the following representations and warranties to Transferors and ensures that such representations and warranties
shall be true, complete and not misleading in any respect as of the execution date of this Agreement and the Closing Date:
6.2.1 The Transferee is an entity duly registered and validly existing under applicable Laws;
6.2.2 The Transferee has obtained the approval of its board of directors required for the consummation of this Agreement and the transactions
contemplated under this Agreement;
6.2.3 The execution and delivery of the Transaction Documents, performance of all obligations thereunder and consummation of the
transactions thereunder by the Transferee have been duly and fully authorized by all requisite actions; the Transferee has full civil
capacity and civil rights to execute the Transaction Documents, perform all obligations thereunder and consummate the transactions
thereunder; the Transaction Documents are legally binding upon the Transferee upon execution; the Transferee’s execution and delivery
of this Agreement and consummation of the transactions contemplated thereunder shall not require notice to any third party or consent of
any third party (including, without limitation, the creditors of the Transferee or other third parties).
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7.1 From the execution date of this Agreement to the Closing Date, the Warrantors shall jointly and severally covenant the following matters to the
Transferee:
Article 7 Covenants
7.1.1 The Transferors shall conduct the Underlying Business in the ordinary course of business, preserve intact the business organization of the
Persons relating to the operation of the Underlying Business, maintain relationships with third parties, retain existing officers and
employees, and preserve current status (except for normal wear and tear) of all assets and properties owned or used by the entities relating
to the operation of the Underlying Business.
7.1.2 The Transferors shall ensure that the Underlying Business is operated in the manner the same as prior to the execution date of this
Agreement and maintain business cooperation relationship with customers, suppliers, banks and other entities involved in the Underlying
Business, without changing the major work content and positions of the employees involved in the operation of the Underlying Business;
in respect of the business contracts that will expire before or on the execution date of this Agreement, the Transferors shall ensure that
such business contracts can be renewed and are normally performed; and ensure the operation of the Underlying Business is in
compliance with all applicable Laws and regulations in all respects.
7.1.3 To ensure the normal operation of the Underlying Business, safeguard and maintain the good condition and stability of the Underlying
Assets, not engage in or permit any acts or omissions that may violate any representations, warranties or covenants set forth herein, and
maintain the validity of the Underlying Assets, including, without limitation, timely and fully payment of Annual Fees, and diligently
handling relevant administrative proceedings, disputes, lawsuits, arbitration or other legal proceedings.
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7.1.4 Contact and discuss with the partners so as to cause the partners to agree to transfer the relevant Underlying Assets in such manner as
specified by this Agreement so as to transfer the Underlying Assets to the Transferee or its designated Affiliate. With respect to the
Underlying Assets that the partners agree to transfer and the Transferee agrees in writing, the Transferors shall arrange the execution of
relevant agreements, contracts and/or other documents by the parties respectively within the practicable time.
7.1.5 Take all necessary actions and reasonable efforts to cause the ownership or relevant rights of the Underlying Assets to be fully vested or
transferred in accordance with this Agreement, take all necessary actions and execute all necessary documents to cause the ownership of
the Underlying Assets and any rights with respect thereto to be fully vested in the Transferee and successfully complete the closing.
7.1.6 Maintain the operation of the Underlying Business and good condition of the Underlying Assets in the manner conducted prior to the
execution date of this Agreement.
7.1.7 In case of becoming aware of any act or omission in breach of any representation or warranty contained in this Agreement, it shall
immediately disclose the same in writing to the Transferee. In particular, once the Transferors become aware of any assets which should
be included in the scope of the Underlying Assets but are not included in this Agreement, the Transferors shall immediately transfer or
license such assets to the Transferee in accordance with this Agreement without compensation and complete the relevant change
registration (if necessary).
7.1.8 Each of the Transferors and the Warrantors shall provide the Transferee and its representatives with such information relating to the
Underlying Business and the Underlying Assets as it may reasonably request, including, without limitation, providing the attorneys,
accountants and other representatives appointed by it with all accounts, records, contracts, technical data, personnel data, management
information and other documents relating to the Underlying Business and the Underlying Assets. In addition, the Transferors or the
corresponding Transferors shall immediately notify the Transferee in writing of any breach of this Agreement that has occurred or is
expected to occur by any of them.
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7.1.9 Transferors and the relevant Uxin Group Company shall, and shall cause their respective Affiliates and advisers, and their respective
directors, officers and representatives to, (i) on an exclusive basis, deal with the matters relating to this Transaction together with
Transferee and its Affiliates, (ii) not enter into any similar transaction or any other transaction in conflict with the transactions
contemplated in the Transaction Documents (any of such transactions being referred to as the “Third Party Transaction”),
(iii) immediately terminate any discussions or negotiations with any Person in respect of the Third Party Transaction, and thereafter
refrain from entering into any discussions or negotiations with any Person in respect of the Third Party Transaction or providing any
information to any Person in respect of the Third Party Transaction; and (iv) not encourage or take any other action to make, or facilitate
any inquiry or proposal with respect to the possible Third Party Transaction. The Transferors or relevant Uxin Group Company shall
promptly notify the Transferee of any enquiry it receives from any other party in respect of a possible third party transaction. This
provision will automatically become invalid if Transferee fails to pay the First Installment of the Transfer Consideration in accordance
with this Agreement after the Transferors and Uxin Group Company satisfy and fulfill the conditions precedent set forth in Article 4.3 in
accordance with this Agreement.
7.1.10 Without the prior written consent of the Transferee, the Transferors and Uxin Group Company involved in the operation of the Underlying
Business shall not take the following actions, nor shall they take the following actions, in connection with the Underlying Business and
the Underlying Assets (if applicable) (other than as would not have any adverse effect on the execution and performance of this
Agreement and other Transaction Documents or the implementation of this Transfer by the Transferors and the relevant Uxin Group
Company or the normal production and operation of Uxin Group Company in connection with the operation of the Underlying Business,
provided that such normal production and operation by Uxin Group Company would not have any adverse effect on the execution and
performance of this Agreement and other Transaction Documents and the implementation of this Transfer by the Transferors and Uxin
Group Company):
(i) To sell, lease, transfer, authorize or assign any of the Underlying Assets;
(ii) To assume or incur liabilities, liabilities, obligations or expenses exceeding RMB100,000 (or the equivalent thereof in other
currencies) in the aggregate;
(iii) To make any capital expenditure in excess of RMB100,000 (or the equivalent thereof in other currencies);
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(iv) To create any Encumbrance on any Underlying Assets;
(v) To license any of the Underlying Intellectual Property Rights to others, or allow any of the Underlying Intellectual Property
Rights to expire or be forfeited, donated or waived, or disclose any material trade secrets, formulae, processes, know-how or
other Underlying Intellectual Property Rights in relation to the Underlying Business which are not generally known to the public
prior to such disclosure;
(vi) To amend or adjust any material provision of any Underlying Contract, or consent to the termination of, or consent not to any
renewal in respect of, any Underlying Contract;
(vii) To declare, pay and make any declaration or distribution of dividends;
(viii) To effect or become a party to any acquisition;
(ix) To increase or delay of the remuneration of the employees corresponding to the Underlying Business and the Underlying Assets,
or to modify the employment contracts, confidentiality agreements, Intellectual Property agreements and non-compete
agreements of the employees corresponding to the Underlying Business and the Underlying Assets, unless required by Laws;
(x) To terminate, amend or revise any of the Underlying Contracts or to assume any obligations under any Underlying Contracts in
the name of the Transferee or its Affiliate;
(xi) To sell, transfer, lease or in any other manner dispose of any Underlying Assets;
(xii) To take any action which would cause the termination, expiration, invalidity, suspension non-renewal of or any adverse effect to
any authorization necessary for the purpose of operating the Underlying Business;
(xiii) To release or waive any Liabilities with respect to the Underlying Business;
(xiv) To waive or transfer any rights or claims in connection with the Underlying Business;
(xv) To take other actions that may have actual or potential adverse effect on the Transaction hereunder;
(xvi) To enter into or conduct any related transaction by the corresponding entities of the Transferors which operates the Underlying
Business with other Transferors or their Affiliates with respect to the Underlying Assets.
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7.2 The Warrantors jointly and severally covenant to the Transferee as follows as of the Closing Date:
7.2.1 In case of becoming aware of any act or omission in breach of any representation or warranty contained in this Agreement, it shall
immediately disclose the same in writing to the Transferee.
7.2.2 From the date of this Agreement until the Closing Date with respect to the transfer of all the Underlying Assets to the Transferee or their
designated Affiliates in accordance with the mechanism set forth in Article 2 hereof, except for the performance of the obligations set
forth herein or receipt of the prior written consent of the Transferee, the Transferors and the relevant Uxin Group Company shall not
(1) use, license, sell, lease, reproduce, pledge or dispose of the Underlying Assets to be transferred or any portion thereof; (2) claim the
ownership or Intellectual Property of the Underlying Assets to be transferred (or any update, upgrade or development portion); (3) apply
for the registration of the name, similar name, or any Intellectual Property included in the Underlying Assets to be transferred (including,
without limitation, any update, upgrade or development portion) as a trademark, domain name, tradename or other items, or register the
copyright, or use the same without authorization; (4) disclose to a third party the trade secrets relating to the Underlying Assets to be
transferred; (5) revoke the application for the Underlying Intellectual Property Rights under application or fail to take action within the
specified time limit as required by the relevant Governmental Authorities with respect to such application.
7.2.3 The Transferors shall complete the matters set forth in Article 2 which shall be completed after the Closing Date in accordance with the
methods and mechanisms set forth in this Agreement and provide the Transferee with evidence satisfactory to them at the time and in the
manner requested by the Transferee.
7.2.4 The Transferors warrant that from the execution date of this Agreement to the date when all the change registration or filling of
Governmental Authorities (if applicable) with respect to the transfer of the Underlying Assets are completed, the Transferors shall operate
the Underlying Asset as normal and shall not establish or permit to exist any security or other Liabilities and Encumbrance which may
affect the rights and interests of the Underlying Assets.
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7.2.5 After the transfer of the Underlying Assets hereunder to the Transferee, the Transferors shall not take any action which would impair the
legality, validity and value of such Underlying Assets or impedes the full use of the Underlying Assets by the Transferee.
7.2.6 The Transferors shall assist the Transferee in the operation of the business with respect to the Underlying Assets in accordance with this
Agreement and give necessary support and cooperation to the Transferee to ensure the smooth implementation of such business.
7.2.7 If any business, Intellectual Property, contracts, assets in kind and other relevant assets are discovered to have not been disclosed in this
Agreement and other Transaction Documents, and confirmed by the Parties in an amicable and fair manner as the assets that shall be used
in the Underlying Business and necessary for the purpose of operating the Underlying Business by the Transferee in the same manner as
conducted by the Transferors prior to the Closing Date (collectively, the “Omitted Assets”, and for the avoidance of doubt the Omitted
Assets shall not include the relevant assets which are expressly agreed to be excluded from the Underlying Business in this Transaction
by the Transferee in writing), the Transferors shall disclose the existence and nature of such Omitted Assets as soon as practicable,
provide the Transferee with relevant information concerning such Omitted Assets, and transfer or license such Omitted Assets to the
Transferee or its designated Affiliate in accordance with the provisions hereof concerning license, and relevant consideration shall be
deemed to have been included in the consideration set forth in this Agreement and the relevant ancillary agreements. Such transfer/license
shall be deemed retroactively as effective as of the Closing Date.
7.2.8 Each of the Transferors and Uxin Group Company shall assist the transfer of the Underlying Assets between the Transferee and the
Transferors in accordance with this Agreement and provide the Transferee or its designated Affiliate or their respective Affiliates with
long-term and free of charge support and cooperation in respect of business, technology, finance and personnel so as to cause the smooth
implementation of the transfer of the Underlying Assets. Specifically:
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(i) With respect to technology, the Transferors shall use reasonable efforts to provide the Transferee and its Affiliates with
necessary technical support needed for the Underlying Business. In particular, without prejudice to the generality of the
foregoing, from the Closing Date to the 12-month period after the payment of the Second Installment of the Transfer
Consideration, the Transferors and Uxin Group Company shall provide the Transferee, on a free-of-charge basis, with
continuous and stable support and assistance no lower than the standards prior to the Closing Date in connection with shared
technology and systems and services of Uxin Group Company with respect to Uxin Group Company’s relevant business
systems, technical systems and other Underlying Business and the Underlying Assets involved in the operation of the
Underlying Business (for the avoidance of doubt, if such Underlying Technologies and Systems require the Transferors and
relevant Uxin Group Company’s paying for purchase of corresponding services from a third party, the Transferee shall settle
with the Transferors based on actual use).
(ii) With respect to Intellectual Property, the Transferors shall assist the Transferee and its Affiliates in completing the change
registration of the relevant Intellectual Property in accordance with this Agreement;
(iii) With respect to the personnel, the Transferors shall designate personnel to communicate promptly and fully with the Transferee
and its Affiliates with respect to the details of the performance of this Agreement;
(iv) After the Underlying Business being transferred to the Transferee, except for any matter arising in accordance with this
Agreement or other Transaction Documents, the Transferors or its Affiliates shall not take any action detrimental to the smooth
operation of the Underlying Business or impede the smooth operation of the Underlying Business by the Transferee.
7.2.9 Within five (5) Business Days after the closing, the Transferors and relevant Uxin Group Company shall provide the financial and
business data and relevant materials of the Underlying Business and the Underlying Assets (refer to the Appendix XXIII for the list of
specific requirements for materials) as of the Closing Date for the convenience of the Transferee’ review of the Underlying Assets and
asset appraisal and audit.
7.3 After the Closing Date, each of Uxin Group Company shall not, and shall procure that none of their respective Affiliates shall, individually or
jointly, without the prior written consent of the Transferee, directly or indirectly through any other Person (including by virtue of having a direct or
indirect interest) or on behalf of any other Person (whether as a director, partner, consultant, manager, employee, agent or otherwise):
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7.3.1 To carry on, be engaged or involved in or be interested (financially or otherwise) in any way in any business in competition with the
Underlying Business, in any manner;
7.3.2 To purchase of any interest in, or establishment or merger of, any business competing with the Underlying Business;
7.3.3 To assist or license in any manner, any third party, in competition with the Underlying Business, to engage in any business the same as, or
similar to or competing with, the Underlying Business (including, without limitation, transfer or license any assets and personnel of Uxin
Group Company relating to the Underlying Business and/or the business cooperation conducted under the Business Cooperation
Agreements to any third party, or assist any third party to engage in any business the same as, or similar to or competing with, the
Underlying Business);
7.3.4 To interfere in any way with the relationships between the Transferee or its Affiliates and the customers, customers, employees or
suppliers engaged in the conduct of the Underlying Business;
7.3.5 To approach any supplier or service provider of the Underlying Business by means of engaging the business in competition.
7.4 Within five (5) years from the Closing Date, without the prior written consent of the Transferee, Dai Kun shall not, and shall cause his Affiliates
not to, individually or jointly, directly or indirectly through any other Person (including by virtue of having a direct or indirect interest) or on
behalf of any other Person (whether as a director, partner, consultant, manager, employee, agent or otherwise):
7.4.1 To carry on, be engaged or involved in or be interested (financially or otherwise) in any way in any business in competition with the
Underlying Business, in any manner;
7.4.2 To purchase of any interest in, or establishment or merger of, any business competing with the Underlying Business;
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7.4.3 To assist or license in any manner, any third party, in competition with the Underlying Business, to engage in any business the same as, or
similar to or competing with, the Underlying Business (including, without limitation, transfer or license any assets and personnel of Uxin
Group Company relating to the Underlying Business and/or the business cooperation conducted under the Business Cooperation
Agreements to any third party, or assist any third party to engage in any business the same as, or similar to or competing with, the
Underlying Business);
7.4.4 To interfere in any way with the relationships between the Transferee or its Affiliates and the customers, customers, employees or
suppliers engaged in the conduct of the Underlying Business;
7.4.5 To approach any supplier or service provider of the Underlying Business through engaging in the business in competition.
7.5 Each of the Warrantors understands, acknowledges and agrees that for the purpose of consummating this Transaction in the manner and according
to the mechanism set forth herein, the business cooperation under the Business Cooperation Agreement and any other matters required to be
carried out by the Transferors and/or the relevant Uxin Group Company after the closing (the “Post-Closing Continuing Obligations”), it shall
maintain the good existence and operation of its relevant assets and business and shall not make any event or action that may have adverse effect
on the Transferors and/or the relevant Uxin Group Company in their performance of Post-Closing Continuing Obligations. In particular, if the
transfer or assignment of any Underlying Contracts and Underlying Customer Relationships fails to be completed prior to the payment date of the
Second Installment of the Transfer Consideration, the Transferors and Uxin Group Company shall continue to cause and ensure the completion of
the transfer and delivery of such Underlying Contracts and Underlying Customer Relationships in the manner and mechanism set forth herein as
soon as practicable after the payment date of the Second Installment of the Transfer Consideration.
7.6 The Parties hereto agree and acknowledge that, unless otherwise provided in this Agreement, the Transfer Consideration shall constitute
reasonable and sufficient consideration for the transfer of the Underlying Assets hereunder. If a transfer and/or license and/or pledge agreement
needs to be entered into separately by relevant parties for the purpose of completing relevant transfer and/or license and/or pledge registration
formalities in connection with the transfer of the Underlying Assets, the Transferee shall not be required to pay any amount to the Transferors or
the other parties pursuant to such agreement. In addition, if there is any discrepancy between such separately executed agreement and this
Agreement, this Agreement shall prevail.
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7.7 The Warrantors hereby undertake to assume joint and several liability for the liabilities and obligations of Dai Kun, the Transferors and Uxin
Group under this Agreement. In respect of the obligations to be performed by Uxin Group Company hereunder, each Warrantor shall cause and
ensure such Group Company to perform such obligations.
7.8 The Parties understand and agree that the C2B Business of Uxin Group Company shall be conducted through the following mechanism among
Uxin Group Company, the Transferee and/or its Affiliates:
(1) The Parties agree that April 1, 2020 (the “C2B Business Cooperation Commencement Date”) shall be the C2B Business Cooperation
Commencement Date;
(2) In consideration that, a certain period of time is required for the switch over of systems, functions and technologies relating to the C2B
Business (including their updates, innovations and re-developments from time to time) (collectively, the “C2B System Technology”), and of
the payment systems and banking systems relating to the C2B Business (the “C2B Payment System”), the Parties agree that the date of
switch over of the C2B System Technology and the C2B Payment System corresponding to the C2B Business shall be April 7, 2020 or such
other date as the Transferee may reasonably request (the “C2B System and Payment Switch Date”);
The Transferors and Uxin Group Company shall, at the time and in the manner reasonably requested by the Transferee, copy and deliver the
C2B System Technology to the Transferee prior to the C2B System and Payment Switch Date, change the C2B Payment System to the
payment system of the Transferee, and change the receiving and payment account corresponding to the C2B Business to the bank account
designated by the Transferee;
(3) From the C2B Business Cooperation Commencement Date, Uxin Group Company agrees to sell all Personal Car Source Clues collected
through its business platform and entrances (including, without limitation, the entrance of “I want to sell cars”) to the Transferee at a price
agreed by Uxin Group Company and the Transferee and the Transferors and Uxin Group Company shall ensure that such clues sold to the
Transferee shall be exclusively owned by the Transferee;
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(4) From the C2B Business Cooperation Commencement Date, the revenues and amounts corresponding to the C2B Business of Uxin Group
Company shall belong to the Transferee. To achieve the above purposes and results, the Parties agree to:
(i) From the C2B System and Payment Switch Date, the relevant customer shall enter into an agreement with the Transferee directly in
respect of any new business or new customer related to the C2B Business, and the deposits, prepayments and other amounts payable by
the relevant customer shall be paid to the bank account designated by the Transferee accordingly;
(ii) From the C2B Business Cooperation Commencement Date to the C2B System and Payment Switch Date, the Transferors and Uxin
Group Company shall, on behalf of the Transferee, enter into relevant agreements, collect and pay relevant amounts; provided that all
package price payments, deposit payment amounts, prepayment amounts and other amounts corresponding to new orders and bookings
arising from any C2B Business shall be paid to the bank account designated by the Transferee to the satisfaction of the Transferee prior
to 24: 00 of the Business Day immediately following the generation of such amounts;
(iii) The Transferors and Uxin Group Company shall pay the balance of all funds deposited by the customers corresponding to all C2B
Businesses, the balance of deposits, the amount of prepayment, the amount of services newly purchased by the customers in
March 2020 and renewed by the customers for April 2020 and the all booking packages price paid by the customers as of the C2B
Business Cooperation Commencement Date in a lump sum to the bank account designated by the Transferee in a manner and
mechanism satisfactory to the Transferee.
(5) C2B Business Contracts Transfer
The Transferors and Uxin Group Company agree that the C2B Business Agreement entered into between any customer corresponding to any
C2B Business and Uxin Group Company on or before the C2B Business Cooperation Commencement Date and during the period from the
C2B Business Cooperation Commencement Date to the C2B System and the Payment Switch Date (the “Transferred C2B Agreement”)
shall be transferred in the following manner:
(i) The transfer of the C2B Agreements shall be completed on the C2B System and Payment Switch Date or any other time agreed by the
Transferee in a manner and mechanism satisfactory to the Transferee;
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(ii) If any customer does not agree to the transfer of the C2B Agreements in accordance with the above (i), unless otherwise requested by
the Transferee, as a principal the Transferee shall return the unused balance and the corresponding deposits of the month when the
transfer occurs to the customer concerned, and the Transferors and Uxin Group Company shall cooperate in the execution of the
relevant service termination agreements in respect of such customer in a manner and mechanism satisfactory to the Transferee;
(iii) For the avoidance of doubt, Transferors and Uxin Group Company hereby acknowledge and agree that, for the sake of the switch of the
C2B System Technology and the C2B Payment System, with respect to the customers newly executed and the cash withdrawal
application initiated by the customers corresponding to the C2B Agreement during the period from the C2B Business Cooperation
Commencement Date to the C2B System and the Payment Switch Date, such new agreements and withdrawal applications shall be
completed by offline transfer and shall not be completed through online C2B Payment System.
(6) With respect to the C2B System Technology, the Transferors shall provide and deliver a complete code and data to the Transferee on or prior
to the C2B Business Cooperation Commencement Date (unless otherwise provided for herein);
Meanwhile, Transferors and Uxin Group Company hereby acknowledge and agree that:
The Transferors and relevant Uxin Group Company hereby acknowledge and covenant that they shall license the C2B System Technology to
the Transferee permanently and free of charge and the Transferee shall have the right to undertake internal sub-license and sublicense
arrangements within the Transferee and its Affiliates and make reasonable sub-authorization and sub-license arrangements to third parties in
respect of the C2B System Technology for the purpose of reasonably necessary for the conduct of C2B Business. The Transferors and the
relevant Uxin Group Company further covenant that, with respect to the C2B System Technology, they shall continuously ensure the stability
and good existing of such C2B System Technology and pay the relevant fees in a timely manner, handle the relevant issues in a timely manner
and on their own and shall not assign, guarantee, create any Encumbrance, restriction or any third party rights. The Transferors and the
relevant Uxin Group Company shall take all necessary measures to ensure that the Transferee can use the C2B System Technology in a
sustainable and good manner.
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(7) Within five (5) Business Days after the execution of this Agreement, but in any event no later than March 31, 2020, the Transferors and Uxin
Group Company shall provide the Transferee with the following amount, details and list corresponding to the C2B Business in such manner
and under such mechanism as reasonably satisfactory to the Transferee: the total outstanding balance of funds deposited by the customers
corresponding to the C2B Business as of the C2B Business Cooperation Commencement Date, the balance of margin and the amount of
prepayment, the amount of services newly purchased by the customers or renewed by the clients in March 2020 in April 2020 and the amount
of all booked packages of the customers. Any customer refund claim and related claim that are not set forth in the above amount, list and
schedule acknowledged by the Transferee shall be assumed and resolved by the Transferors and Uxin Group Company, and the Transferee
shall not be liable therefor.
(8) For the avoidance of doubt, the Transferee hereby understands and agrees that the business cooperation set forth in this Article 7.8 is solely
between the Transferors and Uxin Group Company and the Transferee in connection with the C2B Business. None of the contents and
arrangements under this Article 7.8 shall affect the conduct of transactions corresponding to the Underlying Assets and the Underlying
Business hereunder, and shall not be conditions precedent to the payment by the Transferee of the First Installment of the Transfer
Consideration and the Second Installment of the Transfer Consideration in accordance with this Agreement.
7.9 The Warrantors hereby jointly and severally agree that if the Transferee is subject to any damages, losses, claims, lawsuits, payment requirements,
judgments, settlements, taxes, interests, costs and expenses (including, without limitation, reasonable attorneys’ fee) at any time due to the
ownership issues of Intellectual Property under the Underlying Contracts set forth in Appendix XX, the Warrantors shall jointly and severally
indemnify, defend and hold harmless the Transferee and its applicable 58 Indemnified Persons (as defined below), and cause the Transferee and its
Affiliates and each of its other 58 Indemnified Persons to be indemnified on behalf of themselves or each of other Indemnified Persons, whether or
not a Party hereto.
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Article 8 Liability for Breach
8.1 The Warrantors jointly and severally agree that the Warrantors shall jointly and severally indemnify, defend and hold harmless the Transferee
and its Affiliates, directors, partners, shareholders, employees, agents and representatives (the “58 Indemnified Persons”) from and against any
damages, losses, claims, litigations, payment demands, judgments, settlements, taxes, interests, costs and expenses (including without limitation
reasonable attorneys’ fees) directly or indirectly relating to or arising out of the following matters or brought against the 58 Indemnified Persons
(regardless of whether brought by third party, by the Parties hereto or of other circumstances); the Transferee and its Affiliates may act on behalf
of themselves or on behalf of each Indemnified Person so that the Transferee and its Affiliates and each 58 Indemnified Persons could be
indemnified, regardless of whether or not it is a Party to this Agreement:
8.1.1 Breach by any Warrantor of any representations, warranties, covenants, agreements or obligations made by it under this Agreement,
including, without limitation, that any representation or warranty made by any Party under this Agreement is untrue;
8.1.2 The Transferors fail to fully pay any due taxes (including, without limitation, any penalties, surcharges, fines and interest relating to
taxes) payable or shall be withheld by the Transferors with respect to the Underlying Assets on or prior to the Closing Date in
accordance with the PRC Laws;
8.1.3 Penalty or Liability suffered by the Transferee or its Affiliates due to the use of the Underlying Intellectual Property Rights and any
other losses suffered by the Transferee or its Affiliates in connection with or relating to the Underlying Intellectual Property Rights;
8.1.4 Any losses suffered by the Transferee or its Affiliates resulting from any litigation, claim, dispute, administrative penalty or other legal
proceedings, damages, losses, judgments, legal actions and arbitration initiated against the Transferee or its Affiliates arising from any
action taken on or prior to the Closing Date in respect of the Underlying Assets and Underlying Business;
8.1.5 Any liabilities arising from any non-compliance activities of the Transferors with respect to the Underlying Assets on or prior to the
Closing Date;
8.1.6 Any Liability resulting from any non-compliance actions of the Transferors relating to the operation of the Underlying Business on or
before the Closing Date, including, without limitation, failure to obtain payment license, commercial bribery and failure to comply with
regulatory provisions of applicable Laws regarding the auctions;
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8.1.7 The losses suffered by the Transferee due to the fact that the Underlying Assets are registered or registered under the name or otherwise
vested in any Person other than the Transferors at any time prior to the transfer and/or delivery of the Underlying Assets to the
Transferee in accordance with this Agreement;
8.1.8 The Transferee’s losses arising from the missing Transferred Underlying Copyrights as disclosed in the Disclosure Letter;
8.1.9 The liabilities or losses suffered by the Transferee due to the Transferors’ failure to provide the Transferee with all original copies of
offline contracts prior to the Closing Date.
8.2 The Transferee agree that the Transferee shall indemnify, defend and hold harmless the Transferors and their Affiliates, directors, partners,
shareholders, employees, agents and representatives (the “Uxin Indemnified Persons”) from and against any damages, losses, claims, litigations,
payment demands, judgments, settlements, taxes, interests, costs and expenses (including without limitation reasonable attorneys’ fees) directly or
indirectly relating to or arising out of the following matters or brought against the Uxin Indemnified Persons (regardless of whether brought by
third party, by the Parties hereto or of other circumstances: Any breach by Transferee of any representations, warranties, covenants, agreements or
obligations made by it under this Agreement, including, without limitation, the failure by Transferee to pay in full or in a timely manner any
Transfer Consideration.
8.3 58 Information agrees to assume joint and several liability for the Transferee’ performance of their obligation of paying the Transfer Consideration
under this Agreement.
Article 9 Modification and Termination
9.1 This Agreement may be amended or modified by the Parties through mutual agreement. Any amendment or modification shall be made in writing
and become effective upon execution by the Parties hereto.
9.2 This Agreement may be terminated upon the mutual written consent of the Parties.
9.3 After the rescission of this Agreement in accordance with Article 9.2 above, unless otherwise agreed upon by the Parties, each Party hereto shall
return the considerations or the Underlying Assets received from the other Parties hereunder based on the principles of fairness, reasonableness,
honesty and credibility and try to restore to the status when this Agreement is executed.
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9.4 After the rescission of this Agreement, all rights and obligations of the Parties hereunder shall terminate. A Party shall not have other right of
claim against the other Parties under this Agreement or for the rescission of this Agreement, except for the liabilities assumed in accordance with
Article 8 and 9 hereof.
9.5 After the rescission of this Agreement, this Agreement (except for Article 8 (Liability for Breach), Article 9 (Modification and Termination),
Article 10 (Confidentiality), Article 11 (Governing Law and Dispute Resolution) and Article 12.6 (Expenses) hereof) shall lapse and cease to be
binding and effective and none of the Parties shall not assume liability and obligation of this Agreement. For the avoidance of doubt,
notwithstanding the rescission of this Agreement, a Party shall remain liable for any loss suffered by other Parties due to its breach of this
Agreement prior to the rescission hereof.
Article 10 Confidentiality
10.1 The Parties shall keep the existence and contents of this Agreement (the “Confidential Information”) confidential and without the prior written
consent of the Parties, shall not disclose the Confidential Information to any third party other than the professional consultants of the Parties, and
the directors, officers and employees of the Parties who actively participate in this Transaction (collectively the “Authorized Persons”). The
Parties must impel and ensure their respective Authorized Persons who receive the Confidential Information to comply with the same
confidentiality obligations as the Parties.
10.2 None of the Parties shall disclose the Confidential Information to any third party through press conference, industrial or professional media,
marketing materials or otherwise without the prior written consent of the Parties.
10.3 The restrictions set out in this Article 10 shall not apply to the disclosure of any information which:
10.3.1 The disclosure or use is required by the regulatory authorities;
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10.3.2 The disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreements
entered into pursuant to this Agreement or the reasonable disclosure of relevant matters to tax authorities;
10.3.3 The information has become public due to any reason that is attributable to any Party hereto.
If Confidential Information is disclosed for any of the above reasons, the disclosing Party shall discuss such disclosed matter with the other Party
within a reasonable time before its disclosure or submission of Confidential Information and shall request the other Party to give confidential
treatment to the Confidential Information disclosed or submitted by the disclosing Party as much as possible.
Article 11 Governing Law and Dispute Resolution
11.1 The formation, validity, interpretation and performance of this Agreement shall be governed by and bound by the PRC Laws.
11.2 All disputes arising out of or in connection with this Agreement shall be settled by the Parties through friendly negotiations; if such dispute cannot
be settled through negotiations within thirty (30) days from the date on which any Party gives notice to the other Parties, such dispute shall be
submitted to the Beijing Arbitration Commission for arbitration in Beijing in accordance with the Commission’s arbitration rules in effectiveness
at the time of applying for arbitration. The arbitration tribunal shall consist of three arbitrators, and the arbitration proceedings shall be conducted
in Chinese. The arbitral award shall be final and binding upon the Parties.
11.3 During arbitration procedure, the Parties shall continue to perform the other parts of this Agreement, except for the part in dispute.
12.1 This Agreement shall become effective upon signature or seal by the Parties. For matters not covered by this Agreement, the Parties shall enter
into a supplementary agreement through consultations. The supplementary agreement shall have the same legal effect as this Agreement.
Modification of this Agreement shall be made in writing through consultations and become effective on the date when the Parties affix their
signatures or seals to this Agreement.
Article 12 Others
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12.2 None of the Parties shall assign their respective rights and obligations under this Agreement to any third party without the prior written consent
from the other Parties.
12.3 This Agreement represents the entire agreement of the Parties with respect to the underlying matter hereof and supersedes and replaces any other
written or oral agreement or document executed by the Parties with respect to the underlying matter hereof.
12.4 If any term of this Agreement is invalid or unenforceable due to any law applicable to it, such term shall be deemed to have never existed and the
validity of other terms of this Agreement shall not be affected. The Parties to this Agreement shall negotiate and agree upon the new provisions
within the scope of lawfulness so as to ensure that the original provisions are fulfilled as to the greatest extent as possible.
12.5 No delay or omission by any Party to exercise any right, power or remedy accruing to any other Party upon any breach or default of this
Agreement, shall impair such right, power or remedy of such Party nor shall be construed to be a waiver of such breach or default, or an
acquiescence therein, or of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent, approval of breach or
default of any nature or character of this Agreement, or any waiver of any terms or conditions of this Agreement, must be in writing and shall be
effective only to the extent set forth in such writing. Any remedy provided for in this Agreement or by law or by other method to any Party, shall
be cumulative, not alternative and not exclusive.
12.6 Expenses. Unless otherwise agreed herein, Transferors shall bear all costs and expenses arising out of this Transaction. While the Parties shall bear
miscellaneous costs and expenses arising out of this Transaction and in connection with the transactions respectively (including, without
limitation, professional service fees and other costs and expenses of auditing, financial, legal, agency and other professional service fees and other
expenses).
12.7 All notices hereunder shall be written in Chinese and sent by delivery in person, registered mail, or E-mail to the following addresses and E-mail
addresses, unless otherwise agreed for herein:
Transferee and 58 Information:
Address: Building 101, Garden Jia No. 10, Jiuxianqiao North Road, Chaoyang District, Beijing
Attention: Li Xiaoyang
Email: *
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The Warrantor:
Address: 3/F, Zone E, Lixingxing Center, No. 8 Wangjing Guangshun South Street, Chaoyang District, Beijing
Attention: Zeng Zhen
Telephone: *
Email: *
Dai Kun:
Address: 3/F, Zone E, Lixingxing Center, No. 8 Wangjing Guangshun South Street, Chaoyang District, Beijing
Attention: Dai Kun
Phone: *
Email address: *
Any notice given or given under this Article shall:
(1) In the case of delivery in person and receipt of written receipts, if it is delivered no later than 17:00 on the Business Days of the place of
delivery, it shall be deemed to be served upon receipts of the written receipts upon delivery to the relevant address; or if it is delivered after
17:00 on the Business Days of the place of delivery or any time on a non-Business Day at the place of delivery, it shall be deemed to be
delivered at 9:00 a.m. on the next Business Day of the place of delivery;
(2) Delivery day shall be deemed to be five (5) business days from the mailing date if sent by postal courier service (postage prepaid) from and
to any places inside the PRC;
(3) Delivery day shall be deemed to be ten (10) business days from the mailing date if sent by international courier service (postage prepaid)
from or to any places outside of the PRC; or five (5) business days from the mailing date if sent by postal courier service (postage prepaid);
(4) Any notice given by e-mail shall be deemed to have been served on the date the e-mail is successfully transmitted, if the sender receives
system information that indicates that the e-mail has been successfully sent or no system information has been received within 24 hours
indicating that the e-mail has not been delivered or has been returned.
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(5) During the term of this Agreement, any Party shall have the right to change its address or facsimile number for receiving notices by giving
a written notice to the other Parties 15 days before the change.
12.8 In the event that a separate agreement is executed in accordance with the required forms of the governmental authorities for the purpose of
requested performance of a specific act by a governmental authority in connection with the transactions in this Agreement, this Agreement shall
have full priority over the separate agreement and such agreement may only be used to requested performance of such specific act from the
governmental authority and shall not be used to establish and prove the rights and obligations of the relevant Parties with respect to the matters
stipulated by this Agreement.
12.9 This Agreement is written in English. Ten (10) copies of this agreement shall be signed. The Transferors and the Warrantors shall hold five
(5) copies. The transferee and 58 Information shall hold five (5) copies, each of which shall have the same effect.
[The remainder of this page is intentionally left blank]
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In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
[Signature Page to the Assets and Business Transfer Agreement]
Youxinpai (Beijing) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
Youxin Internet (Beijing) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
Uxin Data-sharing (Beijing) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Yang Li
Yang Li
Uxin Limited
By:
Name:
Title:
/s/ Kun Dai
Kun Dai
Kun Dai:
/s/ Kun Dai
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In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
[Signature Page to the Assets and Business Transfer Agreement]
Youhan (Shanghai) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
Shenzhen Uxin Pengcheng Used Car Trading Market Co., Ltd.
By:
Name:
Title:
/s/ Leilei Huang
Leilei Huang
Yougu (Shanghai) Information Technology Co., Ltd
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
[Signature Page to the Assets and Business Transfer Agreement]
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
Youxin Yishouche (Beijing) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
Youzhen (Beijing) Business Consulting Co., Ltd
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
Chebole (Beijing) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
You Fang (Beijing) Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Zhen Zeng
Zhen Zeng
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
[Signature Page to the Assets and Business Transfer Agreement]
Beijing 58 Paipai Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Jinbo Yao
Jinbo Yao
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
[Signature Page to the Assets and Business Transfer Agreement]
Beijing 58 Information Technology Co., Ltd.
By:
Name:
Title:
/s/ Jinbo Yao
Jinbo Yao
Appendix I: Affiliates of Uxin Group Company
Appendix II: List of Underlying Contracts
Appendix III List of Underlying Copyrights
Appendix VI: List of Underlying Patents
Appendix V：List of Underlying Domain Names
Appendix VI: List of Underlying Trademarks
Appendix VII: List of Underlying Platform Accounts
Appendix VIII: List of Underlying Wechat Accounts
Appendix IX: List of Underlying Technologies and Systems
Appendix X: List of Underlying Deposits
Appendix XI: Agreements relating to the Underlying Copyrights
Appendix XII: Agreements relating to the Underlying Patents
Appendix XIII: Agreements relating to the Underlying Trademarks
Appendix XIV: Agreements relating to the Underlying Domain Names
Appendix XV: [Reserved]
Appendix XVI: Letter of Disclosure
Appendix XVII: Receiving and Payment Accounts and Escrow Arrangement
Appendix XVIII: Time Schedule for the Transfer of the Underlying Contracts
Appendix XIX Leased Properties by the Transferors and the relevant Uxin Group Company for the operation of Underlying Business
Appendix XX: Issues of Intellectual Property Rights in Business Cooperation with Key Customers
Appendix XXI: Receipt Logic and Net Working Capital as of November 30, 2019
Appendix XXII: Underlying Customer Relationships
Appendix XXIII: List of Documentary Request for the Underlying Assets Review
Appendix XXIV: Payment Mechanism for the First Installment of Transfer Consideration
A. The Transferors and the Warrantors hereby irrevocably acknowledge and agree that, the Transferee shall pay the First Installment of Transfer
Consideration based on the following mechanism:
(i) The First Installment of Transfer Consideration equivalent to RMB[*] shall be paid to a bank account in the name of the Transferors that
has been actually and absolutely held by the Transferee as an escrow agent (that is (x) any payment or withdrawal from such bank account shall be
subject to, and only to, the approval, signature or authorization of the Transferee or its designated representative and shall not be subject to the
approval, signature or authorization of the Transferor and its Affiliates; and (y) the Transferee or its designated representative shall has the right to
withdraw any amount from such bank account at any time at its sole discretion; and (z) the foregoing escrow authorization of such bank account shall
be perpetual, irrevocable and inalterable) (the “Transfer Consideration Escrow Bank Account”);
(ii) Except for RMB [*], the remaining Transfer Consideration shall be paid by the Transferee to the bank account designated by the
Transferors.
B. The Transferors and the Warrantors further irrevocably acknowledge and agree that, they shall issue a power of attorney to the Transferee to its
satisfaction with respect to the Transfer Consideration Escrow Bank Account prior to the closing, and irrevocably agree that the Transferee or its
designated representative shall have the right, at its sole discretion, to withdraw and transfer any fund in the Transfer Consideration Escrow Bank
Account at any time without obtaining any authorization or approval of the Transferors and the Warrantors, and that the abovementioned authorization
shall be perpetual, irrevocable and inalterable.
C. For the avoidance of doubt, on the day after the execution date of this Agreement and no later than five (5) Business Days prior to the Closing Date,
the Transferors and the Warrantors shall open the Transfer Consideration Escrow Bank Account with the bank designated by the Transferee in the
manner and mechanism that reasonably requested by the Transferee in respect of the Transfer Consideration Escrow Bank Account. Such Transfer
Consideration Escrow Bank Account shall adhere to the following mechanism:
A seal of the representative of the Transferee shall be added to the seals and chops reserved at the opening bank of the Transfer Consideration Escrow
Account and all the authorized administrators of the Transfer Consideration Escrow Account shall be replaced with the designated personnel of the
Transferee. And all the administrator U-Keys for the operation of the Transfer Consideration Escrow Bank Account, including without limitation, U-key
for the operation, U-key for the approval and U-key for the review, shall be handed over to the Transferee. For the avoidance of doubt, all the administrator
authorization set up by the Transferor and the relevant Uxin Group Company prior to the Closing shall automatically and permanently become invalid as of
the date on which the Transfer Consideration Escrow Account is opened.
The Transferee agrees to grant the Transferor the right to inquire about the Transfer Consideration Escrow Bank Account to the reasonable extent (for the
avoidance of doubt, the Transferee shall not be deemed to breach this Agreement if the Transferors fail to make such inquiry for any reason not attributable
to the Transferee).
Business Cooperation Agreement
April 14, 2020
Exhibit 4.39
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
[*] indicates the redacted confidential portions of this exhibit.
This Business Cooperation Agreement (this “Agreement”) is entered into on April 14, 2020 in Beijing, People’s Republic of China (“PRC”, for the
purpose of this Agreement, excluding the Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan Region) by and
between:
Business Cooperation Agreement
Party A1: Youxinpai (Beijing) Information Technology Co., Ltd.
Registered address: Room 323610, Floor 36, Building 5, Yard 1, Futong East Avenue, Chaoyang District, Beijing;
Party A2: Youxin Internet (Beijing) Information Technology Co., Ltd.
Registered address: Room 532, Floor 5, Southern Building, Block C, No.2 Kexueyuan South Road, Haidian District, Beijing;
Party A3: Youhan (Shanghai) Information Technology Co., Ltd.
Registered address: Room 105-37, Floor 1, Building 2, No.38 Debao Road, (Shanghai) Pilot Free Trade Zone, PRC;
Party A4: Shenzhen Uxin Pengcheng Used Car Trading Market Co., Ltd.
Registered address: the intersection of Chaguang Road and Shigu Road, Xili Street, Nanshan District, Shenzhen (within the vehicle exhibition space of
Youxinpai);
Party A5: Uxin Data-sharing (Beijing) Information Technology Co., Ltd.
Registered address: Unit 1501, Floor 15, Building 3, Chengying Center, No.5 Laiguangying West Road, Chaoyang District, Beijing;
Party A6:Yougu (Shanghai) Information Technology Co., Ltd.
Registered address: Room 368, Part 302, No.211 Fute North Road, (Shanghai) Pilot Free Trade Zone, PRC;
Party A7: Uxin Limited
Registered address: the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands;
Party A8: Youxin Yishouche (Beijing) Information Technology Co., Ltd.
Registered address: 323602 Room, 36/F, Building 5, No. 1 yard, Futongdong Street, Chaoyang District, Beijing;
Party A9: Youzhen (Beijing) Business Consulting Co., Ltd.
Registered address: 323608 Room, Building 5, No. 1 yard, Futongdong Street, Chaoyang District, Beijing;
Party A10: Chebole (Beijing) Information Technology Co., Ltd.
Registered address: 323609 Room, Building 5, No. 1 yard, Futongdong Street, Chaoyang District, Beijing;
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Party A11: You Fang (Beijing) Information Technology Co., Ltd.
Registered address: 323607 Room, Building 5, No. 1 yard, Futongdong Street, Chaoyang District, Beijing;
Party B: Beijing 58 Paipai Information Technology Co., Ltd.
Registered address: Room 406, Floor 4, College Park, Dongsheng Science & Technology Park, Zhongguancun, No.A18, Xueqing Road, Haidian District,
Beijing.
In this Agreement, Party A1, Party A2, Party A3, Party A4, Party A5, Party A6, Party A7, Party A8, Party A9, Party A10, Party A11 are collectively
referred to as “Party A”, Party A and its respective Subsidiaries collectively referred to as “Uxin Group Company”, Party A and Party B are collectively
referred to as “Parties”, and individually referred to as “Party”.
WHEREAS:
1. On March 24, 2020, Party A, Party B and other relevant parties entered into the Assets and Business Transfer Agreement (the “Assets and Business
Transfer Agreement”, as set forth in Appendix I), which provides for business cooperation among Party A, Party B and/or its Affiliates with respect
to Party A’s C2B Business (as defined in the Assets and Business Transfer Agreement).
2. Uxin Group Company intends to sell the Personal Car Source Clues (as defined below) collected by it from the Uxin Business Platform to Party B at
the price negotiated and agreed between Uxin Group Company and the Transferee. Party B agrees to accept the above Personal Car Source Clues and
intends to cooperate with Uxin Group Company in respect of C2B Business.
To clarify the content and methods of business cooperation, the Parties reach the following agreement through mutual consultation.
1 Definitions and Description
1.1 “Uxin Business Platform” shall mean all transaction platforms and entrances developed and operated by Uxin Group Company, which are used to
collect Personal Car Source Clues, including, without limitation, the entrance of “I want to sell car” on “Uxin” PC end (the corresponding domain
name is www.xin.com), “Uxin” M end (the corresponding domain name is m.xin.com.cn) and all of application ends of “Uxin”.
1.2 “Personal Car Source Clue” or “Clue” shall mean the relevant information of the used cars for sale by individuals, including, among others,
geographic location, vehicle license plate, vehicle brand/model/type, the time of issuance of the license plate, travelled mileage and contact
information.
1.3 “Customer” shall mean a merchant or individual which purchases Personal Car Source Clues from Party B and enters into contracts with Party B or
its Affiliates therefore becoming Party B’s business partner for Personal Car Source Clues.
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1.4 “Affiliate” shall mean, with respect to any legal person or unincorporated entity, (i) a person that directly or indirectly Controls such legal person or
unincorporated entity, or is (ii) Controlled directly or indirectly by, such legal person or unincorporated entity; (iii) any other person that is under a
direct or indirect common Control of the same person with such legal person or unincorporated entity. “Affiliate” of any natural person means the
immediate family of such natural person and persons Controlled by such natural person or the immediate family thereof, which includes spouse,
parents, children, brothers and sisters, grandparents, maternal grandparents, grandchildren and maternal grandchildren.
1.5 “Subsidiary” shall mean, with respect to legal person or unincorporated entity, any person Controlled by such legal person or unincorporated entity.
1.6 “Control” shall mean the right to direct or cause others to direct a Party (including, without limitation, the right to direct the business, management
and policies of such person directly or indirectly) obtained due to the ownership of more than fifty percent (50%) of equity interest in the Party, or
ownership of less than fifty percent (50%) of but relative majority of equity interest in the Party, or by way of agreement, appointment of directors
or other non-contractual means.
1.7 “Day” shall mean a calendar day.
1.8 “Business Day” shall mean a day (other than a Saturday, Sunday or statutory holiday) on which banks in the PRC are open for general business.
1.9 Interpreting Rules:
(1) Unless otherwise specified, any reference to a section, article, list, appendix or schedule of this Agreement is a reference to the section, article,
list, appendix or schedule of this Agreement;
(2) Any reference to a law, statute, regulation or ordinance shall be construed as a reference to such law, statute, regulation or ordinance as from time
to time in force, as amended, replaced or re-enacted and shall include any auxiliary legislation made under it;
(3) Words such as “including” and other similar expressions are not intended to be restrictive and shall be construed as if followed by the words
“without limitation”;
(4) Words importing the singular shall include the plural and vice versa; words importing a gender shall include all gender meanings;
(5) The table of contents and headings for this Agreement are for convenience only and do not affect in any way the content or interpretation of any
provision of this Agreement;
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(6) The appendices and schedules are integral parts of this Agreement and have the same effect as the main content of this Agreement. All
references to this Agreement include the appendices and schedules;
(7) References to writing or written shall include any mode of reproducing words in a legible and non-transitory form.
1.10 Where references are made in this Agreement to the specific undertakings or obligations of Uxin Group Company, Party A shall be responsible for
the performance of, or shall procure the specific members of Uxin Group Company to perform such undertakings and, to the extent that the relevant
members of Uxin Group Company perform such undertakings, Party A shall be jointly and severally liable for the performance of such obligations
of each Uxin Group Company.
2 Cooperation Mechanism
(1) The Parties acknowledge and agree that, as requested by Party B, Party A shall transmit all Personal Car Source Clues collected by Party B from
the Uxin Business Platform to the interface designated by Party B in real time on a daily basis through API. If Party B has special requirements
for Personal Car Source Clues, such as geographic area of Personal Car Source Clues, Party B shall notify Uxin Group Company of such special
requirements in writing prior to 12: 00 of the previous Day. If Party B does not notify special requirements for Personal Car Source Clues
provided by Uxin Group Company, Uxin Group Company shall provide Party B with all the Personal Car Source Clues collected from the Uxin
Business Platform.
(2) After receiving the above Personal Car Source Clues provided by Party A, Party B shall conduct repeated clues testing within 1 Day. Clues
passed the repeated clues testing (i.e. with the Clues which have been provided by Uxin Group Company to Party B (including the Clues
provided by Uxin Group Company to Party B or its Affiliates within 2 calendar months in accordance with the Assets and Business Transfer
Agreement)) shall enter Party B’s personal car source clue library (the Personal Car Source Clues entering Party B’s personal car source clue
library are hereinafter referred to as the “Stored Clues”), and such Stored Clues shall be provided by Party B to the Customers.
(3) The Parties acknowledge and agree that Party B undertakes to purchase all Stored Clues collected from the Uxin Business Platform during the
Cooperation Term. Without the prior written consent of Party B, Party A shall not sell to any other party any Personal Car Source Clues provided
by Party A to Party B in accordance with Article 2(1) hereof or use such Personal Car Source Clues in any manner.
(4) Party A covenants that, the Personal Car Source Clues provided to Party B in accordance with this Agreement are true, accurate, complete and
legal, and the methods and channels through which it obtains the Personal Car Source Clues are in compliance with laws and regulations. There
is no Personal Car Source Clues fabricated by Uxin Group Company in any manner or any Personal Car Source Clues obtained through any
illegal channel.
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(5) Party A acknowledges and agrees that the persons who shall perform the obligations under this Agreement shall include all Uxin Group
Company, whether or not they are Parties to this Agreement, i.e. each Uxin Group Company shall provide Party B with the Personal Car Source
Clues collected from the Uxin Business Platform in accordance with the provisions hereof and perform their obligations under this Agreement.
3 Fees and settlements
(1) The Parties acknowledge and agree that the price of the Personal Car Source Clues that Party A sells to Party B (the “Clue Price”) shall be:
(i) Clue Price of Type I: RMB[*]/piece (taxes included), Clue of Type I means the information of the car for sale submitted through the function
of “car sales reservation” after entering into the entrance of “I want to sell car” (or the entrance of similar function if renamed) of “Uxin” PC
end (the corresponding domain name is www.xin.com ), “Uxin” M end (the corresponding domain name is m.xin.com.cn ) or all of
application ends of “Uxin”;
(ii) Clue Price of Type II: RMB[*]/piece (taxes included). Clue of Type II means the information of the car for sale submitted through the
function of “to estimate the price” in the “Uxin” PC end (the corresponding domain name is www.xin.com), “Uxin” M end (the
corresponding domain name is m.xin.com) or all the app application ends of “Uxin”.
(iii) With each Clue of Type I purchased by Party B, Party A provides 0.65 piece of Clue of Type II as gift.
(2) The Parties shall check the quantity of Stored Clues on the 3rd Business Day of each month, and confirm the quantity of Clues purchased (including
the quantity of Clue of Type I and Clue of Type II). The fees for purchasing Personal Car Source Clues paid by Party B to Party A each month (the
“Purchase Fees”) shall be calculated as follows: Purchase Fees = Clue Price of Type I × Pieces of Stored Clues of Type I + Clue Price of Type II ×
Pieces of Stored Clues of Type II — Clue Price of Type II × Pieces of Clues as a gift.
(3) Party A shall issue VAT special invoice equivalent to the Purchase Fees to Party B within 3 Business Days after the Parties determine the quantity of
Clues purchased and the Purchase Fees based on the above provision. Party B shall pay the Purchase Fees to Party A’s designated account within 30
Days upon receipt of the invoice.
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4 Cooperation Term
(1) This Agreement shall commence from April 1, 2020 and end on March 31, 2021 (the “Cooperation Term”). If the Parties agree to extend the
Cooperation Term before the expiration of the Cooperation Term, the Parties shall enter into a separate agreement for the extended Cooperation
Term.
(2) If, during the Cooperation Term, either Party is bankrupt, insolvent, or enters into liquidation or dissolution proceedings, or ceases to carry on
business or is unable to pay its debts as they fall due or is otherwise unable to continue its existence, such Party shall give a written notice to the
other Party and the other Party shall have the right, but not an obligation, to terminate this Agreement upon thirty (30) Days prior written notice.
5 Further Arrangements
5.1 After the execution of this Agreement, the Parties agree to jointly procure their respective professional personnel to cooperate with each other and
be responsible for the coordination and overall arrangement of the cooperation between the Parties during the Cooperation Term hereof.
6 Intellectual Property and Data
6.1 Unless otherwise stipulated in this Agreement and the Assets and Business Transfer Agreement, for the purpose of this Agreement, the ownership of
any materials and information provided by the Parties respectively and the Intellectual Property (as defined below) thereon, including, without
limitation, all software systems, hardware systems and algorithms independently researched and developed by the Parties and the Intellectual
Property thereof shall still belong to the original Intellectual Property owner or provider who provides such materials, technology and algorithms,
and the ownership thereof shall not be changed due to the cooperation under this Agreement.
6.2 Unless otherwise expressly provided in this Agreement and the Assets and Business Transfer Agreement, without the prior written consent of the
right holder, neither party shall use without consent or reproduce the patent, trademark, name, mark, trade secret, know-how, data material, domain
name, copyright or other intellectual property (the “Intellectual Property”) of the other party.
6.3 The Parties shall use their best efforts to guarantee that the related business of this business cooperation is lawful and compliant; if any Party’s
cooperation under this Agreement infringes the Intellectual Property rights or other legitimate rights of any other party, or the products, services,
data or materials provided by such Party infringe the Intellectual Property rights or other legitimate rights of any other party, thus causing losses to
the other Party’s group, the group of such Party shall indemnify the other Party’s group for such losses.
6.4 From the execution date of this Agreement, with respect to the use of data generated by the Parties as a result of the cooperation under this
Agreement (including, without limitation, customer data, launch data, user data and others, collectively the “Business Data”), the Parties covenant
and warrant that they will not disclose such Business Data to the public or provide such Business Data to third parties and shall attach great
importance to and take all reasonable and necessary confidentiality measures to protect the Business Data collected during the cooperation so as to
ensure the security of such Business Data, except as permitted by the Parties in writing in advance.
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6.5 Neither Party shall use or mention any name, trade name, trademark or logo of the other Party or its Affiliates in any products or in any promotion
or marketing channels without the prior written consent of the other Party.
7 Confidentiality
7.1 The terms, detailed provisions, and appendices of this Agreement (including if any, all terms and provisions, and even the existence of this
Agreement, as well as any other relevant investment documents) shall be treated as confidential information and shall not be disclosed by the Parties
under this Agreement to any third party, unless otherwise specified.
7.2 The restrictions mentioned in Article 7 above does not apply to the information disclosed in the following situations:
7.2.1 The disclosure or use is required by laws, any regulatory authority or any stock exchange (the Parties shall then negotiate in good faith to
agree on the disclosure or use of the core commercial contents of this Agreement to the minimum extent as possible);
7.2.2 The disclosure is made to professional consultants of the Parties’ group, provided that the Parties’ group shall require such professional
consultants to comply with this Article 7 with respect to such confidential information as they were the Party to this Agreement;
7.2.3 The information has been in the public domain due to any reason that is not attributable to the Parties hereto;
7.2.4 The disclosure or use has been approved in advance and in writing by all the other Parties.
7.3 Regardless of whether the other terms in this Agreement are invalid, changed, cancelled, terminated, or not operational for any reason, Article 7
remains valid.
8 Expenses
Unless otherwise stipulated by this Agreement and the Assets and Business Transfer Agreement, each of the Parties shall bear all of its own costs and
expenses (including but not limited to taxes and fees) arising from the execution and performance of this Agreement.
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9 Representation, Undertakings and Warranties
Each Party makes the following representation, undertakings and warranties to the other Party:
9.1 It is a company established legally and validly existing;
9.2 It has the right to enter into this Agreement, and the execution, delivery and performance of this Agreement have been fully authorized, approved or
permitted; Upon execution, this Agreement shall be binding upon such Party, and shall be valid, effective and enforceable; the execution of this
Agreement by the duly authorized representative shall have been duly authorized on behalf of such Party;
9.3 The execution, delivery and performance of this Agreement do not require filing with, or sending notice to, any governmental authority or license,
permit, consent or other approvals from any governmental authority or any other person; and
9.4 It is capable of performing its obligations under this Agreement; and such performance of obligations does not violate any applicable law and
regulation, its articles of association, other constitutional documents, and any other legal documents binding upon it.
10 Force Majeure
10.1 Force majeure under this Agreement means any objective conditions that is unforeseeable at the time of execution of this Agreement, the occurrence
of which is unavoidable, and the consequences of which is insurmountable by the Parties.
10.2 In case where a force majeure event occurs, the Party affected by such event shall not be responsible for any damage, additional costs, or losses
which the other Party may suffer due to the failure or delay of performance of such Party’s obligations under this Agreement, and such failure or
delay of performance of this Agreement shall not be deemed a breach of this Agreement. The Party alleging the occurrence of the force majeure
event shall take appropriate actions to minimize or eliminate the effects of the force majeure event, and attempt to resume the performance of the
obligations delayed or hindered by the force majeure event within the shortest possible time.
11 Governing Law and Dispute Resolution
11.1 The formation, validity, interpretation, implementation of this Agreement and the settlement of any disputes arising under this Agreement shall be
governed by and interpreted in accordance with the PRC laws.
11.2 All disputes arising from the implementation of this Agreement or in connection with this Agreement shall be settled by the Parties through friendly
consultation. If any dispute cannot be settled through consultation, either Party shall have the right to submit the dispute to the Beijing Arbitration
Commission for arbitration in Beijing in accordance with the arbitration rules of the Beijing Arbitration Commission effective at that time. The
arbitration proceedings shall be conducted in Chinese. The arbitration award shall be final and binding for all Parties.
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11.3 During the dispute resolution period, except for the matters in dispute, the Parties shall continue to respectively be entitled to the other rights and
perform the other obligations under this Agreement.
12 Liabilities
12.1 If any Party (the “Breaching Party”) breaches any provision of this Agreement (including, without limitation, breach of any representations,
undertakings and warranties herein), fails to perform its obligations under this Agreement (including, without limitation, various undertakings and
obligations that shall be performed), or performed the obligations in a way contrary to the provisions hereof, such Party shall be deemed to have
constituted a breach of this Agreement (the “Breach”). The non-breaching Party shall have the right to give a written notice to the defaulting party
to request the Breaching Party to remedy the Breach and perform its obligations under this Agreement as soon as possible from the date of receipt of
the notice.
12.2 The Breaching Party shall be liable to indemnify the non-breaching Party and its Affiliates for the losses suffered by them as a result of the Breach.
Unless otherwise provided for herein, the indemnification amount paid by the Breaching Party to the non-breaching Party for the Breach shall equal
to the losses, costs and expenses (including, without limitation, reasonable fees and expenses of legal counsels and consultants) incurred by the non-
breaching Party and its Affiliates due to the Breach.
12.3 It is specifically agreed that if Uxin Group Company breaches this Agreement and causes Party B’s inability to obtain Personal Car Source Clues
within 15 minutes, Party A undertakes to solve such problem within 24 hours upon receiving the service request of Party B. If Party A fails to solve
the problem within the agreed time period due to Party A’s own reason, resulting in revenue decrease on the part of Party B, or disputes between
Party B and its Customers and the indemnification liability of Party B, Party A shall pay a sum of liquidated damages equals to 0.5% of the
settlement amount of the same month to Party B.
13 Others
13.1 During the Cooperation Term, neither Party shall comment negatively on the other Party in the public, including but not limited to commenting the
company’s image, company brand, product design, research and development, applications, operation strategy, and all other information related to
the company and its products.
13.2 In the case of termination of this Agreement, unless otherwise provided herein, the Parties shall not further perform this Agreement. However,
Articles 7, Articles 10, Articles 11, Articles 12 and Articles 13 hereof shall remain valid. The termination of this Agreement does not affect the
indemnification or compensation or other remedies to which each Party is entitled to under this Agreement.
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13.3 Any notice or other communication in connection with this Agreement delivered from one Party to the other Party (the “Notice”) shall be in writing
and shall be delivered to the contact person according to the correspondence address or communication number or email address listed below:
Party A
Contact person: Xuemei He
Mailing Address: 4/F, Tower E, Lixingxing Center, No. 8 Guangshun South Street, Chaoyang District, Beijing
Mobile phone: *
E-mail: *
Party B
Contact person: Jiang Zhao
Mailing Address: Building 101, No. 10 Jia, Jiuxianqiao North Road, Chaoyang District, Beijing
Email: *
13.4 The time when the Notice is served with respect to the notifying methods specified in the preceding paragraph shall be determined in the following
ways:
13.4.1 If the Notice is delivered face-to-face, it shall be deemed to be served when the recipient signs for receipt;
13.4.2 All the Notices delivered by mailing shall be given by registered mail or express mail. The Notices by registered mail shall be deemed to be
served to the recipient on the seventh (7th) day from the mailing date, and the Notices by express mail shall be deemed to have been served
when the recipient signs for receipt.
13.4.3 If the Notices is delivered by email, the Notice shall be deemed to be served when the email system shows that the recipient actually receives
the Notice.
If either Party changes the above mailing address or contact information (the “Party with Contact Information Update”), it shall notify the other
Party within seven (7) days after the occurrence of such change. If the Party with Contact Information Update fails to notify the other Party in time
as agreed, it shall bear the losses caused hereby.
Any Party may at any time change its address for the Notices by a notice delivered to the other Party in accordance with the terms hereof.
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13.5 The Parties shall designate personnel to communicate with each other in respect of the cooperation matters set forth in Article 2 hereof. In case of
any change of the contact person of either Party, such Party shall notify the other Party in accordance with the notifying methods set forth in
Article 13.4 within 12 hours upon the occurrence of such change of the contact person.
13.6 This Agreement may be amended and supplemented by consultation and consensus between the parties, and any amendment and supplement to this
Agreement shall be agreed in writing. The Parties agree that the Parties shall review and discuss the terms and conditions of this Agreement at least
once a year after the effective date of this Agreement based on circumstances then. If any amendment or supplement to the terms and conditions of
this Agreement is needed according to the circumstance then, the Parties shall actively cooperate with each other to reach an agreement. The
amendments and supplements that have been duly performed by the Parties related to this Agreement shall be a part of this Agreement and shall
have the same legal effect as this Agreement.
13.7 This Agreement shall come into effect on the date it is performed by all parties. After coming into effect, this Agreement shall constitute the entire
agreement and consensus reached by the Parties with respect to the subject matter hereof, and replace any and all other oral or written agreements
and consensus reached by the Parties prior to this Agreement other than the Asset and Business Transfer Agreement.
13.8 Failure of any Party hereto to timely exercise a right under this Agreement shall not constitute a waiver thereof, nor affect the exercise of such right
in the future by such Party.
13.9 If any term of this Agreement is deemed as invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability
of any other term of this Agreement. Under such circumstance, the Parties hereto shall negotiate in good faith to agree on the substitute terms that
are as consistent as possible with the expressed intent of the original terms and satisfactory to all the Parties.
13.10 In the case of any discrepancy between the provisions of this Agreement and the Assets and the Business Transfer Agreement, this Agreement shall
prevail to the extent of the matters agreed in this Agreement.
13.11 The headings that are used in this Agreement are for convenience only and shall not to be used in construing or interpreting this Agreement.
13.12 This Agreement shall be made in four (4) copies with Party A and Party B holding two (2) copies respectively. Each copy shall have the same legal
effect.
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In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
Youxinpai (Beijing) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
Youxin Internet (Beijing) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
Uxin Data-sharing (Beijing) Information Technology Co., Ltd. (Seal)
/s/ Yang Li
By:
Name: Yang Li
Title:
Uxin Limited
/s/ Kun Dai
By:
Name: Kun Dai
Title:
Kun Dai:
/s/ Kun Dai
SIGNATURE PAGE
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
Youhan (Shanghai) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
Shenzhen Uxin Pengcheng Used Car Trading Market Co., Ltd. (Seal)
/s/ Leilei Huang
By:
Name: Leilei Huang
Title:
Yougu (Shanghai) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
SIGNATURE PAGE
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
Youxin Yishouche (Beijing) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
Youzhen (Beijing) Business Consulting Co., Ltd (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
Chebole (Beijing) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
You Fang (Beijing) Information Technology Co., Ltd. (Seal)
/s/ Zhen Zeng
By:
Name: Zhen Zeng
Title:
SIGNATURE PAGE
In witness whereof, this Agreement is signed by the duly authorized representatives of the following parties on the date of above written:
Beijing 58 Paipai Information Technology Co., Ltd. (Seal)
/s/ Jinbo Yao
By:
Name: Jinbo Yao
Title:
SIGNATURE PAGE
Appendix I
The Assets and Business Transfer Agreement
List of Principal Subsidiaries and Consolidated Affiliated Entities
EXHIBIT 8.1
Place of Incorporation
Subsidiaries:
Uxin Used Car Limited
UcarEase Holding Limited
UcarBuy Holding Limited
Uxin Hong Kong Limited
UcarShow HK Limited
GloryFin International Group Holding Company Limited
UcarBuy HK Limited
Youxinpai (Beijing) Information Technology Co., Ltd.
Youhan (Shanghai) Information Technology Co., Ltd.
Yougu (Shanghai) Information Technology Co., Ltd.
Youzhen (Beijing) Business Consulting Co., Ltd.
Kai Feng Finance Lease (Hangzhou) Co., Ltd.
Youqin (Shanxi) Finance Lease Co., Ltd.
Boyu Finance Lease (Tianjin) Co., Ltd.
Youxin (Shanghai) Used Car Business Co., Ltd.
Baogu Automobile Technology Services (Beijing) Co., Ltd.
Consolidated affiliated entities:
Youxin Internet (Beijing) Information Technology Co., Ltd.
Youxin Yishouche (Beijing) Information Technology Co., Ltd.
Cayman Islands
British Virgin Islands
British Virgin Islands
Hong Kong
Hong Kong
Hong Kong
Hong Kong
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
PRC
EXHIBIT 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Kun Dai, certify that:
1. I have reviewed this annual report on Form 20-F of Uxin Limited (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal
control over financial reporting.
Date:
May 12, 2020
By:
/s/ Kun Dai
Name: Kun Dai
Title:
Chief Executive Officer
EXHIBIT 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Zhen Zeng, certify that:
1. I have reviewed this annual report on Form 20-F of Uxin Limited (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by
the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal
control over financial reporting.
Date: May 12, 2020
By:
/s/ Zhen Zeng
Name: Zhen Zeng
Title:
Chief Financial Officer
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EXHIBIT 13.1
In connection with the Annual Report of Uxin Limited (the “Company”) on Form 20-F for the year ended December 31, 2019 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Kun Dai, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: May 12, 2020
By:
/s/ Kun Dai
Name: Kun Dai
Title:
Chief Executive Officer
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EXHIBIT 13.2
In connection with the Annual Report of Uxin Limited (the “Company”) on Form 20-F for the year ended December 31, 2019 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Zhen Zeng, Chief Financial Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: May 12, 2020
By:
/s/ Zhen Zeng
Name: Zhen Zeng
Title:
Chief Financial Officer
Consent of Independent Registered Public Accounting Firm
EXHIBIT 15.1
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-227576 and No. 333-232204) of Uxin Limited of
our report dated May 12, 2020 relating to the financial statements, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
May 12, 2020
EXHIBIT 15.2
May 12, 2020
Uxin Limited.
2-5/F, Tower E, LSHM Center,
No. 8 Guangshun South Avenue,
Chaoyang District,
Beijing, 100102
People’s Republic of China
Dear Sir/Madam:
We hereby consent to the reference of our name under the headings “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate
Structure” and “Item 4. Information on the Company—C. Organizational Structure” in Uxin Limited’s Annual Report on Form 20-F for the year ended
December 31, 2019 (the “Annual Report”), which will be filed with the Securities and Exchange Commission (the “SEC”) on the date hereof, and further
consent to the incorporation by reference into the Registration Statements on Form S-8 (No. 333-227576 and No. 333-232204) pertaining to Uxin Limited’s
2018 Amended and Restated Share Incentive Plan and 2018 Second Amended and Restated Share Incentive Plan of the summary of our opinion under the
headings “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure” and “Item 4. Information on the Company—C.
Organizational Structure” in the Annual Report. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities
Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Very truly yours,
/s/ JunHe LLP
JunHe LLP