Exhibit 10.2

 

Business Cooperation Agreement and Valuation Adjustment Mechanism and
Indemnification

Agreement

 

This Business Cooperation Agreement and Valuation Adjustment Mechanism and
Indemnification Agreement (hereinafter, this “Agreement”) is made and entered
into on [August 26, 2018] in [Changsha] by and among:

 

(1)The Company: Sichuan Jinkailong Automobile Leasing Co., Ltd.

 

Unified social credit code: 91510115MA62NLDU04

 

Place of business: Floor 2, Building 1, No. 2 Liudao Street, Jinma Town,
Wenjiang District, Chengdu City

 

(2)Party A: Hunan Ruixi Financial Leasing Co., Ltd.

 

Unified social credit code: 91430100MA4PDEM573

 

Place of business: Room 910, Building 1, Huitong Building, No. 168 Hehua Road,
Hehuayuan Street, Furong District, Changsha City, Hunan Province

 

(3)Party B: Xiaoliang Chen

 

Identity card number: 330727198705232217

 

Domicile: No. 135, Xichan Village, Renchuan Town, Pan’an County, Zhejiang
Province

 

(4)Party C: Xi Yang

 

Identity card number: 522426198609164722

 

Domicile: No. 31, Group 13, Fangbei Village, Nanquan Town, Shifang City, Sichuan
Province

 

(5)Party D: Yiqiang He

 

Identity card number: 510682198606094755

 

Domicile: No. 31, Group 13, Fangbei Village, Nanquan Town, Shifang City, Sichuan
Province

 

(6)Party E: Xiaohui Luo

 

Identity card number: 510902198602214670

 

Domicile: No. 2, Group 4, Qilidian Village, Baoshi Town, Anju District, Suining
City, Sichuan Province

 

Of which, Party C and Party D are husband and wife; Party B, Party C, Party D
and Party E shall be collectively referred to hereinafter as the “Original
Shareholders”.

 

Whereas,

 

1.Sichuan Jinkailong Automobile Leasing Co., Ltd. is a limited liability company
duly established and validly existing under the law of the People’s Republic of
China, and as of the execution date of this Agreement, it has a registered
capital of RMB10 million, with its shareholding set out in the table below:

 

Name of shareholder Capital contribution (in RMB million) Shareholding
percentage Xiaoliang Chen Subscribed for 5.3 Actual paid-in is 0 53% Xi Yang
Subscribed for 4.7 Actual paid-in is 0 47%

 

   

 

 

2.Party A is willing to acquire 35% of the shares in the Company held by the
Original Shareholders in the aggregate. After Party A becomes a shareholder of
the Company, it will jointly operate the Company with the Original Shareholders
and they will enter into a number of business cooperation arrangements.

 

In order to better expand the Company’s business and market share and to protect
the legitimate rights and interests of each party, the Parties have entered into
this Agreement on the following terms and conditions after due negotiation
regarding the issue of joint cooperation among them in accordance with
applicable state laws, regulations and consistent with principles of equality,
mutual benefit and furtherance of growth together:

 

1.Matter of Cooperation

 

1.1Party A is willing to acquire 35% of the shares in the Company in the
aggregate held by the Original Shareholders for the own account or by the
Original Shareholders on the behalf of others for a consideration of RMB0.

 

1.2After the completion of this share acquisition, Party A will entrust the
Original Shareholders with the operation and management of the Company, which
shall set up a management team meeting the requirements of Party A to develop
the business.

 

2.After the completion of the above acquisition, Party A shall, in its capacity
of a shareholder of the Company, enter into an automobile sale cooperation
arrangement with the Target Company in an amount not more than RMB40 million.

 

3.Shareholding in the Company

 

3.1As of the execution date of this Agreement, the registered capital of the
Company is RMB10 million. The shareholding structure of the Company as
registered at the authority for industry and commerce is set out in the table
below:

 

Name of shareholder Capital contribution (in RMB million) Shareholding
percentage Xiaoliang Chen Subscribed for 5.3 Actual paid-in is 0 53% Xi Yang
Subscribed for 4.7 Actual paid-in is 0 47%

 

3.2Pursuant to the Share Entrustment Agreement between Party C and Party D dated
April 26, 2018, Party C shall hold the 42.3% of shares in the Company on the
behalf of Party D, the amount of whose shares was paid by Party D; pursuant to
the Share Entrustment Agreement between Party B and Party E dated April 26,
2018, Party B shall hold the 5.3% of shares in the Company on the behalf of
Party E, the amount of whose shares was paid by Party E; pursuant to the Share
Entrustment Agreement between Party C and Party E dated April 26, 2018, Party C
shall hold the 4.7% shares in the Company on the behalf of Party E, the amount
of whose shares was paid by Party E, with the details set out in the following
table:

 

Shareholder with industrial and commercial registration Industrial and
commercial shareholding Actual holder Shareholding as entrusted Xiaoliang Chen
53% Xiaoliang Chen 47.7% Xiaohui Luo 5.3% Xi Yang 47% Yiqiang He 42.3% Xiaohui
Luo 4.7%

 

   

 

 

3.3Party B, Party D and Party E are the actual shareholders of the Company,
collectively holding 100% of the shares in the Company.

 

4.Share Acquisition

 

4.1Party A will acquire 35% shares in the aggregate in the Company held by the
Original Shareholders for their own account and for others. The actual
shareholders agree and authorize Party B to transfer the 18.55% shares it held
in the Company and interests therein to Party A for a consideration of RMB0, and
authorize Party C to transfer the 16.45% shares it held in the Company and
interests therein to Party A for a consideration of RMB0 (collectively, the
“Share Acquisition”). After the completion of this share acquisition, the
shareholders and their shareholding in the Company shall be as set forth in the
following table:

 

Shareholder name Capital contribution (in RMB million) Shareholding percentage
Hunan Ruixi Financial Leasing Co., Ltd. Subscribed for 3.5 Actually paid 0 35%
Xiaoliang Chen Subscribed for 3.445 Actually paid 0 34.45% Xi Yang Subscribed
for 3.055 Actually paid 0 30.55%

 

 

4.2Party A, on the one part, and Party B, Party C, on the other part, will enter
into the Share Transfer Agreement on the matter of the Share Acquisition, and
will process changes of industrial and commercial registration.

 

4.3The Original Shareholders undertake that, after the completion of the Share
Acquisition, none of the shareholders of the Company (other than Party A) shall
hold more than 35% of shares in the Company, and all shareholders shall assist
Party A with the consolidation of financial statements regarding the Company,
and ensure Party A has a control of the general meeting and board of directors
of the Company.

 

4.4After the completion of the Share Acquisition, Party A shall hold 35% of the
shares in the Company, and the Original Shareholders shall collectively hold 65%
of the shares. The shareholders with industrial and commercial registration, and
actual shareholders’ shareholding in the Company shall be as set out in the
following table:

 

Shareholder with industrial and commercial registration Industrial and
commercial shareholding Actual shareholder Shareholding entrusted Xiaoliang Chen
34.45% Xiaoliang Chen 31.005% Xiaohui Luo 3.445% Xi Yang 30.55% Yiqiang He
27.495% Xiaohui Luo 3.055% Hunan Ruixi Financial Leasing Co., Ltd. 35% Hunan
Ruixi Financial Leasing Co., Ltd.

 

/

 

5.Business Cooperation

 

5.1After the completion of the share acquisition set forth in Article 3, Party A
agrees to enter into automobile sale arrangement with the Company in an amount
up to RMB40 million (hereinafter, the “total automobile price”) and other
cooperation. To the extent of the above maximum amount, the Company will, as
required by its business needs, file a business application with Party A
regarding the automobile sale and other business, and the Parties will
separately enter into an Automobile Sale Contract with respect to each
transaction (to be subject to the contract entered into between the Parties).

 

   

 

 

5.2Payment of amounts under the Automobile Sale Contract: The two Parties agree
that, within one month after the occurrence of each single transaction, namely,
within one month after the title to the automobiles is registered by Party A
under the name of the Company, the Company shall pay at least 70% of the total
contract price, otherwise a monthly interest at a rate of 1.5% shall accrue,
which shall be payable to Party A within one month; the remaining automobile
purchase price (not exceeding 30% of the total contract price) shall be payable
to Party A within 36 months in 36 monthly installments at a monthly interest
rate of 0.59% of the amount overdue, and if Company fails to pay so on a monthly
basis, then Party A is entitled to charge 1% of the total amount overdue
(including the interest) as a late penalty.

 

5.3Each party agrees that, where the Original Shareholders are in violation of
any obligations hereunder or under any other related agreements, and the default
fails to be cured within a reasonable period of time after a written notice
served on the Original Shareholders by Party A, Party A is entitled to take such
actions as ceasing the automobile purchase and sale business, terminating the
related agreement, changing the types of transaction, without incurring any
liability for breach of contract or liability for damages.

 

6.Conditions Precedent

 

6.1The conditions to the obligation of Party A to conduct the automobile
purchase and sale transaction set forth in Article 5 shall be:

 

(1)All Parties hereto shall have duly entered into this Agreement;

 

(2)The Company shall have completed a due diligence to the satisfaction of Party
A, including but not limited to financial and legal due diligence;

 

(3)Provision of other certificates, authorizations or other documents related to
or required for the validity and enforceability of this Agreement as requested
by Party A, including but not limited to the shareholder resolutions adopted by
the Company;

 

(4)The senior management and the Original Shareholders of the Company shall have
entered into a labor contract, a non-compete agreement and a confidentiality
agreement to the satisfaction of Party A in the substance and form required by
Party A;

 

(5)Party A shall have assigned executive directors and financial personnel to
the Company;

 

(6)The Company shall have conducted the rectification as required by Party A,
including but not limited to effecting changes to the business operation mode,
senior management and financial personnel;

 

(7)The Company shall be able to conduct normal business and not affected by the
previous license revocation;

 

(8)Party A shall have completed the Share Acquisition as set forth in Article 3,
and the Company shall have completed the change of industrial and commercial
registration, and Party A shall have become a shareholder of the Company.

 

7.Performance Guarantee and Equity Compensation

 

7.1The Original Shareholders shall be responsible for the business operation and
staffing of the Company and Party A within the boundary of Hunan Province. The
Original Shareholders warrant that, within 9 months after Party A has offered
cooperation regarding the automobile purchase and sale transactions for the
first time (the “performance review period”), the Company shall achieve the
following performance indices that meet the requirements of Party A:

 

   

 

 

(1)The Company and Party A shall obtain a total amount for automobile financing
in Hunan Province of RMB200 million (pre-tax) in the aggregate; of which, Party
A’s automobile transactions in Hunan Province shall achieve an amount (pre-tax)
of not less than RMB40 million.

 

(2)The transactions of the Company and Party A in Hunan Province shall achieve a
revenue of RMB20 million in the aggregate, and achieve a net profit no less than
RMB10 million; of which, Party A’s transactions in Hunan Province shall achieve
a revenue no less than RMB4 million, and achieve a net profit of not less than
RMB2 million.

 

(3)The business transactions in Hunan Province shall be carried out after Party
A is enlisted by the Bank of Changsha, obtains the credit line granted by the
Bank of Changsha and commences its normal business. If Party A fails to obtain
the credit line granted by the Bank of Changsha, the part of transactions to be
conducted in Hunan as mentioned above is not required to be fulfilled in Hunan.

 

7.2If the Company and Party A fail to fulfill the performance guarantee under
Article 7.1, Party A shall pay the Original Shareholders 35% of the shares in
the Company as an equity indemnification in proportion to the shares actually
transferred by them (with the payment terms to be determined by the Original
Shareholders upon negotiation). The equity indemnification shall be equal to the
product of (1) the audited net profit of the Company at the end of the
performance review period and (2) the shareholding percentage (“Equity
Compensation Amount”). If the business guarantee under Article 7.1 fails to be
fulfilled during the performance review period, Party A is not required to pay
any Equity Compensation Amount.

 

7.3If Party A fails to fulfillment its obligation to provide the automobile
financial lease service of a total amount of RMB40 million to the Company during
the performance review period (here “fails” shall only refer to the situation
where the automobile financial lease transactions proposed by the Company
meeting the applicable requirements have achieved an amount of RMB40 million but
Party A fails to meet the fund requirements), then irrespective of whether or
not the Company and Party A have fulfilled the performance guarantee under
Article 7.1, Party A shall pay the actual controllers and the Original
Shareholders the Equity Compensation Amount equal to the product of the audited
net profit of the Company at the end of the performance review period and the
shareholding percentage.

 

7.4The above revenue, expenditure mentioned above shall be subject to those set
forth in the financial statements acceptable to each Party.

 

7.5Each Party shall be responsible for the payment of its own taxes regarding
the payment of Equity Compensation Amount. If any tax is required to be deducted
or withheld by Party A, Party A is entitled to directly deduct the same from the
Equity Compensation Amount.

 

8.Corporate Governance

 

8.1The Company shall have full-time financial personnel, and establish a fund
management system. Party A is entitled to assign full-time financial personnel
to the Company to supervise the finance of the Company. The Company shall:

 

(1)Within sixty (60) days after the end of each financial year, provide each
Shareholder with audited annual financial statements for the previous accounting
year;

 

(2)Within ten (10) days after the end of each quarter, provide each Shareholder
with financial statements for such quarter.

 

8.2The Original Shareholders hereby agree that, as of the execution date of this
Agreement and two years after they cease to be the shareholders of the Company,
except with the prior written consent of Party A, they shall not directly or
indirectly engage in any commercial activity that is similar to the operation of
the Company, nor shall solicit and offer any employment/position of another
company to any employee of the Company.

 

   

 

 

8.3Each Party agrees that, the Company shall distribute profits to the
Shareholders once a year in proportion to the shareholding of each Shareholder.

 

8.4After Party A becomes the shareholder of the Company, the Company shall have
an executive director, and Party A may appoint a person to the Company as an
executive director.

 

8.5After Party A becomes a shareholder of the Company, it shall have the veto
power on the following issues:

 

(1)To increase or decrease the registered capital of the Company;

 

(2)Dissolution, liquidation, combination, division of the Company;

 

(3)Disposition of major assets of the Company of an value greater than RMB1
million;

 

(4)Establishment of any subsidiary, joint venture, partnership or conduct of
external equity investment;

 

(5)Establishment of any stock and option plan that may affect the shareholding
of Party A;

 

(6)Approval of profit distribution plan;

 

(7)Any major change to the scope of the main business;

 

(8)Any amendment to the articles of association of the Company that has an
adverse effect on the shareholder interests of Party A;

 

(9)Provision of any security for obligations of the Company or a third party.

 

9.Acquisition of Remaining Shares of the Company

 

9.1Party A is entitled, during the [12] months after the expiry of the
performance review period (“Exclusive Period”), to negotiate with the Original
Shareholders on whether to transfer the remaining 65% shares of the Company, and
Party A has the right of first refusal to purchase the transferred shares, all
other things being equal.

 

9.2During the above Exclusive Period, if the Original Shareholders determine to
transfer the shares to a third party, or conduct negotiation with any
prospective third party regarding the purchase of shares, or in response to the
request by Party A to enter into a formal agreement regarding the transfer but
the Original Shareholders unreasonably refuse to do so, then the Original
Shareholders shall be liable to indemnify Party A for the losses incurred as a
result thereof.

 

9.3Party A hereby agrees that, if it fails to prepare itself for or fails to
complete such transaction, it will notify the Original Shareholders.

 

10.Pre-emptive Right and Anti-Dilution Measures

 

10.1Pre-emptive right: the Original Shareholders further undertake that, if the
Company increases its capital or issues any share of any class to any person, it
will procure the Company to first offer to Party A prior to others, which shall
entitle Party A to purchase such shares on the same issue terms and for the same
consideration as those proposed to be offered by the Company to the subscribers,
so that the shareholding by Party A will be rendered equal to that prior to the
capital increase or share issuance; and if any agreement or arrangement renders
any final investment cost by any new investor lower than the compensation paid
by Party A to the Original Shareholders, Party A shall make the share adjustment
in the following formula of weighted average ratchet:

 

   

 

 

The formula of weighted average ratchet:

 

A = B × (C + D) / (C + E)

 

Of which,

 

A = new and adjusted unit price after the investor receives the compensation;

 

B = previous unit price at which the investor receives the shares of the
Company;

 

C = registered capital of the Company prior to the further capital increase;

 

D = registered capital attributable to the further capital increase at the price
of B;

 

E = actually increased registered capital of the Company as a result of the
capital increase

 

In order to make up for the difference regarding the shareholding of Party A
before and after the weighted average ratchet adjustment, Party A may request
the Original Shareholders to transfer all or part of their shares or equity to
Party A free of charge, so as to render the total shares held by Party A after
the share transfer equal to the actual total investment by Party A/A.

 

11.Priority of Claims in Liquidation and Priority to Receive Dividends

 

11.1Subject to applicable Chinese laws and regulations and other rules, in the
case of any liquidation, dissolution or closure of the Company, Party A may have
the right to receive liquidated assets prior to other shareholders of the
Company.

 

11.2Party A is entitled to receive share dividends prior to other shareholders
of the Company.

 

12.Redemption

 

12.1In the case of any of the following, Party A is entitled to request the
Company or the Original Shareholders to redeem all shares held by Party A in the
Company:

 

(1)Any defects exists in the acquired equity or this equity acquisition fails to
be completed due to the Original Shareholders or any company controlled by the
Original Shareholders;

 

(2)The Original Shareholders or the Company fails to achieve the performance
requirements provided herein;

 

(3)The Company fails to conduct its business in a normal manner due to license
revocation;

 

(4)The Company’s business is alleged to violate any law or regulation;

 

(5)The Company fails to renew the cooperation agreement with Didi Chuxing
Technology Co., Ltd.;

 

(6)Other events that prevent the investment purpose of Party A from being
achieved.

 

In the case of any event set forth in this Article 12.1, Party A may request the
Original Shareholders or the Company to purchase all or part of the shares held
by Party A in the Company at a redemption price that is equal to the product of
current after-tax net profit of the Company and the shareholding percentage; if
Party A suffers any loss as a result thereof, Party A may hold the Original
Shareholders and the Company liable to indemnify for the losses, including but
not limited to the capital cost loss (at a bank loan interest rate for the same
period of time), attorney’s fee, litigation fee, insurance preservation cost,
investigation cost incurred in the recovery.

 

   

 

 

13.Confidentiality

 

13.1During the term of this Agreement, each Party shall:

 

(1)Strictly keep in confidence the confidential information and not use the same
for any purpose other than the performance of this Agreement;

 

(2)The validity of this confidentiality clause shall bind employees, directors,
shareholders, consultants, agents or other representatives and other entities
and individuals bound by this Agreement. The relevant party shall be liable for
breach of contract for the violation of such entities or individuals.

 

13.2Article 13.1 above does not apply to the following information:

 

(1)Information that the recipient has known prior to the disclosure by any other
party, as proved in written records;

 

(2)Information that is or becomes publicly available without any breach of the
recipient of this Agreement;

 

(3)Information to be disclosed as required by applicable Chinese laws, any
securities regulatory authority or stock exchange or the market; in such case,
the recipient shall only disclose the confidential information required to be
disclosed to the relevant authority to the reasonable extent required;

 

(4)Information independently developed by the recipient without reference to any
confidential information hereunder.

 

13.3Each party shall be liable for the damage as a result of its breach of this
Article.

 

14.Force Majeure Event

 

In the case of occurrence of any force majeure event, which prevents any Party
from the performance of its obligations hereunder, then the performance of such
obligations shall be suspended during the duration of the delay caused by such
force majeure event, and the period for the performance shall be automatically
extended for a period equal to the duration of the suspension, without incurring
any liability on such Party. The party claiming a force majeure event shall
promptly give a written notice to other Parties, with appropriate and reasonable
proof evidencing the existence of the event, and verified or notarized, where
appropriate. The party claiming the existence of the force majeure event shall
also exert all reasonable efforts to avoid and mitigate the impact of the force
majeure event.

 

15.Event of Default

 

15.1If any Party defaults in any of its obligations, warranties or undertakings
hereunder, which results in non-performance of this Agreement or renders the
performance of this Agreement impossible, the defaulting party shall be liable
to indemnify other parties for the losses incurred as a result thereof,
including reasonable attorney’s fees. If all Parties are in default, each Party
shall be liable for breach of contract respectively.

 

15.2If any dispute arises as a result of the failure by the Company to adjust
its business mode and supplement normative documents necessary in the previous
business as required by Party A, the Company and the Original Shareholders shall
bear unlimited joint and several liability for the same, and Party A may also
recover the losses, if any, suffered by Party A as a result thereof from the
Company and the Original Shareholders.

 

   

 

 

16.Taxes and Charges

 

Each Party shall be responsible for the payment of its own taxes and charges
regarding the formation, performance of this Agreement and dispute resolution
hereunder pursuant to the applicable state regulations.

 

17.Dispute Resolution

 

Any dispute arising under this Agreement, including that regarding the
existence, validity or termination of this Agreement (the “Dispute”), shall be
first resolved among the Parties through amicable negotiation, and any party may
at any time issue a written notice to request other parties for negotiation, and
state the nature of the dispute. If the Dispute fails to be resolved within
forty five days after one Party give the written notice under this Article, then
either Party may bring a lawsuit at the people’s court at the place of Party A.

 

18.Governing Law

 

The formation, taking effect, validity, interpretation and performance of this
Agreement and all issues related hereto shall be governed by the law of the
People’s Republic of China.

 

19.Others

 

19.1This Agreement shall be executed in several counterparts, with each copy to
be an original, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement and have the same force and effect.

 

19.2All notices required or permitted to be sent under this Agreement shall be
sent to the recipient(s) according to the following addresses via personal
delivery or a special courier internationally recognized, or according to the
following E-mail addresses:

 

The Company: Sichuan Jinkailong Automobile Leasing Co., Ltd.

 

Address: Floor 2, Building 1, No. 2 Liudao Street, Jinma Town, Wenjiang
District, Chengdu City

 

E-mail address: 1061896893@qq.com

 

Recipient: Wen Xiang

 

 

Party A: Hunan Ruixi Financial Leasing Co., Ltd.

 

Address: Room 910, Building 1, Huitong Building, No. 168 Hehua Road, Hehuayuan
Street, Furong District, Changsha City, Hunan Province

 

E-mail address: 77128824@qq.com

 

Recipient: Huang Liang

 

 

Party B: Xiaoliang Chen

 

Address: No. 135, Xichan Village, Renchuan Town, Pan’an County, Zhejiang
Province

 

E-mail address: 653802636@qq.com

 

Recipient: Xiaoliang Chen

 

   

 

 

Party C: Xi Yang

 

Address: No. 31, Group 13, Fangbei Village, Nanquan Town, Shifang City, Sichuan
Province

 

E-mail address: 326128816@qq.com

 

Recipient: Xi Yang

 

 

Party D: Yiqiang He

 

Address: No. 31, Group 13, Fangbei Village, Nanquan Town, Shifang City, Sichuan
Province

 

E-mail address: 254838145@qq.com

 

Recipient: Yiqiang He

 

 

Party E: Xiaohui Luo

 

Address: No. 2, Group 4, Qilidian Village, Baoshi Town, Anju District, Suining
City, Sichuan Province

 

E-mail address: 408042965@qq.com

 

Recipient: Xiaohui Luo

 

All notices shall be deemed properly delivered once received. Each Party may
change its address (or fax number) for receiving notices by giving a notice in
the manner set forth herein.

 

19.3This Agreement shall not be altered or annulled without the written consent
of all Parties.

 

19.4This Agreement is written in Chinese.

 

[No text below]

 

   

 

 

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed
on the date first above written.

 

 

The Company: Sichuan Jinkailong Automobile Leasing Co., Ltd.

 

Legal representative: /s/ Xiaoliang Chen

 

 

 

Party A: Hunan Ruixi Financial Leasing Co., Ltd. (seal)

 

Legal representative: /s/ Xianglong Li

 

 

 

Party B: Xiaoliang Chen

 

Signature: /s/ Xiaoliang Chen

 

 

 

Party C: Xi Yang

 

Signature: /s/ Xi Yang

 

 

 

Party D: Yiqiang He

 

Signature: /s/ Yiqiang He

 

 

 

Party E: Xiaohui Luo

 

Signature: /s/ Xiaohui Luo

 

 

 

Appendix:

 

Photocopies of lawful and valid identity cards of each Party, or in the case of
an entity, a photocopy of the duplicate copy of the business license affixed
with the common seal.