# EDGAR Filing Document

**Accession Number:** 0001841931
**File Stem:** 0001193125-23-013126
**Filing Date:** 2023-1
**Character Count:** 2690755
**Document Hash:** 5ff64a3d56d42ec4bc495f26156fe980
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-23-013126.hdr.sgml**: 20230123

**ACCESSION NUMBER**: 0001193125-23-013126

**CONFORMED SUBMISSION TYPE**: F-1

**PUBLIC DOCUMENT COUNT**: 46

**FILED AS OF DATE**: 20230123

**DATE AS OF CHANGE**: 20230123

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** New Ruipeng Pet Group Inc.
- **CENTRAL INDEX KEY:** 0001841931
- **STANDARD INDUSTRIAL CLASSIFICATION:** AGRICULTURE SERVICES [0700]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-269357
- **FILM NUMBER:** 23544097

**BUSINESS ADDRESS:**
- **STREET 1:** 56F, BUILDING A
- **STREET 2:** NO.9289 BINHE BOULEVARD, FUTIAN DISTRICT
- **CITY:** SHENZHEN
- **STATE:** F4
- **ZIP:** 518000
- **BUSINESS PHONE:** 86 755 8398 6686

**MAIL ADDRESS:**
- **STREET 1:** 56F, BUILDING A
- **STREET 2:** NO.9289 BINHE BOULEVARD, FUTIAN DISTRICT
- **CITY:** SHENZHEN
- **STATE:** F4
- **ZIP:** 518000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Ruipeng Pet Group Inc.
- **DATE OF NAME CHANGE:** 20210122

##### [**Table of Contents**](#toc)
**As filed with the Securities and Exchange Commission on January 23, 2023** 

**Registration No. 333-** 

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**SECURITIES AND EXCHANGE COMMISSION** 

**WASHINGTON, D.C. 20549** 

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**FORM F-1** 

**REGISTRATION STATEMENT** 

***UNDER***

***THE SECURITIES ACT OF 1933***

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## New Ruipeng Pet Group Inc.
**(Exact name of Registrant as specified in its charter)** 

**Not Applicable** 

**(Translation of Registrant's name into English)** 

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| | | |
|:---|:---|:---|
| **Cayman Islands** | **0700** | **Not Applicable** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(Primary Standard Industrial**<br> **Classification Code Number)** | **(I.R.S. Employer**<br> **Identification No.)** |

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**11F, Building B, Kingkey Timemark** 

**No.9289 Binhe Boulevard, Futian District** 

**Shenzhen, Guangdong Province 518042** 

**People's Republic of China** 

**+86 755-8398-6686** 

**(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)** 

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**Cogency Global Inc.** 

**122 East 42nd Street, 18th Floor** 

**New York, NY 10168** 

**(800) 221-0102** 

**(Name, address, including zip code, and telephone number, including area code, of agent for service)** 

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***Copies to:***

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| | | |
|:---|:---|:---|
| **Haiping Li, Esq.**<br> **Yuting Wu, Esq.**<br> **Skadden, Arps, Slate, Meagher & Flom LLP**<br> **JingAn Kerry Centre, Tower II, 46/F**<br> **1539 Nanjing West Road**<br> **Shanghai, the People's Republic of China**<br> **+86 21-6193-8200** | **Brian V. Breheny, Esq.**<br> **Skadden, Arps, Slate, Meagher & Flom LLP**<br> **1440 New York Avenue, N.W.**<br> **Washington, D.C.**<br> **United States**<br> **1 202-371-7000** | **Li He, Esq.**<br> **James C. Lin, Esq.**<br> **Davis Polk & Wardwell LLP**<br> **18/F, The Hong Kong Club Building**<br> **3A Chater Road, Central**<br> **Hong Kong**<br> **+852 2533-3300** |

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**Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.** 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company. ☒

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 7(a)(2)(B) of the Securities Act. ☐

† 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.

**The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.** 

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**The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.** 

*Subject to Completion. Dated , 2023.* 

*American Depositary Shares*![LOGO](g148072g06m99.jpg)

*New Ruipeng Pet Group Inc.* 

*Representing Ordinary Shares* 

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***This is an initial public offering of American depositary shares (the "ADSs"), by New Ruipeng Pet Group Inc. Each ADS represents of our ordinary shares, par value US$0.000001 per share.***

***Prior to this offering, there has been no public market for the ADSs or our ordinary shares. We anticipate that the initial public offering price will be between US$ and US$ per ADS. We intend to apply to list the ADSs on the Nasdaq Global Select Market under the symbol "RPET."***

***We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements.***

***New Ruipeng Pet Group Inc. is not a Chinese operating company, but a Cayman Islands holding company with operations primarily conducted by its subsidiaries in China. We face various legal and operational risks and uncertainties associated with being based in or having our operations primarily in China and the complex and evolving PRC laws and regulations. For example, we face risks associated with the fact that the PRC government has significant authority in regulating our operations and may influence or intervene in our operations at any time, regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, anti-monopoly regulatory actions, and oversight on cybersecurity and data security, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other foreign exchange. On December 16, 2021, the PCAOB issued its report notifying the SEC of its determination that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong, including our auditor. Under the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. Furthermore, on December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the HFCAA, pursuant to which the SEC will identify a "Commission-Identified Issuer" if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for two consecutive years. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. For more details, see "Risk Factors—Risks Related to Doing Business in China—The PRC government's significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs," "Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work," and "Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment."***

***Unless otherwise indicated or the context otherwise requires, references in this prospectus to "New Ruipeng," "we," "us," "our company" and "our" are to New Ruipeng Pet Group Inc., our Cayman Islands holding company, and its subsidiaries. New Ruipeng Pet Group Inc., our holding company, or the Parent, may transfer cash to our offshore intermediary holding entities in the Cayman Islands and Hong Kong, including Skyfield Holdings (Cayman) Inc. and HHRP Holdings (Cayman) Inc. and their respective subsidiaries, through capital injections and intra-group loans. Our offshore intermediary holding entities, in turn, may transfer cash to our PRC subsidiaries New Ruipeng Pet Healthcare Group Co., Ltd. and Skyfield (Shanghai) Investment Co., Ltd. through capital injections and intra-group loans. Similarly, New Ruipeng Pet Healthcare Group Co., Ltd. and Skyfield (Shanghai) Investment Co., Ltd. may transfer cash to their respective subsidiaries in the PRC through capital injections and intra-group loans. Cash may also be transferred through our organization by way of intra-group transactions. If our wholly owned subsidiaries in the PRC realize accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay dividends or distribute earnings to our offshore intermediary holding entities, which, in turn, may transfer cash to the Parent through dividends or other distributions. With necessary funds, the Parent may pay dividends or make other distributions to U.S. investors and service any debt it may have incurred outside of the PRC. In 2020, 2021 and the nine months ended September 30, 2022, the Parent transferred cash in the amount of US$56 million, US$210 million and US$100 million, respectively, to our PRC subsidiaries through our offshore intermediary holding entities by way of capital contribution to the PRC subsidiaries. In 2020, 2021 and the nine months ended September 30, 2022, no assets other than cash were transferred between the Parent and a subsidiary, no subsidiaries paid dividends or made other distributions to the Parent, and no dividends or distributions were paid or made to U.S. investors.***

***We have established stringent controls and procedures for cash flows within our organization. Each transfer of cash among our Cayman Islands holding company and our subsidiaries is subject to internal approval. To effect a cash transfer, a number of steps are needed, including but not limited to the issuance of payment receipt, logging into the online banking system and completing its verification process, inspection of the invoice, and payment execution. A single employee is not permitted to complete each and every stage of a cash transfer, but rather only portions of the whole procedure. Only the finance department is authorized to make cash transfers. Within the finance department, the roles of payment approval, payment execution, record keeping, and auditing are segregated to minimize risk. For a detailed description of how cash is transferred through our organization, see "Summary—Cash Flows through Our Organization."***

***Pursuant to a convertible note purchase agreement entered into with a subsidiary of Nestlé S.A., a global food and beverage company, we issued to the purchaser a convertible note dated January 17, 2023 for an aggregate purchase price and with a principal amount of US$50,000,000. Subject to the terms and conditions of and exceptions provided in this note: (i) concurrently with, and subject to, the completion of this offering, half of the principal amount of the note (i.e., US$25,000,000) will be automatically converted into a number of our ordinary shares at a conversion price equal to the initial public offering price (adjusted for the ADS-to-ordinary share ratio), and (ii) the remaining half of the principal amount will be automatically converted after the [180-day] lock-up period applicable to this offering, provided that certain conditions are satisfied. For more details, please refer to "The Offering—Nestlé Convertible Note" and "Description of Share Capital—History of Securities Issuances."***

***Carmignac Gestion, an asset manager established in France and licensed as a UCITS management company and alternative investment fund manager (AIFM), has indicated, on behalf of certain mutual funds it manages, an interest in subscribing for an aggregate of up to US$30 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. In addition, Snow Lake Management LP, an affiliate of certain of our existing shareholders, has indicated, on behalf of Snow Lake China Master Fund, Ltd. and Snow Lake China Master Long Fund, Ltd., an interest in subscribing for an aggregate of up to US$20 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. Assuming an initial public offering price of US$ per ADS, the midpoint of the estimated initial public offering price range, the number of ADSs to be purchased by these investors would be up to ADSs, which represents approximately % of the ADSs being offered in this offering, assuming the underwriters do not exercise their over-allotment option. Because the indications of interest are not binding agreements or commitments to purchase, such investors may determine to purchase more, fewer or no ADSs in this offering, and we and the underwriters are under no obligation to sell ADSs to them. The underwriters will receive the same underwriting discounts and commissions on any ADSs purchased by such investors as they will on any other ADSs sold to the public in this offering.***

***Investing in our ADSs involves risks. See "[Risk Factors](#rom148072_4)" beginning on page 25 for factors you should consider before buying the ADSs.***

***Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.***

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*PRICE US$ PER ADS* 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Per ADS*** | ***Per ADS*** | ***Total*** | ***Total*** |  |
|  *Initial public offering price* | | *US$* | | *US$* | |
|  *Underwriting discounts and commissions* | | *US$* | | *US$* | |
|  *Proceeds, before expenses, to us* | | *US$* | | *US$* | |

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*(1)* *For a description of compensation payable to the underwriters, see "Underwriting."* 

*We have granted the underwriters an option to purchase up to an additional ADSs within 30 days from the date of this prospectus at the initial public offering price, less the underwriting discounts and commissions.* 

*The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, New York on or about , 2023.* 

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*MORGAN STANLEY* &nbsp;&nbsp;&nbsp;&nbsp;*Credit Suisse* *CICC* *UBS Investment Bank*

*Prospectus dated , 2023* 

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##### [**Table of Contents**](#toc)
![LOGO](g148072g69k39.jpg)

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##### [**Table of Contents**](#toc)
![LOGO](g148072g22p00.jpg)

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![LOGO](g148072g23u00.jpg)

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##### [**Table of Contents**](#toc)
**TABLE OF CONTENTS** 

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|  | **Page** |
|  [PROSPECTUS SUMMARY](#rom148072_1) | 1 |
|  [RISK FACTORS](#rom148072_4) | 26 |
|  [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](#rom148072_5) | 89 |
|  [USE OF PROCEEDS](#rom148072_6) | 91 |
|  [DIVIDEND POLICY](#rom148072_7) | 92 |
|  [CAPITALIZATION](#rom148072_8) | 93 |
|  [DILUTION](#rom148072_9) | 95 |
|  [ENFORCEABILITY OF CIVIL LIABILITIES](#rom148072_10) | 97 |
|  [CORPORATE HISTORY AND STRUCTURE](#rom148072_11) | 99 |
|  [SELECTED CONSOLIDATED FINANCIAL DATA](#rom148072_12) | 102 |
|  [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#rom148072_13) | 107 |
|  [INDUSTRY](#rom148072_14) | 146 |
|  [BUSINESS](#rom148072_15) | 151 |
|  [REGULATION](#rom148072_16) | 181 |
|  [MANAGEMENT](#rom148072_17) | 207 |
|  [PRINCIPAL SHAREHOLDERS](#rom148072_18) | 215 |
|  [RELATED PARTY TRANSACTIONS](#rom148072_19) | 219 |
|  [DESCRIPTION OF SHARE CAPITAL](#rom148072_20) | 221 |
|  [DESCRIPTION OF AMERICAN DEPOSITARY SHARES](#rom148072_21) | 236 |
|  [SHARES ELIGIBLE FOR FUTURE SALES](#rom148072_22) | 253 |
|  [TAXATION](#rom148072_23) | 255 |
|  [UNDERWRITING](#rom148072_24) | 261 |
|  [EXPENSES RELATED TO THIS OFFERING](#rom148072_25) | 273 |
|  [LEGAL MATTERS](#rom148072_26) | 274 |
|  [EXPERTS](#rom148072_27) | 275 |
|  [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#rom148072_28) | 276 |
|  [INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS](#rom148072_29) | F-1 |

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You should rely only on the information contained in this prospectus or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free writing prospectus. We are offering to sell, and seeking offers to buy the ADSs, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ADSs.

Neither we have nor any of the underwriters has taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside the United States.

**Until , 2023 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.** 

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##### [**Table of Contents**](#toc)
**PROSPECTUS SUMMARY** 

*The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors," before deciding whether to invest in our ADSs. This prospectus contains information from an industry report commissioned by us and prepared by Frost & Sullivan, an independent research firm, to provide information regarding our industry and our market position.* 

**Our Mission** 

Be the trusted partner for animal well-being and bring happiness to pet families.

**Our Vision** 

We aspire to build a world-leading comprehensive pet services platform and an integrated pet ecosystem.

**Our Business** 

***Who We Are***

We are the largest pet care platform in China and the second largest globally in terms of number of hospitals and revenue from pet care services in both 2020 and 2021, according to Frost & Sullivan. As of December 31, 2021, we had 23 pet hospital brands and 1,887 pet hospitals, approximately three times the sum of pet hospitals of our competitors that ranked the second through the tenth in China. By September 30, 2022, we had further increased our number of pet hospitals in China to 1,942. As of December 31, 2021, we had operations in 31 provinces and 111 cities, and we had an approximately 30% pet care market share in first-tier cities across China in 2021, according to Frost & Sullivan. As of September 30, 2022, we operated in 114 cities across China. We operate pet care services, supply chain services, and local services as three pillars, and have expanded into other business segments including third-party diagnosis, continued veterinary education and marketing-as-a-service. We have thus become the leading one-stop pet care platform in China in terms of number of pet hospitals, revenue and service scope, according to Frost & Sullivan, providing integrated services to pets and pet parents.

We are a pioneer in China's pet care industry. We have operated in the pet care industry for over 20 years and are the oldest national pet hospital chain operator in China according to Frost & Sullivan. Since our inception, we have built a digitalized pet care platform covering the full lifecycle of pets, and remained true and dedicated to making pets healthier and providing superior pet care services. Through operation experience accumulated over the years, we have achieved rapid network expansion across pet care services, supply chain services and local services through a combination of organic growth and acquisitions.

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***Our Opportunities***

China is the second largest pet market in the world in terms of pet-related spending, according to Frost & Sullivan. It has experienced rapid growth over the past few years. The size of China's pet market increased from RMB94.3 billion in 2015 to RMB265.6 billion in 2021 in terms of pet-related spending, representing a CAGR of approximately 18.8%. However, China's pet market is still at an early stage of development as compared to that of the United States. For example, the average annual spending per companion pet in first-tier cities in China was approximately RMB4,700, only 58.0% of the average annual spending per companion pet of approximately RMB8,100 in the United States in 2021, according to Frost & Sullivan. Despite our market position in China's pet market, the average annual net revenues generated from each active customer for our pet care services was RMB1,194 in 2020 and increased to RMB1,203 (US$180) in 2021. China's household pet ownership rate was 23.7% in 2021, as compared with 69.7% in the United States, which leaves ample room for rapid growth in China's pet industry. According to Frost & Sullivan, the size of China's pet market is expected to further increase to RMB537.6 billion in 2026, representing a CAGR of 15.1% from 2021.

We see vast opportunities for pet care in China and believe we are well-positioned to capture them. The size of China's pet care market grew from RMB20.0 billion in 2015 to RMB54.5 billion in 2021, representing a CAGR of approximately 18.2%. Driven by pet parents' growing awareness of pet healthcare, longer pet life expectancy and more aging-associated pet diseases, the need for in-depth pet care services is expected to grow rapidly. The size of China's pet care market is expected to reach RMB135.6 billion in 2026, according to Frost & Sullivan. However, the pet care industry is highly fragmented and has become increasingly competitive as existing market players expand their pet-related service and product offerings and new players enter into the market.

***What We Offer and Our Value Propositions***

We offer comprehensive services to pets, pet parents and participants of the pet services value chain under a closed-loop business model.

![LOGO](g148072g10p63.jpg)

We believe that our core business, namely pet care services, supply chain services and local services, are complementary and synergistic to each other. On the customer front, our well-developed pet care services form a

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high entry barrier, helping us accumulate a sizable customer base through top-notch pet medical services. Our pet care services and local services segments generate mutual traffic referrals and cross-selling. The supply chain services, on the other hand, empower pet care services and local services by lowering procurement costs and improving operating efficiency, which is made possible by our strong brand and centralized procurement capabilities. On the foundation of these three business pillars, we have expanded into third-party diagnosis, continued veterinary education services and marketing-as-a-service. We are committed to constructing a world-leading comprehensive pet services platform and a mutually beneficial and integrated pet ecosystem.

***Value Proposition to Pet Parents***

*Pet Care Services*. Our extensive pet hospital network provides pet parents with a trusted one-stop platform for comprehensive pet care services, including general and specialized treatments and advanced diagnosis. We are able to provide full-lifecycle healthcare services for pets from their birth. In 2020, 2021 and the nine months ended September 30, 2022, we provided pet care services to approximately 1.7 million, 2.5 million and 2.2 million active customers and treated approximately 4.3 million, 5.8 million and 4.7 million medical cases, respectively. We have established a "1+P+C" ("1": comprehensive pet hospitals; "P": specialty pet hospitals; "C": community pet hospitals) pet hospital network and referral system, which brings us closer to the community of pet parents and enables us to serve diverse medical needs with our diagnosis and treatment expertise.

*Local Services*. Our local services and new retail initiatives further strengthen our engagement with pets and pet parents. Pet parents can purchase pet goods and services through our proprietary online platform "Rvet" (阿闻) and our partner platforms, enjoying timely delivery of products and services. In addition, we operate offline stores through the JackPet brand targeting the high-end market. Our stores provide customers with a one-stop superior and personalized experience across the full spectrum of pet-related services.

***Value Proposition to Our Business Partners and Pet Industry***

*Supply Chain*. We are one of the few supply chain integrators with advanced centralized procurement capabilities in China's pet industry. As of September 30, 2022, leveraging our 7 regional distribution centers, 58 provincial and municipal warehouses and 50 trade subsidiaries, we have established an efficient supply chain network that covers over 100 major cities. In the nine months ended September 30, 2022, we provided services to more than 45,000 pet stores, hospitals, clinics and others nationwide. Our centralized supply chain system gives us a stronger bargaining power and better access to popular and sought-after drugs and other pet products. Leveraging big data analysis, we are also able to accurately monitor product demands and optimize logistics and inventory management for pet product manufacturers, pet stores, hospitals and clinics.

*Third-party Diagnosis*. Our third-party diagnosis business enhances the treatment and diagnosis capabilities of pet hospitals. We provide diagnosis services to both our own hospitals and third-party hospitals. Assisted by cutting-edge technology and advanced equipment, we deliver comprehensive and professional diagnosis services to our clients. As of September 30, 2022, our laboratories had cumulatively served more than 4,700 pet hospitals.

*Continued Veterinary Education*. We have the largest veterinary talent training platform in the industry, according to Frost & Sullivan. Our continued veterinary education services foster general veterinarians and specialists in the pet care industry. As of December 31, 2021, we had built a talent pool of over 5,200 licensed and experienced veterinarians led by an expert team representing more than 60% of veterinary experts in China. Our continued veterinary education courses complement veterinary practice and empower the industry. We had 726 well qualified local instructors, 300 international lecturers and approximately 131,000 trainees as of September 30, 2022.

*Marketing-as-a-Service*. We have built a pet care platform with a multi-channel network to reach pet parents through our comprehensive online and offline product and service offerings and our efforts of branding and pet

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culture promotion. In particular, we have a wide and growing pool of Key Opinion Leaders ("KOLs") who have gained a large, vibrant and loyal fan base. Our broad access to pet parents well positions us to offer marketing services to pet brands. Through us, our brand partners gain access to a highly efficient marketing network and a massive base of potential customers.

***Our Scale***

The chart below shows some highlights of our business.

![LOGO](g148072g25j25.jpg)

Our total revenues increased by 59.0% from RMB3,008.3 million in 2020 to RMB4,783.7 million (US$672.5 million) in 2021, and increased by 26.9% from RMB3,399.7 million in the nine months ended September 30, 2021 to RMB4,315.1 million (US$606.6 million) in the nine months ended September 30, 2022. Our gross profit increased significantly from RMB142.5 million in 2020 to RMB223.2 million (US$31.4 million) in 2021, and increased by 27.6% from RMB171.4 million in the nine months ended September 30, 2021 to RMB218.8 million (US$30.8 million) in the nine months ended September 30, 2022. Our net losses amounted to RMB999.8 million, RMB1,311.3 million (US$184.3 million), RMB856.6 million and RMB1,109.4 million (US$156.0 million) in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively, while net losses as a percentage of total revenues decreased from 33.2% in 2020 to 27.4% in 2021, and further decreased to 25.7% in the nine months ended September 30, 2022. As a testimony to our improving operational efficiency, our operating expenses as a percentage of total revenues also decreased from 37.3% in 2020 to 33.0% in 2021, and further decreased to 29.7% in the nine months ended September 30, 2022. Our Adjusted EBITDA was negative RMB615.4 million, negative RMB852.4 million (negative US$119.8 million), negative RMB517.7 million and negative RMB749.6 million (negative US$105.4 million) in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively, and our Adjusted EBITDA Margin improved from negative 20.5% in 2020 to negative 17.8% in 2021, and further improved to negative 17.4% in the nine months ended September 30, 2022. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures."

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**Recent Developments** 

China began to modify its zero-COVID policy in late 2022, and most of the travel restrictions and quarantine requirements were lifted in December 2022. There were significant surges of COVID-19 cases in many cities in China during this time, which disrupted our and our suppliers' operations and adversely affected our operational and financial performance in the fourth quarter of 2022, especially in December.

The number of our total pet hospitals declined from 1,942 as of September 30, 2022 to approximately 1,850 as of December 31, 2022. In the three months ended December 31, 2022, we provided pet care services to approximately 0.7 million active customers and treated approximately 1.4 million medical cases. In particular, our monthly active customers decreased from approximately 540 thousand in October 2022 to approximately 470 thousand in November 2022, and further to approximately 450 thousand in December 2022. Our monthly medical cases decreased from approximately 560 thousand in October 2022 to approximately 470 thousand in November 2022, and further to approximately 430 thousand in December 2022.

Mainly due to the aforesaid impact of COVID-19, we currently estimate that the year-over-year growth of our revenues in 2022 could be below that of the first nine months of 2022 as compared with the first nine months of 2021. Based on our preliminary unaudited management accounts, our estimated total revenues for the eleven months ended November 30, 2022 were between RMB5.2 billion and RMB5.3 billion. We also estimate that the amount of our total revenues for December 2022 could be lower than that for October or November 2022. Because we do not have final results for the fourth quarter of 2022, our actual results when they become available could differ materially from the estimated results discussed herein. In addition, because of the preliminary nature of the information currently available to us regarding the fourth quarter of 2022, we may discover additional developments of which we are currently unaware. See "Special Note Regarding Forward-Looking Statements" in this prospectus.

For more details, see "Risk Factors—Risks Related to Our Business and Industry—We face risks related to natural disasters, health epidemics such as the outbreak of COVID-19 and other events beyond our control, which could significantly disrupt our operations."

**Our Strengths** 

We believe the following strengths contribute to our success and differentiate us from our competitors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the largest one-stop pet care platform representing scarcity value in a high-growth and recession-resilient
market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unique business model with significant network effect propelling operational excellence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• integrated ecosystem empowering the pet service value chain and capturing pet lifetime value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• large pool of top-notch and committed talents supported by our well-rounded continued veterinary education
services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• proprietary data and technology infrastructure empowering digitalization; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• visionary management team with strong execution capabilities, extensive industry experience and an inspiring
corporate culture.

**Our Strategies** 

We intend to accomplish our mission by pursuing the following growth strategies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• strengthen leadership in the pet care industry in China and further upgrade the scope and quality of our pet care
services;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enhance supply chain services and local services capabilities, and integrate the pet service value chain to
empower industry growth and build a vibrant ecosystem;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• continued investment in industry talents to build a pool of top-notch veterinary talents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• further improve operational quality and capabilities through digitalized technology; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• empower the global pet industry, develop localized pet business capabilities in overseas regions, and construct a
pet metaverse through the existing digitalization functionalities.

**Our Efforts to Enhance Our Corporate Social Responsibility** 

During the COVID-19 pandemic, we leveraged our supply chain network and collaborated with around 40 pet food companies and collectively donated over 160,000 kilograms of pet food, cat litter and other pet products through our supply chain hubs across China to pets and pet parents located within Wuhan, when the city was in lockdown. Over the 2021 Chinese New Year, we launched the "free Chinese New Year's Eve dinner" event for homeless pets at various rescue centers in China. We also led and executed the "TNR" (Trap-Neuter-Release) initiative by offering over 2,000 free sterilization surgeries across our hospitals nationwide. During the outbreak of COVID-19 in Shenzhen in March and April 2022, we formed a medical volunteer team and established China's first pet care station in Shenzhen. We took care of over 200 pets whose owners were quarantined in other places. Our care for pets and professional capabilities demonstrated in these efforts won praise from all over the country. On April 16, 2022, our medical volunteer team established the second pet care station in Guangzhou to care for the pets of many families living in areas under lockdown. We have shared our experience in building pet care stations in the hope of helping those with pet care needs across the country. During the lockdown in Shanghai that began in March 2022, we actively communicated with and organized 36 well-known brands in the pet industry to participate in efforts to combat the COVID-19 pandemic. We provided free delivery of pet supplies ordered through our proprietary online platform "Rvet" to over 2,000 residential compounds and over 1,900 communities. We delivered pet supplies for 60 consecutive days during the lockdown, covering 14 districts of the city and fulfilling approximately 7,800 group-buying orders. In addition, we organized more than 300 veterinarians to provide free online consultation services, serving almost 70,000 pet parents. Dozens of staff members of some of our pet hospitals in the Shanghai area voluntarily stayed on site during the lockdown and treated more than 700 medical cases during that time. We also organized 31 key opinion leaders in the pet industry to hold a live webcast for 12 hours and share their experience in dealing with the pandemic with an audience from around the country. The number of viewers of the live webcast reached over 60,000 and over 1 million likes were recorded. In addition, together with a foundation we collaborate with, we donated 7.8 tons of dog food to the stray animal rescue bases in Shanghai to alleviate the shortage of pet food.

We are also committed to promoting the commercialization of scientific research results in universities, supporting the training of young talents, and improving student research capabilities. We collaborated with multiple universities across the country in donations, scholarships and research funds, making contributions to the development of the industry and cultivating veterinary professionals.

**Corporate History and Structure** 

We commenced operations in December 1998 through Ruipeng Pet Hospital, a pet hospital brand founded in Shenzhen, Guangdong province by Mr. Yonghe Peng, our founder, co-chairman of the board of directors and president. From 1999 to 2012, we kept expanding our pet hospital network in Guangdong province. In 2013, we expanded our geographical reach from Guangdong province to cities in other southern provinces in China. In 2016, we acquired Meilianzhonghe, one of the most influential and iconic brands in China's pet care industry, and expanded to northern China.

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To facilitate offshore listing, we incorporated Ruipeng Pet Group Inc. in June 2019 under the laws of the Cayman Islands as our offshore holding company. On December 31, 2019, we completed the acquisition of Skyfield Group, a China-based pet hospital group. Upon the completion of the acquisition, Skyfield Group became a wholly owned subsidiary of Ruipeng Pet Group Inc. and several major pet hospital brands such as Ainuo, Anan, Naja and Puppy Town were integrated into our pet hospital network.

In connection with the acquisition of Skyfield Group, we completed a series of offshore and onshore restructuring transactions. As a result of such transactions, our operating subsidiaries in the PRC are now direct or indirect subsidiaries of Skyfield (Shanghai) Investment Co., Ltd. and New Ruipeng Pet Healthcare Group Co., Ltd., our PRC holding companies, or the PRC Holding Companies. We hold 100% or majority equity interests in the PRC Holding Companies through HHRP Holdings (Cayman) Inc., HHRP Holdings Limited, Skyfield Holdings (Cayman) Inc. and Skyfield Holdings Limited, our offshore intermediary holding entities.

In August 2021, we changed the name of our Cayman Islands holding company from Ruipeng Pet Group Inc. to New Ruipeng Pet Group Inc.

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The following diagram illustrates our corporate structure, including our principal subsidiaries, as of the date of this prospectus:

![LOGO](g148072g15j67.jpg)

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Notes:

(1) Primarily engages in pet care services through its subsidiaries and/or branches.

(2) Shenzhen Great Sun Network Technology Co., Ltd., through its subsidiary, primarily engages in pet-related big data research and development.

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(3) Jichongjia (Shanghai) Enterprise Management Co., Ltd. and Nanjing Jichongjia Intelligent Technology Co., Ltd.,
through subsidiaries and/or branches, primarily engage in local services business.

(4) Runhe Supply Chain Group Co. Ltd., through subsidiaries and/or branches, primarily engages in pet product and
equipment supply chain management business. Shenzhen Hewang Enterprise Management Center (Limited Partnership), Shenzhen Runjia Management Consulting Partnership (Limited Partnership), Shenzhen Zekai Management Center (Limited Partnership), Shenzhen
Heqi Enterprise Management Center (Limited Partnership), and Shenzhen Yirun Enterprise Management Center (Limited Partnership), each a limited partnership incorporated in the PRC, hold the remaining 3.41%, 2.94%, 2.17%, 1.19% and 0.75% equity
interests in Runhe Supply Chain Group Co. Ltd., respectively. Each of Shenzhen Hewang Enterprise Management Center (Limited Partnership), Shenzhen Heqi Enterprise Management Center (Limited Partnership) and Shenzhen Zekai Management Center (Limited
Partnership) is owned by certain minority shareholders of our company.

**Cash Flows through Our Organization** 

New Ruipeng Pet Group Inc., our holding company, or the Parent, may transfer cash to our offshore intermediary holding entities in the Cayman Islands and Hong Kong, including Skyfield Holdings (Cayman) Inc. and HHRP Holdings (Cayman) Inc. and their respective subsidiaries, through capital injections and intra-group loans. Our offshore intermediary holding entities, in turn, may transfer cash to our PRC subsidiaries New Ruipeng Pet Healthcare Group Co., Ltd. and Skyfield (Shanghai) Investment Co., Ltd. through capital injections and intra-group loans. Similarly, New Ruipeng Pet Healthcare Group Co., Ltd. and Skyfield (Shanghai) Investment Co., Ltd. may transfer cash to their respective subsidiaries in the PRC through capital injections and intra-group loans. Cash may also be transferred through our organization by way of intra-group transactions. If our wholly owned subsidiaries in the PRC realize accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay dividends or distribute earnings to our offshore intermediary holding entities, which, in turn, may transfer cash to the Parent through dividends or other distributions. With necessary funds, the Parent may pay dividends or make other distributions to U.S. investors and service any debt it may have incurred outside of the PRC. In 2020, 2021 and the nine months ended September 30, 2022, the Parent transferred cash in the amount of US$56 million, US$210 million and US$100 million, respectively, to our PRC subsidiaries through our offshore intermediary holding entities by way of capital contribution to the PRC subsidiaries. In 2020, 2021 and the nine months ended September 30, 2022, no assets other than cash were transferred between the Parent and a subsidiary, no subsidiaries paid dividends or made other distributions to the Parent, and no dividends or distributions were paid or made to U.S. investors.

We have established stringent controls and procedures for cash flows within our organization. Each transfer of cash among our Cayman Islands holding company and our subsidiaries is subject to internal approval. To effect a cash transfer, a number of steps are needed, including but not limited to the issuance of payment receipt, logging into the online banking system and completing its verification process, inspection of the invoice, and payment execution. A single employee is not permitted to complete each and every stage of a cash transfer, but rather only portions of the whole procedure. Only the finance department is authorized to make cash transfers. Within the finance department, the roles of payment approval, payment execution, record keeping, and auditing are segregated to minimize risk.

Under PRC laws and regulations, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute earnings to the holding company and U.S. investors is also limited. We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our PRC subsidiaries incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Under PRC laws and regulations, each of our PRC subsidiaries may pay dividends only out of its respective accumulated profits as determined in accordance with PRC

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accounting standards and regulations. In addition, a PRC enterprise is required to set aside at least 10% of its after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, a PRC enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to a staff welfare and bonus fund. These reserve fund and staff welfare and bonus fund cannot be distributed to us as dividends. In addition, our PRC subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us. For more details, see "Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business" and "Risk Factors—Risks Related to Doing Business in China—Governmental control of currency conversion may affect the value of your investment."

**Summary of Risk Factors** 

An investment in our ADSs involves significant risks. You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ADSs. Below is a summary of material risks we face, organized under relevant headings. Full-fledged discussion of these risks can be found in the section headed "Risk Factors."

***Risks related to our business and industry***

Risks and uncertainties relating to our business and industry include, but are not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The pet care industry is highly fragmented and competitive. If we fail to compete effectively, we may lose our
market share or fail to gain additional market share, and our growth and profitability may be materially and adversely affected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Negative publicity arising from claims that we do not properly care for pets we treat or negative media coverage
in general could adversely affect how we are perceived by the public and reduce our revenues and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A decline in consumer spending or a change in consumer preferences or demographics may materially and adversely
affect our business and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to acquire and retain new customers, or fail to do so in a cost-effective manner, our business,
financial condition and results of operations may be materially and adversely affected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Expanding into new businesses and services may expose us to new challenges and more risks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The growth of our business depends on our ability to effectively capture the evolving consumer trends, improve
existing products and services and expand into new offerings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be
materially and adversely affected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to generate or obtain sufficient capital to finance our business operations and growth, we may be
unable to sustain our growth and our business may be materially and adversely affected;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our continued success is substantially dependent on positive perceptions of our brands. Any harm to our brands or
failure to maintain and enhance our brand recognition may materially and adversely affect our business and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to take adequate safety precautions, there will be an increased risk of injuries or other health
problems suffered by our employees, customers or trainees at our facilities and we may be subject to additional costs and regulatory, litigation and reputational risks;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Animal health products and medications used on animals are subject to safety, quality or efficacy concerns, which
may have a material and adverse effect on our reputation, financial condition and results of operations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and
adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License
for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things.

For more detailed information, see "Risk Factors—Risks Related to Our Business and Industry."

***Risks related to doing business in China***

We are also subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The PRC government's significant authority in regulating our operations and its oversight or control over
offshore offerings and foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. The PRC government may influence or intervene in our operations at any
time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our ADSs. Implementation of industry-wide regulations
in this nature may cause the value of such securities to significantly decline or become worthless.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes in China's economic, political or social conditions or government policies could have a material
adverse effect on our business and operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the
enforcement of laws and that rules and regulations in China can change quickly with little advance notice, could result in a material adverse change in our operations and/or the value of our ADSs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The approval or other requirements of the CSRC or other PRC governmental authorities may be required in
connection with this offering under PRC law, and, if required, we cannot predict whether we will be able to obtain such approval or how long it will take. Any failure to obtain or delay in obtaining the required approval for this offering, or a
rescission of such approval would subject us to sanctions imposed by the relevant PRC regulatory authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity
and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of
operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The PCAOB had historically been unable to inspect our auditor in relation to their audit work.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable
to inspect or investigate completely auditors located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are subject to PRC laws and regulations restricting capital flows which may affect our liquidity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.

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For more detailed information, see "Risk Factors—Risk Related to Doing Business in China."

***Risks related to our ADSs and this offering***

In addition to the risks described above, we are subject to general risks related to our ADSs and this offering, including, without limitation, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There has been no public market for our shares or ADSs prior to this offering, and you may not be able to resell
our ADSs at or above the price you paid, or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The trading price of our ADSs may be volatile, which could result in substantial losses to you;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The concentration of our share ownership among executive officers, directors, and principal shareholders and
their affiliated entities will likely limit your ability to influence corporate matters and could discourage others from pursuing any change of control transaction that holders of our ordinary shares and ADSs may view as beneficial; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about
our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.

For more detailed information, see "Risk Factors—Risks Related to Our ADSs and this Offering."

**Permissions for Our Operation and Securities Issuances to Foreign Investors and Recent Regulatory Developments** 

Under PRC laws and regulations, we are required to obtain or complete a number of licenses, approvals, registrations, filings and other permissions for our operation. Below is a summary of the permissions that are material to our business and operations and their current status:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Licenses for Animal Diagnosis and Treatment for our pet hospitals. As of the date of this prospectus, the
majority of our pet hospitals have obtained such licenses, and we are in the process of applying for such licenses for some pet hospitals that are newly established or that recently changed their business venues.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Radiation Safety Licenses for our pet hospitals that use radioisotopes and radiation-emitting devices. As of the
date of this prospectus, most of our pet hospitals using radioisotopes and radiation-emitting devices have obtained such licenses, and we are in the process of applying for such licenses for our pet hospitals that have not.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Veterinary Drug Operation Licenses for our supply chain services relating to veterinary drugs distribution. As of
the date of this prospectus, all of our PRC subsidiaries engaged in the veterinary drug distribution business have obtained such licenses, except that some of our PRC subsidiaries that have changed their business names and/or business addresses have
not renewed their Veterinary Drug Operation Licenses to reflect the up-to-date status.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Value-added Telecommunications Business Operating License for online data processing and transaction processing
services in relation to our Rvet platform, which we have obtained as of the date of this prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Permits and filings related to fire protection and environmental protection. The local requirements and practices
vary among different regions of China. We have been communicating with the local authorities regularly, aiming to obtain the permits or complete the filings where applicable and practicable.

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For more details, see "Risk Factors—Risks Related to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things" and "Risk Factors—Risks Related to Our Business and Industry—If we fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material and adverse effect on the success of our business." In addition, there remain substantial uncertainties with respect to the regulatory requirements for our online local services and online and offline continued veterinary education services. See "Risk Factors—Risks Related to Our Business and Industry—Certain of our products and solutions in relation to online local services and online and offline continued education services may be subject to value-add telecommunications-related regulations, other internet-related regulations or education related regulations, which are foreign prohibited or restricted areas, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition."

On November 14, 2021, the Cyberspace Administration of China, or the CAC, issued the Administrative Regulations of Cyber Data Security (Draft for Comments), or the Draft Cyber Data Security Regulations, which provide that data processors conducting the following activities shall apply for cybersecurity review: (i) merger, reorganization or spin-off of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests affects or may affect national security; (ii) listing abroad of data processors processing over one million users' personal information; (iii) listing in Hong Kong which affects or may affect national security; (iv) other data processing activities that affect or may affect national security. On December 28, 2021, the CAC, together with other relevant administrative departments, jointly promulgated the Cybersecurity Review Measures which became effective on February 15, 2022. According to the Cybersecurity Review Measures, a critical information infrastructure operator shall declare any network product or service that affects or may affect national security for a cybersecurity review, and an internet platform operator who possesses personal information of more than one million users shall apply for a cybersecurity review before listing in a foreign country, and the relevant governmental authorities may initiate a cybersecurity review if they consider that the relevant network products or services or data processing activities affect or may affect national security. On April 15, 2022, we received written confirmation from the Cybersecurity Review Office that we are not required to apply for a cybersecurity review in connection with this offering and our proposed listing under the Cybersecurity Review Measures. However, we cannot preclude the possibility that the Cybersecurity Review Measures will subject us to the cybersecurity review by the CAC in relation to our operations or require us to adjust our business practices. See "Risk Factors—Risks Related to Doing Business in China—Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of operations."

On July 6, 2021, the PRC government promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the July 6 Opinions, which, among other things, called for enhanced administration and supervision of overseas-listed China-based companies, proposed to strengthen the supervision of overseas issuance and listing of shares by China-based companies and clarified the responsibilities of competent domestic industry regulators and government authorities. Since the July 6 Opinions were promulgated, no further explanations or detailed rules and regulations with respect to the July 6 Opinions have been issued, leaving uncertainties regarding the interpretation and implementation of the July 6 Opinions. On December 24, 2021, the State Council's Administrative Regulations on Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Public Comments) and the Administrative Measures on Filing of Overseas Issuance and

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Listing of Securities by Domestic Enterprises (Draft for Public Comments) were released for public comments by the CSRC, and such public comment period has ended. Pursuant to these drafts, PRC domestic companies that directly or indirectly offer or list their securities in an overseas market, which include (i) any PRC company limited by shares that contemplates an offering or listing of its securities in an overseas market, and (ii) any offshore company that conducts its business operations primarily in China and contemplates an offering or listing of its securities in an overseas market based on its onshore equities, assets or similar interests, are required to file with the CSRC within three business days after submitting their listing application documents. The drafts, among others, further stipulate that when determining whether an offering and listing shall be deemed as an "indirect overseas offering and listing by a Chinese company", the principle of "substance over form" shall be followed, and if the issuer meets the following conditions, its offering and listing shall be determined as an "indirect overseas offering and listing by a Chinese company" and is therefore subject to the filing requirement: (1) the revenues, profits, total assets or net assets of the Chinese operating entities in the most recent financial year account for more than 50% of the corresponding data in the issuer's audited consolidated financial statements for the same period; or (2) the majority of senior management in charge of business operations are Chinese citizens or have domicile in the PRC, and its principal place of business is located in the PRC or main business activities are conducted in the PRC. Failure to complete such filing may subject a PRC domestic company to a warning or a fine between RMB1 million and RMB10 million. If the circumstances are serious, the PRC domestic company may be ordered to suspend its business or suspend its operation for rectification, or its permits or businesses license may be revoked. However, as of the date of this prospectus, uncertainties exist regarding the final form of these regulations as well as the interpretation and implementation thereof after promulgation. In the event that these drafts come into effect before the consummation of this offering, we will take any and all actions necessary to complete the required filing with the CSRC. See "Risk Factors—Risks Related to Doing Business in China—The approval or other administration requirements of the China Securities Regulatory Commission, or the CSRC, or other PRC governmental authorities may be required in connection with this offering under PRC law." We plan to comply with the filing procedures of the CSRC with respect to this offering, if and when such procedures are adopted by the CSRC.

**The Holding Foreign Companies Accountable Act** 

Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. See "Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work" and "Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment."

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**Implication of Being an Emerging Growth Company** 

As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include an 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. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the United States Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

**Implication of Being a Foreign Private Issuer** 

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 of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers. Moreover, the information we are required to file with or furnish to the SEC is less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, 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 Stock Market listing standards. See "Risk Factors—Risks Related to Our ADSs and This Offering—As an exempted 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 Stock Market's corporate governance requirements; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Stock Market's corporate governance requirements."

**Corporate Information** 

Our principal executive offices are located at 11F, Building B, Kingkey Timemark, No.9289 Binhe Boulevard, Futian District, Shenzhen, Guangdong Province 518042, People's Republic of China. Our telephone number at this address is +86 755-8398-6686. Our registered office in the Cayman Islands is located at Citco Fund Services (Cayman Islands) Limited of 89 Nexus Way, Camana Bay; PO Box 31106, George Town, Grand Cayman, KY1-1205, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

Investors should submit any inquiries to the address or through the telephone number of our principal executive offices. Our main website is <u>http://www.ruipengpet.com</u>. The information contained on our website is not a part of this prospectus.

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**Conventions that Apply to this Prospectus** 

Unless otherwise indicated or the context otherwise requires, and for purposes of this prospectus only:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "active customer" refers to a customer making at least one purchase for a service or product in a given
period, and active customers for our pet care services refer to customers who purchased services or products provided by our pet hospital network;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "ADRs" refer to the American depositary receipts that evidence our ADSs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "ADSs" refer to our American depositary shares, each of which represents
 ordinary shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "China" or "the PRC" refers to the People's Republic of China, excluding, for the
purposes of this prospectus only, Hong Kong, Macau and Taiwan, and "Greater China" includes Hong Kong, Macau and Taiwan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "customer repurchase rate" refers to the percentage of customers that have purchased more than once in
a calendar year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "first-tier cities" in China refers to Beijing, Shanghai, Guangzhou and Shenzhen;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Nestlé Convertible Note" refers to the convertible note dated January 17, 2023 issued by us to a
subsidiary of Nestlé S.A. pursuant to a convertible note purchase agreement, and "IPO Conversion Amount" in connection with the Nestlé Convertible Note refers to the half of the principal amount of such note (i.e., US$25,000,000)
that is subject to automatic conversion concurrently with the completion of this offering in accordance with the terms and conditions of such note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "New Ruipeng," "we," "us," "our company" and "our" refer to New
Ruipeng Pet Group Inc., a Cayman Islands holding company, and its subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "pet care market share" refers to the result of dividing revenue of pet care services by the size of
China's pet care industry excluding the size of veterinary stations. The size of veterinary stations is excluded because the main business of veterinary stations is typically different from that of pet hospitals, as veterinary stations focus
primarily on animal husbandry, while pet hospitals focus primarily on companion pets and pet care services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "RMB" and "Renminbi" refer to the legal currency of China;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "shares" or "ordinary shares" refers to our ordinary shares, par value US$0.000001 per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "Skyfield Group" refers Skyfield Holdings (Cayman) Inc. and its subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "US$," "U.S. dollars," "$," and "dollars" refer to the legal currency of
the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "veterinary expert" in China refers to a veterinary professional who has conducted clinical work for
pets for over 10 years, has provided specialized diagnosis and treatment for more than 200 cases, has issued more than three publications on core journals in the field, and has class hours or presentations of over 20 hours during industry meetings;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "veterinary stations" refers to animal husbandry and veterinary stations established and operated by
local governments that focus primarily on issues on livestock production.

When we refer to our "pet hospitals," the term includes our pet hospitals and a small number of pet clinics unless the context indicates otherwise.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their option to purchase additional ADSs.

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Our reporting currency is RMB. This prospectus also contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. Unless otherwise stated, all translations from RMB to U.S. dollars were made at a rate of RMB7.1135 to US$1.00, the exchange rate in effect as of September 30, 2022 as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System on September 30, 2022. We make no representation that any RMB or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all.

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**THE OFFERING** 

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| Offering price  | We currently estimate that the initial public offering price will be between US$ and US$ per ADS. |

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ADSs offered by us ADSs (or ADSs if the underwriters exercise their option to purchase additional ADSs in full).

ADSs outstanding immediately after this offering ADSs (or ADSs if the underwriters exercise their option to purchase additional ADSs in full).

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|:---|:---|
| Ordinary shares issued and outstanding immediately after this offering  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ordinary shares (or ordinary shares if the underwriters exercise their option to purchase additional ADSs in full), including ordinary shares that we will issue to the holder of the Nestlé Convertible Note upon the automatic conversion of the IPO Conversion Amount concurrently with the completion of this offering, calculated based upon an assumed initial public offering price of US$ per ADS, which is the mid-point of the price range shown on the cover page of this prospectus. This number assumes that all of our outstanding shares have been converted, on a one-for-one basis, into our ordinary shares immediately upon the completion of this offering. |

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|:---|:---|
| The ADSs  | Each ADS represents ordinary shares, par value US$0.000001 per share. |

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The depositary will hold ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time.

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement.

You may surrender your ADSs to the depositary in exchange for ordinary shares. The depositary will charge you fees for any such exchange.

We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended.

To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

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Option to purchase additional shares We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an additional ADSs.

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|:---|:---|
| Nestlé Convertible Note  | Pursuant to a convertible note purchase agreement entered into with a subsidiary of Nestlé S.A., or the purchaser, we issued to the purchaser a convertible note dated January 17, 2023, or the Note, for an aggregate purchase price and with a principal amount of US$50,000,000. |

---

Subject to the terms and conditions of and exceptions provided in the Note, concurrently with, and subject to, the completion of this offering, half of the principal amount (i.e., US$25,000,000), or the IPO Conversion Amount, will be automatically converted into a number of our ordinary shares at a conversion price equal to the initial public offering price (adjusted for the ADS-to-ordinary share ratio), unless this share number falls below 65,082,399, the minimum number of conversion shares provided in the Note, or the Minimum Number, in which case the IPO Conversion Amount will be converted into the Minimum Number of shares. Subject to the terms and conditions of and exceptions provided in the Note, the remaining half of the principal amount will be automatically converted, on the first day immediately after the [180-day] lock-up period applicable to this offering, into a number of our ordinary shares at a conversion price equal to the average closing price of our ADSs during the last five trading days of the lock-up period (adjusted for the ADS-to-ordinary share ratio) (or the Minimum Number as applicable), provided, among other things, that such average price is higher than the initial public offering price.

In addition to the automatic conversions described above, the purchaser may also elect to convert the Note in certain other circumstances. For example, subject to the applicable automatic conversion described above and other terms and conditions of the Note, the purchaser may elect to convert half of the principal amount at any time after this offering into a number of shares equal to the higher of (i) the quotient obtained by dividing such amount by the average closing price of the previous five trading days (adjusted for the ADS-to-ordinary share ratio), or if the conversion is to take place on or prior to the fifth trading day following the completion of this offering, by the initial public offering price (adjusted for the ADS-to-ordinary share ratio), and (ii) the Minimum Number. Upon the maturity date, the purchaser also has an option to convert the outstanding amount of the Note (if any) into shares at a conversion price determined in accordance with the Note.

Our issuance and sale of the Note was made through private placement pursuant to an exemption from registration with the SEC, under Regulation S of the United States Securities Act of 1933,

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as amended. We refer to the Note as the Note or the Nestlé Convertible Note in this prospectus.

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| | |
|:---|:---|
| Indication of Interest  | Carmignac Gestion, an asset manager established in France and licensed as a UCITS management company and alternative investment fund manager (AIFM), has indicated, on behalf of certain mutual funds it manages, an interest in subscribing for an aggregate of up to US$30 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. In addition, Snow Lake Management LP, an affiliate of certain of our existing shareholders, has indicated, on behalf of Snow Lake China Master Fund, Ltd. and Snow Lake China Master Long Fund, Ltd., an interest in subscribing for an aggregate of up to US$20 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. Assuming an initial public offering price of US$ per ADS, the midpoint of the estimated initial public offering price range, the number of ADSs to be purchased by these investors would be up to ADSs, which represents approximately % of the ADSs being offered in this offering, assuming the underwriters do not exercise their over-allotment option. Because the indications of interest are not binding agreements or commitments to purchase, such investors may determine to purchase more, fewer or no ADSs in this offering, and we and the underwriters are under no obligation to sell ADSs to them. The underwriters will receive the same underwriting discounts and commissions on any ADSs purchased by such investors as they will on any other ADSs sold to the public in this offering. For additional information, see "Underwriting." |

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|:---|:---|
| Use of proceeds  | We expect that we will receive net proceeds of approximately US$ million from this offering, or approximately US$ million if the underwriters exercise their option to purchase additional ADSs in full, assuming an initial public offering price of US$ per ADS, which is the midpoint of the estimated range of the initial public offering price, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. |

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We intend to use the net proceeds from this offering (i) approximately 35% for strengthening our brand, expanding our pet hospital network in China, and further upgrading our pet care services; (ii) approximately 20% for investing in our supply chain service and local services capabilities; (iii) approximately 20% for exploring new initiatives including upstream and downstream business opportunities as well as global expansion, although we have not identified any specific opportunities including mergers and acquisitions at this time; (iv) approximately 15% for research and development to enhance digitalization and technology, especially in smart treatment, online platform and data insight; and (v) approximately 10% for working capital and other general corporate purposes. See "Use of Proceeds" for more information.

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|:---|:---|
| Lock-up  | [We, our directors and executive officers, our current shareholders and the holder of the Nestlé Convertible Note have agreed with the underwriters not to sell, transfer or otherwise dispose of any ADSs or ordinary shares or any securities convertible into or exchangeable or exercisable for any of our ordinary shares or ADSs for a period of [180] days after the date of this prospectus, subject to certain exceptions. See "Shares Eligible for Future Sales" and "Underwriting."] |

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Listing We intend to apply to have the ADSs listed on the Nasdaq Global Select Market under the symbol "RPET." Our ADSs and shares will not be listed on any other stock exchange or traded on any automated quotation system.

Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of The Depository Trust Company on , 2023.

Depositary JPMorgan Chase Bank, N.A.

The number of ordinary shares that will be outstanding immediately after this offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is based on 13,564,280,460 issued and outstanding ordinary shares as of the date of this prospectus, assuming
that all of our outstanding Class A ordinary shares and Class B ordinary shares have been converted, on a one-for-one basis, into our ordinary shares immediately upon the completion of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• includes ordinary
shares in the form of ADSs that we will issue and sell in this offering, assuming the underwriters do not exercise their over-allotment option to purchase additional ADSs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• includes ordinary
shares that we will issue to the holder of the Nestlé Convertible Note upon the automatic conversion of the IPO Conversion Amount concurrently with the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• excludes all ordinary shares issuable upon exercise of our outstanding options and ordinary shares reserved for
future issuances under our share incentive plan.

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**SUMMARY CONSOLIDATED FINANCIAL DATA** 

The following summary consolidated statements of net loss data for the years ended December 31, 2020 and 2021, summary consolidated balance sheets data as of December 31, 2020 and 2021 and summary consolidated statements of cash flow data for the years ended December 31, 2020 and 2021 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated statements of net loss data for the nine months ended September 30, 2021 and 2022, summary consolidated balance sheet data as of September 30, 2022 and summary consolidated cash flow data for the nine months ended September 30, 2021 and 2022 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated 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 prospectus.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
|  **Summary Consolidated Statements of Net Loss Data:** |  |  |  |  |  |  |
|  **Revenues** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | 2053955 | 2973521 | 418011 | 2147330 | 2284246 | 321115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product**  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | 591732 | 1280311 | 179983 | 880852 | 1573222 | 221160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | 362598 | 529839 | 74484 | 371479 | 457649 | 64335 |
|  **Total revenues** | **3008285** | **4783671** | **672478** | **3399661** | **4315117** | **606610** |
|  **Cost of revenues** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | (1969207) | (2872948) | (403872) | (2066671) | (2279401) | (320433) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product**  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | (508356) | (1133886) | (159399) | (764012) | (1392209) | (195714) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | (388241) | (553676) | (77835) | (397544) | (424724) | (59707) |
|  **Total cost of revenues** | **(2865804)** | **(4560510)** | **(641106)** | **(3228227)** | **(4096334)** | **(575854)** |
|  **Gross profit** | **142481** | **223161** | **31372** | **171434** | **218783** | **30756** |
|  **Operating expenses:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and marketing  | (174720) | (357173) | (50211) | (222616) | (282419) | (39702) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative  | (895681) | (1136143) | (159716) | (796680) | (907933) | (127635) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development  | (52332) | (82656) | (11620) | (57662) | (92727) | (13035) |
|  **Total operating expenses** | **(1122733)** | **(1575972)** | **(221547)** | **(1076958)** | **(1283079)** | **(180372)** |
|  **Loss from operations** | **(980252)** | **(1352811)** | **(190175)** | **(905524)** | **(1064296)** | **(149616)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 18593 | 34493 | 4848 | 30242 | 18491 | 2599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (12993) | (32631) | (4587) | (22479) | (55818) | (7847) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) | 1471 | (390) | (55) | (585) | (6735) | (947) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net (loss) profit from equity method investments | (290) | (626) | (88) | (2778) | 2176 | 306 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions | 6609 | 54337 | 7639 | 54337 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | (21277) | (2123) | (298) | (681) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long- term investments |  | 509 | 72 | 2861 | 217 | 31 |
|  **Loss before income taxes** | **(988139)** | **(1299242)** | **(182644)** | **(844607)** | **(1105965)** | **(155474)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expenses | (11645) | (12014) | (1689) | (11984) | (3393) | (477) |
|  **Net loss** | **(999784)** | **(1311256)** | **(184333)** | **(856591)** | **(1109358)** | **(155951)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to non-controlling interests | 26375 | 14103 | 1983 | 9452 | 14034 | 1973 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) on foreign currency denominated redeemable ordinary shares | (186396) | (74390) | (10458) | (19450) | 339473 | 47722 |
|  **Net loss attributable to Ruipeng Pet Group Inc.** | **(1159805)** | **(1371543)** | **(192808)** | **(866589)** | **(755851)** | **(106256)** |
|  **Net loss per share attributable to ordinary shares:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | (0.10) | (0.11) | (0.02) | (0.07) | (0.06) | (0.01) |
|  **Weighted average shares used to compute net loss per share attributable to ordinary shares:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 5179509953 | 5008056549 | 5008056549 | 4868768293 | 5422013363 | 5422013363 |

---

The following table presents our summary consolidated statements of balance sheet data as of December 31, 2020 and 2021 and September 30, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of September 30,** | **As of September 30,** |
|  | **2020** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Summary Consolidated Statements of Balance Sheet Data:** |  |  |  |  |  |
|  **Current assets:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 4024308 | 772640 | 108616 | 855947 | 120327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted cash |  | 914725 | 128590 | 1571701 | 220946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term investments |  | 893598 | 125620 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | 92713 | 125872 | 17695 | 122060 | 17159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | 423646 | 729935 | 102612 | 665445 | 93547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 416920 | 720752 | 101322 | 568096 | 79862 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties | 8246 | 916 | 129 |  |  |
|  **Total current assets** | **4965833** | **4158438** | **584584** | **3783249** | **531841** |
|  **Total assets** | **8696870** | **9494692** | **1334743** | **11146028** | **1566884** |
|  **Current liabilities:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term bank borrowings | 350000 | 1392280 | 195724 | 1893788 | 266225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 180654 | 237759 | 33423 | 227837 | 32029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable | 12244 | 1920 | 270 | 1697 | 239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities |  |  |  | 471100 | 66226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities | 234778 | 355722 | 50007 | 350891 | 49327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 1151283 | 1535527 | 215861 | 1518964 | 213532 |

---

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---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of September 30,** | **As of September 30,** |
|  | **2020** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Total current liabilities** | **1928959** | **3523208** | **495285** | **4464277** | **627578** |
|  **Total liabilities** | **1934179** | **3532626** | **496609** | **6031258** | **847861** |
|  **Redeemable ordinary shares** | **8361156** | 8243339 | 1158830 | 8814747 | 1239158 |
|  **Total Ruipeng Pet Group Inc. shareholders' deficit** | **(1718562)** | **(2334895)** | **(328234)** | **(3748952)** | **(527019)** |
|  **Non-controlling interests** | **120097** | 53622 | 7538 | 48975 | 6884 |
|  **Total other shareholders' deficit** | **(1598465)** | **(2281273)** | **(320696)** | **(3699977)** | **(520135)** |
|  **Total liabilities, redeemable ordinary shares and other shareholders' deficit** | **8696870** | **9494692** | **1334743** | **11146028** | **1566884** |

---

The following table presents our summary consolidated statements of cash flow data for the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2021 and 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Summary Consolidated Statements of Cash Flow Data:** |  |  |  |  |  |  |
|  Net cash used in operating activities | (476107) | (1166773) | (164022) | (810911) | (502096) | (70584) |
|  Net cash (used in) provided by investing activities | (338966) | (2099295) | (295114) | (2369766) | 571583 | 80352 |
|  Net cash provided by financing activities | 4033403 | 971849 | 136620 | 429106 | 455432 | 64024 |
|  Exchange rate effect on cash, cash equivalents and restricted cash  | (167373) | (42724) | (6006) | (24327) | 215364 | 30275 |
|  Net increase (decrease) in cash, cash equivalents and restricted cash | 3050957 | (2336943) | (328522) | (2775898) | 740283 | 104067 |
|  Cash, cash equivalents and restricted cash at the beginning of the year/period | 973351 | 4024308 | 565728 | 4024308 | 1687365 | 237206 |
|  Cash, cash equivalents and restricted cash at the end of the year/period | 4024308 | 1687365 | 237206 | 1248410 | 2427648 | 341273 |

---

**Non-GAAP Financial Measures** 

In evaluating our business, we consider and use Adjusted EBITDA and Adjusted EBITDA Margin as supplemental non-GAAP measures to review and assess our operating performance. The presentation of these non-GAAP measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define Adjusted EBITDA as net income, plus net interest expense, depreciation and amortization, and further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operations. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of our total revenues.

We present Adjusted EBITDA and Adjusted EBITDA Margin because they are used by our management to evaluate our operating performance and formulate business plans. These non-GAAP measures reflect the company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. We also believe that the use of these non-GAAP measures facilitate investors to understand and evaluate our current operating performance and future prospects in the same manner as management does, if they so choose. We also believe that these non-GAAP measures provide useful information to both management and investors by

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excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are non-recurring in nature or may not be indicative of our core operating results and business outlook.

These non-GAAP measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP measures have limitations as analytical tools. The non-GAAP adjustments to loss before income tax to arrive at the Adjusted EBITDA do not reflect all items of income and expense that affect our operations. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling Adjusted EBITDA to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

The following table reconciles loss before income taxes to Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  **Reconciliation of loss before income tax to Adjusted EBITDA and Adjusted EBITDA Margin:** |  |  |  |  |  |  |
|  **Loss before income taxes** | (988139) | (1299242) | (182644) | (844607) | (1105965) | (155474) |
|  Adjustments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 313943 | 356990 | 50185 | 260602 | 292352 | 41098 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 12993 | 32631 | 4587 | 22479 | 55818 | 7847 |
|  **EBITDA** | **(661203)** | **(909621)** | **(127872)** | **(561526)** | **(757795)** | **(106529)** |
|  Other Adjustments: |  |  |  |  |  |  |
|  *Non-cash costs*: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 5961 | 42114 | 5920 | 41518 | 1788 | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | 21277 | 2123 | 298 | 681 |  |  |
|  *Non-recurring costs*: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One-off non-capitalizable deal expenses related to financing<sup>(1)</sup> | 18537 | 12995 | 1827 | 1594 | 6384 | 898 |
|  **Adjusted EBITDA** | **(615428)** | **(852389)** | **(119827)** | **(517733)** | **(749623)** | **(105380)** |
|  **Adjusted EBITDA Margin** | **(20.5)%** | **(17.8)%** | **(17.8)%** | **(15.2)%** | **(17.4)%** | **(17.4)%** |

---

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Notes:

(1) One-off non-capitalizable deal expenses related to financing primarily consist of financial and legal
professional fees paid in connection with our financing.

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**RISK FACTORS** 

*An investment in our ADSs involves significant risks. You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ADSs. Any of the following risks could have a material and adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ADSs could decline, and you may lose all or part of your investment. In particular, as we are a China-based company incorporated in the Cayman Islands, you should pay special attention to the subsection headed "Risks Related to Doing Business in China" below.* 

**Risks Related to Our Business and Industry** 

***The pet care industry is highly fragmented and competitive. If we fail to compete effectively, we may lose our market share or fail to gain additional market share, and our growth and profitability may be materially and adversely affected.***

The pet care industry is highly fragmented and competitive and we expect that competition may become even more intense in the future. We compete with a number of pet care services providers, specialty pet store chains and independent pet stores. We also compete with online retailers, supermarkets, warehouse clubs and mass merchants. The pet care industry has become increasingly competitive as existing market players expand their pet-related service and product offerings and new players enter into the market. Some of our international competitors are larger and have access to greater capital and the ability to invest in more resources than we do.

We may face greater competition from national, international, regional, local and online pet care services providers in the future. In particular, if any of our major competitors seeks to gain or retain market share by reducing prices or by introducing additional products or services, we may be required to reduce prices on our key products or services or introduce new offerings in order to remain competitive, which may negatively affect our profitability and require a change in our operating strategies.

In addition, new competitors have been entering our market and may continue to do so and existing competitors may introduce new and competitive products and services. Some of our competitors or potential competitors may seek to differentiate themselves by offering similar products or services at lower prices or bundled product and service offerings through co-marketing arrangements.

We believe that our ability to compete effectively depends on many factors, including the breadth and depth of our products and service offerings, our pricing competitiveness, customer experience, our ability to form and retain a closed-loop business model, our supply chain capabilities, our technological capabilities, quality control of our product and service offerings, our long-term investments in equity method investees in the pet care industry, our marketing efforts, and the strength and reputation of our brand.

In addition, as our business continues to grow rapidly, we face significant competition for highly skilled personnel, including management, veterinarians and other pet care professionals, and back-office personnel such as IT professionals. The success of our growth strategy depends in part on our ability to retain existing personnel and attract additional highly skilled employees.

Furthermore, if consumer preferences change and thereby decrease the attractiveness of what we believe to be our competitive advantages, including high-quality service offerings, our extensive product assortment, premium product offerings, competitive pricing, and a unique customer experience, or if we fail to otherwise positively differentiate our customer experience from that of our competitors, we may lose our market share or fail to gain additional market share, and as a result, our growth and profitability could be adversely affected.

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***Negative publicity arising from claims that we do not properly care for pets we treat or negative media coverage in general could adversely affect how we are perceived by the public and reduce our revenues and profitability.***

From time to time we receive claims or complaints alleging that we do not properly care for some of the pets we handle, which may include dogs, cats, birds, fish, reptiles, and other animals. Deaths, injuries or losses sometimes occur while animals are under our care, including during transportation. Although the claims or complaints we receive are often due to inadequate communication with our customers, we may be subject to claims that our animal care practices, including veterinary, grooming and other services, or the related training of our associates, do not provide the proper level of care. Our efforts to establish our reputation as a "health and wellness" company increase the risk of claims or complaints regarding our practices. Any such claims or complaints, as well as any related news reports or reports on social media, even if inaccurate or untrue, could cause negative publicity, which in turn could harm our business and have a material adverse effect on our results of operations.

In addition, negative publicity about us or our business, shareholders, affiliates, directors, officers or other employees, brand partners, manufacturers, third-party platforms, service providers and other third parties as well as the industry in which we operate, can harm our operations and reputation. Such negative publicity could be related to a variety of matters, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• alleged misconduct or other improper activities committed by our shareholders, affiliates, directors, officers
and other employees, as well as our brand partners, manufacturers, third-party platforms, service providers and other third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• allegations or rumors about us or our shareholders, affiliates, directors, officers and other employees, as well
as our brand partners, manufacturers, third-party platforms, service providers and other third parties, including but not limited to allegations or rumors about excessive overtime or other mistreatment of employees or violations of labor laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• customer complaints about the quality, pricing, delivery, returns, refunds and other aspects of products and
services provided by us or third parties we cooperate with;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• complaints or disputes arising from the interpretation of terms and conditions of the pet medical cards we
provide;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• infringement activities associated with counterfeit goods on our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• security breaches or customer data leakage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• challenges or scrutiny from animal welfare advocates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• governmental and regulatory investigations or penalties resulting from our failure to comply with applicable laws
and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• instances of product or service safety issues including injuries and deaths of pets caused by products and
services on our platform, even those not involving us or our business partners; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other lawsuits and legal proceedings, with or without merits.

In addition to traditional media, there has been an increasing use of social media platforms and similar devices in China, including instant messaging applications, social media websites and other forms of internet-based communications that provide individuals with access to a broad audience of users and other interested persons. The availability of information on instant messaging applications and social media platforms is virtually immediate and may not afford us an opportunity for redress or correction. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning our company, shareholders, directors, officers and employees as well as our brand partners, manufacturers, third-party platforms, service providers and other third parties may be posted on such platforms at any time. Such negative publicity, whether valid or not, may result in a decrease in customer confidence in us and materially and adversely affect our reputation, business, financial condition and results of operations.

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***A decline in consumer spending or a change in consumer preferences or demographics may materially and adversely affect our business and results of operations.***

Our sales and profitability depends in part on the frequency of visits to our pet hospitals, which is impacted by consumer spending habits. Consumer spending habits are affected by a number of factors, including among other things, the continued impact of the COVID-19 outbreak, disruption or volatility in global financial markets, changes in interest rates, the availability of discretionary income and credit, weather, consumer confidence, unemployment levels and government orders restricting freedom of movement. The Chinese economy has undergone and may in the future undergo, significant volatility. Business and financial disruptions in China could have a material adverse effect on the demand for our services. We may experience declines in sales or changes in the types of products and services sold during economic downturns. Our business could be harmed by any material decline in the amount of consumer spending, which could reduce our sales, or result in a decrease in the sales of higher-margin products, which could reduce our profitability and adversely affect our business. In addition, economic concerns may cause some pet parents to elect to skip or defer visits to pet hospitals, forgo expensive treatment options or defer treatment for their pets altogether, or affect their willingness to approve certain diagnosis tests, comply with a treatment plan, or even own a pet. Additionally, the frequency of visits to our pet hospitals and the number of diagnosis tests performed by our laboratories may be negatively impacted as a result of preventative care and better pet nutrition. The demand for our products and services may decline as a result of the eradication or substantial declines in the prevalence of certain diseases. Also, many pet-related products traditionally sold at pet hospitals have become more widely available in retail stores and other channels of distribution, including the internet, resulting in a decline in demand for these products at our pet hospitals. All of the foregoing may result in a decrease in sales of our products and services, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

In addition, we have benefited from increasing pet ownership, discretionary spending on pets and current trends in humanization and premiumization in the pet care industry, as well as favorable pet ownership demographics. To the extent these trends slow or reverse, our sales and profitability would be adversely affected. The success of our business depends in part on our ability to identify and respond to evolving trends in demographics and consumer preferences. Failure to timely identify or effectively respond to changing consumer tastes, preferences, spending patterns and pet care needs could adversely affect our relationship with our customers, the demand for our products and services, our market share and our profitability.

***If we fail to acquire and retain new customers, or fail to do so in a cost-effective manner, our business, financial condition and results of operations may be materially and adversely affected.***

Our success depends on our ability to acquire and retain new customers and to do so in a cost-effective manner. In order to expand our customer base, we must appeal to, and acquire new pet parents and customers who have historically sought pet care services from other providers or purchased their pet products from other online or offline suppliers or retailers. We have incurred significant marketing and advertising expenses to promote our services and products to potential new customers. We cannot assure you that the net sales from the new customers we acquire will ultimately exceed the cost of acquiring those customers. If we fail to deliver a quality hospital visit or shopping experience, or if customers do not perceive the products or services we offer to be of high value and quality, we may be unable to acquire or retain customers. If we are unable to acquire or retain customers who purchase products or services in volumes sufficient to grow our business, we may be unable to generate the scale necessary to achieve operational efficiency and drive beneficial network effects with our suppliers. Consequently, our prices may increase, or may not decrease to levels sufficient to generate customer interest, our net sales may decrease and our margins and profitability may decline or not improve. As a result, our business, financial condition, and results of operations may be materially and adversely affected.

We believe that many of our new customers originate from word-of-mouth and other non-paid referrals from our customers. Therefore, we must ensure that our customers remain loyal to us in order to continue receiving those referrals. If our efforts to satisfy our customers are not successful, we may be unable to acquire

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new customers in sufficient numbers to continue to grow our business, and we may be required to incur significantly higher marketing expenses in order to acquire new customers.

We drive a significant amount of traffic to our website via social networking or other e-commerce channels used by our current and prospective customers. As social networking and e-commerce channels continue to rapidly evolve, we may be unable to develop or maintain a presence within these channels. If we are unable to cost-effectively drive traffic to our website, our ability to acquire new customers and our financial condition would be materially and adversely affected. Additionally, if we fail to increase our net sales per active customer, generate repeat purchases or maintain high levels of customer engagement, our business, financial condition, and results of operations could be materially and adversely affected.

Additionally, we host and participate in offline events to promote our brand name, such as the Pet Carnival in Beijing and various industry conferences, forums and seminars. As a result of COVID-19 and the travel and social gathering restrictions it brought, our ability to continue to host or participate in such events, and in turn our ability to promote our brand name through such events, was adversely affected and may continue to be adversely affected. We also cannot assure you that the benefit from hosting or participating in such events will ultimately exceed the significant costs it brings.

***Expanding into new businesses and services may expose us to new challenges and more risks.***

We strive to offer a wide variety of pet products and services that are responsive to customers' evolving needs. Offering new products or services or expanding into new businesses, including launching new products and services and expansion into new product or service categories, involves new risks and challenges. For example, we currently provide to our customers a new service through a Weixin mini program, where we display various pet-related insurance products provided by qualified third-party insurance institutions. Such new service may be deemed as selling Internet insurance products or providing insurance services as an insurance agent, in which case we may be required to obtain the insurance agency business license. We do not believe we are required to obtain such license. However, we cannot assure you that the regulatory authorities will be of the same view. Further, we may offer certain financing services to our supply chain customers in the future, which may subject us to credit risks as well as regulatory risks related to the operation of a financing business. In addition, our lack of familiarity with those new products and services and lack of relevant customer data relating to them may make it more difficult for us to anticipate customer demand and preferences. We may misjudge consumer demand, resulting in inventory and personnel buildup and possible inventory write-down. It may also make it more difficult for us to inspect and control quality and ensure proper service provision or handling, storage and delivery of products. We may experience higher return rates on new products, receive more customer complaints about new products or services and face costly product liability claims related to our new products, which would harm our brand and reputation as well as our financial performance. Furthermore, we may not have much purchasing power in new categories of products and services, and we may not be able to negotiate favorable terms with suppliers. We may need to price aggressively to gain market share or remain competitive in new product or service categories. It may be difficult for us to achieve profitability in the new product or service categories and our profit margin, if any, may be lower than we anticipate, which would adversely affect our overall profitability and results of operations. We cannot assure you that we will be able to recoup our investments in introducing these new product or service categories.

***The growth of our business depends on our ability to effectively capture the evolving consumer trends, improve existing products and services and expand into new offerings.***

Our growth depends, in part, on our ability to successfully introduce, improve, and reposition our products and services to meet the requirements of pet parents. This, in turn, depends on our ability to predict and respond to evolving consumer trends, demands and preferences. Our ability to innovate is affected by the technical capability of our product development staff and third-party consultants, our attractiveness as a partner for outside research and development scientists and entrepreneurs, the success of our management and sales team in introducing and marketing new products and service offerings, our ability to leverage our digital and data

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capabilities to gather and respond to consumer feedback, and developing and testing new products, including complying with governmental regulations.

By leveraging our proprietary big data and AI technologies, we have introduced an intelligent pet care system to cover the full spectrum of smart treatment from an identification protocol applicable to dog noses and cat faces at the pre-examination stage to a smart follow-up tool at the post-examination stage. We have also introduced other advanced technologies for our pet care services. We continue to invest in the research and development of such intelligent pet care and high-end diagnosis and treatment technologies, but such effort may fail to produce results that meet our expectations.

We may be unable to determine with accuracy when or whether any of our products or services now under development will be launched, and we may be unable to develop or otherwise acquire product candidates or products. Additionally, we cannot predict whether any such products or services, once launched, will be commercially successful. If we are unable to successfully develop or otherwise acquire new products or services, our business, financial condition and results of operations may be materially adversely affected.

***If we are unable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected.***

Our ability to maintain or enhance our growth rates and profitability depends in part on our ability to increase our revenue and operating income through a balanced program of organic growth initiatives. Our growth strategies include to strengthen leadership in the pet care industry in China and further upgrade the scope and quality of our pet care services, to enhance supply chain services and local services capabilities and integrate the pet service value chain to empower industry growth and build up a vibrant ecosystem, to continue our investment in industry talents to build a pool of top-notch veterinary talents, to further improve operational quality and capabilities through digitalized technology, and to empower the global pet industry, develop localized pet business capabilities in overseas regions, and construct a pet metaverse through the existing digitalization functionalities. However, we may not be able to execute on these strategies as effectively as anticipated. Our ability to execute on these strategies depends on a number of factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether we have adequate capital resources to expand and optimize our ecosystem, expand our offerings, build our
digital and data capabilities and increase our spending on talent development;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continue to build new pet hospitals, acquire existing hospitals and further consolidate the
industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to hire, train and retain skilled managers and personnel, including veterinarians, information
technology professionals, owned brand merchants, instructors, and groomers and trainers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to establish our brand in international markets and compete with local players by leveraging our
digital capabilities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continue to upgrade our information and other operating systems and to make use of the data that
we collect through these systems to offer better products and services to our customers.

Our current pet hospitals and other businesses may not maintain their levels of sales and profitability, and our growth strategies may not generate sales necessary to achieve a comparable level of profitability. To the extent that we are unable to execute on our growth strategies in accordance with our expectations and fail to maintain the current levels of sales and profitability, our business and results of operations may suffer. In addition, our internal growth may continue to fluctuate and may be below our historical rates. Any reduction in the rate of our internal growth may cause our revenue and operating income to decrease. Investors should not assume that our historical growth rates are reliable indicators of results in future periods.

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***If we fail to generate or obtain sufficient capital to finance our business operations and growth, we may be unable to sustain our growth and our business may be materially and adversely affected.***

Our growth rate depends, to a large degree, on the availability of adequate capital to fund the expansion of our offerings, including veterinary and other services and digital capabilities, which in turn will depend in large part on cash flow generated by our business and the availability of equity and debt capital. We cannot assure you that we will be able to maintain sufficient cash flow or obtain sufficient equity or debt capital on acceptable terms, or at all, to support our expansion plans.

Even if we are able to obtain additional financings, such financings may be on terms that are dilutive or potentially dilutive to our shareholders, and the prices at which new investors would be willing to purchase our securities may be lower than the public offering price of this offering or the current market price per share of our ordinary shares. The holders of new securities may also have rights, preferences, or privileges that are senior to those of existing stockholders. If new financing sources are required, but are insufficient or unavailable, we may need to modify our growth and operating plans and business strategies based on available funding, if any, which would harm our ability to grow our business.

***Our continued success is substantially dependent on positive perceptions of our brands. Any harm to our brands or failure to maintain and enhance our brand recognition may materially and adversely affect our business and results of operations.***

We believe that one of the reasons our customers prefer to purchase products and services from us, and that our partners choose us to collaborate with, is the reputation we have built over the years of serving our primary constituencies: customers, partners, and the communities in which we operate. To be successful in the future, we must continue to preserve, grow, and leverage the value of our reputation and our brands, including our pet hospitals, local services channels, supply chain, diagnosis laboratories, and continued veterinary education institutions. Reputational value is based in large part on perceptions of subjective qualities, and even isolated incidents that erode trust and confidence, particularly if they result in adverse publicity or widespread reaction on social media, governmental investigations, or litigation, can have an adverse impact on these perceptions and lead to adverse effects on our business, including decreased comparable sales, consumer boycotts and loss of new pet hospital development opportunities.

In addition, while we plan to continue to invest in the development of our business, including in the expansion of our offering of private brand products, we may be unable to maintain or expand sales of our private brand products for a number of reasons, including the loss of key suppliers and product recalls. See "—Our private label products may not always appeal to our customers, and may compete with our brand partners." Our inability to sustain the growth and sales of our private brand offerings may materially and adversely affect our projected growth rates, business, financial condition, and results of operations.

Our large number of trademarks are valuable assets that support our brands and consumers' perception of our products and services. We rely on trademark laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our trademarks and brands. We may fail to protect our trademarks for a variety of reasons, such as malicious preemptive registration of trademarks by third parties. See "—Failure to establish, maintain, protect, and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of our technology or our brands could harm our competitive position or require us to incur significant expenses to enforce our rights." If we are unable to maintain our reputation, protect our trademarks and brands, and further enhance our brand recognition, our results of operations and business may suffer.

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***If we fail to take adequate safety precautions, there will be an increased risk of injuries or other health problems suffered by our employees, customers or trainees at our facilities and we may be subject to additional costs and regulatory, litigation and reputational risks.***

We have seen and may in the future see work-related injuries suffered by employees at our pet hospitals, stores, front distribution centers ("FDC"), warehouses and company-provided dormitories and during work-related travel. In particular, our hospital personnel face the risk of being injured by the pets they serve on a daily basis. Our employees are also subject to the risk of contracting various occupational diseases, animal diseases transmissible to humans and depression and other mental problems. The highly infectious nature of certain diseases such as rabies makes such diseases highly dangerous to our employees, our customers and other people who come into contact with them. Furthermore, our customers may also suffer injuries at our hospitals or other facilities, such as injuries caused by pets. Our trainees who receive training at our teaching facilities and training bases may also get injured due to inadequate safety measures taken by us. We have taken precautionary measures to protect our employees, customers and trainees and create a safe environment and continue to invest in such measures to improve the safety of our facilities. However, we cannot assure you that our safety measures will be adequate or effective. If our employees, customers or trainees are injured due to inadequate safety measures or accidents, we may be liable for medical costs and other forms of compensation and subject to government-imposed penalties and litigation and reputational risks.

***Animal health products and medications used on animals are subject to safety, quality or efficacy concerns, which may have a material and adverse effect on our reputation, financial condition and results of operations.***

Safety, quality or efficacy concerns can arise with respect to our products, including veterinary drugs and other medications used on animals, whether or not scientifically or clinically supported, leading to product recalls, withdrawals or suspended or declining sales, as well as product liability and other claims.

Violations of relevant regulations and regulatory actions based on these types of safety, quality or efficacy concerns could impact all or a significant portion of a product's sales, affect the licenses of the veterinarians involved, and could, depending on the circumstances, materially and adversely affect our operating results. The cost of compliance with such laws and regulations may further impose financial burden on us. For example, for certain pet diseases that do not have an effective veterinary treatment option, some of our pet hospitals use on pets human medications or veterinary drugs pending regulatory approval or without import veterinary drug registration certificates. In addition, for certain pet diseases that do not have an effective treatment option, off-label use of certain veterinary drugs is provided in some of our hospitals. Also, some of our hospitals had inaccurate or incomplete records on veterinary drug use. These practices could violate the relevant PRC regulations. We cannot assure you that our hospitals will not use human medications or other problematic veterinary drugs on pets or the drug use records will remain authentic and complete in the future as required by the relevant PRC laws and regulations, which may subject us to order to rectify, administrative penalty of fines or revocation of the certificate or the licenses of the veterinarians involved or other civil or criminal liabilities for any loss caused. Further, as to the purchase, use and storage of narcotic and psychotropic drugs for animals, certain of our hospitals have not followed all the national or local required procedures, and there is no assurance we will be able to rectify the current practice of such hospitals and satisfy all the procedures and requirements under the relevant PRC laws and regulations and we may be subject to a warning, order to rectify, fines or other administrative penalties from the relevant regulators. Moreover, we did not have the relevant supporting documents of product quality qualifications or quarantine certificates for certain of the veterinary drugs we sold through our local services segment, and we cannot assure you that we will be able to obtain such qualifications or certificates in a timely manner or at all and we may be subject to order to rectify, administrative penalty of fines, confiscation of the drugs marketed and the income therefrom, revocation of the certificate on veterinary drugs operation, or other civil or criminal liabilities for any loss caused.

We have put in place a comprehensive set of internal policies to prevent and rectify the issues described above, including policies that (i) prohibit the inappropriate or unapproved use of human medications on pets or

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unapproved veterinary drugs, (ii) prohibit purchase, use and storage of narcotic and psychotropic drugs for animals and sales of veterinary drugs without relevant product quality qualifications or quarantine certificates and (iii) require each pet hospital and related veterinarian to maintain accurate and complete medical records. However, we cannot assure you that we will be able to remediate or rectify these issues and be in full compliance with the relevant PRC laws and regulations in a timely manner. In the event of an accident related to any of such animal health concerns, we may be held liable for any consequential damage and any resulting claims for damages, which may exceed our financial resources and may materially adversely affect our business, financial condition, results of operations and future growth prospects.

In addition, since we depend on positive perceptions of the safety, quality and efficacy of our products, and animal health products generally, by our customers, veterinarians and end-users, any concerns as to the safety, quality or efficacy of our products, whether actual or perceived, may harm our reputation. These concerns and the related harm to our reputation could materially adversely affect our operating results and financial condition, regardless of whether such reports are accurate.

***Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things.***

Our business is subject to intense regulation, and we are required to hold a number of licenses and permits in connection with our business operations, including, but not limited to, the License for Animal Diagnosis and Treatment, the Veterinary Drug Operation License and the Radiation Safety License. Approvals and licenses related to fire safety and environmental protection, among other things, are required for conducting business in our hospitals, FDCs and warehouses. Certain aspects of our business were not or have not been in full compliance with one or more of these requirements. If the applicable local government authorities consider that we were or have been operating without the proper approvals, licenses or permits, they have the power to, among other things, levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our relevant business or impose restrictions on the affected portion of our business. Any of these actions by government authorities may have a material and adverse effect on our results of operations.

Specifically, certain of our hospitals had in the past failed to obtain or renew, or have not obtained or renewed as of the date of this prospectus, the License for Animal Diagnosis and Treatment under their own names. Certain hospitals had in the past failed to submit, or have not submitted as of the date of this prospectus, annual reports regarding animal diagnosis and treatment activities to the relevant government authorities in a timely manner. The registered business scope, business addresses, hospital names or legal representatives stated on the licenses of some hospitals had in the past failed to reflect the latest status, or have not reflected the latest status as of the date of this prospectus. We may be given a warning, or be ordered to rectify the non-compliance or suspend the operation, or be subject to penalties of fines or confiscation of related gains, or even the relevant license may be revoked or cancelled, as the case maybe, by the relevant government authorities. We are in the process of making the applicable applications, filings and/or renewals with the applicable local authorities. However, we cannot assure you that we can obtain or renew such permits and licenses in a timely manner, or at all, due to complex procedural requirements and policies. Some of our hospitals may fail to meet certain establishment requirements at national or local regulatory levels, such as the selected location or the size of the usable area, though such hospitals have obtained the License for Animal Diagnosis and Treatment. To date, the regulatory governmental authorities have not raised any objection to our location or area size, nor have they imposed any penalties on us or revoked the License for Animal Diagnosis and Treatment held by us. If the relevant local government authorities require us to rectify such defects, we cannot assure you that we will be able to find an alternative suitable location satisfying the regulatory requirements and to obtain the approvals, permits or renewals from the proper level of government authorities, in a timely manner or at all.

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Further, some of our PRC entities have changed their business names and/or business addresses, but have not been able to renew their Veterinary Drug Operation Licenses or other relevant permits to reflect the latest status. For those entities, we have paused their business operations, and plan to resume once they receive the updated licenses and permits. We cannot assure you that we will be able to renew such licenses and permits in a timely manner, or at all, in the future. Failing to do so may subject us to business suspension for rectification, fines or confiscation of the related income and the veterinary drugs for distributions.

In addition, we use radioisotopes and radiation-emitting devices in many of our hospitals, and are required to apply for Radiation Safety Licenses. However, many of our hospitals failed to obtain the Radiation Safety License before using radioisotopes and radiation-emitting devices. Historically, one of our PRC entities sold radioisotopes and radiation-emitting devices to pet hospitals without a Radian Safety License as required under applicable laws and regulations. Such PRC entity has rectified its operations and obtained the required license as of the date of this prospectus. We might be ordered to rectify in a prescribed period, failing which we may be subject to cease of operation or revocation of the license, penalty of fines and confiscation of related gains. Many of our hospitals did not apply for the approval of the change registration as to the Radiation Safety License in a timely manner, which may also lead to administrative penalties if we fail to rectify as requested by the relevant government authority. We are in the process of making the applicable applications, filings and/or renewals with the applicable local authorities. However, we cannot assure you that we can obtain or renew such permits and licenses in a timely manner, or at all, due to complex procedural requirements and policies.

Furthermore, some of our premises used as pet hospitals and third-party diagnosis laboratories have not completed the fire control acceptance filing in a timely manner or at all. We might be ordered to stop the use of or to suspend our business operations in these premises, and imposed fines by the competent housing and urban and rural development authorities. We are in the process of making the applicable applications and filings with the applicable local authorities. However, we cannot assure you that we can obtain such permits and licenses in a timely manner, or at all, due to complex procedural requirements and policies.

Besides, many of our pet hospitals and our third-party diagnosis laboratory in Beijing and Chengdu historically did not complete the environmental impact assessment and acceptance filings, or have not completed the environmental impact assessment and acceptance filings as of the date of this prospectus, or failed to obtain the wastewater discharge permit or the pollutant discharge permit or go through the registration of pollutant discharge, as the case may be. We might be ordered to rectify within a prescribed period, failure to do which might result in fines imposed by the competent governmental authorities on us. If serious environmental pollution and ecological destruction were caused, we might be ordered to suspend, cease or close the relevant operations. We are in the process of making the applicable applications and filings with the applicable local authorities. However, we cannot assure you that we can obtain such permits and licenses in a timely manner, or at all, due to complex procedural requirements and policies.

We may also be required to obtain other approvals, permits or registration during our business operations. For example, we had in the past failed to obtain, or have not obtained as of the date of this prospectus, the certificate for animal epidemic prevention conditions to operate animal farms and raising areas, the relevant quarantine certificates to transport or sell live animals and the relevant filing record to set up a pathogenic microbiology laboratory. Failing to do so may subject us to a warning, order to rectify in a prescribed time or suspend business for rectification or penalties of fines or confiscation of the related income and the veterinary drugs for distributions without the required license. We are in the process of making the applicable applications and filings with the applicable local authorities. However, we cannot assure you that we can obtain such permits and licenses in a timely manner, or at all, due to complex procedural requirements and policies. We had historically received penalties or disciplinary actions by relevant governmental authorities in the ordinary course of business due to the lack of the foregoing approvals, licenses, permits and filings.

As of the date of this prospectus, we have not been subject to material penalties or other material disciplinary action from the relevant governmental authorities regarding the conducting of our business without

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such approvals, licenses, permits and filing. However, we cannot assure you that the relevant governmental authorities would not require us to obtain the approvals, certificates or permits, complete filings or take any other actions retrospectively in the future. If the relevant governmental authorities require us to obtain the approvals, licenses or permits, or to complete filings, we cannot assure you that we will be able to do so in a timely manner or at all.

In addition, new laws and regulations may be enforced from time to time to require additional licenses and permits other than those we currently have. We may provide new products or services or expand our current business, which may also requires additional licenses and permits. We cannot assure you that we will be able to obtain such licenses and permits in a timely and cost-effective manner, and our financial condition and results of operations could be adversely affected if we fail to do so.

***We have sought and will continue to seek to grow our business through acquisitions of or investments in pet hospitals, new or complementary businesses, products or services, or through strategic ventures, and the failure to successfully identify these opportunities, manage and integrate these acquisitions, investments, or alliances, or to achieve an adequate return on these investments, could have an adverse effect on us.***

The pet care industry is highly fragmented. We have completed acquisitions in the past and may pursue expansion and acquisition opportunities in the future. If we are unable to manage acquisitions, investments, or strategic ventures, or integrate any acquired businesses, services, or technologies effectively, we may not realize the expected benefits from the transaction relative to the consideration paid, and our business, financial condition, and results of operations may be adversely affected. To be successful, the integration process requires us to achieve the benefits of combining the companies, including generating operating efficiencies and synergies and eliminating or reducing redundant costs. This integration process involves inherent uncertainties, and we cannot assure you that the anticipated benefits of these acquisitions will be fully realized without incurring unanticipated costs or diverting management's attention from our core operations.

From time to time we also make strategic investments. These investments typically involve many of the same risks posed by acquisitions, particularly those risks associated with the diversion of our resources, the inability of the new venture to generate sufficient revenues, the management of relationships with third parties, and potential expenses. Strategic ventures have the added risk that the other strategic venture partners may have economic, business, or legal interests or objectives that are inconsistent with our interests and objectives.

We may not be able to make acquisitions or investments on favorable terms or within a desired time frame. For certain of our PRC subsidiaries we acquired historically, certain provisions of the shareholder agreements or investment agreements restrict us to transfer or dispose our equity interest in such PRC subsidiaries, which may affect our equity interests in the relevant PRC subsidiaries.

In addition, we may be unsuccessful in identifying and evaluating business, legal, or financial risks as part of the due diligence process associated with a particular transaction. We also cannot guarantee that we are able to resolve all the issues we have identified effectively, or at all, such as historical non-compliance incidents (including but not limited to underpayment of taxes) associated with acquired businesses. In addition, some investments may result in the incurrence of debt or may have contingent consideration components that may require us to pay additional amounts in the future in relation to future performance results of the subject business. If we do enter into agreements with respect to these transactions, we may fail to complete them due to factors such as failure to obtain regulatory or other approvals. We may be unable to realize the full benefits from these transactions, such as increased net sales or enhanced efficiencies, within the timeframes that we expect or at all. These events could divert attention from our other businesses and adversely affect our business, financial condition, and results of operations. Any future acquisitions also could result in potentially dilutive issuances of equity securities, the incurrence of additional debt, or the assumption of contingent liabilities.

Furthermore, we may be unsuccessful in the integration of the acquired businesses. Any difficulties in the integration process could result in increased expense, loss of customers and a decline in operating margins and

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profitability. We may experience delays and increased costs in integrating acquired businesses, particularly where we acquire a large number of animal hospitals in a single region at or about the same time. We also could experience delays in converting the systems of acquired businesses into our systems, which could result in increased staff and payroll expense to collect our results as well as delays in reporting our results, both for a particular region and on a consolidated basis. Further, the legal and business environment prevalent in new territories and with respect to new businesses may pose risks that we do not anticipate and materially adversely impact our ability to integrate newly acquired operations. In addition, our management may spend a greater amount of time integrating these new businesses and less time managing our existing businesses. During these periods, there may be less attention directed to marketing efforts or staffing issues, which could affect our revenue and expense. For all of these reasons, our historical success in integrating acquired businesses is not a reliable indicator of our ability to do so in the future.

Relatedly, from time to time, for our acquisitions, we use direct or indirect beneficial ownership in our equity interest as consideration to the selling shareholders. The interests of those external parties who become our direct or indirect beneficial owners this way may not align with ours. Even though they have limited influence on our operations and our relationship with them is governed by relevant contracts, disputes with them may arise and they may act against our interest, including harming our reputation. Additionally, some of the above acquisitions in China with direct or indirect beneficial ownership in our equity interest as consideration may be subject to the approval of the MOFCOM under Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, but we have not obtained such approval, which is rarely granted in practice. As of the date of this prospectus, we have not received any notice of warning or been subject to penalties or other disciplinary action in this regard. However, there is uncertainty as to how the M&A Rules will be interpreted or implemented or whether the relevant government authorities would promulgate any detailed requirements. Moreover, we may be required to receive approval under anti-monopoly and competition laws for our past and future acquisitions. We cannot guarantee that we will be able to obtain such regulatory approval when needed in a timely manner, or at all, failure of which will subject us to anti-monopoly regulatory actions.

***If we fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material and adverse effect on the success of our business.***

We are subject to numerous environmental, fire protection, drainage or health and safety laws and regulations, including but not limited to those governing the construction procedures of pet hospitals, the use of radioisotopes and radiation-emitting devices, the handling, use, storage, treatment and disposal of hazardous materials, drainage and wastes discharge of stationary pollution sources. The cost of compliance with such laws and regulations is substantial. We failed to fulfill the relevant environmental or fire protection procedures, such as failure to prepare or complete environmental impact assessment document, obtain environmental assessment approval/filing receipt, complete environmental protection acceptance formalities, or complete filing of fire control acceptance for many of our hospitals and our third-party diagnosis laboratories, which have caused penalties on us and may subject us to potential penalties. See "—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things." Further, many of our hospitals conduct the disposal of medical waste without a qualified disposal institution or a valid disposal agreement, and as a result, such hospitals may be warned or fined by the relevant competent authorities; where the spread of epidemic disease or environmental pollution accident is caused, such hospitals may be subject to the suspension or revocation of their business or operating licenses, or even criminal liabilities. Our third-party diagnosis laboratory in Beijing historically did not file the disposal plan of hazardous materials to the relevant environmental authority, nor has it renewed its agreement regarding the disposal of hazardous materials with a

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qualified disposal institution as of the date of this prospectus, and we have not signed a valid agreement regarding the disposal of hazardous materials with a qualified disposal institution for our third-party diagnosis laboratory in Chengdu. These incidents may cause the relevant laboratories to be ordered to rectify, subject to penalty of fines or confiscation of illegal gains, or such business may even be suspended or closed in serious situations. Additionally, we may be required to obtain the water drainage permit, the pollutant discharge permit or go through the registration of pollutant discharge but we have not done so because of the uncertainties of the interpretation and implementation of the relevant PRC laws and regulations. There is no assurance that we will be able to rectify these non-compliances in a short time or at all. We could be subject to cease of operation, fines, confiscation of illegal gains or other penalties. We cannot eliminate the risk of contamination or injury from these materials, which could cause an interruption of our business operations. We cannot guarantee that the safety procedures utilized by our partners and by third-party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by laws and regulations or will eliminate the risk of accidental contamination or injury from these materials. In such an event, we could be held liable for any resulting damages, and such liability could exceed our resources. In addition, we may be required to incur substantial costs to comply with current or future environmental, health and safety laws and regulations which are complex, change frequently and have tended to become more stringent. We do not currently carry biological or hazardous waste insurance coverage. In the event of an accident or environmental discharge, we may be held liable for any consequential damage and any resulting claims for damages, which may exceed our financial resources and may materially adversely affect our business, financial condition, results of operations and future growth prospect. We are taking measures to remediate the non-compliance described above and are actively monitoring related legal and regulatory risk exposures.

***Although we have been successful in external acquisitions leveraging our disciplined acquisition approach and have also been successful in integrating Skyfield Group, we have a limited operating history as an integrated group after our acquisition of Skyfield Group, which makes it difficult to evaluate our business and prospects and may increase the risks associated with your investment.***

Although we have a long and successful operating track record in providing pet care services, we have a limited history as an integrated group after our acquisition of Skyfield Group in 2019. We have a long history of successful acquisitions and post-acquisition integration and have been successful in integrating Skyfield Group as well. Our total revenue grew from RMB3,008.3 million in 2020 to RMB4,783.7 million (US$672.5 million) in 2021, and grew from RMB3,399.7 million in the nine months ended September 30, 2021 to RMB4,315.1 million (US$606.6 million) in the nine months ended September 30, 2022. However, we may fail to continue our growth or maintain our historical growth rate. Any evaluation of our business and predictions about our prospects or viability may not be as accurate as they could be if we had a longer operating history.

We have built and continue to expand an integrated pet care platform with a variety of service and product offerings. Our limited operating history, particularly in light of the rapidly evolving pet care industry in which we operate, the changing regulatory and market environments we encounter, as well as the continuous expansion and evolvement of our business, may make it difficult to evaluate our prospects for future performance. As a result, any assessment of our future performance or viability is subject to significant uncertainty, and your investment in our ADSs is subject to increased risks due to such uncertainty. We will encounter various risks and difficulties in operating and expanding our integrated platform. If we do not address these risks and difficulties successfully, our business will suffer.

***We have incurred net losses in the past, and we may not be able to achieve or increase profitability in the future.***

We have a history of losses and expect our operating losses to continue in the near-term as we increase investment in our businesses. Our net losses amounted to RMB999.8 million in 2020, RMB1,311.3 million (US$184.3 million) in 2021 and RMB1,109.4 million (US$156.0 million) in the nine months ended September 30, 2022. It is difficult for us to predict our future results of operations. Our net losses may continue or increase, and we

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may not be able to achieve or increase profitability in the future. Our revenues may not increase sufficiently to offset the increase in our expenses as we launch or acquire new hospitals, expand our product and service offerings, increase our brand awareness, hire additional personnel, expand our customer base, enhance customer experience, expand overseas and enhance our digitalization. We will continue to invest in sales, marketing and branding efforts, which is expected to cause our sales and marketing expenses to increase continuously and rapidly. We will also continue to invest in improving our technologies and developing additional products and services. If our future growth and operating performance fail to meet investor expectations, or if we have future negative cash flow or losses resulting from our investment to implement our growth strategies, our financial condition and the price of our ADSs could be materially and adversely affected.

Moreover, as a public company, we may incur certain legal, accounting and other expenses that we did not previously incur as a private company. These efforts may be more costly than we expect. We may continue to incur losses in the future and we cannot assure you that we will eventually achieve profitability.

***We face various risks with regard to the operation of our pet hospitals.***

As of September 30, 2022, we operated 1,942 pet hospitals covering 31 provinces and 114 cities across China, offering the full scope of pet care specialties. We strive to exercise a high level of control and supervision over the operation of every hospital in our network and ensure that every hospital adheres to high professional service standards. Given the large scale of our hospital network and the fact that we operate a small portion of our hospitals with partners with a minority stake in such hospitals, we may not be able to ensure that our hospitals can always provide high-quality services to our customers. Our reputation, business and results of operations may suffer as a result. See "—Misconduct or illegal actions of our third-party suppliers, merchants or other business partners, or deterioration in our relationship with partners, could materially harm our reputation, business, financial condition and results of operations." In addition, our employees or the employees of our partners may not perform in line with applicable laws and regulations and our internal policies relating to hospital management. We may also be exposed to fraud or other misconduct committed by our employees or the employees of our partners, which could adversely affect our reputation and subject us to financial losses and sanctions imposed by government authorities.

As medical service providers, we are subject to malpractice claims if pets are injured or die as a result of our services. Any such claims may result in liabilities, reputational damage to our business and a material adverse impact on our financial condition and results of operations.

Some of our pet hospitals had temporarily failed to meet the statutory requirement for the minimum number of veterinarians that must remain on site in a pet hospital, due to internal and external mobility of our veterinarians and temporary shortages of skilled veterinarians in certain regions in which we operate. We are taking prompt action to ensure compliance by actively monitoring the mobility rate at each pet hospital and seeking and recruiting skilled veterinarians. However, in the event that we are ordered by the authorities to rectify within a specified time period and we fail to do so, the original license-issuing authorities may withdraw and revoke the License for Animal Diagnosis and Treatment for the related pet hospital. In addition, licensed veterinarians are regulated by the relevant PRC laws and regulations in various aspects. If a licensed veterinarian in our hospital fails to fully comply with the relevant regulatory requirements, such as issuance of unapproved prescriptions or improper use of drugs, the relevant hospital may also subject to administrative penalties due to the misconduct of the licensed veterinarian. We are taking measures to remediate the non-compliance described above and are actively monitoring related legal and regulatory risk exposures.

As we sell pet food, drugs and other supplies in our hospitals, we are also subject to risks related to the safety, quality or efficacy of such products. See "—Animal health products and medications used on animals are subject to safety, quality or efficacy concerns, which may have a material and adverse effect on our reputation, financial condition and results of operations."

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According to the relevant PRC laws and regulations, where a pet hospital concurrently sells pet food, drugs and other supplies, such area and the animal diagnosis and treatment area shall be separately set up. Some of our pet hospitals have not set up the area for sales of pet food, drugs and other supplies separately as required. There is no assurance that these hospitals will cure such defects successfully or all of our pet hospitals will be in full compliance with such legal requirements, which may subject us to rectification in a prescribed period, penalty of fines, suspension of business operation or even withdrawal of the License for Animal Diagnosis and Treatment.

In addition, some local governmental authorities may have further regulatory requirements on pet hospitals. We may not be aware of such local regulatory requirements and potential penalties may be imposed by the relevant government authority. We are in the process of setting up policies and procedures to identify and address the relevant local regulatory requirements on pet hospitals that may have an impact on us.

***We are subject to certain risks relating to the warehousing and shipment of our products.***

We store our merchandise and supplies in our FDCs and warehouses across China. If any accidents, including fires, or thefts, were to occur, causing damages to our products, FDCs or warehouses or loss of our products, our ability to supply products to our customers on time and our market reputation, financial condition, results of operations or business could be materially and adversely affected. Accidents may also occur during the shipment of our products, including power failures that cause damage to cold-chain-stored products. We often outsource the delivery of our products to our customers to third-party logistics and transportation companies. Relying on these third parties increases the risk that we may fail to deliver finished products on time or fail to maintain the quality of the products during shipment. The efficient operation of our local services and supply chain businesses depends on the timely receipt of products from our FDCs and warehouses. Such logistics services could be suspended, which would interrupt the supply of our products, if unforeseen events occur, such as COVID-19, poor handling of and damage to our products, transportation bottlenecks and/or labor strikes. If our products are not delivered on time or are delivered in a damaged state, our market reputation could be adversely affected, and it could have a material adverse effect on our financial condition, results of operations or business. In addition, warehousing and shipment workers, including those of the third-party service providers, may incur work-related injuries at our warehouses or FDCs or on the shipment route, in which case our warehousing operation and shipment services may be disrupted and we may be liable for additional costs and legal risks.

***Failure to maintain the quality and safety of the products we sell and significant merchandise returns or refunds resulted could have a material and adverse effect on our reputation, financial condition and results of operations.***

The quality and safety of the products we sell are critical to our supply chain business and local services business. We have implemented stringent measures to monitor the quality of the products we sell, including our private label products and products of third-party brand partners. Yet, due to the scale and rapid growth of our operations and the fact that we do not manufacture the products ourselves, we are not able to fully monitor or control the quality of the products we sell and the quality control measures taken by the upstream suppliers or manufacturers may not be effective. There can be no assurance that there will be no quality issues with the products we sell.

We may be exposed to product recalls and withdrawals and adverse publicity if the products we sell are alleged to be fake or expired, or cause injury or illness or if we violate any governmental regulations. We may also voluntarily recall or withdraw products that we consider below our standards, whether for function, appearance or otherwise. Consumer concerns regarding the safety of the products we sell, whether justified or not, could adversely affect our brand reputation and business. A product recall or withdrawal could result in substantial and unexpected expenditures, destruction of product inventory and lost sales, which could reduce our cash flow and prevent us from achieving profitability. In addition, a product recall or withdrawal may have detrimental effects on our brand reputation, leading to increased scrutiny by regulatory agencies and sharp

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decrease in demand for our products, all of which require significant management attention. These could negatively impact our business and, consequently, adversely affect our results of operations and reputation.

We do not carry product liability insurance and may be subject to product liability claims if consumption and use of the products we sell is alleged to cause injury or illness to pets or pet parents. The real or perceived sale of defective pet products by us could result in product liability claims against our brand partners or us, expose us or our brand partners to governmental enforcement action or private litigation, or lead to costly recalls and a loss of consumer confidence, any of which could have an adverse effect on our business, financial condition, and results of operations. While we may attempt to seek compensation from responsible brand partners or manufacturers in the event that we become subject to claims due to their misconduct, such compensation may be limited and if we cannot fully recover our damages from them, we will be required to bear such losses at our own costs. Any material product liability claim, litigation or governmental enforcement action could materially and adversely affect our business, financial condition and results of operations. Even unsuccessful claims could result in the use of funds and managerial efforts in defending them and could negatively impact on our reputation.

In addition, we allow our customers to return certain products and offer refunds, subject to our return and refunds policy. If merchandise returns or refunds are significant or higher than anticipated and forecasted, our business, financial condition, and results of operations could be adversely affected. Furthermore, we revise our policies relating to returns or refunds from time to time, and may do so in the future, which may result in customer dissatisfaction and harm to our reputation or brand, or an increase in the number of product returns or the amount of refunds we make.

Furthermore, we could be adversely affected if customers lose confidence in the safety and quality of vendor-supplied food products. All of our vendors are required to comply with applicable product safety laws, and we are dependent upon them to ensure such compliance. Adverse publicity about these types of concerns, whether valid or not, may discourage customers from buying the products from us, or cause vendor production and delivery disruptions. The real or perceived sale of contaminated food products by us could result in product liability claims against our vendors or us, expose us or our vendors to governmental enforcement action or private litigation, or lead to costly recalls and a loss of customer confidence, any of which could have an adverse effect on our sales, operations, and financial performance.

***Our private label products may not always appeal to our customers, and may compete with our brand partners.***

We have launched several private labels, which offer high-value-for-money pet food and products. There is no assurance that our private label product offerings will continue to generate customer interests and cater to their needs. If we are unable to generate sufficient sales of our private label products, we may fail to cover our development, manufacturing and marketing expenses on these products, and our business, results of operations and financial condition may be adversely affected.

Moreover, we are likely to face competition from our brand partners, whose products are part of our offerings as well. Branded products may have an advantage over our private label products primarily due to name recognition, although private label products are typically more competitively priced compared to branded products. In addition, selling private label products may harm our relationship with our brand partners. If we lose our brand partners or if our relationship with our brand partners deteriorate, our business may be adversely affected. See "—We rely on suppliers of pet products in our business. We may be unable to source additional, or strengthen our existing relationships with, suppliers. Our suppliers have limited supply capabilities and may fail to meet our demands. In addition, the loss of any of our key suppliers would negatively impact our business."

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***We outsource the manufacturing of our private label products. As a result, we may be subject to additional regulatory requirements, and our business, results of operations, financial conditions and reputation may be affected by issues relating to our manufacturers.***

We outsource the manufacturing of our private label products to pet product manufacturers in China. We may be unable to maintain our relationships with our manufacturing partners or identify or enter into relationships with new manufacturing partners to meet the manufacturing and assembly needs of our private label business in a timely manner, or at all. Additionally, manufacturing at our manufacturing partners may be disrupted or delayed for a variety of reasons, including, but not limited to, natural and man-made disasters, information technology system failures, commercial disputes, labor disputes, and environmental and worker health and safety issues. As a result, we may experience shortage in supply and delay in delivery of our private label products, and our business, financial condition, results of operations and reputation may be materially and adversely affected.

Pet product manufacturing are strictly regulated in China. We are not regulated as a pet product manufacturer, but we may be indirectly subject to the relevant PRC laws and regulations as a result of our outsourcing and our cooperation with manufacturing service providers. If any of our private label products is deemed to violate any PRC laws or regulations, we may be liable for outsourcing the manufacturing of such products even if we are not the manufacturer. If any of our manufacturing partners is deemed to violate any PRC laws or regulations, we may be jointly liable due to the products we provide, or we may even have to suspend our private label products sales. In addition, it is uncertain under relevant PRC laws whether we are required to obtain a Production License for Pet Feeds/Additives for outsourcing our private label products, and new laws and regulations may be enforced or there may be different interpretation and implementation of the current laws and regulations from time to time to require additional licenses and permits in this regard, and we cannot assure you that we will be able to obtain such licenses and permits in a timely and cost-effective manner. As a result, our business, reputation, financial performance and prospects could be materially and adversely affected.

***Any disruption, malfunction, or increased costs in the operation, expansion or replenishment of our supply chain system would affect our ability to deliver the products we sell to customers or increase our expenses, which could harm our sales and profitability.***

Our vendors generally ship merchandise to one or more of our FDCs or warehouses, which receive and allocate merchandise to our locations and local services customers. If any shipped merchandise were to be delayed for any reason, our operations may be significantly disrupted. Any disruption to shipping and transportation channels could cause additional costs incurred in transportation and delivery. We may not be able to pass all or any portion of these higher costs on to our customers or adjust our pricing structure in a timely manner in order to remain competitive, either of which could have a material adverse effect on our results of operations.

If any of our FDCs or warehouses were to shut down due to the impact of COVID-19 or lose significant capacity for any reason, our operations would likely be significantly disrupted. We compete with other retailers for the supply of personnel to staff our FDCs and warehouses, some of whom are larger than us and have access to greater capital resources than we do. If we are unable to successfully recruit and retain personnel to staff our FDCs and warehouses, we may face labor shortages or be forced to increase wages and enhance benefits for such personnel, which may have an adverse effect on our results of operations. In addition, any interruption or malfunction in our FDCs and warehouses, including, but not limited to, the loss of a key vendor that provides transportation of merchandise, or regulatory issues with respect to any of our FDCs or warehouses, could adversely affect our sales and results of operations. An interruption in our inventory supply chain could result in out-of-stock or excess merchandise inventory levels or adversely affect our ability to make timely deliveries to local services customers, and could adversely affect our sales and results of operations.

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***Our local services business depends in part on third-party platforms, and any disruption in the operation of those platforms and in our relationships with them could negatively affect our business and results of operations.***

We partner with major online local services platforms in China for our local services. If those platforms experience disruption or otherwise fail to consistently and adequately support our business, including as a result of errors or failures in their systems or events beyond their control, or if they refuse to provide their platforms on terms acceptable to us or at all and we are not able to find suitable alternatives, our business and results of operations may be adversely affected. In addition, online local services platforms may lack expertise in the pet industry, and may lose appeal to customers who need tailored services and specialized pet products. To the extent that we fail to leverage traffic on these third-party platforms, our revenue may decline and we may experience difficulties in locating customers. At the same time, our cooperation with these third-party platforms may be negatively affected by a number of factors, including but not limited to higher commissions and fees, negative publicity and service outages of these platforms, all of which are beyond our control. In addition, these third-party platforms may deem our business a strong competitor of theirs and terminate their cooperation with us. If our relationships with these third-party platforms deteriorate or are terminated or if we fail to maintain the relationships on commercially viable terms, we may not be able to quickly locate alternative sales channels. Hence, our operations and financial condition will be adversely affected.

***We face various risks as a local services provider.***

As part of our growth strategy, we seek to further integrate our offline and online operations and have made significant investments to integrate and grow our local services business, such as our collaboration with online local services platforms and our own online platforms with local services. We may require additional capital in the future to sustain or grow our local services business. Business risks related to our local services business include our inability to keep pace with rapid technological change, failure in our security procedures or operational controls, failure or inadequacy in our systems or labor resource levels to effectively process customer orders in a timely manner, disruption in third-party platforms, and relevant government regulation and legal uncertainties. If any of these risks materialize, it could have an adverse effect on our business.

In some circumstances, increased transactions through online platforms may result in reduced customer traffic in our offline channels, particularly as customers take advantage of home delivery services available for online orders when making certain types of purchases. There is a risk that any such reduced customer traffic may reduce the sales of certain products and services in our hospitals and other offline retail outlets. The availability of free shipping of online orders increases our costs and could adversely affect our profitability.

In addition, as other internet retailers have increased market share in recent years, we have faced increased competition, and may continue to face increased competition in the future, from internet retailers who enter the market. Our failure to positively differentiate our product and services offerings or customer experience from these internet retailers could have a material adverse effect on our business, financial condition and results of operations.

***We rely on suppliers of pet products in our business. We may be unable to source additional, or strengthen our existing relationships with, suppliers. Our suppliers have limited supply capabilities and may fail to meet our demands. In addition, the loss of any of our key suppliers would negatively impact our business.***

In order to attract quality suppliers, we must:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• demonstrate our ability to help our suppliers increase their sales;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• offer suppliers a high quality, cost-effective fulfillment process; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• continue to provide suppliers a dynamic and real-time view of our demand and inventory needs.

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If we are unable to provide our suppliers with a compelling return on investment and an ability to increase their sales, we may be unable to maintain and/or expand our supplier network, which would negatively impact our business.

We purchase significant amounts of products from a number of vendors with limited supply capabilities. There can be no assurance that our current pet product vendors will be able to accommodate our anticipated growth and expansion of our locations and local services business. Potential inability of our existing vendors to provide products or other product supply disruptions that may occur in the future could impair our business, financial condition, and results of operations. To date, vendor-related supply challenges have not had a material effect on our business or our sales and profitability. We do not maintain long-term supply contracts with any of our merchandise vendors. Any vendor could discontinue selling to us at any time. Although we do not materially rely on any particular vendor, the loss of any of our significant vendors of pet products, particularly premium pet products, that we offer could have a negative impact on our business, financial condition, and results of operations.

We continually seek to expand our base of pet product vendors and to identify new pet products. If we are unable to identify or enter into distribution relationships with new vendors or to replace the loss of any of our existing vendors, we may experience a competitive disadvantage, our business may be disrupted, and our results of operations may be adversely affected.

Most of the premium pet product brands that we purchase are not widely carried in supermarkets, warehouse clubs, or mass merchants. If any premium pet product manufacturers were to make premium pet products widely available in supermarkets or through mass merchants, or if the premium brands currently available to supermarkets and mass merchants were to increase their market share at the expense of the premium brands sold only through specialty retailers, our ability to attract and retain customers or our competitive position may suffer. Further, if supermarkets, warehouse clubs, or mass merchants begin offering any of these premium pet product brands at lower prices, our sales and gross margin could be adversely affected.

Several of the pet products brands we currently purchase and offer for sale to our customers are not offered by our closest pet specialty competitor. However, in most cases, we have not entered into formal exclusivity agreements with the vendors for such brands. In the event these vendors choose to enter into distribution arrangements with other specialty pet retailers or other competitors our sales could suffer and our business could be adversely affected.

Our principal vendors currently provide us with certain incentives such as volume purchasing and trade discounts. A reduction or discontinuance of these incentives would increase our costs and could reduce our profitability.

***The instructors at our continued veterinary education institutions or programs may cease their relationship with us, which may cause disruptions to our continued veterinary education services and harm to our reputation.***

We have engaged a number of professors, lecturers, researchers and other experts in the veterinary field to teach at our continued education institutions and other programs. They may cease their relationship with us for different reasons, such as restrictions imposed by their primary employers. As we rely on these instructors to conduct our continued education services, if a significant number of them cease teaching at our programs and we are unable to find replacements in a timely and cost-effective manner, our continued education services may be disrupted and the reputation of our veterinary universities and programs may suffer as a result.

***If we are not able to continue to attract trainees to enroll in our continued veterinary education institutions or other programs, the prospects of our continued veterinary education services will suffer.***

The success of our continued veterinary education services depends partly on the number of trainees enrolled in our institutions and other programs. Therefore, our ability to continue to attract trainees is critical to

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the continued success and growth of our continued education services. This in turn will depend on several factors, including our ability to develop new courses and enhance existing courses to respond to changes in market trends and trainee demands, expand our geographic footprints, retain qualified instructors, manage our growth while maintaining consistent and high education quality, improve our online programs, and market our courses effectively to a broader base of prospective trainees. Furthermore, our ability to attract trainees also depends on our ability to provide educational content that is perceived as effective and valuable for practical training purposes. If we are unable to continue to attract trainees to enroll in our education programs, the prospects of our continued veterinary education services will suffer.

***If we are not able to continually tailor our curriculum to market demand and enhance our courses to adequately and promptly respond to developments in the pet care profession, our continued veterinary education institutions and other programs may become less attractive to trainees.***

New trends in the pet care industry and rapid developments in pet care knowledge and technologies may change the type of skills required for professionals in the marketplace. This requires us to continually develop, update and enhance our course materials to adapt to the needs of the pet care profession. We may be unable to update our courses in a timely and cost-effective manner, or at all, to keep pace with changes in market requirements. Any inability to track and respond to these changes in a cost-effective and timely manner or to tailor our courses to the changes would render our courses less attractive to trainees, which may harm our reputation and ability to continue to attract trainees and develop our continued veterinary education services.

***Our limited experience and small scale in the third-party diagnosis industry could inhibit our success in this industry.***

We have limited experience in the third-party diagnosis industry and we currently operate at a relatively small scale. Although we have seen a relatively high growth in our third-party diagnosis services, established international competitors have significantly more experience and operate on a larger scale than we do. Our limited experience and small scale in this industry could negatively affect our ability to successfully appeal to potential customers in the market, develop expertise and new technologies in the veterinary diagnosis field, attract talents, manage the risks and features of this industry, and compete with the larger and more experienced competitors. There can be no assurance that we will be successful in achieving growth and profitability in the third-party diagnosis services comparable to the results we have achieved in our other business segments such as pet care services.

***We face risks related to natural disasters, health epidemics such as the outbreak of COVID-19 and other events beyond our control, which could significantly disrupt our operations.***

Our business could be adversely affected by the effects of epidemics, including COVID-19, avian influenza, severe acute respiratory syndrome, (SARS), influenza A (H1N1), Ebola or another epidemic. Any such occurrences could cause severe disruption to our daily operations at our pet hospitals, fulfillment infrastructure, offline stores, and other facilities and functions, and may even require a temporary closure of our facilities or suspension of certain services or operations. In recent years, there have been outbreaks of epidemics in China and globally. For example, in early 2020, in connection with the 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. The COVID-19 pandemic has also resulted in temporary closure of many corporate offices, retail stores, manufacturing facilities and factories across China. At the early stage of the pandemic, we reduced operations in some of our hospitals and other businesses, which affected our revenues at the time. Since late 2021 and throughout 2022, there have been outbreaks of COVID-19 in many parts of China, particularly due to the Delta and Omicron variants. Strict restrictive measures were imposed, which affected our operations. For example, lockdowns imposed in cities across China caused disruptions to the normal operation of our pet hospitals and led to the temporary closures of certain pet hospitals. Our supply chain has also experienced

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disruptions. China began to modify its zero-COVID policy in late 2022, and most of the travel restrictions and quarantine requirements were lifted in December 2022. There were significant surges of COVID-19 cases in many cities in China during this time, which disrupted our and our suppliers' operations and adversely affected our operational and financial performance in the fourth quarter of 2022, especially in December. For example, the number of our total pet hospitals declined from 1,942 as of September 30, 2022 to approximately 1,850 as of December 31, 2022. Mainly due to such impact of COVID-19, we currently estimate that the year-over-year growth of our revenues in 2022 could be below that of the first nine months of 2022 as compared with the first nine months of 2021. Based on our preliminary unaudited management accounts, our estimated total revenues for the eleven months ended November 30, 2022 were between RMB5.2 billion and RMB5.3 billion. We also estimate that the amount of our total revenues for December 2022 could be lower than that for October or November 2022. Because we do not have final results for the fourth quarter of 2022, our actual results when they become available could differ materially from the estimated results discussed herein. In addition, because of the preliminary nature of the information currently available to us regarding the fourth quarter of 2022, we may discover additional developments of which we are currently unaware. For details, please see "Prospectus Summary—Recent Developments."

There remains uncertainty as to the future impact of the virus, especially in light of this change in policy. Future lockdowns or other restrictive measures that may be imposed, especially those imposed in major cities where we have a significant presence, may have a material impact on our operations and financial condition. The future impact of the pandemic remains highly uncertain and it may continue to adversely affect our revenues for an uncertain period of time. Despite our efforts to manage these matters, their ultimate effects also depend on factors beyond our knowledge or control, including the duration, severity, and recurrence of any outbreak and actions taken to contain its spread and mitigate its public health effects. The pandemic may continue to adversely affect our business, financial position, results of operations, and cash flows, including by resulting in (i) significant volatility in demand for our products and services, (ii) changes in consumer behavior and preferences, (iii) disruptions of our manufacturing and supply chain operations, (iv) disruption of our cost saving programs and restructuring initiatives, (v) limitations on our employees' ability to work and travel, and (vi) changes to economic or political conditions in markets in which we operate. In addition, the operations of our pet hospitals, stores, FDCs, warehouses and continued veterinary education institutions, among other things, could be in the future, substantially disrupted by governmental policies ordering shutdowns or by the inability of our employees to travel to work. Our expansion plans for pet care services and FDCs and our plan to expand internationally may also be delayed by or become costlier due to the continuing spread of COVID-19. Such disruptions and delays or increased costs in our expansion may negatively impact our financial performance and slow our future growth. The uncertainty around the duration of business disruptions and the extent of the spread of the virus in China and to other areas of the world will likely continue to adversely impact the national or global economy and negatively impact consumer spending. Any of these outcomes could have a material adverse impact on our business, financial condition, results of operations, and ability to execute and capitalize on our strategies. The full extent of COVID-19's impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, any long-term health impacts on any partners who have been infected with COVID-19, its impact on capital and financial markets, and any new information that may emerge concerning the severity of the virus and its spread to other regions, as well as the actions taken to contain it, among others.

In addition, public health issues such as H1N1 flu, avian flu, or another epidemic, and natural disasters such as hurricanes, tornadoes, floods, earthquakes, and other adverse weather and climate conditions, and events such as local protests, war or civil unrest in a country in which our vendors are located, terrorist or military activities disrupting transportation, communication, or utility systems, or cyberattacks against or other disruptions to the operation of banks with which we hold accounts, whether occurring in China or abroad, could disrupt our operations or the operations of one or more of our vendors, or could severely damage or destroy one or more of our hospitals or FDCs located in the affected areas. For example, day-to-day operations, particularly our ability to receive products from our vendors or transport products to our FDCs, could be adversely affected, or we could be required to close hospitals or FDCs in the affected areas or in areas served by the affected FDC. These factors

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could also cause consumer confidence and spending to decrease or result in increased volatility in China and global financial markets and economy. These or other occurrences could significantly impact our operating results and financial performance.

***If we are unable to recruit, train and retain qualified personnel or sufficient workforce while controlling our labor costs, our business may be materially and adversely affected.***

We intend to hire additional qualified employees to support our business operations and planned expansion. In the meantime, we may lose our existing employees for various reasons. Our future success depends, to a significant extent, on our ability to recruit, train and retain qualified personnel, particularly technical, marketing and other operational personnel with experience in the pet care industry. Our experienced mid-level managers are instrumental in implementing our business strategies, executing our business plans and supporting our business operations and growth. The effective operation of our managerial and operating systems, customer service center and other back office functions also depends on the hard work and quality performance of our management and employees. Since our industry is characterized by high demand and intense competition for talents and labor, we can provide no assurance that we will be able to attract or retain qualified staff or other highly skilled employees that we will need to achieve our strategic objectives. Labor costs in China have increased with China's economic development, particularly in the large cities where we have business operations. As we have a large offline network of pet hospitals, FDCs and warehouses, we are more vulnerable to labor costs increases than that of many of our competitors, which may put us at a competitive disadvantage. If the compensation package offered by us is not competitive in the market, we may not be able to provide sufficient incentives to or maintain stable and dedicated operational staffs and other labor support. Any failure to address these risks and uncertainties could materially and adversely affect our results of operations and financial performance. In addition, our ability to train and integrate new employees into our operations may also be limited and may not meet the demand for our business growth on a timely fashion, or at all, and rapid expansion may impair our ability to maintain our corporate culture.

***We may experience difficulties recruiting and retaining skilled veterinarians due to shortages that could disrupt our business.***

The successful growth of our pet care services business depends on our ability to recruit and retain skilled veterinarians and other veterinary technical staff. Our continued veterinary education institutions and programs provide a source and training platform for veterinary talents, but we still face competition from other pet care services providers in the labor market for veterinarians. From time to time, we may experience shortages of skilled veterinarians in markets in which we operate our pet care services business, which may require us or our affiliated veterinary practices to increase wages and enhance benefits to recruit and retain enough qualified veterinarians to adequately staff our pet care services operations. If we are unable to recruit and retain qualified veterinarians, or to control our labor costs, our business, financial condition, and results of operations may be adversely affected. If our labor costs increase, we may not be able to raise our rates for our products and services to offset these increased costs. Our failure to recruit and retain qualified veterinarians, or to control our labor costs, could have a material adverse effect on our business, financial position, results of operations, and cash flows.

***The wide variety of payment methods that we accept subjects us to third-party payment processing-related and other risks.***

We accept a wide variety of payment methods, including bank transfers and online payments through various third-party online payment platforms such as Alipay, Weixin Pay and UnionPay, in order to ensure smooth customer experience. For certain payment methods, we pay varying service fees, which may increase over time and raise our operating costs and lower our profit margins. We may also be subject to fraud, money laundering and other illegal activities in connection with the various payment methods we accept. In addition, some of our customers are not familiar or comfortable with electronic forms of payments. In rare cases, they may

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pay us cash while our employees process electronic payments for them, which could subject us to allegations of generating inaccurate sales.

We are also subject to various regulations, rules and requirements, regulatory or otherwise, governing online payment processing and fund transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply with. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers, process electronic fund transfers or facilitate other types of online payments, and our business, financial condition and results of operations could suffer as a result.

***Misconduct or illegal actions of our third-party suppliers, merchants or other business partners, or deterioration in our relationship with partners, could harm our reputation, business, financial condition and results of operations.***

We work with third parties in providing many of our services and products on our platform, such as third-party suppliers, third-party online local services platforms, and third-party logistic service providers. Certain third-party partners operate a small number of our hospitals. We carefully select our third-party suppliers, merchants, 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. Furthermore, 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.

We may be held liable for third party information or content displayed on, retrieved from or linked to our platforms. The data we collect and use may be inaccurate or incomplete due to errors or on the part of our employees or third-party information providers, or frauds. 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.

In addition, as we operate a small portion of our hospitals with partners with a minority stake in such hospitals, the interests of such partners may not always align with ours, and they may have different visions, beliefs or strategies for operating the hospitals than ours. As a result, their operational methods and activities may not be in our interest and may conflict with the group standards, strategies and goals. Furthermore, our relationship with those partners may deteriorate and disputes may arise. In such event, the partners may refuse to collaborate with us according to the terms of our partnership and we may lose control over the operation of the relevant hospitals. The services provided in those hospitals may then deviate from our standards and guidelines, which in turn could tarnish our reputation. The partners may also terminate our partnership and even engage in intentional activities to sabotage the operation of our hospitals and our brand name. We may even be involved in legal litigation in relation to such event. Consequently, our reputation, business, financial position and results of operations may be materially and adversely affected.

***Consolidation among pet product vendors may decrease our sales and profitability.***

Consolidation among animal health products vendors could result in our vendors increasing their market share, which could give them greater pricing power and make it easier for such vendors to sell their products

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directly to animal health customers, both of which would decrease our net sales and profitability and increase the competition for our customers. Finally, if our current vendors consolidate, their management teams are more likely to change, which could result in adverse changes in distribution practices.

The surviving companies from consolidation transactions may have high market shares with respect to certain animal health products, and they could use their increased leverage in the channel to negotiate terms with distributors that are worse to the distributor than the terms that we have been able to negotiate with existing suppliers individually while they are competing with each other. There also remains uncertainty related to any changes to the terms that may be included in the vendor contracts we negotiate for the upcoming year as a result of those transactions. There is also a possibility of product disruption as those consolidated companies integrate their operations which could adversely impact our financial results.

***Our operations and the pet industry are subject to extensive governmental regulation.***

Our operations and the pet industry are subject to various national and local laws and regulations in China ****and laws and regulations of foreign jurisdictions into which we expand our business. These laws and regulations govern, among other things, our relationships with employees, including overtime, terms and conditions of employment and working conditions; the procurement, distribution, use and storage of foods, drugs, and controlled substances intended for animal use; our businesses that provide pet care services, including animal treatment and diagnosis services; the transportation, handling, display and sale of animals; emissions to air and water and the generation, handling, storage, discharge, transportation, disposal, and remediation of waste and hazardous materials; the processing, storage, distribution, safety, advertising, labeling, promotion, and import or export of our products and services; providing services to our customers; contracted services with various third-party providers; credit card, debit card and mobile payment processing; the handling, security, protection, and use of customer and associate information; pricing; tax; lease of property; use of intangible assets; and the licensing and certification of services. See "Regulation."

Violations of or liability under applicable laws and regulations may result in administrative, civil or criminal fines, penalties or sanctions against us, revocation or modification of applicable permits, licenses, or authorizations, environmental, health and safety investigations or remedial activities, voluntary or involuntary product recalls, warning or cease and desist orders against operations that are not in compliance, or third-party liability claims against us, among other things. Such laws and regulations generally have become more stringent over time and may become more so in the future, and we may incur, directly or indirectly, material costs to comply with current or future laws and regulations or in any required product recalls. Some of these laws and regulations are subject to varying and uncertain interpretations, application, and enforcement by courts and regulatory authorities with broad discretion, which can mean that our efforts to maintain compliance in all jurisdictions are not always successful. Liabilities under, costs of compliance with, and the impacts on us of any alleged or determined non-compliance with any such laws and regulations could materially and adversely affect our business, reputation, financial condition, and results of operations. In addition, changes in the laws and regulations to which we are subject could impose significant limitations and require changes to our business, which may increase our compliance expenses, make our business costlier and less efficient to conduct, and compromise our growth strategy. Local governments in certain regions in which we operate may impose local regulations or rules that are unfriendly to pets or pet parentship, which would negatively affect our business there. In addition, although we are not legally bound by guidelines or policies made by veterinary and other professional associations, we may voluntarily comply with such guidelines or policies and our operations may be affected by changes in such guidelines or policies. We cannot assure you that the PRC central government, local governments or professional associations will not adopt additional and more stringent laws, regulations, policies, guidelines or other measures in the future, nor can we assure you when and whether the existing laws, regulations, policies, guidelines and other measures will be eased or otherwise changed. Such changes may adversely affect our business and results of operations.

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***Certain of our products and solutions in relation to online local services and online and offline continued education services may be subject to value-add telecommunications-related regulations, other internet-related regulations or education-related regulations, which are foreign prohibited or restricted areas, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition.***

Our businesses on "Rvet" platform are subject to value-add telecommunications-related regulations and other internet-related regulations and our online and offline continued education services may be subject to education-related regulations and internet-related regulations. Such businesses may be required to apply for and obtain additional licenses or permits for our operations as the interpretation and implementation of current PRC laws and regulations are still evolving, and new laws and regulations may also be promulgated. Additionally, as our online local services on "Rvet" platform and offline and online continued veterinary education services may be deemed to be foreign prohibited or restricted business under the current PRC laws and regulations, we may not be able to obtain the required license or permits at all, or we may need to adjust our current structure to continue operating such business.

We have obtained a Value-added Telecommunications Business Operating License for online data processing and transaction processing services to conduct our online local services business on "Rvet" platform and have filed with provincial education regulatory authority as an Education App for "Zhiyue" platform. We have obtained a Value-added Telecommunications Business Operating License (internet information services) through one of our PRC subsidiaries. We may be required to apply for the Value-added Telecommunications Business Operating License (internet information services) issued by the MIIT for companies with foreign shareholders, to conduct our online local services on "Rvet" platform and online education services on "Zhiyue" platform. Additionally, we may be required to apply for and obtain additional licenses, permits or recordation, given the significant uncertainties of the interpretation and implementation of certain regulatory requirements applicable to our online local services on "Rvet" platform, online continued veterinary education business on "Zhiyue" platform, and offline continued veterinary education business, such as the License for Online Transmission of Audio-Visual Programs, the Internet Culture Operation License, the Online Publishing Service Permit, the Production and Operation of Radio and TV Programs Permit, the Private School Operation Permit.

We cannot assure you that our application will be approved in a timely manner or at all, due to complex procedural requirements and policies, or that if we are required to obtain any of these additional licenses, permits or approvals, or we will be able to do so in a timely manner, if at all, because the approvals of such licenses have significant uncertainties and some of such business are foreign prohibited or restricted business under the current PRC laws and regulations. For example, online transmission of audio-visual programs, internet culture activities, online publishing and production and operation of radio and TV programs are foreign prohibited, and the license for Online Transmission of Audio-Visual Programs will only be granted to a state-owned or state-controlled entity. Any non-compliance may result in fines or other penalties being imposed on us. We may also be ordered to stop operating such business through our PRC subsidiaries for violation of foreign investment regulations and policies, and accordingly, we may need to adjust our current structure. See "Regulation." There is no assurance that national or local PRC authorities will not adopt different enforcement practice, or any PRC government will not issue more explicit interpretation and rules or promulgate new laws and regulations from time to time to further regulate the education or value-added telecommunications industry or other aspects of internet industry, which may subject us to additional licensing requirements or structure reorganization to continue to operate our business.

We plan to continually enrich the service offerings on our platform though our PRC subsidiaries. However, we cannot assure you that we will be able to obtain the requisite license for providing online pet-related services and education services on a timely basis or at all, or the relevant government authorities will allow us to continually operate such business through our PRC subsidiaries given the foreign investment regulations and policies. Our inability to obtain such license or any delay in obtaining such license could have a material and adverse impact on our business and results of operations. If we are asked to cease or adjust such business for

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violation of foreign investment regulations and policies, our business and results of operations could also be materially and adversely impacted.

***If we fail to manage our inventory effectively, our results of operations, financial condition and liquidity may suffer.***

We seek to optimize inventory levels to operate our business successfully. Nonetheless, we are exposed to inventory risks that may adversely affect our operating results as a result of new product launches, vendor reliability, changes in customer preferences or demand, changes in consumer spending patterns with respect to our products, seasonality. We endeavor to accurately predict these trends and avoid over or under stocking products that we sell. Demand for products, however, can change between the time inventory is ordered and the date of sale and we may be unable to accurately forecast such changes. Any of the events above could result in out-of-stock or excess merchandise inventory levels that could harm our sales and the results of operations.

***We may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading under PRC laws.***

PRC advertising laws, rules and regulations require advertisers, advertising operators and advertising distributors to ensure that the content of the advertisements they prepare or distribute is fair and accurate and is in compliance with applicable law. Violation of these laws, rules or regulations may result in penalties, including fines, confiscation of advertising fees and orders to cease dissemination of the advertisements. Additionally, we may be subject to claims by customers misled by information on our mobile apps, website or other portals where we place advertisements. However, we cannot assure you that we will be in full compliance with such advertising laws and regulations and will not be subject to penalties in the future.

Further, as we provide online and offline marketing and information services in relation to veterinary drugs to third-party partners, helping them design and implement effective marketing strategies, to certain extent, we also rely on such partners to comply with the above advertising laws and regulation, such as advertisements of veterinary drugs shall be approved before being placed. If the relevant advertisement fails to fully comply with the relevant advertising rules, we may subject to civil claims, fines and other legal or administrative sanctions even if it is the third-party that causes such failure.

***Significant impairment of our goodwill and intangible assets could materially impact our financial position and results of our operations.***

Our goodwill and intangible assets primarily arise from our acquisitions. As of September 30, 2022, our goodwill was RMB3,978.9 million (US$559.3 million) and represented 35.7% of our total assets. We are required to review our goodwill for impairment on an annual basis or more frequently if events or changes in circumstances indicate evidence of impairment. The application of a goodwill impairment test requires significant management judgment. If our estimates and judgment are inaccurate, the fair value determined could be inaccurate and the impairment may not be recognized in a timely manner. If the fair value declines, we may need to recognize goodwill impairment in the future, which could have a material adverse effect on our results of operations. In addition, we perform valuation of each identifiable intangible assets arising from business combination. The intangible assets are expensed or amortized using the straight-line approach over the estimated economic useful lives of the assets. There can be no assurance that we will not be required to record impairments on goodwill or intangible assets in the future or that such impairments will not be material. Any significant impairment losses charged against our goodwill or intangible assets could have a material adverse effect on our business, financial condition and results of operations. In addition, our lack of material tangible assets may expose us to certain risks, including decreased ability to obtain debt financings or hedge against fluctuations in value of our intangible assets.

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***If our expansion into new geographical areas is not successful, our business and prospects may be materially and adversely affected.***

We have a track record of successfully expanding into new geographical areas across China. We cannot assure you, however, that we will be able to maintain this momentum in the future. In particular, we may fail to implement our strategy of expanding overseas. As the conditions of the pet care markets in any new local markets, especially those outside of China, may vary significantly from where we currently operate our platform, expansion into new geographical areas involves new risks and challenges. Our lack of familiarity with these geographical areas may make it more difficult for us to keep pace with the evolving market conditions. In addition, there may be one or more existing market leaders in any geographical area that we decide to expand into. If we fail to cooperate with them, such companies may be able to compete more effectively than us by leveraging their experience in doing business in that market as well as their familiarity with the local customers and suppliers.

***Our business generates and processes a large amount of data, and we are required to comply with PRC laws relating to cybersecurity, information security, privacy and data protection. The improper use or disclosure of data could have a material and adverse effect on our business and prospects.***

Our business generates and processes a large quantity of data. We face risks inherent in handling and protecting large volume of data. In particular, we face a number of challenges relating to data from transactions and other activities on our platforms, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• protecting the data in and hosted on our system, including against attacks on our system by outside parties or
fraudulent behavior or improper use by our employees or customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• addressing concerns related to privacy and sharing, safety, security and other factors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer,
disclosure and security of personal information, including any requests from regulatory and government authorities relating to this data.

In addition, some of our third-party service providers such as logistics and delivery service providers have access to personal data or other sensitive data of our customers. If the information security efforts of such third-party service providers are compromised, or if they fail to detect and respond to data security breaches, we could be subject to legal or regulatory action, including direct claims by customers or other injured parties, class actions, shareholder derivative suits and governmental action. A data security breach of our third-party service providers may negatively affect our reputation, increase our insurance costs or result in loss of coverage, and we may need to incur additional significant costs to protect against information security breaches.

The PRC regulatory and enforcement regime with regard to data security and data protection is evolving. We may be required by Chinese governmental authorities to share personal information and data that we collect to comply with PRC laws relating to cybersecurity. All these laws and regulations may result in adjustment in our business, approval requirements for certain of our operations or this offering, and additional expenses to us and subject us to negative publicity which could harm our reputation and negatively affect the trading price of the ADSs. There are also uncertainties with respect to how these laws will be implemented in practice. PRC regulators have been increasingly focused on regulation in the areas of data security and data protection. See "Risk Factors—Risks Related to Doing Business in China—Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of operations" and "Regulation—Regulations on Cyber Security and Privacy." Furthermore, on August 20, 2021, the Standing Committee of the National People's Congress promulgated the Personal Information Protection Law, which became effective on November 1, 2021. The Personal Information Protection Law requires, among others, that the processing of personal information should have a specific and reasonable purpose, and shall be conducted in a way that has the

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least impact on personal rights and interests, and should be directly related to the processing purpose, and that collecting personal information shall be limited to the minimum scope for achieving the processing purpose. These laws and regulations are continually evolving and not always clear, and the measures we take to comply with these laws, regulations and industry standards may not always be effective. We cannot assure you that we will comply with such laws and regulations regarding cybersecurity, information security, privacy and data protection in all respects and any failure or perceived failure to comply with these laws, regulations or policy may result in inquiries, penalties and other proceedings or actions against us by governmental authorities, customers or others, such as warnings, fines, making certain required rectification, service suspension or removal of our apps from the relevant app stores and/or other sanctions, as well as negative publicity and damage to our reputation.

Historically, we may not have fully complied with the laws and regulations in relation to data privacy and personal information protection. Although we have adopted policies and measures to comply with the relevant laws and regulations on data privacy and personal information protection and have taken measures to protect the data security and minimize the risk of data loss, we cannot assure you that the measures we have taken are always sufficient and effective. If we are unable to manage these risks, we could become subject to penalties, fines, suspension of business and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected.

***Restrictions imposed in reaction to outbreaks of animal diseases could have a material adverse effect on our business, financial condition and results of operations.***

If animal diseases, such as rabies, toxoplasmosis, brucellosis, Lyme disease, leptospirosis, flea allergic dermatitis, sarcoptic mange, trichomoniasis, mad cow disease, foot-and-mouth disease, or highly pathogenic avian influenza, also known as "bird flu," impact the availability of certain ingredients our vendors use in products, our vendors may be required to locate alternative sources for those ingredients. Those sources may not be available to sustain our sales volumes, may be costlier, and may affect the quality and efficacy of our products. If outbreaks of such animal diseases, or the regulation or publicity resulting therefrom impacts the cost of certain ingredients we have in our products, or the cost of the alternative ingredients necessary for our products as compared to our current costs, we may be required to increase the selling price of our products to avoid margin deterioration. However, we may not be able to charge higher prices for our products without negatively impacting future sales volumes.

***If we are unable to conduct marketing activities cost-effectively, our results of operations and financial condition may be materially and adversely affected.***

We have incurred significant expenses on a variety of different marketing and brand promotion efforts designed to expand our customer base, increase the transaction volume on our platform and enhance our brand recognition. Our brand promotion and marketing activities may not be well received by customers and may not realize the levels of effectiveness that we anticipate. In 2020, 2021 and the nine months ended September 30, 2021 and 2022, the largest component of our sales and marketing expenses was advertising and marketing promotion expenses, which amounted to RMB101.9 million, RMB165.2 million (US$23.2 million), RMB107.4 million and RMB89.5 million (US$12.6 million), respectively. Marketing approaches and tools in the pet care market in China are evolving. This further requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with industry developments and customer preferences. Failure to refine our existing marketing approaches or to introduce new marketing approaches in a cost-effective manner could reduce our market share, cause our net revenues to decline and negatively impact our profitability.

***Our success depends on the continuing and collaborative efforts of our management team, and our business may be severely disrupted if we lose their services.***

Our success heavily depends upon the continued services of our management. In particular, we rely on the expertise and experience of Mr. Yonghe Peng, our founder, co-chairman of the board of directors and president,

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and other executive officers. If one or more of our senior management were unable or unwilling to continue in their present positions, we might not be able to replace them easily or at all, and our business, financial condition and results of operations may be materially and adversely affected. If any of our senior management joins a competitor or forms a competing business, we may lose customers, suppliers, know-how and key professionals and staff members. Our senior management has entered into employment agreements and confidentiality and non-competition agreements with us. However, if any dispute arises between our officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all. In addition, we do not have key-man insurance for any of our executive officers or other key personnel. Events or activities attributed to our executive officers or other key personnel, and related publicity, whether or not justified, may affect their ability or willingness to continue to serve our company or dedicate their full time and efforts to our company and negatively affect our brand and reputation, resulting in an adverse effect on our business, operating results and financial condition.

***If we fail to adopt new technologies to changing customer requirements or emerging industry standards, our business may be materially and adversely affected.***

To remain competitive, we must continue to enhance and improve the responsiveness, functionality and features of our mobile apps and websites. The industry we operate in is characterized by rapid technological evolution, changes in customer requirements and preferences, frequent introductions of new products and services embodying new technologies and the emergence of new industry standards and practices, any of which could render our existing technologies and systems obsolete. Our success will depend, in part, on our ability to identify, develop, acquire or license leading technologies useful in our business, and respond to technological advances and emerging industry standards and practices, such as mobile internet, in a cost-effective and timely way. In recent years, we invested in the development of many new technologies and business initiatives, such as AI and big data. The development of websites, mobile apps and other proprietary technologies entails significant technical and business risks. We cannot assure you that we will be able to successfully develop or effectively use new technologies, recoup the costs of developing new technologies or adapt our websites, mobile apps, proprietary technologies and systems to meet customer requirements or emerging industry standards. If we are unable to develop technologies successfully or adapt in a cost-effective and timely manner in response to changing market conditions or customer requirements, whether for technical, legal, financial or other reasons, our business, prospects, financial condition and results of operations may be materially and adversely affected.

***Any disruption to our technology systems and resulting interruptions in the availability of our website, applications, platform or services could adversely affect our business and results of operations.***

The efficient operation of our business is dependent on our information systems. In particular, we rely on our information systems to effectively manage our financial and operational data, to maintain our in-stock positions, and to transact the sale of our products through online or offline channels. The failure of our information systems to perform as designed, loss of data, undetected software or human errors, bugs or vulnerabilities, or any interruption of our information systems for a significant period of time could disrupt our business.

Our operations also depend on our ability to maintain and protect the computer systems we use to manage our purchase orders, inventory levels, websites, mobile applications, accounting functions, and other critical aspects of our business. Our systems are vulnerable to damage from fire, floods, earthquakes, power loss, telecommunications failures, terrorist and cyber-attacks, and similar events. Our disaster recovery planning may not be sufficient to adequately respond to any such events. In addition, we may have inadequate insurance coverage to compensate for any related losses and expenses. Any of these events could damage our reputation, disrupt our business, and be expensive to remedy.

We continue to invest in our information systems and IT infrastructure. Enhancement to or replacement of our major financial or operational information systems could have a significant impact on our ability to conduct

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our business operations and increase our risk of loss resulting from disruptions of normal operating processes and procedures that may occur during the implementation of new information systems. It may also require us to divest resources to ensure that implementation is successful. We can make no assurances that the costs of investments in our information systems will not exceed estimates, that the systems will be implemented without material disruption, or that the systems will be as beneficial as predicted. If any of these events occur, our results of operations could be adversely affected.

***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 make 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. We have been subject to an alleged cyber-attack, and we may experience breaches or attempts of breaches to our system or the systems of third-party service providers who host our servers in the future. Breaches to our security measures or the systems of our third-party service providers, 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 rely on certain key operating metrics to evaluate the performance of our business, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.***

We regularly review our operating metrics in relation to our customers and transaction volumes to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using our internal data as well as third-party platform's data, have not been validated by an independent third party, and may not be indicative of our future operation results. Our operating metrics may differ from estimates published by third parties or from similarly titled metrics used by other companies due to differences in methodology. If we discover material inaccuracies in the operating metrics we use, or if they are perceived to be inaccurate, our reputation may be harmed and our evaluation methods and results may be impaired, which could negatively affect our business.

***Failure to establish, maintain, protect, and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of our technology or our brands could harm our competitive position or require us to incur significant expenses to enforce our rights.***

Our trademarks are valuable assets that support our brand and consumers' perception of our products. We rely on trademark, copyright, trade secret, patent, and other intellectual property laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our trademarks, trade names, proprietary information, technologies, and processes. We might not be able to obtain broad protection in the PRC or in other jurisdictions for all of our intellectual property. The protection of our intellectual property rights may require the expenditure of significant financial, managerial and operational resources. Moreover, the steps we take to protect our intellectual

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property may not adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights, and we may be unable to broadly enforce all of our trademarks. Any of our patents, trademarks, or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Our patent and trademark applications may never be granted. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may be unable to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Even if issued, there can be no assurance that these patents will adequately protect our intellectual property, as the legal standards relating to the validity, enforceability and scope of protection of patent and other intellectual property rights are uncertain. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or intellectual property rights. Further, our nondisclosure agreements and confidentiality agreements may not effectively prevent disclosure of our proprietary information, technologies and processes and may not provide an adequate remedy in the event of unauthorized disclosure of such information, which could harm our competitive position. In addition, effective intellectual property protection may be unavailable or limited for some of our trademarks and patents in some foreign countries. We might be required to expend significant resources to monitor and protect our intellectual property rights. For example, we may need to engage in litigation or similar activities to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others. However, we may be unable to discover or determine the extent of any infringement, misappropriation, or other violation of our intellectual property rights and other proprietary rights. Despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights and other proprietary rights. Any such litigation, whether or not resolved in our favor, could require us to expend significant resources and divert the efforts and attention of our management and other personnel from our business operations. If we fail to protect our intellectual property, our business, financial condition and results of operations may be materially adversely affected.

***We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.***

We have obligations with respect to the non-use and non-disclosure of third-party intellectual property. The steps we take to prevent misappropriation, infringement, or other violation of the intellectual property of others may not be successful. From time to time, third parties have asserted intellectual property infringement claims against us and may continue to do so in the future. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims. While we believe that our products and operations do not infringe in any material respect upon proprietary rights of other parties and/or that meritorious defenses would exist with respect to any assertions to the contrary, we may from time to time be found to infringe on the proprietary rights of others.

Any claims that our products, services or marketing materials infringe the proprietary rights of third parties, regardless of their merit or resolution, could be costly, result in injunctions against us or payment of damages by us, and may divert the efforts and attention of our management and technical personnel. We may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If such proceedings result in an adverse outcome, we could, among other things, be required to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay substantial damages;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cease the manufacture, use, distribution, or sale of the infringing products, operations, or services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discontinue the use of the infringing methods or processes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expend significant resources to develop non-infringing products, operations, or services or re-brand our business and products; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• obtain a license from the third party claiming infringement, which may not be available on commercially
reasonable terms, or may not be available at all.

If any of the foregoing occurs, our ability to compete could be affected or our business, financial condition, and results of operations may be materially adversely affected.

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***If we fail to implement and maintain an effective system of internal controls to remediate our material weaknesses over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected.***

Prior to this offering, we were a private company with limited accounting and financial reporting personnel and other resources with which to address our internal control over financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial statements as of and for the years ended December 31, 2020 and 2021, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, or PCAOB, a "material weakness" is a deficiency, or a combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified relate to our (i) lack of sufficient accounting and financial reporting personnel with the requisite knowledge, skills and experience in application of U.S. GAAP and SEC reporting requirement, (ii) lack of financial accounting and reporting policies and procedures that are commensurate with U.S. GAAP and SEC reporting requirements and (iii) ineffective control environment and monitoring to support the U.S. GAAP and SEC financial reporting process, that have been identified. To remediate the material weaknesses, we have adopted measures to improve our internal control over financial reporting, including, among others: (i) hiring additional qualified accounting and financial reporting personnel with appropriate knowledge, skills and experience in U.S. GAAP accounting and SEC reporting; and (ii) organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements. In 2021, we hired two employees dedicated to the preparation of consolidated financial statements and SEC reporting, both of whom have prior work experience in audit firms and the finance departments of public companies. Moreover, in order to enhance the centralized management of the financial records of our group, we established a financial shared service center in Wuhan in 2021 with 35 employees as of September 30, 2022. Together with our Chengdu financial shared service center, as of September 30, 2022, our financial shared service centers had a total of 187 employees. We also set up a financial data center with three employees to integrate the financial information of our group with business operations through a systematic approach. In addition, in March 2022, we hired a new deputy financial director with seven years of prior work experience in the finance departments of multinational enterprises, including over five years of managerial experience, for our Chengdu financial shared service center. Going forward, we plan to continue to enhance the centralized management of our financial records and the quality control of our financial reporting, and provide our accounting and financial reporting staff with extensive training resources. We have been training our accounting and financial reporting staff primarily through on-the-job trainings. In July 2022, we purchased relevant online courses and memberships for these employees to facilitate their training and self-learning. We mandate a minimum of 40 hours of learning of these courses per annum for each of the senior members of our accounting and financial reporting team. As of September 30, 2022, the senior members of our accounting and financial reporting team have completed an aggregate of 150 hours of learning. We plan to organize regular internal training sessions related to U.S. GAAP and SEC reporting starting from September 2022. We also plan to adopt additional measures to improve our internal control over financial reporting, including, among others, (i) creating a U.S. GAAP accounting and reporting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest U.S. GAAP accounting standards, (ii) further hiring executive accounting personnel with strong knowledge and experience in U.S. GAAP accounting and SEC reporting as necessary; (iii) establishing "tone at the top" entity level controls, including but not limited to an audit committee with at least one qualified financial expert and an internal audit department, with the oversight of the board of directors with proper composition; and (iv) identify the relevant controls that address the quality of the information generated and used in the performance of key controls supporting the financial statement line items and footnote disclosure. Our internal control team, consisting of nine members as of September 30, 2022, oversees the establishment of the internal control system of our group, the formulation and implementation of internal control process, identification and resolution of key issues and risk management relating to internal control. At the end of 2021, we hired an internal control consulting firm to conduct a comprehensive review and evaluation of our financial

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management process in terms of management system, internal control process, operating procedures, information system and others. Based on the review and recommendations of the internal control consultants, we have formulated a detailed optimization plan for our internal control and financial reporting system, and have prepared an initial draft of the U.S. GAAP accounting and reporting policies and procedures manual for internal approval. We plan to adopt such manual and complete the optimization plan by the end of 2022. We also plan to embed internal control responsibility into the fabric of our culture, business, processes, and procedures by implementing a control self-assessment program as part of our ongoing evaluations. We will also establish an audit committee with at least one qualified financial expert immediately upon the effectiveness of our registration statement on Form F-1, of which this prospectus is a part. However, we cannot assure you that these measures may fully address the material weaknesses in our internal control over financial reporting. Although we have been actively taking measures to remediate the material weaknesses identified and have been able to successfully implement certain initiatives, the remediation, especially with respect to the lack of sufficient accounting and financial reporting personnel, has been, and will continue to be, subject to various uncertainties. The recruitment market has been relatively inactive as a result of the ongoing COVID-19 pandemic. In addition, there is an inherent talent pool shortage for personnel with U.S. GAAP accounting and SEC financial reporting knowledge and related prior work experience. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act of 2002 for purposes of identifying and reporting any material weakness in our internal control over financial reporting. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional material weaknesses may have been identified.

Upon the completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require 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 in our second annual report on Form 20-F after becoming a public company. 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 may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, 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 or more material weaknesses 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. We may not be able to anticipate and identify accounting issues, or other risks critical to financial reporting that could materially impact the consolidated financial statements. Generally speaking, 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 our 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 from prior periods.

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***Fluctuations in exchange rates could have a material and adverse effect on our results of operations and your investment.***

We are subject to fluctuations in foreign exchange rates between our reporting currency, Renminbi, and currencies of other countries in which certain of our assets are denominated. Such fluctuations may result in significant increases or decreases in our reported revenue and other results as expressed in Renminbi, and in the reported value of our assets, liabilities and cash flows. In addition, currency fluctuation may adversely affect receivables, payables, debt, firm commitments and forecast transactions denominated in foreign currencies. Fluctuation in exchange rates, depreciation of local currencies, changes in monetary and/or fiscal policy or inflation in the countries in which we operate or sell our products could have a material adverse effect on our business, financial condition and 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. For example, to the extent that we need to convert U.S. dollars we receive into Renminbi to pay our operating expenses, appreciation of Renminbi against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of Renminbi against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. 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. We expect that we will continue to be exposed to foreign currency exchange risk to the extent that our hedging arrangements do not cover all of our exposure to foreign currency exchange risk. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

***Failure to comply with the terms of our indebtedness could have an adverse effect on our cash flow and liquidity.***

As of December 31, 2020 and 2021 and September 30, 2022, our short-term bank borrowings were RMB350.0 million, RMB1,392.3 million (US$195.7 million) and RMB1,893.8 million (US$266.2 million), respectively. Our short-term bank borrowings consist of credit loan with a weighted average annual interest rate of 5.03%, 3.78% and 3.96% as of December 31, 2020 and 2021 and September 30, 2022, respectively, and original maturity terms of one year. Under the terms of our indebtedness and under any debt financing arrangement that we may enter into in the future, we are, and may be in the future, subject to covenants that could, among other things, restrict our business and operations. If we breach any of these covenants, our lenders under our future credit facilities will be entitled to accelerate our debt obligations. Any default under our future credit facilities could require that we repay these debts prior to maturity as well as limit our ability to obtain additional financing, which in turn may have a material adverse effect on our cash flow and liquidity.

***Our results of operations may be subject to fluctuations due to seasonal or operational reasons.***

Our quarterly operating results may fluctuate due to the timing of expenses, hospital or store openings or closures, and other factors.

Our expansion plans, including the timing of new pet hospitals, and related pre-opening costs, the amount of net sales contributed by new hospitals, and the timing of and estimated costs associated with hospital closings or

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relocations, if any, may cause our quarterly results of operations to fluctuate. Further, new pet hospitals and service offerings tend to experience higher payroll, advertising and other store-level expenses as a percentage of net sales than more mature hospitals, and such openings also often contribute to lower pet hospital operating margins until those hospitals become established, which may result in quarterly fluctuations in operating results. Quarterly operating results are not necessarily accurate predictors of performance.

Quarterly operating results may also vary depending on a number of factors, many of which are outside our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• holidays;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our pricing policies or those of our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our sales and channels mix and the relevant gross margins of the products and services sold;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the hiring and retention of key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• wage and cost pressures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• costs related to acquisitions of businesses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic factors.

***We plan to grant options under our share incentive plan, which may result in increased share-based compensation expenses.*** 

We adopted a share incentive plan in June 2021, or the 2021 Plan, for the purpose of granting share-based compensation awards to employees, directors, and consultants to incentivize their performance and align their interests with ours. Under the 2021 Plan, we are authorized to grant options and other types of awards. The maximum number of ordinary shares that may be issued pursuant to all awards under the 2021 Plan is 500 million. See "Management—Share Incentive Plan." As of December 31, 2022, options to purchase 175,626,852 ordinary shares and RMB30.0 million worth of ordinary shares based on the per share exercise price as specified in the award agreement were outstanding.

We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees, and we plan 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.

Furthermore, perspective candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. Thus, our ability to attract or retain highly skilled employees may be adversely affected by declines in the perceived value of our equity or equity awards. Furthermore, there are no assurances that the number of shares reserved for issuance under our share incentive plans will be sufficient to grant equity awards adequate to recruit new employees and to compensate existing employees.

***We have limited insurance coverage, which could expose us to significant costs and business disruption.***

We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased insurance covering our inventory and fixed assets such as equipment, furniture and office facilities. We also provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees. We do not maintain business interruption insurance, product liability insurance, malpractice liability insurance or key-man life insurance. We consider our insurance coverage to be in line with the industry norm in China. However, 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 policy on a timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial condition and results of operations could be materially and adversely affected.

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***We may, from time to time, be subject to legal proceedings during the course of our business operations.***

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, advertising 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 hospital partners, or third-party providers of various services, including construction, logistics and delivery service and certain data services.

For example, we are currently subject to certain investment disputes, labor disputes, tort disputes, contract disputes, anti-competition related disputes, trademark related disputes and other types of disputes in the ordinary course of our business. These cases are still ongoing, but we believe these 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 do not believe that any of these 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.

***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 2021 and 2022. Due to the impact of COVID-19 and other factors, the world economy has suffered a noticeable slowdown. Whether this will lead to a prolonged downturn in the economy is still unknown. Commercial activities throughout the world could continue to be curtailed with decreased consumer spending, business disruptions, interrupted supply chains and difficulties in travel. Our business has been adversely affected by the outbreak of COVID-19. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted.

Even before the outbreak of COVID-19, 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 2021. The conflict in Ukraine and the imposition of broad economic sanctions on Russia could raise energy prices and disrupt global markets. Unrest, terrorist threats and the potential for war 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.

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***The current tensions in international trade and rising political tensions, particularly between the U.S. and China, may adversely impact our business, financial condition, and results of operations.***

There have been changes in international trade policies and rising political tensions, particularly between the U.S. and China, but also as a result of the conflict in Ukraine and sanctions on Russia. The U.S. government has made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies towards China. While the "Phase One" agreement was signed between the United States and China on trade matters, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade, tax policy related to international commerce, or other trade matters. The situation is further complicated by the political tensions between the United States and China that escalated during the COVID-19 pandemic and in the wake of the PRC National People's Congress' decision on Hong Kong national security legislation and sanctions and restrictions imposed by the U.S. government on Chinese companies and citizens. Against this backdrop, China has implemented, and may further implement, measures in response to the Chinese trade policies, treaties, tariffs and sanctions and restrictions against Chinese companies initiated by the U.S. government. For example, the MOFCOM published Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures on January 9, 2021, which applies to cases where the extraterritorial application of foreign laws and measures violates international law and basic norms of international relations, and improperly prohibits or restricts PRC citizens, legal persons or other organizations from conducting normal economic, trade and related activities with third countries (regions) and their citizens, legal persons or other organizations. Rising trade and political tensions could reduce levels of trades, investments, technological exchanges and other economic activities between China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets, and international trade policies. It could also adversely affect the financial and economic conditions in the jurisdictions in which we operate, as well as our overseas expansion, our financial condition, and results of operations.

Expanding internationally is one of our growth strategies. Any rising trade and political tensions or unfavorable government policies on international trade and Chinese companies could delay our plan to expand internationally, impact our competitive position, or hinder our commercial activities in certain countries. In addition, our results of operations could be adversely affected if any such tensions or unfavorable government trade policies harm the Chinese economy or the global economy in general.

***We face certain risks relating to the real properties that we lease.***

We lease offices, operational places, warehouses and FDCs from third parties for our operations in China. Any defects in lessors' title to the leased properties may disrupt our use of our offices, operational places, FDCs or warehouses, which may, in turn, affect our business operations. We had not been provided with certain building ownership certificates or the proofs of having the right to sublease the properties by our lessors. Some of our leased properties are located on collective lands which may not be used for construction or non-agricultural purpose, or on allocated lands which may not be leased for profit purpose without any approval. Further, our use of some of our leased properties is inconsistent with the legally specified use of the properties as provided in their titles. In addition, some of our leased properties had been mortgaged before we leased. There is a risk that the lender may have disputes with regards to the relevant debts mortgaged by the properties or the mortgagee may seek to enforce its security interests under the properties. The landlords may also default under the lease agreements, or choose to unilaterally terminate the lease. As a result, we may need to seek for an alternative lease, and our operation of business may be accordingly affected.

Under PRC law, lease agreements of commodity housing tenancy are required to be registered with the local construction (real estate) departments. As of the date of this prospectus, most of our lease agreements for our leased properties in China have not been registered with the relevant PRC government authorities, which may expose us to potential fines if we fail to remediate after receiving any notice from the relevant PRC government authorities. Failure to complete the lease registration will not affect the legal effectiveness of the lease

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agreements according to PRC law, but the real estate administrative authorities may require the parties to the lease agreements to complete lease registration within a prescribed period of time, and the failure to do so may expose us to potential warnings and penalties. As of the date of this prospectus, we have not received any notice, fines or penalties from the relevant authorities. We are taking measures to remediate the non-compliance described above and are actively monitoring related legal and regulatory risk exposures.

**Risks Related to Doing Business in China** 

***The PRC government's significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.***

We conduct our business primarily in China. Our operations in China are governed by PRC laws and regulations. The PRC government has significant oversight and discretion over the conduct of our business, and may influence or intervene in our operations at any time. The PRC government has recently published new policies that significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could result in a material adverse change in our operation and/or the value of our ADSs. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business. The Chinese government has exerted more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers. Such actions could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our ADSs to significantly decline or be worthless. For more details, see "—The approval or other administration requirements of the China Securities Regulatory Commission, or the CSRC, or other PRC governmental authorities may be required in connection with this offering under PRC law."

***Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and operations.***

A substantial majority of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects 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 PRC economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC 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 is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC 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 PRC economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The growth rate of the Chinese economy has gradually slowed since 2010, and the impact of COVID-19 on the global and Chinese economy is likely to be severe. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall PRC 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

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regulations. In addition, the PRC government has significant authority to exert influence on the ability of a China-based issuer, such as our company, to conduct its business. Any prolonged slowdown in the global and Chinese economy may reduce the demand for our products and services and materially and adversely affect our business and results of operations.

***Uncertainties with respect to the PRC legal system could materially and adversely affect us.***

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Since these laws and regulations are relatively new and may be amended from time to time, and the PRC legal system continues to rapidly evolve, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretations of many laws, regulations and rules may not be uniform and enforcement of these laws, regulations and rules involves uncertainties. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. Besides, the PRC is geographically large and divided into various provinces and municipalities and, as such, different laws, rules, regulations and policies may have different and varying applications and interpretations in different parts of the PRC. Legislation or regulations, particularly in local applications, may be enacted without sufficient prior notice or announcement to the public. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis, or at all, and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. Agreements that are governed by PRC laws may be more difficult to enforce by legal or arbitral proceedings in the PRC than that in other countries with different legal systems. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

***The approval or other administration requirements of the China Securities Regulatory Commission, or the CSRC, or other PRC governmental authorities may be required in connection with this offering under PRC law.***

The M&A Rules purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear. If CSRC approval is required, it is uncertain how long it will take for us to obtain such approval, and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or a delay in obtaining CSRC approval for this offering may subject us to sanctions imposed by the CSRC and other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.

Our PRC counsel has advised us that, based on its understanding of the current PRC laws and regulations, we will not be required to submit an application to the CSRC for the approval under the M&A Rules for this offering and the listing and trading of the ADSs on the Nasdaq Stock Market because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours under this prospectus are subject to this regulation; and (ii) we did not acquire any equity interests or assets of a "PRC domestic company" as such terms are defined under the M&A Rules.

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However, our PRC counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC governmental authorities, including the CSRC, would reach the same conclusion as our PRC counsel, and hence, we may face regulatory actions or other sanctions from them.

Furthermore, on July 6, 2021, the PRC government promulgated the July 6 Opinions, which, among other things, called for enhanced administration and supervision of overseas-listed China-based companies, proposed to strengthen the supervision of the overseas issuance and listing of shares by China-based companies and clarified the responsibilities of competent domestic industry regulators and government authorities. On December 28, 2021, the CAC, together with other relevant administrative departments, jointly released the Cybersecurity Review Measures, which took effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, network platform operators with personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before going to list abroad. See "— Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of operations."

On December 24, 2021, the State Council's Administrative Regulations on Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Public Comments) and the Administrative Measures on Filing of Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Public Comments) were released for public comments by the CSRC, and such public comment period has ended. Pursuant to these drafts, PRC domestic companies that directly or indirectly offer or list their securities in an overseas market, which include (i) any PRC company limited by shares that contemplates an offering or listing of its securities in an overseas market, and (ii) any offshore company that conducts its business operations primarily in China and contemplates to offer or list its securities in an overseas market based on its onshore equities, assets or similar interests, are required to file with the CSRC within three business days after submitting their listing application documents to the relevant regulator in the place of intended listing. The drafts, among others, further stipulate that when determining whether an offering and listing shall be deemed an "indirect overseas offering and listing by a Chinese company," the principle of "substance over form" shall be followed, and if the issuer meets the following conditions, its offering and listing shall be determined as an "indirect overseas offering and listing by a Chinese company" and is therefore subject to the filing requirement: (1) the revenues, profits, total assets or net assets of the Chinese operating entities in the most recent financial year account for more than 50% of the corresponding data in the issuer's audited consolidated financial statements for the same period; or (2) the majority of senior management in charge of business operations are Chinese citizens or have domicile in the PRC, and its principal place of business is located in the PRC or main business activities are conducted in the PRC. Failure to complete such filing may subject a PRC domestic company to a warning or a fine between RMB1 million and RMB10 million, in addition to adverse impact on the offering and listing plan. If the circumstances are serious, the PRC domestic company may be ordered to suspend its business or suspend its operation for rectification, or its permits or businesses license may be revoked. However, as of the date of this prospectus, uncertainties exist regarding the final form of these regulations as well as the interpretation and implementation thereof after promulgation and their impact on us. Pursuant to these regulations, a domestic enterprise applying for listing abroad shall, among others, complete record-filing procedures and report relevant information to the securities regulatory authority as required. We plan to comply with the filing procedures of the CSRC with respect to this offering, if and when such procedures are adopted by the CSRC.

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***Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of operations.***

The PRC regulatory and enforcement regime with regard to data security and data protection is evolving and may be subject to different interpretations or significant changes. Moreover, different PRC regulatory bodies, including the SCNPC, the Ministry of Industry and Information Technology, or the MIIT, the CAC, the Ministry of Public Security and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protections laws and regulations with varying standards and applications. See "Regulation—Regulations on Cyber Security and Privacy." The evolving nature and uncertainty in the interpretation and enforcement of data security and data protection laws increase the risk of incompliance or perceived incompliance with such laws.

On November 14, 2021, the CAC issued the Administrative Regulations of Cyber Data Security (Draft for Comments), or the Draft Cyber Data Security Regulations, which provide that data processors conducting the following activities shall apply for cybersecurity review: (i) merger, reorganization or spin-off of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests affects or may affect national security; (ii) listing abroad of data processors processing over one million users' personal information; (iii) listing in Hong Kong which affects or may affect national security; (iv) other data processing activities that affect or may affect national security. On December 28, 2021, the CAC, together with other relevant administrative departments, jointly promulgated the Cybersecurity Review Measures which took effect on February 15, 2022. According to the Cybersecurity Review Measures, a critical information infrastructure operator, or CIIO, shall declare any network product or service that affects or may affect national security for a cybersecurity review, and an internet platform operator who possesses personal information of more than one million users shall apply for a cybersecurity review before listing in a foreign country, and the relevant governmental authorities may initiate a cybersecurity review if they consider relevant network products or services affect or data processing activities may affect national security.

On April 15, 2022, we received written confirmation from the Cybersecurity Review Office that we are not required to apply for a cybersecurity review in connection with this offering and our proposed listing under the Cybersecurity Review Measures. Furthermore, we have not been designated by the relevant PRC authorities as an CIIO, have not been involved in any cybersecurity-related investigation initiated by the CAC or any other PRC authority, and have not received any cybersecurity-related warning or sanction from the PRC government, or any notice from relevant authorities specifying us to file for the cybersecurity review. As the definitions for terms such as internet platform operator and national security are broad, and the government will likely retain significant discretion as to the interpretation and enforcement of the Cybersecurity Review Measures and any implementation rules, we may be subject to related rules. We cannot preclude the possibility that the Cybersecurity Review Measures will subject us to the cybersecurity review by the CAC in relation to our operations or require us to adjust our business practices, in which case our business, financial condition and prospects and the price of our ADSs may be materially and negatively affected. On July 7 2022, the CAC promulgated the Measures for the Security Assessment of Outbound Data Transfer, which became effective on September 1, 2022. The Measures for the Security Assessment of Outbound Data Transfer specified that when data processors engage in outbound data transfer under any of the following circumstances, they shall apply for a security assessment with the CAC in accordance with the relevant national regulations: (i) where a data processor transfers critical information abroad; (ii) where a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals transfers personal information abroad; (iii) where a data processor has transferred personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year, and (iv) other circumstances prescribed by the CAC for which declaration for security assessment for outbound data transfers is required.

In the event that we are subject with the cybersecurity review by the CAC in relation to our operations, we may experience disruptions of our business. Such review could also result in negative publicity with respect to

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our company and diversion of our managerial and financial resources. Furthermore, if we were found to be in violation of applicable laws and regulations of the PRC during such review, we may be subject to administrative penalties, including fines and service suspension, which could have a material and adverse impact on our business, results of operations and financial condition and the value of our ADSs.

In addition to the Cybersecurity Review Measures, the PRC government has introduced a wide range of laws and regulations on cybersecurity and data security in recent years. For example, the PRC Cyber Security Law came into effect on June 1, 2017 and requires network constructors, network operators, and service providers that provide services via network to perform certain functions related to cyber security protection and the strengthening of network information management through taking technical and other necessary measures to safeguard the operation of networks, responding to network security effectively, preventing illegal and criminal activities, and maintaining the integrity and confidentiality and usability of network data. In addition, the law imposes certain additional requirements on CIIOs, including that during their operations in the PRC, CIIOs should generally store the personal information and important data collected and produced within the territory of PRC and perform certain security obligations. The PRC Data Security Law, on the other hand, was promulgated on June 10, 2021 and took effect in September 2021, and provides for data security and privacy obligations on entities and individuals carrying out data processing activities, including but not limited to the collection, storage, use, processing, transmission, provision, and public disclosure of data. The PRC Data Security Law also requires a national security review procedure for those data activities which may affect national security and imposes export restrictions on certain data and information. Since the PRC Cyber Security Law, the PRC Data Security Law and other applicable laws and rules are newly issued, there exists great uncertainty with respect to their interpretations and implementations. As of the date of this prospectus, we are in compliance with the currently effective and applicable PRC laws on cybersecurity and data security in all material respects and those laws do not have a material adverse impact on our business or offshore listing plan. However, we cannot preclude the possibility that new laws, regulations or rules promulgated in the future will impose additional compliance requirements on us, will subject us to the cybersecurity or national security review in relation to our operations, or will require us to change our business practices or incur additional operating expenses, which may have material and negative impacts on our business, financial condition and prospects and the value of our ADSs.

***The PCAOB had historically been unable to inspect our auditor in relation to their audit work.***

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. The inability of the PCAOB to conduct inspections of auditors in China in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firm's audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections, which could cause investors and potential investors in the ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

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***Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.***

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our shares and ADSs are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

***We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.***

We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If any of our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries, may pay dividends only out of its respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a PRC enterprise is required to set aside at least 10% of its after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, a PRC enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to a staff welfare and bonus fund. These reserve fund and staff welfare and bonus fund cannot be distributed to us as dividends.

Our PRC subsidiaries generate primarily all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us.

The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other

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kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by PRC companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

***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 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.

***PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.***

We are an offshore holding company conducting our operations in China through our PRC subsidiaries. We may make loans to our PRC subsidiaries subject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions to our PRC subsidiaries.

Any loans to our PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange loan registrations. For example, loans by us to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE, and medium or long-term loans by us to our PRC subsidiaries must be recorded and registered with the National Development and Reform Committee, or the NDRC. In addition, a foreign invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or investments other than banks' principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

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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 SAFE Circular 19, effective June 2015 which was further amended on December 30, 2019, 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*, *the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign Exchange Businesses*, and *the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital Account Foreign Exchange Businesses*. According to SAFE Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated *the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account*, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from this offering, to our PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expand our business in China.

On October 23, 2019, the SAFE promulgated the *Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment*, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiaries or future capital contributions by us to our PRC subsidiaries. As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiaries when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

***Certain PRC regulations may make it more difficult for us to pursue growth through acquisitions.***

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 the Ministry of Commerce, or MOFCOM, be notified in advance of any change of control transaction in which a foreign investor acquires control of a PRC domestic enterprise and involves any of the following circumstances: (i) any important industry is concerned; (ii) such transaction involves factors that impact or may impact national economic security; or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. We do not expect that this offering will trigger MOFCOM pre-notification under each of the above-mentioned circumstances or any review by other PRC government

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authorities, except as disclosed below in "Risks Related to Doing Business in China—The approval of the China Securities Regulatory Commission may be required in connection with this offering, and, if required, we cannot predict whether we will be able to obtain such approval." Moreover, *the Anti-Monopoly Law* promulgated by the Standing Committee of National People's Congress which became effective in 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by State Administration for Market Regulation, or the SAMR, the successive authority of MOFCOM, before they can be completed. In addition, PRC national security review rules that became effective in September 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. The *Measures for the Security Review of Foreign Investment* promulgated by the National Development and Reform Commission, or the NDRC and the MOFCOM and became effective on January 18, 2021 further requires any foreign investment that has or possibly has an impact on state security be subject to security review. We may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

***Litigation and negative publicity surrounding China-based companies listed in the U.S. may result in increased regulatory scrutiny of us and negatively impact the trading price of the ADSs and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.***

We believe that litigation and negative publicity surrounding companies with operations in China that are listed in the U.S. have negatively impacted stock prices for such companies. Various equity-based research organizations have published reports on China-based companies after examining, among other things, their corporate governance practices, related party transactions, sales practices and financial statements that have led to special investigations and stock suspensions on national exchanges. Any similar scrutiny of us, regardless of its merit, could result in a diversion of management resources and energy, potential costs to defend ourselves against rumors, decreases and volatility in the ADS trading price, and increased directors and officers insurance premiums and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

***Failure to make adequate contributions to certain employee benefit plans as required by PRC regulations may subject us to penalties.***

We are required under PRC law to participate in various government sponsored employee benefit plans, including social security insurance, housing provident funds and other welfare-oriented payments, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses. An employer shall pay employee benefits for its employees in accordance with the rates provided under relevant regulations and shall withhold the social insurance and other employee benefits that should be assumed by the employees. For example, an employer that has not made social insurance contributions at a rate and based on an amount prescribed by the law, or at all, may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of up to 0.05% per day, as the case may be. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it may be subject to a fine ranging from one to three times of the amount overdue. If there is a failure to pay the full amount of housing provident fund as required, the housing provident fund management center may require payment of the outstanding amount within a prescribed period. If the payment is not made within such time limit, an application may be made to the PRC courts for compulsory enforcement. We have not made adequate employee benefit payments to social security insurance and the housing provident fund based on the required salary basis or make adequate social security insurance and housing fund contributions for our

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employees in a manner stipulated by the PRC laws and regulations. In addition, to efficiently administer the contribution of employment benefit plans of our employees in some cities, we engage third-party agents to make the contribution for our employees. If the relevant competent government authority is of the view that we have underpaid social insurance and housing provident fund for our employees or the third-party agency arrangement does not satisfy the requirements under the relevant PRC laws and regulations, we may be required to pay the shortage of our contributions or subject to fines or other legal sanctions. If we are subject to full distribution, late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. We had accrued our payable for contributions to certain employee benefit plans including social welfare and housing fund for our employees based on their minimum salary base according to the existing PRC laws and regulations for the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022.

***The custodians or authorized users of our controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these assets.***

Under PRC law, legal documents for corporate transactions, including agreements and contracts such as the leases and sales contracts that our business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant local branch of the market supervision administration.

In order to maintain the physical security of our chops and the chops of our PRC entities, we generally store these items in secured locations accessible only by the authorized personnel of each of our PRC subsidiaries. Although we monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control over the relevant entities and experience significant disruption to our operations. If a designated legal representative obtains control of the chops in an effort to obtain control over any of our PRC subsidiaries, we or our PRC subsidiaries would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal action to seek the return of the chops, apply for new chops with the relevant authorities, or otherwise seek legal redress for the violation of the representative's fiduciary duties to us, which could involve significant time and resources and divert management attention away from our regular business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred out of our control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good faith.

***You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws.***

We are a company incorporated under the laws of the Cayman Islands, and a majority of our assets and operations are located in China. In addition, substantially all of our executive officers and directors reside within China and are PRC nationals. 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 as none of them currently resides in the United States or has substantial assets located in 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 written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign

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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.

***The ability of U.S. authorities to bring actions for violations of U.S. securities law and regulations against us, our directors or executive officers may be limited. Therefore, you may not be afforded the same protection as provided to investors in U.S. domestic companies.***

The SEC, the U.S. Department of Justice, or the DOJ, and other U.S. authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons. Due to jurisdictional limitations, matters of comity and various other factors, the SEC, the DOJ and other U.S. authorities may be limited in their ability to pursue bad actors, including in instances of fraud, in emerging markets such as China. We conduct our operations mainly in China and our assets are mainly located in China. In addition, all of our directors and executive officers reside within China. There are significant legal and other obstacles for U.S. authorities to obtain information needed for investigations or litigation against us or our directors or executive officers in case we or any of these individuals engage in fraud or other wrongdoing. In addition, local authorities in China may be constrained in their ability to assist U.S. authorities and overseas investors in connection with legal proceedings. As a result, if we, our directors or executive officers commit any securities law violation, fraud or other financial misconduct, the U.S. authorities may not be able to conduct effective investigations or bring and enforce actions against us, our directors, executive officers or other gatekeepers. Therefore, you may not be able to enjoy the same protection provided by various U.S. authorities as it is provided to investors in U.S. domestic companies.

***It may be difficult for overseas regulators to conduct investigation or collect evidence within China.***

Shareholder claims or regulatory investigation that are common in jurisdictions outside China 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 regulatory 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 United States or other jurisdictions may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the PRC territory, and without the consent by the Chinese securities regulatory authorities and the other competent governmental agencies, no entity or individual may provide documents or materials related to securities business to any foreign party. While detailed interpretation of or implementation rules under the article have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China and the potential obstacles for information provision may further increase difficulties faced by you in protecting your interests. See also "—Risks Related to Our 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.

***Discontinuation of any of the preferential tax treatments and government subsidies or imposition of any additional taxes and surcharges could adversely affect our financial condition and results of operations.***

We have received and continue to receive certain preferential tax treatments and government subsidies from the PRC national government or certain local governments. However, if the national government or local governments change their tax policies, including imposing additional taxes and surcharges, or if we cease to be eligible for any national or local preferential tax treatments, we must pay additional tax or surcharges, which would adversely affect our financial condition and results of operations.

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***We may not be able to obtain certain benefits under the relevant tax treaty on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary.***

We are an exempted company incorporated under the laws of the Cayman Islands and as such rely on dividends and other distributions on equity from our PRC subsidiaries to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC "resident enterprise" to a foreign enterprise investor, unless any such foreign investor's jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment and the foreign investor qualifies for the benefits of such treaty. Pursuant to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC enterprise. Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties, which became effective in August 2015, require non-resident enterprises to determine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file relevant reports and materials with the tax authorities. In addition, the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits, which became effective on January 1, 2020, or the SAT Circular 35, provides that nonresident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, nonresident enterprises and their withholding agents may, upon self-assessment and confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate. They can then file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. In 2020, 2021 and the nine months ended September 30, 2022, we did not record any withholding tax on the retained earnings of our subsidiaries in the PRC as we intended to re-invest all earnings generated from our PRC subsidiaries for the operation and expansion of our business in China, and we intend to continue this practice in the foreseeable future. Should our dividend policy change to allow for offshore distribution of our earnings, we would be subject to a significant withholding tax. We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant tax authority or we will be able to complete the necessary filings with the relevant tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiary.

***PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries' ability to change their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.***

In July 2014, the State Administration of Foreign Exchange, or 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. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities and also requires the foreign-invested enterprise that is established through round-trip investment to truthfully disclose its controller(s). SAFE Circular 37 further requires amendment to the SAFE registrations in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a PRC individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders or beneficial owners who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. In February 2015, SAFE promulgated a *Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment*, or SAFE Notice 13, effective since June 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound

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foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, should be filed with qualified banks instead of SAFE. The qualified banks examine the applications and accept registrations under the supervision of SAFE.

Certain of the relevant shareholders or beneficial owners who are PRC residents are required to make the relevant foreign exchange registrations under SAFE Circular 37, and such registrations are yet to be completed. Any failure or inability of the relevant shareholders or beneficial owners who are PRC residents to comply with the registration procedures set forth in these regulations, or any failure to disclose or misrepresentation of the controller(s) or ultimate shareholders of the foreign-invested enterprise that is established through round-trip investment, may subject us to fines and legal sanctions, such as restrictions on our cross-border investment activities, on the ability of our PRC subsidiaries to distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us. Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under PRC law for circumventing applicable foreign exchange restrictions.

We may not at all times be fully informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurance that these PRC residents will comply with our request to make or obtain any applicable registrations or continuously comply with all requirements under SAFE Circular 37 or other related rules. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by our shareholders or beneficial owners to comply with SAFE regulations, or failure by us to conduct or amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries' ability to make distributions or pay dividends or affect our ownership structure. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.

***Increases in labor costs and enforcement of stricter labor and individual income tax laws and regulations in China 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 employee's probation and unilaterally terminating labor contracts. Some of our PRC entities ask their employees to work overtime due to business needs and fail to fully pay overtime payment in accordance with PRC laws, which may subject us to additional damages. 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, 2002 and 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

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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. 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. Further, we are obligated to withhold individual income tax for our employees.

As the interpretation and implementation of labor-related and individual income tax laws and regulations are still evolving, we cannot assure you that our employment practices do not and will not violate labor-related and individual income tax 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 and individual income tax law and regulations including those relating to obligations to make social insurance payments, contribute to the housing provident funds and withhold individual income tax. If we are deemed to have violated relevant labor and individual income tax laws and regulations, we could be required to provide additional compensation to our employees or be imposed penalties and our business, financial condition and results of operations will be adversely affected.

***Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.***

Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies due to their position as director, senior management or employees of the PRC subsidiaries of the overseas companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies before they obtain the incentive shares or exercise the share options. In addition, in February 2012, the 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 the SAFE through a domestic qualified agent, which could be the PRC subsidiaries of such overseas-listed company, and complete certain other procedures. See "Regulation—Regulations on Foreign Exchange—Stock Incentive Plans." 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 or will be granted incentive shares or options are subject to these regulations. Failure to complete the SAFE registrations may subject us or them to fines and legal sanctions. 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 "Regulation—Regulations on Foreign Exchange—Stock Incentive Plans."

***If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.***

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 China 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 SAT issued *the Circular of the State Administration of Taxation on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance With the De Facto Standards of Organizational Management*, or 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 SAT Circular 82 may reflect SAT's

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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 China; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.

We believe that we are not a PRC resident enterprise for PRC tax purposes. See "Taxation—PRC Taxation." 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 we (or any of our non-PRC subsidiaries) are a PRC resident enterprise for enterprise income tax purposes, we or such subsidiaries could be subject to PRC tax at a rate of 25% on our worldwide income, which could materially reduce our net income, and we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders (including our ADS holders) that are non-resident enterprises. 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 China. Furthermore, if we are deemed a PRC resident enterprise, dividends payable 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 10% in the case of non-PRC enterprises or a rate of 20% in the case of non-PRC individuals unless a reduced rate is available under an applicable tax treaty. Any PRC tax liability may be reduced under applicable tax treaties, but it is unclear whether non-PRC shareholders of our company would be able to obtain 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 would reduce the returns on your investment in the ADSs or ordinary shares.

***We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.***

In February 2015, the SAT issued *The Public Notice Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises*, or SAT Public Notice 7. SAT Public Notice 7 extends its tax jurisdiction to not only indirect transfers but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, SAT Public Notice 7 provides certain criteria on how to assess 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 the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an "indirect transfer" by transferring the taxable assets 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 owns the 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 tax 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. However, according to the aforesaid safe harbor rule, the PRC tax would not be applicable to the transfer by any non-resident enterprise of ADSs of the Company acquired and sold on public securities markets.

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On October 17, 2017, the SAT issued *the Public Notice on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises*, or the SAT Public Notice 37, which came into effect on December 1, 2017. According to SAT Public Notice 37, where the non-resident enterprise fails to declare its tax payable pursuant to Article 39 of the EIT Law, the tax authority may order it to pay its tax due within required time limits, and the non-resident enterprise shall declare and pay its tax payable within such time limits specified by the tax authority. If the non-resident enterprise voluntarily declares and pays its tax payable before the tax authority orders it to do so, it shall be deemed that such enterprise has paid its tax payable in time.

We face uncertainties on the reporting and consequences of future private equity financing transactions, share exchanges or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation and request our PRC subsidiaries to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed under SAT Public Notice 7 and SAT Public Notice 37, and may be required to expend valuable resources to comply with them or to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse effect on our financial condition and results of operations.

**Risks Related to Our ADSs and This Offering** 

***There has been no public market for our shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.***

Prior to this initial public offering, there has been no public market for our shares or ADSs. We will apply to list our ADSs on the Nasdaq Stock Market. Our shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs will be materially and adversely affected.

Negotiations with the underwriters will determine the initial public offering price for our ADSs which may bear no relationship to their market price after the initial public offering. We cannot assure you that an active trading market for our ADSs will develop or that the market price of our ADSs will not decline below the initial public offering price.

Carmignac Gestion, an asset manager established in France and licensed as a UCITS management company and alternative investment fund manager (AIFM), has indicated, on behalf of certain mutual funds it manages, an interest in subscribing for an aggregate of up to US$30 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. In addition, Snow Lake Management LP, an affiliate of certain of our existing shareholders, has indicated, on behalf of Snow Lake China Master Fund, Ltd. and Snow Lake China Master Long Fund, Ltd., an interest in subscribing for an aggregate of up to US$20 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. Assuming an initial public offering price of US$ per ADS, the midpoint of the estimated initial public offering price range, the number of ADSs to be purchased by these investors would be up to ADSs, which represents approximately % of the ADSs being offered in this offering, assuming the underwriters do not exercise their over-allotment option. Because the indications of interest are not binding agreements or commitments to purchase, such investors may determine to purchase more, fewer or no ADSs in this offering, and we and the underwriters are under no obligation to sell ADSs to them. Such subscriptions may reduce the available public float for the ADSs, which may consequently reduce the liquidity of the ADSs relative to what it would have been had these ADSs been subscribed by the public.

***The trading price of our ADSs may be volatile, which could result in substantial losses to you.***

The trading price of our ADSs can be volatile and fluctuate widely in response to a variety of factors, many of which are beyond our control. In addition, the performance and fluctuation of the market prices of other

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companies with business operations located mainly in the PRC that have listed their securities in the United States may affect the volatility in the price of and trading volumes for our ADSs. Some of these companies have experienced significant volatility. The trading performances of these PRC companies' securities may affect the overall investor sentiment towards other PRC companies listed in the United States and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.

In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory developments affecting us or our industry, customers, suppliers or other business partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements of studies and reports relating to the quality of our products and services or those of our
competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the economic performance or market valuations of our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our
expected results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in financial estimates by securities research analysts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• conditions in the pet care industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements by us or our competitors of acquisitions, strategic relationships, joint ventures, capital raisings
or capital commitments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• additions to or departures of our senior management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fluctuations of exchange rates between the RMB and the U.S. dollar;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• release or expiry of lock-up or other transfer restrictions on our issued
and outstanding shares or ADSs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales or perceived potential sales of additional ordinary shares or ADSs.

Furthermore, volatility in the trading price of our ADSs may cause dissatisfaction among the direct or indirect beneficial owners in our equity interest who became such owners by receiving direct or indirect beneficial ownership in our equity interest as consideration paid for certain of our acquisitions and who may be unable to liquidate the ordinary shares they own in a timely manner to maximize their profits. They may thus act against our interest, including harming our reputation.

***The concentration of our share ownership among executive officers, directors, and principal shareholders and their affiliated entities will likely limit your ability to influence corporate matters and could discourage others from pursuing any change of control transaction that holders of our ordinary shares and ADSs may view as beneficial.***

Our executive officers, directors, principal shareholders and their affiliated entities together beneficially own over 60% of our outstanding ordinary shares on an as-converted basis prior to this offering. Upon the completion of this offering and the concurrent conversion of the IPO Conversion Amount of the Nestlé Conversion Note, our executive officers, directors, principal shareholders and their affiliated entities together will beneficially own approximately % of our total outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option, or % of our total outstanding ordinary shares if the underwriters exercise their over-allotment option in full, without taking into account the ADSs that the existing shareholders or their affiliates may purchase in this offering. As a result of the concentration of ownership, these shareholders will have considerable influence over matters such as decisions regarding mergers and consolidations, amendments to our constitutional documents, election of directors and other significant corporate actions. Such shareholders may take actions that are not in the best interest of us or our other shareholders. This concentration

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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 our ordinary shares and ADSs may view as beneficial.

***If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.***

The trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our ADSs or publishes inaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ADSs to decline.

***Because our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.***

If you purchase ADSs in this offering, you will pay more for your ADSs than the amount paid by our existing shareholders for their ordinary shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of US$ per ADS, representing the difference between the initial public offering price of US$ per ADS and our adjusted net tangible book value per ADS as of September 30, 2022, after giving effect to our sale of the ADSs offered in this offering and the conversion of the IPO Conversion Amount of the Nestlé Convertible Note. In addition, you may experience further dilution to the extent that our ordinary shares are issued upon the exercise of share options. See "Dilution" for a more complete description of how the value of your investment in the ADSs will be diluted upon completion of this offering.

***Techniques employed by short sellers may drive down the market price of the ADSs.***

Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller's interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.

Public companies that have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller untrue attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of

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commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations, and any investment in the ADSs could be greatly reduced or even rendered worthless.

***Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on price appreciation of our ADSs for return on your investment.***

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering 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 our 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 of the company, provided that in no circumstances may a dividend be paid out of share premium if this would result in the 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 our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

***Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.***

Sales of our ADSs in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have ordinary shares issued and outstanding, including ordinary shares represented by ADSs, assuming the underwriters do not exercise their over-allotment option. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the United States Securities Act of 1933, as amended, or the Securities Act. The remaining ordinary shares issued and outstanding after this offering will be available for sale, upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities Act. Any or all of these shares may be released prior to the expiration of the lock-up period at the discretion of the representatives of the underwriters of this offering. To the extent shares are released before the expiration of the lock-up period and sold into the market, the market price of our ADSs could decline.

After completion of this offering, certain holders of our ordinary shares may cause us to register under the Securities Act the sale of their shares, subject to the 180-day lock-up period in connection with this offering. Registration of these shares under the Securities Act would result in ADSs representing these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the form of ADSs in the public market could cause the price of our ADSs to decline.

***The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise the same rights as our shareholders.***

Holders of ADSs do not have the same rights as our shareholders. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. As an

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ADS holder, you will only be able to exercise the voting rights carried by the underlying ordinary shares which are 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. Upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying ordinary shares represented by your ADSs in accordance with your instructions. You will not be able to directly exercise your right to vote with respect to the underlying ordinary shares represented by your ADSs unless you withdraw such ordinary shares, and become the registered holder of such ordinary 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 ordinary 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 post-offering memorandum and articles of association that will become effective immediately prior to completion of this offering, 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 ordinary shares represented by your ADSs and becoming the registered holder of such ordinary shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. 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 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 ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying ordinary shares represented by your ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to requisition a shareholders' meeting. Except in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote the underlying ordinary shares represented by your ADSs if you do not vote at shareholders' meetings, which could adversely affect your interests.

Under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote the ordinary shares underlying your ADSs at shareholders' meetings unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have instructed the depositary that we do not wish a discretionary proxy to be given;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have informed the depositary that there is substantial opposition as to a matter to be voted on at the
meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a matter to be voted on at the meeting would have a material adverse impact on shareholders; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the voting at the meeting is to be made on a show of hands.

The effect of this discretionary proxy is that you cannot prevent the ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for ADS holders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

***Forum selection provisions in our post-offering memorandum and articles of association and our deposit agreement with the depositary bank could limit the ability of holders of our ordinary shares, ADSs or other securities to obtain a favorable judicial forum for disputes with us, our directors and officers, the depositary bank, and potentially others.***

Our post-offering memorandum and articles of association provide that the federal district courts of the United States are the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising under the Securities Act and the Exchange Act. Our agreement with the depositary bank

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also provides that the United States District Court for the Southern District of New York (or in the state courts in New York County in New York if either (i) the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, or (ii) the designation of the United States District Court for the Southern District of New York as the exclusive forum for any particular dispute is, or becomes, invalid, illegal or unenforceable) is the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act. However, the enforceability of similar federal court choice of forum provisions has been challenged in legal proceedings in the United States, and it is possible that a court could find this type of provision to be inapplicable, unenforceable, or inconsistent with other documents that are relevant to the filing of such lawsuits. If a court were to find the federal choice of forum provision contained in our post-offering memorandum and articles of association or our deposit agreement with the depositary bank to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. If upheld, the forum selection clause in our post-offering memorandum and articles of association, as well as the forum selection provisions in the deposit agreement, may limit a security-holder's ability to bring a claim against us, our directors and officers, the depositary bank, and potentially others in his or her preferred judicial forum, and this limitation may discourage such lawsuits. In addition, the Securities Act provides that both federal and state courts have jurisdiction over suits brought to enforce any duty or liability under the Securities Act or the rules and regulations thereunder. Accepting or consent to this forum selection provision does not constitute a waiver by you of compliance with federal securities laws and the rules and regulations thereunder. You may not waive compliance with federal securities laws and the rules and regulations thereunder. The exclusive forum provision in our post-offering memorandum and articles of association will not operate so as to deprive the courts of the Cayman Islands from having jurisdiction over matters relating to our internal affairs.

***ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.***

The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including, without limitation any suit, action, claim or proceeding under the U.S. federal securities laws.

If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waive the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the deposit agreement.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary, lead to increased costs to bring a claim, limited access to information and other imbalances of resources between such holder and us, or limit such holder's ability to bring a claim in a judicial forum that such holder finds favorable. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

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Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs shall relieve us or the depositary from our respective obligations to comply with the Securities Act and the Exchange Act nor serve as a waiver by any holder or beneficial owner of ADSs of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

***We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, or to terminate the deposit agreement, without the prior consent of the ADS holders.***

We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement, without the prior consent of the ADS holders. We and the depositary may agree to amend the deposit agreement in any way we decide is necessary or advantageous to us. Amendments may reflect, among other things, operational changes in the ADS program, legal developments affecting ADSs or changes in the terms of our business relationship with the depositary. In the event that the terms of an amendment impose or increase fees, charges or expenses (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, a transaction fee per cancellation request (including through SWIFT, telex or facsimile transmission), applicable delivery expenses or other such fees, charges or expenses) or that would otherwise prejudice any substantial existing right of the ADS holders, such amendment will not become effective as to outstanding ADSs until the expiration of 30 days after notice of that amendment has been disseminated to the ADS holders, but no prior consent of the ADS holders is required under the deposit agreement. Furthermore, we may decide to terminate the ADS facility at any time for any reason. For example, terminations may occur when the ADSs are delisted from the stock exchange in the United States on which the ADSs are listed and we do not list the ADSs on another stock exchange in the United States, nor is there a symbol available for over-the-counter trading of the ADSs in the United States. If the ADS facility will terminate, ADS holders will receive at least 90 days' prior notice, but no prior consent is required from them. Under the circumstances that we decide to make an amendment to the deposit agreement that is disadvantageous to ADS holders or terminate the deposit agreement, the ADS holders may choose to sell their ADSs or surrender their ADSs and become direct holders of the underlying ordinary shares, but will have no right to any compensation whatsoever.

***Your rights to pursue claims against the depositary as a holder of ADSs are limited by the terms of the deposit agreement.***

Under the deposit agreement, any legal suit, action or proceeding against or involving us or the depositary, arising out of or relating in any way to the deposit agreement or the transactions contemplated thereby or by virtue of owning the ADSs may only be instituted in the United States District Court for the Southern District of New York (or in the state courts in New York County in New York if either (i) the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute or (ii) the designation of the United States District Court for the Southern District of New York as the exclusive forum for any particular dispute is, or becomes, invalid, illegal or unenforceable), and you, as a holder of the ADSs, will have irrevocably waived any objection which you may have to the laying of venue of any such proceeding, and irrevocably submitted to the exclusive jurisdiction of such courts in any such action or proceeding. It is possible that a court could find this type of forum selection provision to be inapplicable, unenforceable, or inconsistent with other documents that are relevant to the filing of such lawsuits. For risks related to the enforceability of such exclusive forum selection provision, please see "—Forum selection provisions in our post-offering memorandum and articles of association and our deposit agreement with the depositary bank could limit the ability of holders of our ordinary shares, ADSs or other securities to obtain a favorable judicial forum for disputes with us, our directors and officers, the depositary bank, and potentially others." Accepting or consent to this forum selection provision does not constitute a waiver by you of compliance with federal securities laws and the rules and regulations thereunder. You may not waive compliance with federal securities laws and the rules and regulations thereunder.

The deposit agreement provides that the depositary or an ADS holder may require any claim asserted by it against us arising out of or relating to our ordinary shares, the ADSs or the deposit agreement be referred to and

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finally settled by an arbitration conducted under the terms described in the deposit agreement, although the arbitration provisions do not preclude you from pursuing any claim, including claims under the Securities Act or the Exchange Act in the United States District Court for the Southern District of New York (or in the state courts in New York County in New York if either (i) the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute or (ii) the designation of the United States District Court for the Southern District of New York as the exclusive forum for any particular dispute is, or becomes, invalid, illegal or unenforceable). The exclusive forum selection provisions in the deposit agreement also do not affect the right of any party to the deposit agreement to elect to submit a claim against us to arbitration, or our duty to submit that claim to arbitration, as provided in the deposit agreement, or the right of any party to an arbitration under the deposit agreement, to commence an action to compel that arbitration, or to enter judgment upon or to enforce an award by the arbitrators, in any court having jurisdiction over an action of that kind. See "Description of American Depositary Shares" for more information.

***You may not receive cash dividends if the depositary decides it is impractical to make them available to you.***

The depositary will pay cash distributions on the ADSs only to the extent that we decide to distribute dividends on our ordinary shares or other deposited securities, and we do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. To the extent that there is a distribution, the depositary has agreed to pay you the cash dividends or other distributions it or the custodian receives on our shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent. However, the depositary may, at its discretion, decide that it is inequitable or impractical to make a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property to you.

***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 with limited liability. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands, which we refer to as the Companies Act, 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.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and the register of mortgages and charges) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our post-offering articles of association that will become effective immediately prior to completion of this offering 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.

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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 Act and the laws applicable to companies incorporated in the United States and their shareholders, see "Description of Share Capital—Differences in Corporate Law."

***You may be subject to limitations on transfer of your ADSs.***

Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems 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. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it 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.

***Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.***

We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to you in the United States unless we register both the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Under the deposit agreement, the depositary will not make rights available to you unless both the rights and the underlying securities to be distributed to ADS holders are either registered under the Securities Act or exempt from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective and we may not be able to establish a necessary exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

***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 prospectus based on foreign laws.***

We are an exempted company incorporated under the laws of the Cayman Islands. However, we conduct almost all of our operations outside the United States and a majority of our assets are located in China. In addition, substantially all of our executive officers and directors reside within China for a significant portion of the time and are PRC nationals. As a result, it may be difficult for you to effect service of process upon us or our management residing in China 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 the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. In addition, China does not have treaties providing for reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

***We have not determined a specific use for a portion of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.***

We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the

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opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase our ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

***The post-offering memorandum and articles of association that will become effective immediately prior to the completion of this offering will contain anti-takeover provisions that could discourage a third party from acquiring us and adversely affect the rights of holders of our ordinary shares and the ADSs.***

We will adopt the tenth amended and restated memorandum and articles of association that will become effective immediately prior to the completion of this offering, which we refer to as our post-offering memorandum and articles of association. Our post-offering memorandum and articles of association will contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change of control transactions. 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 ordinary shares, in the form of 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 our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.

***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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect
of a security registered under the Exchange Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the selective disclosure rules by issuers of material nonpublic information under Regulation FD promulgated by
SEC.

We will be 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 the Nasdaq Stock Market. 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.

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***As an exempted 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 Stock Market's corporate governance requirements; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Stock Market's corporate governance requirements.***

As a Cayman Islands company listed on the Nasdaq Stock Market, we are subject to the Nasdaq Stock Market's corporate governance listing standards. However, Nasdaq Stock Market's 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 Stock Market's corporate governance listing standards. If we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq Stock Market's corporate governance listing standards applicable to U.S. domestic issuers.

***There can be no assurance that we will not be a passive foreign investment company for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ADSs or ordinary shares.***

A non-U.S. corporation, such as our company, will be a "passive foreign investment company," or "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 its average assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. 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 and other unbooked intangibles are generally taken into account when determining the value of its assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

Based upon our current and projected income and assets, including the expected cash proceeds from this offering, and projections as to the value of our assets, taking into account the projected market value of our ADSs following this offering, we do not expect to be a PFIC for the current taxable year. However, because PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and assets, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

If we are a PFIC for any taxable year during which a U.S. Holder (as defined in "Taxation—U.S. Federal Income Tax Considerations") holds our ADSs or ordinary shares, the PFIC tax rules discussed under "Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules" will generally apply to such U.S. Holder for such taxable year and, unless the U.S. Holder makes a "mark-to-market" election, will generally apply in future years even if we cease to be a PFIC. See the discussion under "Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules" concerning the U.S. federal income tax considerations of an investment in our ADSs or ordinary shares if we are or become a PFIC and the possibility of making such election.

***We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.***

As a company with less than US$1.235 billion in revenues for our last fiscal year, we qualify as an "emerging growth company" pursuant to the JOBS Act. Therefore, we 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

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reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies. As a result, if we elect not to comply with such reporting and other requirements, in particular the auditor attestation requirements, our investors may not have access to certain information they may deem important.

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 do not plan to "opt out" of such exemptions afforded to an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

***We will incur increased costs and become subject to additional rules and regulations as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."***

Upon completion of this offering, we will become a public company and expect to 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 Securities and Exchange Commission, or the SEC, the Nasdaq Stock Market, impose various requirements on the corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly.

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. We also expect that operating as a public company will make 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 will 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 currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the number of additional costs we may incur or the timing of such costs.

In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company's securities. If we were to be involved in a class action suit, it would possibly divert a significant amount of our management's attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. 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 and adverse effect on our financial condition and results of operations.

In addition, as an emerging growth company, we will still incur expenses in relation to management assessment according to requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002. After we are no longer an "emerging growth company," we expect to incur additional significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS** 

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." Known and unknown risks, uncertainties and other factors, including those listed under "Risk Factors," may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases 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 that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our goals and strategies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our future business development, financial condition and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trends in, expected growth and the market size of the pet industry and pet care industry, both in the PRC and
globally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectation regarding the prospects of our business model, and demand for and market acceptance of our
services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding the effectiveness of our marketing initiatives and the relationship with our
third-party business partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• competition in our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• relevant government policies and regulations relating to our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic and business conditions globally and in China; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assumptions underlying or related to any of the foregoing.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in "Prospectus Summary—Summary of Risk Factors," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," "Regulation" and other sections in this prospectus. You should read thoroughly this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The pet industry and pet care industry may not grow at the rate projected by market data, or at all. Failure of these markets to grow at the projected rate may have a material and adverse effect on our business and the market price of our ADSs. In addition, the rapidly evolving nature of the pet industry and pet care industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to

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update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

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**USE OF PROCEEDS** 

We estimate that we will receive net proceeds from this offering of approximately US$ million, or approximately US$ million if the underwriters exercise their option to purchase additional ADSs in full, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$ per ADS, which is the mid-point of the price range shown on the cover page of this prospectus. A US$1.00 increase (decrease) in the assumed initial public offering price of US$ per ADS would increase (decrease) the net proceeds to us from this offering by US$ , assuming the number of ADSs offered by us as set forth on the cover page of this prospectus remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The primary purposes of this offering are to create a public market for our shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives, and obtain additional capital. We plan to use the net proceeds of this offering as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately 35% for strengthening our brand, expanding our pet hospital network in China, and further upgrading
our pet care services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately 20% for investing in our supply chain service and local services capabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately 20% for exploring new initiatives including upstream and downstream business opportunities as well
as global expansion, although we have not identified any specific opportunities including mergers and acquisitions at this time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately 15% for research and development to enhance digitalization and technology, especially in smart
treatment, online platform and data insight; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately 10% for working capital and other general corporate purposes.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. See "Risk Factors—Risks Related to Our ADSs and This Offering—We have not determined a specific use for a portion of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree."

In using the proceeds of this offering, we are permitted under PRC laws and regulations as an offshore holding company to provide funding to our PRC subsidiaries only through loans or capital contributions, subject to satisfaction of applicable government registration and approval requirements. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, or at all. See "Risk Factors—Risks Related to Doing Business in China— PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business."

Pending any use described above, we plan to invest the net proceeds from this offering in short-term, interest-bearing, debt instruments or demand deposits.

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**DIVIDEND POLICY** 

Our board of directors has complete discretion on whether to pay dividends, subject to certain requirements of 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. In addition, our shareholders may by an ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Even if our board of directors decides to pay dividends on our ordinary shares, 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 our board of directors may deem relevant.

We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. 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 "Regulation—Regulations on Foreign Exchange."

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 our ADS holders in proportion to the 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 "Description of American Depositary Shares." Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

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**CAPITALIZATION** 

The following table sets forth our capitalization as of September 30, 2022:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on an actual basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on a pro forma basis to reflect the conversion of all of our outstanding Class A ordinary shares and Class B
ordinary shares, on a one-for-one basis, into our ordinary shares immediately upon the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on a pro forma as adjusted basis to reflect (i) the conversion of all of our outstanding Class A ordinary
shares and Class B ordinary shares, on a one-for-one basis, into our ordinary shares immediately upon the completion of this offering, (ii) the sale of
 ordinary shares represented by ADSs by us in this offering at an assumed initial public offering price of US$
 per ADS, which is the mid-point of the estimated range of the initial public offering price shown on the cover page of this prospectus,
after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, assuming the underwriters do not exercise their option to purchase additional ADSs, and (iii) the issuance of
 ordinary shares to the holder of the Nestlé Convertible Note upon the automatic conversion of the IPO Conversion Amount concurrently with the completion of this offering,
calculated based on an assumed initial public offering price of US$ per ADS.

You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations."

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** |
|  | **Actual** | **Actual** | **Pro Forma** | **Pro Forma** | **Pro Forma As<br>Adjusted<sup>(1)</sup>** | **Pro Forma As<br>Adjusted<sup>(1)</sup>** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  | **RMB** | **US$** | **RMB** | **US$** | **RMB** | **US$** |
|  **Redeemable ordinary shares:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redeemable ordinary shares - par value of US$0.000001 per share; 8,044,516,894 shares issued and outstanding; liquidation preference of RMB9,973,789 (US$1,402,093) | 8814747 | 1239158 |  |  |  |  |
|  **Other shareholders' deficit:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ordinary shares - par value of US$0.000001 per share; 50,000,000,000 shares authorized, 5,519,763,566 shares issued and 5,422,013,363 outstanding (excluding those reflected as redeemable ordinary shares) | 37 | 5 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital<sup>(2)</sup> | 1451333 | 204025 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasury shares: 97,750,203 shares |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated - other comprehensive loss | (273250) | (38413) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit | (4927072) | (692636) |  |  |  |  |
|  **Total New Ruipeng Pet Group Inc. shareholders' deficit** | **(3748952)** | **(527019)** |  |  |  |  |
|  Non-controlling interests | 48975 | 6884 |  |  |  |  |
|  **Total other shareholders' deficit<sup>(2)</sup>** | **(3699977)** | **(520135)** |  |  |  |  |
|  **Total capitalization** | **5114770** | **719023** |  |  |  |  |

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Notes:

(1) The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital, total shareholders' equity and total capitalization following the completion of this offering are subject to adjustment based on the actual initial public offering price of our ADSs and other
terms of this offering determined at pricing.

(2) A US$1.00 increase (decrease) in the assumed initial public offering price of
US$ per ADS, the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) each of additional paid-in capital, total shareholders' equity, total equity and total capitalization by US$ million.

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**DILUTION** 

If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

Our net tangible book value as of September 30, 2022 was approximately US$ , or US$ per ordinary share as of that date and US$ per ADS. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting net tangible book value per ordinary share, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price of US$ per ordinary share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus adjusted to reflect the ADS-to-ordinary share ratio, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Without taking into account any other changes in net tangible book value after September 30, 2022, other than to give effect to (i) our sale of the ADSs offered in this offering at the assumed initial public offering price of US$ per ADS, which is the midpoint of the estimated range of the initial public offering price, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the issuance of ordinary shares to the holder of the Nestlé Convertible Note upon the automatic conversion of the IPO Conversion Amount concurrently with the completion of this offering, calculated based on an assumed initial public offering price of US$ per ADS, our pro forma as adjusted net tangible book value as of September 30, 2022 would have been US$ , or US$ per ordinary share and US$ per ADS. This represents an immediate increase in net tangible book value of US$ per ordinary share and US$ per ADS to the existing shareholders and an immediate dilution in net tangible book value of US$ per ordinary share and US$ per ADS to investors purchasing ADSs in this offering. The following table illustrates such dilution:

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| | | |
|:---|:---|:---|
|  | **Per Ordinary<br>Share** | **Per ADS** |
|  Assumed initial public offering price | US$ | US$ |
|  Net tangible book value as of September 30, 2022 | US$ | US$ |
|  Pro forma net tangible book value as of September 30, 2022 | US$ | US$ |
|  Pro forma as adjusted net tangible book value after giving effect to this offering and the conversion of the IPO Conversion Amount of the Nestlé Convertible Note | US$ | US$ |
|  Amount of dilution in net tangible book value to new investors in this offering | US$ | US$ |

---

A US$1.00 increase (decrease) in the assumed initial public offering price of US$ per ADS would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to this offering by US$ , the pro forma as adjusted net tangible book value per ordinary share and per ADS after giving effect to this offering by US$ per ordinary share and US$ per ADS and the dilution in pro forma as adjusted net tangible book value per ordinary share and per ADS to new investors in this offering by US$ per ordinary share and US$ per ADS, assuming no change to the number of ADSs offered by us as set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and other offering expenses.

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The following table summarizes, on a pro forma as adjusted basis as of September 30, 2022, the differences between existing shareholders and the new investors with respect to the number of ordinary shares (represented by ADSs or shares) purchased from us, the total consideration paid and the average price per ordinary share and per ADS paid before deducting the underwriting discounts and commissions and estimated offering expenses. The total number of ordinary shares does not include ordinary shares underlying the ADSs issuable upon the exercise of the over-allotment option granted to the underwriters.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Ordinary Shares<br>Purchased** | **Ordinary Shares<br>Purchased** | **Total Consideration** | **Total Consideration** | **Average<br>Price Per<br>Ordinary<br>Share** | **Average<br>Price Per<br>ADS** |
|  | **Number** | **Percent** | **Amount** | **Percent** | **Average<br>Price Per<br>Ordinary<br>Share** | **Average<br>Price Per<br>ADS** |
|  Existing shareholders |  |  | US$% |  | US$ | US$ |
|  New investors |  |  | US$% |  | US$ | US$ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total |  |  | US$ | 100.0% |  |  |

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The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering determined at pricing.

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**ENFORCEABILITY OF CIVIL LIABILITIES** 

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws than the United States and provides less protection for investors as compared to the United States. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.

All of our assets are located outside the United States. In addition, all of our directors and officers are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce 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.

We have appointed Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168 as our agent to receive service of process with respect to any action brought against us in the U.S. District Court for the Southern District of New York in connection with this offering under the federal securities laws of the United States or the securities laws of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York in connection with this offering under the securities laws of the State of New York.

Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.

Maples and Calder (Hong Kong) LLP has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the liquidated sum for which such judgment has been given, provided such judgment (i) is final and conclusive, (ii) is not in respect of taxes, a fine or a penalty; and (iii) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

Haiwen & Partners, our counsel as to PRC law, has advised us that there is uncertainty as to whether the courts of China would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

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Haiwen & Partners has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. The 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 form of reciprocal arrangements with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in China 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 law 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 or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may initiate actions based on PRC law before a PRC court against a company for disputes, if the plaintiff can establish a sufficient contact with China for a PRC court to exercise jurisdiction and has a direct interest, cause of action and a concrete claim. The action may be initiated by a shareholder through filing a complaint with the PRC court. The PRC court will determine whether to accept the complaint in accordance with the PRC Civil Procedures Law. The shareholder may participate in the action by itself or entrust any other person or PRC legal counsel to participate on behalf of such shareholder. In addition, it will be difficult for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our ADSs or ordinary shares, to establish a connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

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**CORPORATE HISTORY AND STRUCTURE** 

We commenced operations in December 1998 through Ruipeng Pet Hospital, a pet hospital brand founded in Shenzhen, Guangdong province by Mr. Yonghe Peng, our founder, co-chairman of the board of directors and president. From 1999 to 2012, we kept expanding our pet hospital network in Guangdong province. In 2013, we expanded our geographical reach from Guangdong province to cities in other southern provinces in China. In 2016, we acquired Meilianzhonghe, one of the most influential and iconic brands in China's pet care industry, and expanded to northern China.

To facilitate offshore listing, we incorporated Ruipeng Pet Group Inc. in June 2019 under the laws of the Cayman Islands as our offshore holding company. On December 31, 2019, we completed the acquisition of Skyfield Group, a China-based pet hospital group. Upon the completion of the acquisition, Skyfield Group became a wholly owned subsidiary of Ruipeng Pet Group Inc. and several major pet hospital brands such as Ainuo, Anan, Naja and Puppy Town were integrated into our pet hospital network.

In connection with the acquisition of Skyfield Group, we completed a series of offshore and onshore restructuring transactions. As a result of such transactions, our operating subsidiaries in the PRC are now direct or indirect subsidiaries of Skyfield (Shanghai) Investment Co., Ltd. and New Ruipeng Pet Healthcare Group Co., Ltd., our PRC holding companies, or the PRC Holding Companies. We hold 100% or majority equity interests in the PRC Holding Companies through HHRP Holdings (Cayman) Inc., HHRP Holdings Limited, Skyfield Holdings (Cayman) Inc. and Skyfield Holdings Limited, our offshore intermediary holding entities.

In August 2021, we changed the name of our Cayman Islands holding company from Ruipeng Pet Group Inc. to New Ruipeng Pet Group Inc.

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The following diagram illustrates our corporate structure, including our principal subsidiaries, as of the date of this prospectus:

![LOGO](g148072g15j67.jpg)

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Notes:

(1) Primarily engages in pet care services through its subsidiaries and/or branches.

(2) Shenzhen Great Sun Network Technology Co., Ltd., through its subsidiary, primarily engages in pet-related big data research and development.

(3) Jichongjia (Shanghai) Enterprise Management Co., Ltd. and Nanjing Jichongjia Intelligent Technology Co., Ltd.,
through subsidiaries and/or branches, primarily engage in local services business.

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(4) Runhe Supply Chain Group Co. Ltd., through subsidiaries and/or branches, primarily engages in pet product and
equipment supply chain management business. Shenzhen Hewang Enterprise Management Center (Limited Partnership), Shenzhen Runjia Management Consulting Partnership (Limited Partnership), Shenzhen Zekai Management Center (Limited Partnership), Shenzhen
Heqi Enterprise Management Center (Limited Partnership), and Shenzhen Yirun Enterprise Management Center (Limited Partnership), each a limited partnership incorporated in the PRC, hold the remaining 3.41%, 2.94%, 2.17%, 1.19% and 0.75% equity
interests in Runhe Supply Chain Group Co. Ltd., respectively. Each of Shenzhen Hewang Enterprise Management Center (Limited Partnership), Shenzhen Heqi Enterprise Management Center (Limited Partnership) and Shenzhen Zekai Management Center (Limited
Partnership) is owned by certain minority shareholders of our company.

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**SELECTED CONSOLIDATED FINANCIAL DATA** 

The following selected consolidated statements of net loss data for the years ended December 31, 2020 and 2021, selected consolidated balance sheets data as of December 31, 2020 and 2021 and selected consolidated statements of cash flow data for the years ended December 31, 2020 and 2021 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated statements of net loss data for the nine months ended September 30, 2021 and 2022, summary consolidated balance sheet data as of September 30, 2022 and summary consolidated cash flow data for the nine months ended September 30, 2021 and 2022 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus and have been prepared on the same basis as our audited consolidated financial statements. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States. Our historical results are not necessarily indicative of results expected for future periods. You should read this Selected Consolidated 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 prospectus.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
|  **Selected Consolidated Statements of Net Loss Data:** |  |  |  |  |  |  |
|  **Revenues** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | 2053955 | 2973521 | 418011 | 2147330 | 2284246 | 321115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product**  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | 591732 | 1280311 | 179983 | 880852 | 1573222 | 221160 |
|  Local services | 362598 | 529839 | <br> 74484 | <br> 371479 | 457649 | <br>64335 |
|  **Total revenues** | **3008285** | **4783671** | **672478** | **3399661** | **4315117** | **606610** |
|  **Cost of revenues** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | (1969207) | (2872948) | (403872) | (2066671) | (2279401) | (320433) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product**  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | (508356) | (1133886) | (159399) | (764012) | (1392209) | (195714) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | (388241) | (553676) | (77835) | (397544) | (424724) | (59707) |
|  **Total cost of revenues** | **(2865804)** | **(4560510)** | **(641106)** | **(3228227)** | **(4096334)** | **(575854)** |
|  **Gross profit** | **142481** | **223161** | **31372** | **171434** | **218783** | **30756** |
|  **Operating expenses:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and marketing  | (174720) | (357173) | (50211) | (222616) | (282419) | (39702) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative  | (895681) | (1136143) | (159716) | (796680) | (907933) | (127635) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development  | (52332) | (82656) | (11620) | (57662) | (92727) | (13035) |
|  **Total operating expenses** | **(1122733)** | **(1575972)** | **(221547)** | **(1076958)** | **(1283079)** | **(180372)** |
|  **Loss from operations** | **(980252)** | **(1352811)** | **(190175)** | **(905524)** | **(1064296)** | **(149616)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 18593 | 34493 | 4848 | 30242 | 18491 | 2599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (12993) | (32631) | (4587) | (22479) | (55818) | (7847) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) | 1471 | (390) | (55) | (585) | (6735) | (947) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net (loss) profit from equity method investments | (290) | (626) | (88) | (2778) | 2176 | 306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions | 6609 | 54337 | 7639 | 54337 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | (21277) | (2123) | (298) | (681) |  |  |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long- term investments | **—** | 509 | 72 | 2861 | 217 | 31 |
|  **Loss before income taxes** | **(988139)** | **(1299242)** | **(182644)** | **(844607)** | **(1105965)** | **(155474)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expenses | (11645) | (12014) | (1689) | (11984) | (3393) | (477) |
|  **Net loss** | **(999784)** | **(1311256)**  | **(184333)** | **(856591)** | **(1109358)** | **(155951)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to non-controlling interests | 26375 | 14103 | 1983 | 9452 | 14034 | 1973 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) on foreign currency denominated redeemable ordinary shares | (186396) | (74390) | (10458) | (19450) | 339473 | 47722 |
|  **Net loss attributable to Ruipeng Pet Group Inc.** | **(1159805)** | **(1371543)** | **(192808)** | **(866589)** | **(755851)** | **(106256)** |
|  **Net loss per share attributable to ordinary shares:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | (0.10) | (0.11) | (0.02) | (0.07) | (0.06) | (0.01) |
|  **Weighted average shares used to compute net loss per share attributable to ordinary shares:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 5179509953 | 5008056549 | 5008056549 | 4868768293 | 5422013363 | 5422013363 |

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##### [**Table of Contents**](#toc)
The following table presents our selected consolidated statements of balance sheet data as of December 31, 2020 and 2021 and September 30, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of September 30,** | **As of September 30,** |
|  | **2020** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Selected Consolidated Statements of Balance Sheet Data:** |  |  |  |  |  |
|  **Current assets:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 4024308 | 772640 | 108616 | 855947 | 120327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted cash |  | 914725 | 128590 | 1571701 | 220946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term investments |  | 893598 | 125620 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net | 92713 | 125872 | 17695 | 122060 | 17159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | 423646 | 729935 | 102612 | 665445 | 93547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 416920 | 720752 | 101322 | 568096 | 79862 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties | 8246 | 916 | 129 |  |  |
|  **Total current assets** | **4965833** | **4158438** | **584584** | **3783249** | **531841** |
|  **Total assets** | **8696870** | **9494692** | **1334743** | **11146028** | **1566884** |
|  **Current liabilities:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term bank borrowings | 350000 | 1392280 | 195724 | 1893788 | 266225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | 180654 | 237759 | 33423 | 227837 | 32029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable | 12244 | 1920 | 270 | 1697 | 239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities |  | **—** | **—** | 471100 | 66226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities | 234778 | 355722 | 50007 | 350891 | 49327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 1151283 | 1535527 | 215861 | 1518964 | 213532 |
|  **Total current liabilities** | **1928959** | **3523208** | **495285** | **4464277** | **627578** |
|  **Total liabilities** | **1934179** | **3532626** | **496609** | **6031258** | **847861** |
|  **Redeemable ordinary shares** | **8361156** | **8243339** | **1158830** | **8814747** | **1239158** |
|  **Total Ruipeng Pet Group Inc. shareholders' deficit** | **(1718562)** | **(2334895)**  | **(328234)** | **(3748952)** | **(527019)** |
|  **Non-controlling interests** | **120097** | **53622** | **7538** | **48975** | **6884** |
|  **Total other shareholders' deficit** | **(1598465)** | **(2281273)**  | **(320696)** | **(3699977)** | **(520135)** |
|  **Total liabilities, redeemable ordinary shares and other shareholders' deficit** | **8696870** | **9494692** | **1334743** | **11146028** | **1566884** |

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##### [**Table of Contents**](#toc)
The following table presents our selected consolidated statements of cash flow data for the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2021 and 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  **Selected Consolidated Statements of Cash Flow Data:** |  |  |  |  |  |  |
|  Net cash used in operating activities | (476107) | (1166773) | (164022) | (810911) | (502096) | (70584) |
|  Net cash (used in) provided by investing activities | (338966) | (2099295) | (295114) | (2369766) | 571583 | 80352 |
|  Net cash provided by financing activities | 4033403 | 971849 | 136620 | 429106 | 455432 | 64024 |
|  Exchange rate effect on cash, cash equivalents and restricted cash | (167373) | (42724) | (6006) | (24327) | 215364 | 30275 |
|  Net increase (decrease) in cash, cash equivalents and restricted cash | 3050957 | (2336943) | (328522) | (2775898) | 740283 | 104067 |
|  Cash, cash equivalents and restricted cash at the beginning of the year/period  | 973351 | 4024308 | 565728 | 4024308 | 1687365 | 237206 |
|  Cash, cash equivalents and restricted cash at the end of the year/period | 4024308 | 1687365 | 237206 | 1248410 | 2427648 | 341273 |

---

**Non-GAAP Financial Measures** 

In evaluating our business, we consider and use Adjusted EBITDA and Adjusted EBITDA Margin as supplemental non-GAAP measures to review and assess our operating performance. The presentation of these non-GAAP measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define Adjusted EBITDA as net income, plus net interest expense, depreciation and amortization, and further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operations. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of our total revenues.

We present Adjusted EBITDA and Adjusted EBITDA Margin because they are used by our management to evaluate our operating performance and formulate business plans. These non-GAAP measures reflect the company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. We also believe that the use of these non-GAAP measures facilitate investors to understand and evaluate our current operating performance and future prospects in the same manner as management does, if they so choose. We also believe that these non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are non-recurring in nature or may not be indicative of our core operating results and business outlook.

These non-GAAP measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP measures have limitations as analytical tools. The non-GAAP adjustments to loss before income tax to arrive at the Adjusted EBITDA do not reflect all items of income and expense that affect our operations. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling Adjusted EBITDA to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

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The following table reconciles loss before income taxes to Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** |
|  | **2020** | **2021** | | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | <br> **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  **Reconciliation of loss before income taxes to Adjusted EBITDA and Adjusted EBITDA Margin:** |  |  |  |  |  |  |
|  **Loss before income taxes** | (988139) | (1299242) | (182644) | (844607) | (1105965) | (155474) |
|  Adjustments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 313943 | 356990 | 50185 | 260602 | 292352 | 41098 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 12993 | 32631 | 4587 | 22479 | 55818 | 7847 |
|  **EBITDA** | **(661203)** | **(909621)** | **(127872)** | **(561526)** | **(757795)** | **(106529)** |
|  Other Adjustments: |  |  |  |  |  |  |
|  *Non-cash costs*: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 5961 | 42114 | 5920 | 41518 | 1788 | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | 21277 | 2123 | 298 | 681 |  |  |
|  *Non-recurring costs*: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One-off non-capitalizable deal expenses related to financing<sup>(1)</sup> | 18537 | 12995 | 1827 | 1594 | 6384 | 898 |
|  **Adjusted EBITDA** | **(615428)** | **(852389)** | **(119827)** | **(517733)** | **(749623)** | **(105380)** |
|  **Adjusted EBITDA Margin** | **(20.5)%** | **(17.8)%** | **(17.8)%** | **(15.2)%** | **(17.4)%** | **(17.4)%** |

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Notes:

(1) One-off non-capitalizable deal expenses related to financing primarily consist of financial and legal
professional fees paid in connection with our financing.

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**MANAGEMENT'S DISCUSSION AND ANALYSIS OF** 

**FINANCIAL CONDITION AND RESULTS OF OPERATIONS** 

*You should read the following discussion and analysis of our financial condition and results of operations together with the section titled "Risk Factors," "Prospectus Summary—Summary Consolidated Financial Data," "Selected Consolidated Financial Data," and the consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled "Risk Factors" and in other parts of this prospectus. Our consolidated financial statements have been prepared in accordance with U.S. GAAP.* 

**Overview** 

We are the largest pet care platform in China and the second largest globally in terms of number of hospitals and revenue from pet care services in both 2020 and 2021, according to Frost & Sullivan. As of December 31, 2021, we had 23 pet hospital brands and 1,887 pet hospitals, approximately three times the sum of pet hospitals of our competitors that ranked the second through the tenth in China. By September 30, 2022, we had further increased our number of pet hospitals in China to 1,942. As of December 31, 2021, we had operations in 31 provinces and 111 cities, and we had an approximately 30% pet care market share in first-tier cities across China in 2021, according to Frost & Sullivan. As of September 30, 2022, we operated in 114 cities across China. We are the leading one-stop pet care platform in terms of number of pet hospitals, revenue and service scope, according to Frost & Sullivan, and a pioneer in building the infrastructure and standard for the pet industry.

We believe that our core business, namely pet care services, supply chain services and local services, are complementary and synergistic to each other. On the customer front, our well-developed pet care services form a high entry barrier, helping us accumulate a sizable customer base through top-notch pet medical services. Our pet care services and local services segments generate mutual traffic referrals and cross-selling. The supply chain services, on the other hand, empower pet care services and local services by lowering procurement costs and improving operating efficiency, which is made possible by our strong brand and centralized procurement capabilities. On the foundation of these three business pillars, we have expanded into third-party diagnosis, continued veterinary education services and marketing-as-a-service. We are committed to constructing a world-leading comprehensive pet services platform and a mutually beneficial and integrated pet ecosystem.

Our total revenues increased by 59.0% from RMB3,008.3 million in 2020 to RMB4,783.7 million (US$672.5 million) in 2021, and increased by 26.9% from RMB3,399.7 million in the nine months ended September 30, 2021 to RMB4,315.1 million (US$606.6 million) in the nine months ended September 30, 2022. Our gross profit increased significantly from RMB142.5 million in 2020 to RMB223.2 million (US$31.4 million) in 2021, and increased by 27.6% from RMB171.4 million in the nine months ended September 30, 2021 to RMB218.8 million (US$30.8 million) in the nine months ended September 30, 2022. Our net losses amounted to RMB999.8 million, RMB1,311.3 million (US$184.3 million), RMB856.6 million and RMB1,109.4 million (US$156.0 million) in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively, while net losses as a percentage of total revenues decreased from 33.2% in 2020 to 27.4% in 2021, and further decreased to 25.7% in the nine months ended September 30, 2022. As a testimony to our improving operational efficiency, our operating expenses as a percentage of total revenues also decreased from 37.3% in 2020 to 33.0% in 2021, and further decreased to 29.7% in the nine months ended September 30, 2022. Our Adjusted EBITDA was negative RMB615.4 million, negative RMB852.4 million (negative US$119.8 million), negative RMB517.7 million and negative RMB749.6 million (negative US$105.4 million) in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively, and our Adjusted EBITDA Margin improved from negative 20.5% in 2020 to negative 17.8% in 2021, and further improved to negative 17.4% in the nine months ended September 30, 2022. See "—Non-GAAP Financial Measures" for more information.

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**Key Factors Affecting Our Results of Operations** 

Our business, results of operations and financial condition are affected by general factors driving China's and global economy, the pet industry and the pet care industry. These factors include urbanization rate, demographics trend, levels of per capita disposable income, pet and pet care industry trends, customer pet purchase trends, levels of consumer spending, pet ownership rate, production and procurement costs, the competitive environment, and other general economic conditions in China and globally that affect consumption and business activities in general. Unfavorable changes in any of these general conditions could materially and adversely affect our results of operations.

While our business is influenced by general factors affecting our industry, our operating results are more directly affected by company specific factors, including the following major factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continuously expand our pet hospital network and strengthen our three-tier hierarchical system of
hospitals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to attract and retain customers and enhance customer experience;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to manage pet product supply chain;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continue developing our local services; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to control cost and enhance operating leverage and efficiency.

***Our Ability to Continuously Expand Our Pet Hospital Network and Strengthen Our Three-Tier Hierarchical System of Hospitals***

Our ability to continuously expand our pet hospital network and strengthen our three-tier hierarchical system of pet hospitals is a key driver for our revenue growth. We generate the majority of our revenues from pet care services provided through our nationwide pet hospital network. Our revenues from pet care services amounted to RMB2,054.0 million in 2020, RMB2,973.5 million (US$418.0 million) in 2021, RMB2,147.3 million in the nine months ended September 30, 2021 and RMB2,284.2 million (US$321.1 million) in the nine months ended September 30, 2022. Such growth depends in part on our ability to expand our hospital network through internal organic growth and external acquisitions. As of December 31, 2019, we integrated 693 pet hospitals operated by Skyfield Group with our own hospital network of 388 pet hospitals in connection with the acquisition of Skyfield Group. As of September 30, 2022, we had 1,942 pet hospitals.

We have become experts in building new hospitals and integrating them into our ecosystem over the years. For example, we have developed standardized tools for selecting sites for our new hospitals. Led by our management team with rich operational experience, we have been able to rapidly integrate the newly built hospitals into our ecosystem and achieve solid financial performance. Our hospitals are strategically located and close to our customers, which enables us to provide comprehensive pet care services to our customers with a meaningful last-mile advantage over our competitors. In 2020, 2021 and the nine months ended September 30, 2022, we built 196, 275 and 54 new hospitals, respectively.

In addition, as the industry leader in China, we are well-positioned to achieve growth through disciplined acquisitions. We actively screen, target, approach and evaluate potential acquisitions. Our acquisition strategy is to target pet hospitals and other complementary businesses that provide, among other things, access to more potential customers, wider geographic coverage and value-added services in China. Since 2019, we have acquired over 1,290 pet hospitals, taking into account the acquisition of Skyfield Group. We actively monitor the performance of each of our pet hospitals and from time to time optimize our nationwide pet hospital network. We believe that our experienced and disciplined management team, together with our organizational platform built on proprietary and scalable information management systems and processes, make us well positioned to participate in and lead the consolidation of the industry. Our ability to continue to invest and expand our hospital network is critical to our results of operations.

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***Our Ability to Attract and Retain Customers and Enhance Customer Experience***

Our business growth depends on our ability to effectively retain existing customers and attract new customers, and increase their spending on our platform through enriched product and service offerings. This is the primary focus of all of our customer engagement efforts, including online and offline marketing campaigns to our existing and new products and service offerings. We have been successful on this front. The number of active customers of our pet care services increased significantly from approximately 1.7 million in 2020 to approximately 2.5 million in 2021 and was approximately 2.2 million in the nine months ended September 30, 2022. In 2021, we achieved a customer repurchase rate for pet care services of approximately 56% (compared to the industry average of between 30% and 40%). The average annual net revenues generated from each active customer for our pet care services was RMB1,194 in 2020 increased to RMB1,203 (US$169) in 2021, despite the impact of the COVID-19 pandemic. Furthermore, since the launch of our local services platform Rvet in February 2020, Rvet had attracted approximately 4.9 million registered users as of September 30, 2022, and had approximately 820,000, 1,350,000 and 957,000 active customers in 2020, 2021 and the nine months ended September 30, 2022, respectively. We calculate registered users as the cumulative number of registered user accounts on Rvet as of a certain date and define an active customer as a customer making at least one purchase for a service or product in a given period. We consider the respective numbers of registered users and active customers of Rvet to be useful indicators of the scale and health of our business on and through Rvet, which is our core online platform and a key component of our local services business. We use these metrics to manage and monitor the growth of Rvet and the local services business in general. By examining changes in the number of registered users, we learn about the rate at which Rvet has been growing and the scale it has grown into and may adjust our branding and marketing efforts accordingly. The number of active customers, on the other hand, serves as a barometer of the effectiveness of our monetization strategies for local services business and helps us reexamine and adapt them as needed. We also believe these metrics provide investors with useful tools for gauging the scale, health and potential growth of Rvet and our local services business and help them understand our overall business by demonstrating the vitality and reach of our brand.

We have made significant efforts to attract and retain customers and increase customer spending. First, leveraging our in-depth expertise in pet care and extensive customer-centric ecosystem we have built, we are able to retain customers effectively, foster long-term customer relationships and facilitate significant cross-selling opportunities. Notably, by offering high-quality specialty pet care services and third-party diagnosis services (which typically have higher margins) that address specialized care needs for our pet patients, we are ideally positioned to deliver a superior customer experience, secure trust from our customers and win us opportunities to cross-sell our other services. Second, our ability to offer holistic, personalized, frequent services to every customer, every day, and in every interaction allows pet parents to reduce the number of service providers they engage, thus saving them time and money and ultimately strengthening our customer relationships and our competitive position. Pet parents who are attracted to our platform for one service are expected to continue to engage us for more of our services and products. In 2021, more than 38% of the customers at our pet hospitals also consumed in our other channels. Our ability to connect our online retail channels with our offline offerings also creates a virtuous loop that drives greater online and offline visits, which in turn creates more opportunities for cross-selling our services and products.

***Our Ability to Manage Pet Product Supply Chain***

Our ability to source high-quality pet products and manage the product supply chain is critical to the success of our supply chain services, which contributed RMB591.7 million, RMB1,280.3 million (US$180.0 million), RMB880.9 million and RMB1,573.2 million (US$221.2 million) to our revenue in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively. Our offering of high-quality pet medicines has been effective in enhancing the popularity of our services and brand. Meeting our customers' needs for superior pet products consistently requires us to establish and maintain a standardized, efficient and cost-effective product supply chain. Our national presence makes us the largest player in China's pet care industry with centralized procurement capabilities, which enable us to leverage our nationwide purchasing power, reduce our dependence

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on any single supplier and give us a strong bargaining position to lower costs. Furthermore, we have put in place a standardized and strict standard operating procedure, covering supplier selection, product selection, warehousing, shipping and delivery, which streamlines our centralized merchandise sourcing process.

In addition, leveraging our centralized procurement capabilities, we are able to unlock new products and advanced equipment by gaining early access to the latest pet food, health products, equipment and other products developed by top pet product brands. As a result, we typically secure supply of new products six months to one year ahead of the rest of the market and have exclusive access to popular products from premium brands, which gives us a clear advantage over our competitors and strengthens our reputation as the market leader.

Furthermore, as our supply chain services further grows in scale, we expect to obtain more favorable terms from both suppliers and customers of our supply chain services, including pricing terms, credit period and volume-based rebates. In addition, we aim to create value for the suppliers of our supply chain services by offering them valuable insights on market demand, consumer preferences and supply chain information based on our vast customer base. We believe these value propositions will also help us deepen our relationships with, and obtain favorable terms from, suppliers and customers of our supply chain services and reduce our procurement costs.

***Our Ability to Continue Developing Our Local Services***

We believe our local services are an important component of our growth strategy. Leveraging our pet product supply chain procurement and management capabilities, we have established an integrated and innovative online-to-offline local retail ecosystem. Our online retail channels include not only major online local services platforms in China, but also Rvet, our own Weixin mini-program that combines retail with general pet health management services. In addition to online channels, we have also been seeking innovative ways to expand our offline channels. Our ability to grow our local services, in particular, connecting our online retail channels with our offline offerings, creates a virtuous loop that integrates customer online and offline experience and drives more visits, which in turn creates more opportunities for cross-selling our services and products. Revenues from our local services increased significantly from RMB362.6 million in 2020 to RMB529.8 million (US$74.5 million) in 2021 and increased from RMB371.5 million in the nine months ended September 30, 2021 to RMB457.6 million (US$64.3 million) in the nine months ended September 30, 2022. We plan to continue to invest in our local services to drive both online and offline traffic through innovative marketing. For example, we will continue to leverage our strong IPs, such as JackPet, to direct traffic and attention of customers to our brands and stores, improve integration of online and offline channels and supplement with our delivery and fulfillment services to boost traffic across our local retail ecosystem.

***Our Ability to Control Cost and Enhance Operating Leverage and Efficiency***

Our ability to achieve profitability is dependent on our ability to control our costs and expenses and improve our operating efficiency.

In 2020, 2021 and the nine months ended September 30, 2022, our cost of revenues consists primarily of (i) labor cost of veterinarians, medical assistants and groomers directly involved in our pet care services and (ii) cost of products sold to external customers in our supply chain services and local services. We will continue to improve our cost structure by enhancing our bargaining power with the continued expansion of our business.

Our general and administrative expenses are the largest contributor of our operating expenses. In 2020, 2021 and the nine months ended September 30, 2022, our general and administrative expenses primarily consist of personnel expenses incurred in connection with regional managerial functions, finance and other back office operations. With our successful integration of Skyfield Group, we will continue to improve administrative management efficiency in the future. Sales and marketing expenses are another significant contributor to our operating expenses. In 2020, 2021 and the nine months ended September 30, 2022, our sales and marketing

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expenses primarily consist of advertising and marketing promotion expenses, rental and depreciation expenses for selling and marketing activities and sales and marketing personnel costs. Our results of operations depend on our ability to conduct sales and marketing that attract and retain customers in a cost-effective manner. We will continue to improve our marketing strategies to enhance our selling and marketing efficiency in the future.

We believe our massive scale, coupled with the network effect of our platform, will allow us to benefit more from substantial economies of scale. Notably, a significant portion of our infrastructure cost, such as rental expenses for newly-built pet hospitals and warehouses, was incurred when we initially set up local operations in various cities and is generally fixed. As our business further grows, we believe we will be able to take advantage of economies of scale to further improve our operational efficiency over time.

**Impact of COVID-19 on Our Operations** 

Our results of operations and financial condition have been and may continue to be affected by the spread of COVID-19. Although China has substantially controlled the spread of COVID-19, the extent to which COVID-19 impacts our results of operations will depend on the future developments of the pandemic which are highly uncertain. See also "Risk Factors—Risks Related to Our Business and Industry—We face risks related to natural disasters, health epidemics such as the outbreak of COVID-19 and other events beyond our control, which could significantly disrupt our operations."

The COVID-19 pandemic had a negative impact on pet care services, resulting in temporary closure of some of our hospitals and shortened operating hours of some of our hospitals, in particular, in major cities of China where our hospitals are relatively concentrated. We had seen a decrease in demand for our pet care services in the first half of 2020. Although our hospital operations were negatively affected in certain cities in China that had a resurgence of the COVID-19 pandemic, we had generally seen a resumption in our business growth in the second half of 2020 and 2021, as the pandemic and the accompanying social restrictions gradually eased in China. The recovery of our business growth since the second half of 2020 was also due to customers' purchasing pattern shifting from offline to online during the COVID-19 pandemic and our efforts to expand our online retail network and channels, as evidenced by the increase in our local services revenue from RMB362.6 million in 2020 to RMB529.8 million (US$74.5 million) in 2021, and from RMB371.5 million in the nine months ended September 30, 2021 to RMB457.6 million (US$64.3 million) in the nine months ended September 30, 2022. Since late 2021 and throughout 2022, there have been outbreaks of COVID-19 in many parts of China, particularly due to the Delta and Omicron variants. Strict restrictive measures were imposed, which affected our operations. For example, lockdowns imposed in cities across China caused disruptions to the normal operation of our pet hospitals and led to the temporary closures of certain pet hospitals. Our supply chain has also experienced disruptions. As China relaxes its "zero-COVID" policy, there has been a significant surge of COVID-19 cases in China. Future lockdowns or other restrictive measures that may be imposed, especially those imposed in major cities where we have a significant presence, may have a material impact on our operations and financial condition.

As of September 30, 2022, we had cash and cash equivalents of RMB855.9 million (US$120.3 million) and restricted cash of RMB1,571.7 million (US$220.9 million). We believe this level of liquidity is sufficient to meet our current and anticipated needs for general corporate purposes for the next 12 months. In addition, while the duration of the pandemic, disruption to our business and related financial impact cannot be reasonably estimated at this time, we currently expect that our consolidated results of operations for 2022 may be affected by potential continuing impact in subsequent periods.

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**Key Components of Results of Operations** 

***Revenues***

The following table sets forth the breakdown of our revenues, in amounts and as percentages of our total revenues for the periods presented:

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **RMB** | **%** | **RMB** | **US$** | **%** | **RMB** | **%** | **RMB** | **US$** | **%** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  Revenues |  |  |  |  |  |  |  |  |  |  |
|  **Services** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Pet care services | 2053955 | 68.3 | 2973521 | 418011 | 62.2 | 2147330 | 63.2 | 2284246 | 321115 | 52.9 |
|  **Product**  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Supply chain  | 591732 | 19.7 | 1280311 | 179983 | 26.8 | 880852 | 25.9 | 1573222 | 221160 | 36.5 |
| &nbsp;&nbsp;&nbsp;&nbsp; Local services | 362598 | 12.0 | 529839 | 74484 | 11.0 | 371479 | 10.9 | 457649 | 64335 | 10.6 |
|  **Total revenues** | **3008285** | **100.0** | **4783671** | **672478** | **100.0** | **3399661** | **100.0** | **4315117** | **606610** | **100.0** |

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We derive our revenues from third parties from (i) pet care services, (ii) supply chain services and (iii) local services.

Pet care services primarily consist of pet medical services and grooming services. Pet medical services include routine services such as deworming, vaccination, physical examination and sterilization, and specialized care for pets. Pet care services also include marketing-as-a-service, third-party diagnosis and continued veterinary education services, which are immaterial in terms of revenue contribution in 2020 and 2021.

Supply chain services consist primarily of sales of pet food, medicine, medical equipment and materials, and other pet products to third-party pet hospitals, pet clinics and pet stores.

Local services consist primarily of sales of pet products through our own and third-party online platforms and offline channels to individual customers.

***Cost of Revenues***

The following table sets forth our cost of revenues for each of the periods presented, both in absolute amount and as a percentage of our total cost of revenues for the periods presented:

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **RMB** | **%** | **RMB** | **US$** | **%** | **RMB** | **%** | **RMB** | **US$** | **%** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  Cost of revenues |  |  |  |  |  |  |  |  |  |  |
|  **Services** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | 1969207 | 68.7 | 2872948 | 403872 | 63.0 | 2066671 | 64.0 | 2279401 | 320433 | 55.6 |
|  **Product** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | 508356 | 17.7 | 1133886 | 159399 | 24.9 | 764012 | 23.6 | 1392209 | 195714 | 34.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | 388241 | 13.6 | 553676 | 77835 | 12.1 | 397544 | 12.3 | 424724 | 59707 | 10.4 |
|  **Total cost of revenues** | **2865804** | **100.0** | **4560510** | **641106** | **100.0** | **3228227** | **100.0** | **4096334** | **575854** | **100.0** |

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Our cost of revenues associated with pet care services consists primarily of (i) labor cost of veterinarians, medical assistants and groomers directly involved in our hospital operations; (ii) material cost of purchased drug

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and medical materials directly used in our hospital operations; (iii) rental expenses in connection with our hospital operations; and (iv) depreciation and amortization expenses in connection with our hospital operations. Our cost of revenues associated with supply chain services and local services consists primarily of cost of products sold to external customers in our supply chain services and local services.

In 2020, 2021 and the nine months ended September 30, 2021 and 2022, labor cost is the largest component of our cost of revenues associated with pet care services. We incurred labor cost of veterinarians, medical assistants and groomers directly involved in our hospital operations of RMB1,039.4 million in 2020, RMB1,552.0 million (US$218.2 million) in 2021, RMB1,130.3 million in the nine months ended September 30, 2021 and RMB1,255.1 million (US$176.4 million) in the nine months ended September 30, 2022, respectively. We incurred material cost of purchased drug and medical materials directly used in our hospital operations of RMB338.2 million in 2020, RMB532.1 million (US$74.8 million) in 2021, RMB377.0 million in the nine months ended September 30, 2021 and RMB356.3 million (US$50.1 million) in the nine months ended September 30, 2022. We incurred rental expenses in connection with our hospital operations of RMB309.3 million in 2020, RMB463.3 million (US$65.1 million) in 2021, RMB328.9 million in the nine months ended September 30, 2021 and RMB399.9 million (US$56.2 million) in the nine months ended September 30, 2022. We incurred depreciation and amortization expenses in connection with our hospital operations of RMB240.7 million in 2020, RMB280.0 million (US$39.4 million) in 2021, RMB193.8 million in the nine months ended September 30, 2021 and RMB227.1 million (US$31.9 million) in the nine months ended September 30, 2022.

In 2020, 2021 and the nine months ended September 30, 2021 and 2022, cost of products sold to external customers is the largest component of our cost of revenues associated with supply chain services and local services. We incurred products purchase cost of RMB710.0 million in 2020, RMB1,429.1 million (US$200.9 million) in 2021, RMB963.6 million in the nine months ended September 30, 2021 and RMB1,629.6 million (US$229.1 million) in the nine months ended September 30, 2022, respectively.

With respect to our local services, our ability to charge sales prices at levels sufficient to cover the corresponding cost of revenues was limited by (i) the requirements from the cooperating third-party online platforms that we offer discounts and participate in other promotions to attract user traffic to the platforms, (ii) the need to offer competitive prices in order to win customers from traditional e-commerce platforms which are more widely known and accepted by consumers, and (iii) the pressure to subsidize our product sales as we compete with traditional e-commerce platforms, many of whom have more financial resources and offer substantial subsidies to customers.

***Gross Profit***

The following table sets forth our gross profit, which is revenues minus cost of revenues, for the periods presented:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Gross profit | 142481 | 223161 | 31372 | 171434 | 218783 | 30756 |

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Our gross profit increased by 56.6% from RMB142.5 million in 2020 to RMB223.2 million (US$31.4 million) in 2021, and increased by 27.6% from RMB171.4 million in the nine months ended September 30, 2021 to RMB218.8 million (US$30.8 million) the nine months ended September 30, 2022. We expect our gross profit to increase in absolute amounts in the foreseeable future, as we continue to carry out our strategy to expand customer base and retain existing customers, enhance customer experience, expand our higher-margin third-party diagnosis services, optimize our cost structure, and improve our operating efficiency.

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***Operating Expenses***

The following table sets forth the breakdown of our total operating expense for each of the periods presented:

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **RMB** | **%** | **RMB** | **US$** | **%** | **RMB** | **%** | **RMB** | **US$** | **%** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  Sales and marketing  | 174720 | 15.6 | 357173 | 50211 | 22.7 | 222616 | 20.6 | 282419 | 39702 | 22.0 |
|  General and administrative  | 895681 | 79.8 | 1136143 | 159716 | 72.1 | 796680 | 74.0 | 907933 | 127635 | 70.8 |
|  Research and development  | 52332 | 4.6 | 82656 | 11620 | 5.2 | 57662 | 5.4 | 92727 | 13035 | 7.2 |
|  **Total operating expenses** | **1122733** | **100.0** | **1575972** | **221547** | **100.0** | **1076958** | **100.0** | **1283079** | **180372** | **100.0** |

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*Sales and marketing expenses.* Sales and marketing expenses primarily consist of (i) advertising and marketing promotion expenses, (ii) rental and depreciation expenses for selling and marketing activities and (iii) sales and marketing personnel costs. In 2020, 2021 and the nine months ended September 30, 2021 and 2022, the largest component of our sales and marketing expenses was advertising and marketing promotion expenses, which amounted to RMB101.9 million, RMB165.2 million (US$23.2 million), RMB107.4 million and RMB89.5 million (US$12.6 million), respectively.

*General and administrative expenses.* General and administrative expenses primarily consist of (i) personnel expenses incurred in connection with regional managerial functions, finance and other back office operations; and (ii) costs associated with general corporate functions including facilities and equipment depreciation expenses, rental and other general corporate related expenses. In 2020, 2021 and the nine months ended September 30, 2021 and 2022, the largest component of our general and administrative expenses was personnel costs for corporate and management functions, which amounted to RMB575.0 million, RMB758.8 million (US$106.7 million), RMB527.4 million and RMB716.1 million (US$100.7 million), respectively.

*Research and development expenses*. Research and development expenses primarily consist of (i) personnel costs for employees involved in the design and development of technology capabilities, and (ii) technology infrastructure costs, including bandwidth and data center costs, rentals, utilities and other expenses necessary to support our internal and external business. In 2020, 2021 and the nine months ended September 30, 2021 and 2022, the largest component of our research and development expenses was personnel costs for the design and development of our technology capabilities, which amounted to RMB38.7 million, RMB58.6 million (US$8.2 million), RMB42.0 million and RMB74.4 million (US$10.5 million), respectively. We expect to continue to expand our research and development team with new hires and invest in research and development for our new business initiatives.

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**Results of Operations** 

The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our revenues for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any period are not necessarily indicative of our future trends.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **RMB** | **%** | **RMB** | **US$** | **%** | **RMB** | **%** | **RMB** | **US$** | **%** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  **Revenues** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | 2053955 | 68.3 | 2973521 | 418011 | 62.2 | 2147330 | 63.2 | 2284246 | 321115 | 52.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | 591732 | 19.7 | 1280311 | 179983 | 26.8 | 880852 | 25.9 | 1573222 | 221160 | 36.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | 362598 | 12.0 | 529839 | 74484 | 11.0 | 371479 | 10.9 | 457649 | 64335 | 10.6 |
|  **Total revenues** | **3008285** | **100.0** | **4783671** | **672478** | **100.0** | **3399661** | **100.0** | **4315117** | **606610** | **100.0** |
|  **Cost of revenues** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | (1969207) | (65.5) | (2872948) | (403872) | (60.1) | (2066671) | (60.8) | (2279401) | (320433) | (52.8) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | (508356) | (16.9) | (1133886) | (159399) | (23.6) | (764012) | (22.5) | (1392209) | (195714) | (32.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | (388241) | (12.9) | (553676) | (77835) | (11.6) | (397544) | (11.7) | (424724) | (59707) | (9.8) |
|  **Total cost of revenues** | **(2865804)** | **(95.3)** | **(4560510)** | **(641106)** | **(95.3)** | **(3228227)** | **(95.0)** | **(4096334)** | **(575854)** | **(94.9)** |
|  **Gross profit** | **142481** | **4.7** | **223161** | **31372** | **4.7** | **171434** | **5.0** | **218783** | **30756** | **5.1** |
|  **Operating expenses:** |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and<br>marketing | (174720) | (5.8) | (357173) | (50211) | (7.5) | (222616) | (6.5) | (282419) | (39702) | (6.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative | (895681) | (29.8) | (1136143) | (159716) | (23.8) | (796680) | (23.5) | (907933) | (127635) | (21.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development | (52332) | (1.7) | (82656) | (11620) | (1.7) | (57662) | (1.7) | (92727) | (13035) | (2.1) |
|  **Total operating expenses** | **(1122733)** | **(37.3)** | **(1575972)** | **(221547)** | **(33.0)** | **(1076958)** | **(31.7)** | **(1283079)** | **(180372)** | **(29.7)** |
|  **Loss from operations** | **(980252)** | **(32.6)** | **(1352811)** | **(190175)** | **(28.3)** | **(905524)** | **(26.7)** | **(1064296)** | **(149616)** | **(24.6)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 18593 | 0.7 | 34493 | 4848 | 0.7 | 30242 | 0.9 | 18491 | 2599 | 0.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (12993) | (0.4) | (32631) | (4587) | (0.7) | (22479) | (0.7) | (55818) | (7847) | (1.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) | 1471 | 0.0 | (390) | <br> (55)  | (0.0) | (585) | (0.0) | (6735) | (947) | (0.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net (loss) profit from equity method investments | (290) | (0.0) | (626) | (88) | (0.0) | (2778) | (0.1) | 2176 | 306 | 0.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions | 6609 | 0.2 | 54337 | 7639 | 1.1 | 54337 | 1.7 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | (21277) | (0.7) | (2123) | (298) | (0.0) | (681) | (0.0) |  |  |  |

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **RMB** | **%** | **RMB** | **US$** | **%** | **RMB** | **%** | **RMB** | **US$** | **%** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long- term investments |  |  | 509 | 72 | 0.0 | 2861 | 0.1 | 217 | 31 | 0.0 |
|  **Loss before income tax** | **(988139)** | **(32.8)** | **(1299242)** | **(182644)** | **(27.2)** | **(844607)** | **(24.8)** | **(1105965)** | **(155474)** | **(25.6)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expenses | (11645) | (0.4) | (12014) | (1689) | (0.2) | (11984) | (0.4) | (3393) | (477) | (0.1) |
|  **Net loss** | **(999784)** | **(33.2)** | **(1311256)** | **(184333)** | **(27.4)** | **(856591)** | **(25.2)** | **(1109358)** | **(155951)** | **(25.7)** |

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**Non-GAAP Financial Measures** 

In evaluating our business, we consider and use Adjusted EBITDA and Adjusted EBITDA Margin as supplemental non-GAAP measures to review and assess our operating performance. The presentation of these non-GAAP measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define Adjusted EBITDA as net income, plus net interest expense, depreciation and amortization, and further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operations. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of our total revenues.

We present Adjusted EBITDA and Adjusted EBITDA Margin because they are used by our management to evaluate our operating performance and formulate business plans. These non-GAAP measures reflect the company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons. We also believe that the use of these non-GAAP measures facilitate investors to understand and evaluate our current operating performance and future prospects in the same manner as management does, if they so choose. We also believe that these non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are non-recurring in nature or may not be indicative of our core operating results and business outlook.

These non-GAAP measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP measures have limitations as analytical tools. The non-GAAP adjustments to loss before income tax to arrive at the Adjusted EBITDA do not reflect all items of income and expense that affect our operations. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling Adjusted EBITDA to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

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The following table reconciles loss before income taxes to Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** | **For the Nine Months Ended<br>September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** | **(in thousands, except for percentages)** |
|  **Reconciliation of loss before income taxes to Adjusted EBITDA and Adjusted EBITDA Margin:** |  |  |  |  |  |  |
|  **Loss before income taxes** | (988139) | (1299242) | (182644) | (844607) | (1105965) | (155474) |
|  Adjustments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 313943 | 356990 | 50185 | 260602 | 292352 | 41098 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | 12993 | 32631 | 4587 | 22479 | 55818 | 7847 |
|  **EBITDA** | **(661203)** | **(909621)** | **(127872)** | **(561526)** | **(757795)** | **(106529)** |
|  Other Adjustments: |  |  |  |  |  |  |
|  *Non-cash costs*: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 5961 | 42114 | 5920 | 41518 | 1788 | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | 21277 | 2123 | 298 | 681 |  |  |
|  *Non-recurring costs*: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; One-off non-capitalizable deal expenses related to financing<sup>(1)</sup> | 18537 | 12995 | 1827 | 1594 | 6384 | 898 |
|  **Adjusted EBITDA** | **(615428)** | **(852389)** | **(119827)** | **(517733)** | **(749623)** | **(105380)** |
|  **Adjusted EBITDA Margin** | **(20.5)%** | **(17.8)%** | **(17.8)%** | **(15.2)%** | **(17.4)%** | **(17.4)%** |

---

Notes:

(1) One-off non-capitalizable deal expenses related to financing primarily consist of financial and legal
professional fees paid in connection with our financing.

**Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021** 

***Revenues***

Our total revenues increased by 26.9% from RMB3,399.7 million in the nine months ended September 30, 2021 to RMB4,315.1 million (US$606.6 million) in the nine months ended September 30, 2022, which was primarily due to an increase in revenues from pet care services and supply chain services.

*Pet care services* 

Our revenues from pet care services increased by 6.4% from RMB2,147.3 million in the nine months ended September 30, 2021 to RMB2,284.2 million (US$321.1 million) in the nine months ended September 30, 2022, which was primarily due to (i) the expansion of our pet hospital network from 1,812 as of September 30, 2021 to 1,942 as of September 30, 2022, including pet hospitals acquired after September 30, 2021 and before September 30, 2022 that contributed 2.4% of our revenues from pet care services in the nine months ended September 30, 2022, and (ii) our continuing efforts to attract and retain customers that resulted in an increase in the number of active customers for pet care services from approximately 2.0 million in the nine months ended September 30, 2021 to approximately 2.2 million in the nine months ended September 30, 2022, despite the impact of the COVID-19 pandemic.

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*Supply chain services* 

Our revenues from supply chain services increased by 78.6% from RMB880.9 million in the nine months ended September 30, 2021 to RMB1,573.2 million (US$221.2 million) in the nine months ended September 30, 2022, which was primarily due to the expansion of our supply chain network, an expanded offering of products in our supply chain business, the expansion of our e-commerce business, and our improved ability to engage more downstream pet hospitals and stores to purchase pet food, medicine, medical equipment and materials, and other products. As a result of such factors, (i) the total sales volume (calculated by aggregating the number of units sold in each product category) increased by approximately 54.2% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022, as we introduced new products and grew the sales of existing products, and (ii) the average unit price of the products sold (calculated by dividing the product sales revenue by the total sales volume) increased by approximately 15.9% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022, as some of the new products have relatively higher prices and we also raised the prices of certain existing products.

*Local services* 

Our revenues from local services increased by 23.2% from RMB371.5 million in the nine months ended September 30, 2021 to RMB457.6 million (US$64.3 million) in the nine months ended September 30, 2022, which was primarily due to our continued expansion of online and offline retail network, including Rvet, JackPet and major third-party online local services platforms in China, to more regions and more customers. Such expansion resulted in an increase of approximately 27.2% in the average unit price of the products sold (calculated by dividing the product sales revenue by the total sales volume) as we increased the prices of certain products and introduced new products with relatively higher prices, which led to the growth of our revenue from local services in the nine months ended September 30, 2022, despite an approximately 3.1% decrease in the total sales volume (calculated by aggregating the number of units sold in each product category) as a result of our efforts to optimize our product mix by reducing the volume of products with lower prices.

***Cost of Revenues***

Our cost of revenues associated with pet care services increased by 10.3% from RMB2,066.7 million in the nine months ended September 30, 2021 to RMB2,279.4 million (US$320.4 million) in the nine months ended September 30, 2022, which was primarily due to a significant increase in labor cost of veterinarians, medical assistants and groomers directly involved in our hospital operations, as a result of the fast expansion of our pet hospital network and an expansion of our pet care talent pool. In the nine months ended September 30, 2021 and 2022, the largest component of our cost of revenues associated with pet care services was labor cost of veterinarians, medical assistants and groomers directly involved in our hospital operations, which amounted to RMB1,130.3 million and RMB1,255.1 million (US$176.4 million), respectively.

Our cost of revenues associated with supply chain services, which is mainly cost of products sold, increased by 82.2% from RMB764.0 million in the nine months ended September 30, 2021 to RMB1,392.2 million (US$195.7 million) in the nine months ended September 30, 2022, which was generally in line with the growth of our supply chain services.

Our cost of revenues associated with local services increased by 6.8% from RMB397.5 million in the nine months ended September 30, 2021 to RMB424.7 million (US$59.7 million) in the nine months ended September 30, 2022. This increase is significantly lower than the increase in revenues from local services in the same period, primarily because of the high labor costs incurred during the nine months ended September 30, 2021 for a large number of temporary business development personnel we hired for local services, which number had decreased substantially in the nine months ended September 30, 2022 as we improved our sales network and channels.

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***Gross Profit***

As a result of the foregoing, (i) our gross profit generated from external customers and associated with pet care services decreased by 94.0% from RMB80.7 million in the nine months ended September 30, 2021 to RMB4.8 million (US$0.7 million) in the nine months ended September 30, 2022, (ii) our gross profit generated from external customers and associated with supply chain services increased by 54.9% from RMB116.8 million in the nine months ended September 30, 2021 to RMB181.0 million (US$25.4 million) in the nine months ended September 30, 2022, and (iii) our gross loss incurred with external customers and associated with local services was RMB26.1 million in the nine months ended September 30, 2021, compared to a gross profit of RMB32.9 million (US4.6 million) incurred with external customers and associated with local services in the nine months ended September 30, 2022.

Our gross margin generated from external customers and associated with pet care services decreased from 3.8% in the nine months ended September 30, 2021 to 0.2% in the nine months ended September 30, 2022, primarily due to (i) the significant increase in our cost of revenues associated with pet care services for reasons described in "—Cost of Revenues," including the expansion of our pet care talent pool that led to increased labor costs; and (ii) the lockdowns and other social restrictions imposed in China during the nine months ended September 30, 2022, especially in certain large cities, that led to temporary closures of our local hospitals and significantly affected our revenues from pet care services. Our gross margin generated from external customers and associated with supply chain services decreased from 13.3% in the nine months ended September 30, 2021 to 11.5% in the nine months ended September 30, 2022, primarily due to the negative impact on revenue of the promotions we offered as part of our growth and competition strategy to accelerate our national expansion, particularly in e-commerce. Our gross margin generated from external customers and associated with local services increased from negative 7.0% in the nine months ended September 30, 2021 to positive 7.2% in the nine months ended September 30, 2022, primarily as a result of (i) the growth in group buying by communities under COVID-19-induced social restrictions which has a relatively higher gross margin; and (ii) further growth in our FDC business. Despite the decrease in the gross margin generated from external customers and associated with pet care services and supply chain services, our overall gross margin generated from external customers increased from 5.0% in the nine months ended September 30, 2021 to 5.1% in the nine months ended September 30, 2022.

We will continue to execute our strategy to focus on identifying, attracting and retaining customers, increasing customer purchases, and optimizing our cost structure.

***Sales and Marketing Expenses***

Our sales and marketing expenses increased by 26.9% from RMB222.6 million in the nine months ended September 30, 2021 to RMB282.4 million (US$39.7 million) in the nine months ended September 30, 2022, which was primarily due to an increase in sales and marketing personnel costs from RMB29.5 million in the nine months ended September 30, 2021 to RMB71.2 million (US$10.0 million) in the nine months ended September 30, 2022. The increase in sales and marketing personnel costs was primarily due to an expansion of our sales and marketing team to support our fast-growing supply chain services.

***General and Administrative Expenses***

Our general and administrative expenses increased by 14.0% from RMB796.7 million in the nine months ended September 30, 2021 to RMB907.9 million (US$127.6 million) in the nine months ended September 30, 2022, which was primarily due to an increase in personnel costs for corporate and management functions from RMB527.4 million in the nine months ended September 30, 2021 to RMB716.1 million (US$100.7 million) in the nine months ended September 30, 2022. Such increase in personnel costs for corporate and management functions was in turn the result of the expansion in our teams of regional managerial operations and other back office functions, including our strategic talent pool.

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***Research and Development Expenses***

Our research and development expenses increased by 60.8% from RMB57.7 million in the nine months ended September 30, 2021 to RMB92.7 million (US$13.0 million) in the nine months ended September 30, 2022, which was primarily due to an increase in personnel costs for the design and development of our technology capabilities from RMB42.0 million in the nine months ended September 30, 2021 to RMB74.4 million (US$10.5 million) in the nine months ended September 30, 2022. Such increase in personnel costs for the design and development of our technology capabilities was in turn the result of the increase in research and development staff headcount as we continuously enhance our data analytics, artificial intelligence and digital information management capabilities.

***Loss from Operations***

As a result of the foregoing, our loss from operations increased by 17.5% from RMB905.5 million in the nine months ended September 30, 2021 to RMB1,064.3 million (US$149.6 million) in the nine months ended September 30, 2022. Our loss from operations as a percentage of total revenues decreased from 26.7% in the nine months ended September 30, 2021 to 24.6% in the nine months ended September 30, 2022.

***Interest Income***

Our interest income decreased from RMB30.2 million in the nine months ended September 30, 2021 to RMB18.5 million (US$2.6 million) in the nine months ended September 30, 2022, which was primarily a result of the larger amount of interest-bearing short-term investments that were outstanding during the nine months ended September 30, 2021.

***Interest Expense***

Our interest expenses increased significantly from RMB22.5 million in the nine months ended September 30, 2021 to RMB55.8 million (US$7.8 million) in the nine months ended September 30, 2022, primarily due to an increase in interest expense accrued on our bank borrowings which increased in line with our business expansion.

***Foreign Exchange Loss***

We recorded foreign exchange loss of RMB585 thousand and RMB6.7 million (US$947 thousand) in the nine months ended September 30, 2021 and 2022, respectively.

***Remeasurement Gain on Step Acquisitions***

Our remeasurement gain on step acquisitions was RMB54.3 million and nil in the nine months ended September 30, 2021 and 2022, respectively. The remeasurement gain on step acquisitions in the nine months ended September 30, 2021 primarily consisted of a gain from the remeasurement of previously held equity interests for pet hospital acquisitions.

***Share of Net (Loss) Profit from Equity Method Investments***

We recorded share of net loss from equity method investments of RMB2.8 million in the nine months ended September 30, 2021, compared to share of net profit from equity method investments of RMB2.2 million (US$306 thousand) in the nine months ended September 30, 2022. Share of net (loss) profit from equity method investments represents proportionate share of undistributed loss or profit from our equity-method investees, including pet hospitals and a pet product manufacture.

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***Gain on Disposal of Subsidiaries and Long-Term Investments***

Our gain on disposal of subsidiaries and long-term investments was RMB2.9 million and RMB217 thousand (US$31 thousand) in the nine months ended September 30, 2021 and 2022, respectively. The gain on disposal of subsidiaries and long-term investments was primarily attributable to the disposal of certain pet hospitals during the relevant period.

***Income Tax Expenses***

Our income tax expenses decreased by 71.7% from RMB12.0 million in the nine months ended September 30, 2021 to RMB3.4 million (US$477 thousand) in the nine months ended September 30, 2022, which was primarily attributable to the beneficial tax policies introduced in China in 2022.

***Net Loss***

Primarily as a result of the foregoing, our net loss increased by 29.5% from RMB856.6 million in the nine months ended September 30, 2021 to RMB1,109.4 million (US$156.0 million) in the nine months ended September 30, 2022. Our net loss as a percentage of total revenues remained stable, amounting to 25.2% in the nine months ended September 30, 2021 and 25.7% in the nine months ended September 30, 2022.

**Year Ended December 31, 2021 Compared to Year Ended December 31, 2020** 

***Revenues***

Our total revenues increased by 59.0% from RMB3,008.3 million in 2020 to RMB4,783.7 million (US$672.5 million) in 2021, which was primarily due to an increase in revenues from pet care services and supply chain services.

*Pet care services* 

Our revenues from pet care services increased by 44.8% from RMB2,054.0 million in 2020 to RMB2,973.5 million (US$418.0 million) in 2021, which was primarily due to (i) the expansion of our pet hospital network from 1,224 as of December 31, 2020 to 1,887 as of December 31, 2021, including pet hospitals acquired in 2021 that contributed 13.5% of our revenues from pet care services in 2021, and (ii) our continuing efforts to attract and retain customers that resulted in an increase in the number of active customers for pet care services from 1.7 million in 2020 to 2.5 million in 2021 and an increase in the average annual net revenues generated from each active customer for our pet care services from RMB1,194 in 2020 to RMB1,203 (US$169) in 2021, despite the impact of the COVID-19 pandemic.

*Supply chain services* 

Our revenues from supply chain services increased by 116.4% from RMB591.7 million in 2020 to RMB1,280.3 million (US$180.0 million) in 2021, which was primarily due to the expansion of our supply chain network, an expanded offering of products in our supply chain business, the expansion of our e-commerce business, and our improved ability to engage more downstream pet hospitals and stores to purchase pet food, medicine, medical equipment and materials, and other products. As a result of such factors, (i) the total sales volume (calculated by aggregating the number of units sold in each product category) increased by approximately 87% from 2020 to 2021, as we introduced new products and grew the sales of existing products, and (ii) the average unit price of the products sold (calculated by dividing the product sales revenue by the total sales volume) increased by approximately 16% from 2020 to 2021, as some of the new products have relatively higher prices and we also raised the prices of certain existing products.

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*Local services* 

Our revenues from local services increased by 46.1% from RMB362.6 million in 2020 to RMB529.8 million (US$74.5 million) in 2021, which was primarily due to our continued expansion of online and offline retail network, including Rvet, JackPet and major third-party online local services platforms in China, to more regions and more customers. Such expansion resulted in an increase of approximately 40% in the total product sales volume (calculated by aggregating the number of units sold in each product category), which led to the growth of our revenue from local services in 2021, despite the relatively stable overall price level of our products for local services from 2020 to 2021.

***Cost of Revenues*** 

Our cost of revenues associated with pet care services increased by 45.9% from RMB1,969.2 million in 2020 to RMB2,872.9 million (US$403.9 million) in 2021, which was primarily due to a significant increase in labor cost of veterinarians, medical assistants and groomers directly involved in our hospital operations, as a result of the fast expansion of our pet hospital network and an expansion of our pet care talent pool. In 2020 and 2021, the largest component of our cost of revenues associated with pet care services was labor cost of veterinarians, medical assistants and groomers directly involved in our hospital operations, which amounted to RMB1,039.4 million and RMB1,552.0 million (US$218.2 million), respectively.

Our cost of revenues associated with supply chain services, which is mainly cost of products sold, increased by 123.0% from RMB508.4 million in 2020 to RMB1,133.9 million (US$159.4 million) in 2021, which was in line with the growth of our supply chain services.

Our cost of revenues associated with local services increased by 42.6% from RMB388.2 million in 2020 to RMB553.7 million (US$77.8 million) in 2021, which was in line with the growth of our local services.

***Gross Profit*** 

As a result of the foregoing, (i) our gross profit generated from external customers and associated with pet care services increased by 18.7% from RMB84.7 million in 2020 to RMB100.6 million (US$14.1 million) in 2021, (ii) our gross profit generated from external customers and associated with supply chain services increased by 75.6% from RMB83.4 million in 2020 to RMB146.4 million (US$20.6 million) in 2021, and (iii) our gross loss incurred with external customers and associated with local services decreased from RMB25.6 million in 2020 to RMB23.8 million (US$3.4 million) in 2021.

Our gross margin generated from external customers and associated with pet care services decreased from 4.1% in 2020 to 3.4% in 2021, primarily due to (i) the significant increase in our cost of revenues associated with pet care services for reasons described in "—Cost of Revenues," including the expansion of our pet care talent pool that led to increased labor costs, and (ii) the substantial growth in the number of new pet hospitals in 2021 that had not benefited significantly from our economies of scale. Our gross margin generated from external customers and associated with supply chain services decreased from 14.1% in 2020 to 11.4% in 2021, primarily due to the negative impact on revenue of the promotions we offered as part of our growth and competition strategy to accelerate our national expansion, particularly in e-commerce. Our gross margin generated from external customers and associated with local services increased from negative 7.1% in 2020 to negative 4.5% in 2021, as supported by our increased scale, we improved our pricing and significantly grew our FDC business in 2021. Despite the decrease in the gross margin generated from external customers and associated with pet care services and supply chain services, our overall gross margin generated from external customers remained stable at 4.7% in 2020 and 2021.

***Sales and Marketing Expenses*** 

Our sales and marketing expenses increased by 104.4% from RMB174.7 million in 2020 to RMB357.2 million (US$50.2 million) in 2021, which was primarily due to (i) an increase in advertising and marketing

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promotion expenses from RMB101.9 million in 2020 to RMB165.2 million (US$23.2 million) in 2021, (ii) an increase in sales and marketing personnel costs from RMB4.6 million in 2020 to RMB53.6 million (US$7.5 million) in 2021, and (iii) an increase in rental expenses for selling and marketing activities from RMB30.1 million in 2020 to RMB54.1 million (US$7.6 million) in 2021. The increase in advertising and marketing promotion expenses was primarily due to an increase in our online and offline promotion activities. The increase in sales and marketing personnel costs was primarily due to an expansion of our sales and marketing team to support our fast-growing supply chain services. The increase in rental expenses for selling and marketing activities was primarily due to an expansion of warehouses for our online business in 2021.

***General and Administrative Expenses*** 

Our general and administrative expenses increased by 26.8% from RMB895.7 million in 2020 to RMB1,136.1 million (US$159.7 million) in 2021, which was primarily due to an increase in personnel costs for corporate and management functions from RMB575.0 million in 2020 to RMB758.8 million (US$106.7 million) in 2021. Such increase in personnel costs for corporate and management functions was in turn the result of the expansion in our teams of regional managerial operations and other back office functions, including our strategic talent pool. Our general and administrative expenses as a percentage of our total revenues decreased from 29.8% in 2020 to 23.8% in 2021, as a result of our improved cost control and enhanced operational efficiency.

***Research and Development Expenses*** 

Our research and development expenses increased by 57.9% from RMB52.3 million in 2020 to RMB82.7 million (US$11.6 million) in 2021, which was primarily due to an increase in personnel costs for the design and development of our technology capabilities from RMB38.7 million in 2020 to RMB58.6 million (US$8.2 million) in 2021. Such increase in personnel costs for the design and development of our technology capabilities was in turn the result of the increase in research and development staff headcount as we continuously enhance our data analytics, artificial intelligence and digital information management capabilities.

***Loss from Operations*** 

As a result of the foregoing, our loss from operations increased by 38.0% from RMB980.3 million in 2020 to RMB1,352.8 million (US$190.2 million) in 2021. However, our loss from operations as a percentage of total revenues improved from 32.6% in 2020 to 28.3% in 2021.

***Interest Income*** 

Our interest income increased significantly from RMB18.6 million in 2020 to RMB34.5 million (US$4.8 million) in 2021, which was primarily due to an increase in interest income accrued on our bank deposits and short-term investments, primarily due to the reinvestment of the proceeds from our Series B financing completed in late 2020 into bank deposits and short-term investments.

***Interest Expense*** 

Our interest expenses increased significantly from RMB13.0 million in 2020 to RMB32.6 million (US$4.6 million) in 2021, primarily due to an increase in interest expense accrued on our bank borrowings which increased in line with our business expansion.

***Foreign Exchange Gain (Loss)***

We recorded foreign exchange gain of RMB1.5 million in 2020 and foreign exchange loss of RMB390 thousand (US$55 thousand) in 2021.

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***Remeasurement Gain on Step Acquisitions*** 

Our remeasurement gain on step acquisitions was RMB6.6 million and RMB54.3 million (US$7.6 million) in 2020 and 2021, respectively. The remeasurement gain on step acquisitions in 2021 primarily consisted of a gain from the remeasurement of previously held equity interests for pet hospital acquisitions. See Note 9 to our audited consolidated financial statements included elsewhere in this prospectus for more details of the step acquisitions.

***Share of Net Loss from Equity Method Investments*** 

In 2020 and 2021, we recorded RMB290 thousand and RMB626 thousand (US$88 thousand), respectively, of proportionate share of undistributed losses from our equity-method investees, including pet hospitals and a pet product manufacturer.

***Gain on Disposal of Subsidiaries*** 

Our gain on disposal of subsidiaries was nil and RMB509 thousand (US$72 thousand) in 2020 and 2021, respectively. The gain on disposal of subsidiaries in 2021 was primarily attributable to the disposal of certain pet hospitals during that year.

***Income Tax Expenses*** 

Our income tax expenses increased by 3.2% from RMB11.6 million in 2020 to RMB12.0 million (US$1.7 million) in 2021, which was primarily attributable to the increase in the profits of certain subsidiaries.

***Net Loss*** 

Primarily as a result of the foregoing, our net loss increased by 31.2% from RMB999.8 million in 2020 to RMB1,311.3 million (US$184.3 million) in 2021. Our net loss as a percentage of total revenues decreased from 33.2% in 2020 to 27.4% in 2021.

**Selected Quarterly Results of Operation** 

The following table sets forth our unaudited quarterly consolidated results of operations for the periods indicated. You should read the following table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. We have prepared this unaudited quarterly consolidated financial data on the same basis as we have prepared our audited consolidated financial statements. The unaudited quarterly consolidated financial data include all adjustments, consisting only of normal and recurring adjustments, that our management considered necessary for a fair statement of our financial position and results of operation for the quarters presented.

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31,** | **June 30,** | **September 30,** | **December 31,** | **March 31,** | **June 30,** | **September 30,** | **December 31,** | **March 31,** | **June 30,** | **September 30,** |
|  | **2020** | **2020** | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** |
|  **Revenues** |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | 418325 | 516143 | 523442 | 596045 | 634973 | 744067 | 768290 | 826191 | 788228 | 742896 | 753122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | 103492 | 153003 | 141419 | 193818 | 217902 | 338504 | 324446 | 399459 | 447477 | 568926 | 556819 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | 85493 | 88173 | 93911 | 95021 | 103246 | 127653 | 140580 | 158360 | 149741 | 164947 | 142961 |
|  **Total revenues**  | **607310** | **757319** | **758772** | **884884** | **956121** | **1210224** | **1233316** | **1384010** | **1385446** | **1476769** | **1452902** |

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|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** | **For the Three Months Ended** |
|  | **March 31,** | **June 30,** | **September 30,** | **December 31,** | **March 31,** | **June 30,** | **September 30,** | **December 31,** | **March 31,** | **June 30,** | **September 30,** |
|  | **2020** | **2020** | **2020** | **2020** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** |
|  | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** |
|  **Cost of revenues** |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services | (445187) | (478438) | (500503) | (545079) | (608580) | (697413) | (760678) | (806277) | (779983) | (742765) | (756653) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain | (89544) | (133384) | (123447) | (161981) | (186330) | (296423) | (281259) | (369874) | (403591) | (495856) | (492762) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services | (94630) | (91953) | (98876) | (102782) | (120391) | (148168) | (128985) | (156132) | (144402) | (148503) | (131819) |
|  **Total cost of revenues**  | **(629361)** | **(703775)** | **(722826)** | **(809842)** | **(915301)** | **(1142004)** | **(1170922)** | **(1332283)** | **(1327976)** | **(1387124)** | **(1381234)** |
|  **Gross (loss) profit**  | **(22051)** | **53544** | **35946** | **75042** | **40820** | **68220** | **62394** | **51727** | **57470** | **89645** | **71668** |
|  **Operating expenses:**  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and marketing | (31564) | (38675) | (48546) | (55935) | (62643) | (72886) | (87087) | (134557) | (91778) | (101824) | (88817) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative | (198733) | (218014) | (216371) | (262563) | (220310) | (249667) | (326703) | (339463) | (315854) | (289549) | (302530) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development | (14585) | (14898) | (9843) | (13006) | (19191) | (19974) | (18497) | (24994) | (29756) | (28962) | (34009) |
|  **Total operating<br>expenses**  | **(244882)** | **(271587)** | **(274760)** | **(331504)** | **(302144)** | **(342527)** | **(432287)** | **(499014)** | **(437388)** | **(420335)** | **(425356)** |
|  **Loss from operations**  | **(266933)** | **(218043)** | **(238814)** | **(256462)** | **(261324)** | **(274307)** | **(369893)** | **(447287)** | **(379918)** | **(330690)** | **(353688)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income | 2901 | 2513 | 6322 | 6857 | 8602 | 11244 | 10396 | 4251 | 4971 | 6148 | 7372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (812) | (2768) | (4086) | (5327) | (7086) | (8098) | (7295) | (10152) | (17706) | (19658) | (18454) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) | 2453 | 48 | (313) | (717) | (127) | 363 | (821) | 195 | (120) | (4958) | (1657) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net (loss) gain from equity method investments | (309) | (47) | (103) | 169 | (2774) | (2) | (2) | 2152 | 585 | 1923 | (332) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  | 6609 |  | 17952 | 36385 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value (loss) gain of contingent consideration |  |  | (22180) | 903 | (320) | (361) |  | (1442) |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on disposal of subsidiaries |  |  |  |  | (2925) | 4196 | 1590 | (2352) | (417) | 76 | 558 |
|  **Loss before income<br>taxes**  | **(262700)** | **(218297)** | **(252565)** | **(254577)** | **(248002)** | **(230580)** | **(366025)** | **(454635)** | **(392605)** | **(347159)** | **(366201)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | (2251) | (2908) | (3480) | (3006) | (1392) | (7398) | (3194) | (30) | (1325) | (1715) | (353) |
|  **Net loss**  | **(264951)** | **(221205)** | **(256045)** | **(257583)** | **(249394)** | **(237978)** | **(369219)** | **(454665)** | **(393930)** | **(348874)** | **(366554)** |

---

Our quarterly results of operation are subject to seasonal fluctuations. Our expansion plans, including the timing of new pet hospitals, whether acquired or built by us, and related costs, the amount of net sales contributed by new hospitals, and the timing of and estimated costs associated with hospital closings or relocations, if any, may cause our quarterly results of operations to fluctuate. Further, new pet hospitals and service offerings tend to experience higher payroll, advertising and other store-level expenses as a percentage of net sales than more mature hospitals, and such openings also often contribute to lower pet hospital operating margins until those hospitals become established, which may result in quarterly fluctuations in operating results. Quarterly operating results are not necessarily accurate predictors of future performance. Overall, the historical seasonality of our business has been relatively mild, but the seasonal trends that we have experienced in the past may not be indicative of our future operating results. See "Risk Factors—Risks Related to Our Business and Industry—Our results of operations may be subject to fluctuations due to seasonal or operational reasons."

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**Segment Information** 

We operate in three operating segments, namely pet care services, supply chain services and local services. We derive the results of the segments directly from our internal management reporting system.

As substantially all of our long-lived assets are located in the PRC and substantially all of our revenues are derived from the PRC, no geographical information is presented. The tables below provide a summary of our operating segment results:

**Year ended December 31, 2020 in RMB (in thousands)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2053955 | 591732 | 362598 |  | 3008285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 517566 | 11057 | (528623) |  |
|  Total | 2053955 | 1109298 | 373655 | (528623) | 3008285 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 1969207 | 508356 | 388241 |  | 2865804 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 50566 | 444064 | 19834 | (514464) |  |
|  Less: Cost of revenues | 2019773 | 952420 | 408075 | (514464) | 2865804 |
|  Segment profit | 34182 | 156878 | (34420) | (14159) | 142481 |
|  Less: Total operating expenses |  |  |  |  | 1122733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (5600) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain |  |  |  |  | (1471) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (6609) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration |  |  |  |  | 21277 |
|  Loss before income taxes |  |  |  |  | (988139) |

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**Year ended December 31, 2021 in RMB (in thousands)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2973521 | 1280311 | 529839 |  | 4783671 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 878585 | 7563 | (886148) |  |
|  Total | 2973521 | 2158896 | 537402 | (886148) | 4783671 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 2872948 | 1133886 | 553676 |  | 4560510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 77332 | 780597 | 20317 | (878246) |  |
|  Less: Cost of revenues | 2950280 | 1914483 | 573993 | (878246) | 4560510 |
|  Segment (loss) profit | 23241 | 244413 | (36591) | (7902) | 223161 |
|  Less: Total operating expenses |  |  |  |  | 1575972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (1862) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 626 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (54337) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration |  |  |  |  | 2123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries |  |  |  |  | (509) |
|  Loss before income taxes |  |  |  |  | (1299242) |

---

**Year ended December 31, 2021 in US$(in thousands)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 418011 | 179983 | 74484 |  | 672478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 123510 | 1063 | (124573) |  |
|  Total | 418011 | 303493 | 75547 | (124573) | 672478 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 403872 | 159399 | 77835 |  | 641106 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 10871 | 109735 | 2856 | (123462) |  |
|  Less: Cost of revenues | 414743 | 269134 | 80691 | (123462) | 641106 |
|  Segment (loss) profit | 3268 | 34359 | (5144) | (1111) | 31372 |
|  Less: Total operating expenses |  |  |  |  | 221547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (261) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (7639) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration |  |  |  |  | 298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries |  |  |  |  | (72) |
|  Loss before income taxes |  |  |  |  | (182644) |

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**Nine months ended September 30, 2021 in RMB (in thousands)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2147330 | 880852 | 371479 |  | 3399661 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 627642 | 7134 | (634776) |  |
|  Total | 2147330 | 1508494 | 378613 | (634776) | 3399661 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 2066671 | 764012 | 397544 |  | 3228227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 65327 | 546782 | 18491 | (630600) |  |
|  Less: Cost of revenues | 2131998 | 1310794 | 416035 | (630600) | 3228227 |
|  Segment profit (loss) | 15332 | 197700 | (37422) | (4176) | 171434 |
|  Less: Total operating expenses |  |  |  |  | 1076958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (7763) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 585 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 2778 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (54337) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent liabilities |  |  |  |  | 681 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  |  |  |  | (2861) |
|  Loss before income taxes |  |  |  |  | (844607) |

---

**Nine months ended September 30, 2022 in RMB (in thousands)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2284246 | 1573222 | 457649 |  | 4315117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 584906 | 2658 | (587564) |  |
|  Total | 2284246 | 2158128 | 460307 | (587564) | 4315117 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 2279401 | 1392209 | 424724 |  | 4096334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 78722 | 487937 | 11329 | (577988) |  |
|  Less: Cost of revenues | 2358123 | 1880146 | 436053 | (577988) | 4096334 |
|  Segment (loss) profit | (73877) | 277982 | 24254 | (9576) | 218783 |
|  Less: Total operating expenses |  |  |  |  | 1283079 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net |  |  |  |  | 37327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 6735 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net profit from equity method investments |  |  |  |  | (2176) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  |  |  |  | (217) |
|  Loss before income taxes |  |  |  |  | (1105965) |

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**Nine months ended September 30, 2022 in US$(in thousands)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 321115 | 221160 | 64335 |  | 606610 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 82225 | 374 | (82599) |  |
|  Total | 321115 | 303385 | 64709 | (82599) | 606610 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 320433 | 195714 | 59707 |  | 575854 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 11067 | 68593 | 1593 | (81253) |  |
|  Less: Cost of revenues | 331500 | 264307 | 61300 | (81253) | 575854 |
|  Segment (loss) profit | (10385) | 39078 | 3409 | (1346) | 30756 |
|  Less: Total operating expenses |  |  |  |  | 180372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net |  |  |  |  | 5248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 947 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net profit from equity method investments |  |  |  |  | (306) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  |  |  |  | (31) |
|  Loss before income taxes |  |  |  |  | (155474) |

---

**Selected Balance Sheet Items** 

***Cash and cash equivalents***

Cash and cash equivalents constitute the majority of our most liquid assets. Our cash and cash equivalents include cash on hands and bank deposits. The total amount of our cash and cash equivalents decreased from RMB4,024.3 million as of December 31, 2020 to RMB772.6 million (US$108.6 million) as of December 31, 2021, primarily due to (i) RMB914.7 million (US$128.6 million) recognized as restricted cash and RMB893.6 million (US$125.6 million) recognized as short-term investments, (ii) a significant amount of cash used in investing activities to expand our business, and (iii) increased inventory costs due to our role as the sole distributor in China for two international pet product brands in 2021 as part of our supply chain business, which required us to maintain a higher level of inventories, as well as the overall growth of our pet care and supply chain services. The total amount of our cash and cash equivalents increased from RMB772.6 million (US$108.6 million) as of December 31, 2021 to RMB855.9 million (US$120.3 million) as of September 30, 2022, primarily due to our redemption of certain short-term investment during the nine months ended September 30, 2022. We believe our liquidity and capital resources, including the bank lines of credit available to us, will help us navigate through unexpected events such as the COVID-19 pandemic.

***Restricted cash***

Restricted cash amounted to nil, RMB914.7 million (US$128.6 million), RMB1,571.7 million (US$220.9 million) as of December 31, 2020 and 2021 and September 30, 2022, respectively. The restricted cash as of September 30, 2022 primarily consists of cash reserved in a bank account used as collateral for short-term bank borrowings we took to support our business expansion and is expected to be released to cash within the next 12 months.

***Short-term investments***

Short-term investments amounted to nil, RMB893.6 million (US$125.6 million) and nil as of December 31, 2020 and 2021 and September 30, 2022, respectively. The short-term investments as of December 31, 2021

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consisted of time deposits in commercial banks with maturities within 12 months and bank structured deposits with maturities months issued by commercial banks.

***Accounts receivable***

Our accounts receivable primarily include receivables from supply chain customers. As of December 31, 2020 and 2021 and September 30, 2022, our accounts receivable was RMB92.7 million, RMB125.9 million (US$17.7 million) and RMB122.1 million (US$17.2 million), respectively. The increase from December 31, 2020 to December 31, 2021 was primarily due to the expansion of our supply chain business.

***Inventories***

Our inventories mainly include purchased pet food, medicine, medical equipment and materials, and other products. As of December 31, 2020 and 2021, and September 30, 2022, our inventories were RMB423.6 million, RMB729.9 million (US$102.6 million) and RMB665.4 million (US$93.5 million), respectively. The increase from December 31, 2020 to December 31, 2021 was mainly due to a higher level of inventories we maintained due to our role as the sole distributor in China for two international pet product brands as part of our supply chain business as well as the overall growth of our pet care and supply chain services. The decrease from December 31, 2021 to September 30, 2022 was mainly due to an increase in sales and the impact of COVID-19 on supply chain that affected inventory shipping and other logistics.

***Prepaid expenses and other current assets***

Our prepaid expenses and other current assets consist of prepaid expenses, advances to suppliers, rebate of purchased goods and other prepaid expenses and current assets. As of December 31, 2020 and 2021 and September 30, 2022, we recorded prepaid expenses and other current assets of RMB417.0 million, RMB720.8 million (US$101.3 million) and RMB568.1 million (US$79.9 million), respectively. The increase from December 31, 2020 to December 31, 2021 was primarily due to a higher level of inventories we purchased and maintained for reasons described in "—Inventories." The decrease from December 31, 2021 to September 30, 2022 was mainly due to accounting policy change in 2022 for leases after which prepaid rental is no longer recorded as prepaid expenses and is recorded in the operating lease right-of-use assets.

***Goodwill***

We recorded goodwill of RMB2,604.9 million, RMB3,898.9 million (US$548.1 million) and RMB3,978.9 million (US$559.3 million) as of December 31, 2020 and 2021 and September 30, 2022, respectively. The goodwill acquired during 2020, 2021 and the nine months ended September 30, 2022 was mainly generated from our acquisition of other pet hospitals and supply chain companies.

***Accounts payable***

Our accounts payable primarily represents the amount payable to pet product suppliers, outsourced delivery companies and marketing services. As of December 31, 2020 and 2021 and September 30, 2022, our accounts payable was RMB180.7 million, RMB237.8 million (US$33.4 million) and RMB227.8 million (US$32.0 million), respectively. The increase from December 31, 2020 to December 31, 2021 was primarily due to an increase in accounts payable to pet product suppliers and an increase in our centralized procurement for our offline channels, which were in line with our business expansion, and improved credit terms we obtained from certain suppliers as a result of our increased bargaining power.

***Contract liabilities***

Our contract liabilities increased from RMB234.8 million as of December 31, 2020 to RMB355.7 million (US$50.0 million) as of December 31, 2021 and decreased to RMB350.9 million (US$49.3 million) as of

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September 30, 2022. The increase from December 31, 2020 to December 31, 2021 was primarily driven by the increasing sales of medical cards and membership prepayments and an increase in contract liabilities assumed from business combinations in 2021.

***Accrued expenses and other liabilities***

Our accrued expenses and other liabilities consist of accrued payroll and welfare benefits, amounts due to former shareholders of acquired entities, unpaid cash consideration of acquisition of subsidiaries and non-controlling interests and other accrued expenses and liabilities. As of December 31, 2020 and 2021 and September 30, 2022, we recorded accrued expenses and other liabilities of RMB1,151.3 million, RMB1,535.5 million (US$215.9 million) and RMB1,519.0 million (US$213.5 million), respectively. The increase from December 31, 2020 to December 31, 2021 was primarily due to an increase in accrued payroll and welfare benefits, as our labor force expanded in 2021 in line with our business growth, and an increase in unpaid cash consideration of acquisition of subsidiaries and non-controlling interests as a result of our increased acquisition efforts in 2021.

**Liquidity and Capital Resources** 

***Cash flows and working capital***

We had net cash used in operating activities of RMB476.1 million in 2020, RMB1,166.8 million (US$164.0 million) in 2021 and RMB502.1 million (US$70.6 million) in the nine months ended September 30, 2022. Our primary sources of liquidity have been proceeds from equity financings and short-term bank borrowings. As of December 31, 2020 and 2021 and September 30, 2022, our cash and cash equivalents were RMB4,024.3 million, RMB772.6 million (US$108.6 million) and RMB855.9 million (US$120.3 million), respectively. Cash and cash equivalents consist of cash on-hand and highly liquid investments with original maturity of three months or less and are unrestricted from withdrawal or use. As of December 31, 2020 and 2021 and September 30, 2022, our restricted cash was nil, RMB914.7 million (US$128.6 million) and RMB1,571.7 million (US$220.9 million), respectively, and our short-term investments were nil, RMB893.6 million (US$125.6 million) and nil, respectively. As of September 30, 2022, approximately 76.2% of our cash, cash equivalents and restricted cash were held in US dollars, the majority of which are proceeds from our Series B financing, and the remaining 23.8% were held in Renminbi.

Our short-term bank borrowings consist of credit loan with a weighted average annual interest rate of 5.03%, 3.78% and 3.96% as of December 31, 2020 and 2021 and September 30, 2022, respectively, and original maturity terms of one year. As of December 31, 2020 and 2021 and September 30, 2022, our short-term bank borrowings were RMB350.0 million, RMB1,392.3 million (US$195.7 million) and RMB1,893.8 million (US$266.2 million), respectively. Such short-term bank borrowings were made from major Chinese banks including China CITIC Bank and China Merchants Bank and included customary covenants such as the obligations to notify the lender of material events and to adhere to the agreed uses of the loans as specified in the respective agreements. We did not breach any of such covenants in 2020, 2021 and the nine months ended September 30, 2022.

We believe our cash and cash equivalents, restricted cash, short-term investments and bank lines of credit available to us will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months following September 30, 2022. Specifically: (i) as of September 30, 2022, we had unused lines of credit in the total amount of RMB2,235.2 million (US$314.2 million), of which RMB1,434.0 million (US$201.6 million) is expected to be held as collateral and RMB801.2 million (US$112.6 million) (consisting primarily of unsecured borrowings), or approximately 36% of the total amount of unused lines of credit, will be available for use; (ii) as of September 30, 2022, the total amount of our cash, cash equivalents and restricted cash was RMB2,427.6 million (US$341.3 million), of which RMB1,571.7 million (US$220.9 million) was restricted cash; and (iii) we expect our operating cash outflow during the next 12 months following September 30, 2022 to be lower than that of 2021 as we have strengthened our control over operating cash

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spending since early 2022 (our operating cash outflow amounted to RMB502.1 million (US$70.6 million) in the nine months ended September 30, 2022, compared to RMB810.9 million in the nine months ended September 30, 2021), and expect our investing cash outflow in the next 12 months following September 30, 2022 to be lower than that of 2021 primarily due to (a) an expected lower level of investments and capital expenditures as a result of, among other things, the impact of the COVID-19 pandemic which restricts our ability to make additional acquisitions and investments, and (b) the fact that we have the discretion as to future investments and their related capital expenditures and, for the next 12 months following September 30, 2022, expect to focus more on the integration and empowerment of existing pet hospitals to unlock their growth potential. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. In the short term and long term, if we determine that our cash requirements exceed the amount of cash we have on hand, we may seek to draw on our bank lines of credit, issue equity or equity linked securities or obtain additional debt financing. 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.

All 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, 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 SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC subsidiaries are 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. Historically, our PRC subsidiaries have not paid dividends to us, and it will not be able to pay dividends until it generates accumulated profits. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE, its local branches and certain local banks.

As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, subject to the approval of government authorities and limits on the amount of capital contributions and loans. This may delay us from using the proceeds from this offering to make loans or capital contributions to our PRC subsidiaries. We expect to invest substantially all of the proceeds from this offering into our PRC operations within the business scopes of our PRC subsidiaries. See "Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business."

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The following table sets forth the movements of our cash flows for the periods presented:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Year Ended December 31,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** | **For the Nine Months Ended September 30,** |
|  | **2020** | **2021** | **2021** | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** | **RMB** | **RMB** | **US$** |
|  | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
|  Net cash used in operating activities | (476107) | (1166773) | (164022) | (810911) | (502096) | (70584) |
|  Net cash (used in) provided by investing activities | (338966) | (2099295) | (295114) | (2369766) | 571583 | 80352 |
|  Net cash provided by financing activities | 4033403 | 971849 | 136620 | 429106 | 455432 | 64024 |
|  Exchange rate effect on cash, cash equivalents and restricted cash | (167373) | (42724) | (6006) | (24327) | 215364 | 30275 |
|  Net increase (decrease) in cash, cash equivalents and restricted cash | 3050957 | (2336943) | (328522) | (2775898) | 740283 | 104067 |
|  Cash, cash equivalents and restricted cash at the beginning of the year/period | 973351 | 4024308 | 565728 | 4024308 | 1687365 | 237206 |
|  Cash, cash equivalents and restricted cash at the end of the year/period | 4024308 | 1687365 | 237206 | 1248410 | 2427648 | 341273 |

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***Operating activities***

Net cash used in operating activities in the nine months ended September 30, 2022 was RMB502.1 million (US$70.6 million). This amount was primarily attributable to net loss of RMB1,109.4 million (US$156.0 million) in the same period, adjusted for certain non-cash items and changes in certain working capital accounts. Such non-cash items primarily included (i) lease expense to reduce operating lease right-of-use assets of RMB396.3 million (US$55.7 million) and (ii) depreciation of property and equipment of RMB274.5 million (US$38.6 million). The changes in working capital accounts that affected operating cash flow in the nine months ended September 30, 2022 primarily included a decrease in non-current operating lease liabilities of RMB362.2 million (US$50.9 million), partially offset by (i) an increase in accrued expenses and other liabilities of RMB165.9 million (US$23.3 million), (ii) a decrease in inventories of RMB81.8 million (US$11.5 million), and (iii) an increase in current operating lease liabilities of RMB26.0 million (US$3.7 million). The decrease in non-current operating lease liabilities and the increase in current operating liabilities were primarily a result of accounting policy changes. The increase in accrued expenses and other liabilities was in line with the overall growth of our business in the nine months ended September 30, 2022. The decrease in inventories was primarily due to an increase in sales and the impact of COVID-19 on supply chain that affected inventory shipping and other logistics.

Net cash used in operating activities in 2021 was RMB1,166.8 million (US$164.0 million). This amount was primarily attributable to net loss of RMB1,311.3 million (US$184.3 million) in the same period, adjusted for certain non-cash items and changes in certain working capital accounts. Such non-cash items primarily included depreciation of property and equipment of RMB335.6 million (US$47.2 million) and remeasurement gain on step acquisition of RMB54.3 million (US$7.6 million). The changes in working capital accounts that affected operating cash flow in 2021 primarily included (i) an increase in accrued expenses and other liabilities of RMB80.1 million (US$11.3 million), (ii) an increase in contract liabilities of RMB78.1 million (US$11.0 million), and (iii) an increase in accounts payable of RMB20.2 million (US$2.8 million), offset by (i) an increase in inventories of RMB206.7 million (US$29.1 million), (ii) an increase in prepaid expenses and other current assets of RMB172.5 million (US$24.2 million), and (iii) an increase in accounts receivable of RMB19.1 million (US$2.7 million). The increases in inventories, prepaid expenses and other current assets, accounts receivable, accounts payable, contract liabilities and accrued expenses and other liabilities were in line with the overall growth of our business in 2021.

Net cash used in operating activities in 2020 was RMB476.1 million. This amount was primarily attributable to net loss of RMB999.8 million in the same period, adjusted for certain non-cash items and changes in certain working capital accounts. Such non-cash items primarily included depreciation of property and equipment of

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RMB294.5 million. The changes in working capital accounts that affected operating cash flow in 2020 primarily included (i) an increase in accrued expenses and other liabilities of RMB151.7 million, (ii) an increase in contract liabilities of RMB107.6 million, and (iii) an increase in accounts payable of RMB29.1 million, partially offset by (i) an increase in inventories of RMB79.5 million, and (ii) an increase in prepaid expenses and other current assets of RMB24.5 million. The increases in inventories, prepaid expenses and other current assets, accounts payable, contract liabilities and accrued expenses and other liabilities were in line with the overall growth of our business in 2020.

***Investing activities***

Net cash provided by investing activities in the nine months ended September 30, 2022 was RMB571.6 million (US$80.4 million), consisting primarily of proceeds from maturity of short-term investments of RMB891.3 million (US$125.3 million), partially offset by (i) RMB194.9 million (US$27.4 million) of purchase of property and equipment, which primarily include medical equipment and materials and (ii) RMB119.6 million (US$16.8 million) for acquisition of subsidiaries and equity method investments, net of cash acquired.

Net cash used in investing activities in 2021 was RMB2,099.3 million (US$295.1 million), consisting primarily of (i) RMB2,397.9 million (US$337.1 million) for purchase of short-term investments, (ii) RMB657.1 million (US$92.4 million) for acquisition of subsidiaries and equity method investments, net of cash acquired, and (iii) RMB425.1 million (US$59.8 million) of purchase of property and equipment, which primarily include medical equipment and materials, partially offset by proceeds from maturity of short-term investments of RMB1,487.0 million (US$209.0 million).

Net cash used in investing activities in 2020 was RMB339.0 million, consisting primarily of RMB130.7 million for acquisitions of subsidiaries net of cash acquired, and RMB181.7 million of purchase of property and equipment, which primarily include medical equipment and materials.

***Financing activities***

Net cash provided by financing activities in the nine months ended September 30, 2022 was RMB455.4 million (US$64.0 million), primarily attributable to RMB1,676.5 million (US$235.7 million) of proceeds from short-term borrowings, partially offset by RMB1,175.0 million (US$165.2 million) of repayments of short-term borrowings.

Net cash provided by financing activities in 2021 was RMB971.8 million (US$136.6 million), primarily attributable to RMB1,491.8 million (US$209.7 million) of proceeds from short-term borrowings, partially offset by RMB458.3 million (US$64.4 million) of repayments of short-term borrowings.

Net cash provided by financing activities in 2020 was RMB4.0 billion, consisting primarily of RMB3.8 billion of proceeds from issuance of shares, in particular, with respect to the Series B financing, and RMB349.6 million of proceeds from short-term borrowings.

**Capital Expenditures** 

Our capital expenditures are primarily incurred for purposes of purchasing medical equipment and materials and acquisition of intangible assets. Our capital expenditures were RMB189.4 million, RMB435.0 million (US$61.1 million) and RMB197.2 million (US$27.7 million) in 2020, 2021 and the nine months ended September 30, 2022, respectively. We intend to fund our future capital expenditures with our cash generated from business operations and proceeds from equity and debt financing. We will continue to make well-planned capital expenditures to meet the expected growth of our business.

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**Material Cash Requirements** 

Other than the ordinary cash requirements for our operations, our material cash requirements as of September 30, 2022 and any subsequent interim period primarily include our capital expenditures, operating lease commitments, purchase obligations, as well as cash requirements for potential investments and repayments of bank borrowings (see Note 9 to our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus).

The following table sets forth our contractual obligations as of September 30, 2022:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Due by September 30, 2022** | **Due by September 30, 2022** | **Due by September 30, 2022** | **Due by September 30, 2022** | **Due by September 30, 2022** | **Due by September 30, 2022** | **Due by September 30, 2022** |
|  | **Total** | **2023** | **2024** | **2025** | **2026** | **2027** | **After** |
|  | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** | **(in RMB thousands)** |
|  Operating lease commitments<sup>(1)</sup> | 2449377 | 591893 | 486075 | 406486 | 313817 | 227025 | 424081 |

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Note:

(1) Operating lease commitments consist of the commitments under the lease agreements for our pet hospitals,
warehouses and office premises.

Our purchase obligations as of September 30, 2022 primarily include (i) purchase of medical equipment and pet medications, food and other products of RMB1,347.0 million, (ii) cash investment commitments of RMB15.3 million, and (iii) capital expenditures, which mainly consist of new pet hospital renovation costs, of RMB26.0 million.

We intend to fund our existing and future material cash requirements primarily with anticipated cash flows from operations, our existing cash balance and other financing alternatives. We will continue to make cash commitments, including capital expenditures, to support the growth of our business.

Except for those disclosed above, we did not have any significant capital or other commitments, long-term obligations, or guarantees as of September 30, 2022.

**Off-Balance Sheet Commitments and Arrangements** 

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders' 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. Moreover, 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.

**Holding Company Structure** 

Our company, New Ruipeng Pet Group Inc., is a holding company with no material operations of its own. We currently conduct our operations primarily through our PRC subsidiaries. As a result, our 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 subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries and their subsidiaries 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 their registered capital. In addition, our subsidiaries in China may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their

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discretion, and their subsidiaries may allocate a portion of their after-tax profits based on PRC accounting standards to a surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a foreign-invested enterprise 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.

**Quantitative and Qualitative Disclosures about Market Risk** 

***Foreign exchange risk***

The revenues and expenses of our entities in the PRC are generally denominated in RMB and their assets and liabilities 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 the 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.

Renminbi is not freely convertible into foreign currencies. Remittances of foreign currencies into the PRC or remittances of Renminbi out of the PRC as well as exchange between Renminbi and foreign currencies require approval by foreign exchange administrative authorities with certain supporting documentation. SAFE, under the authority of the People's Bank of China, controls the conversion of Renminbi into other currencies.

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 ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollars against the Renminbi would have a negative effect on the U.S. dollar amounts available to us.

We estimate that we will receive net proceeds of approximately US$ million from this offering if the underwriters do not exercise their option to purchase additional ADSs, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, based on the initial offering price of US$ per ADS, the midpoint of the estimated initial public offering price range shown on the cover page of this prospectus. Assuming that we convert the full amount of the net proceeds from this offering into Renminbi, a 10% appreciation of U.S. dollars against Renminbi, from the exchange rate of RMB7.1135 for US$1.00 as of September 30, 2022, to a rate of RMB7.8249 to US$1.00, would result in an increase of RMB million in our net proceeds from this offering. Conversely, a 10% depreciation of U.S. dollars against Renminbi, from the exchange rate of RMB7.1135 for US$1.00 as of September 30, 2022, to a rate of RMB6.4022 to US$1.00 would result in a decrease of RMB million in our net proceeds from this offering.

***Interest rate risk***

Our exposure to interest rate risk primarily relates to the interest expenses on our short term bank borrowings. Our short term bank borrowing bears interests at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest expenses may exceed expectations due to changes in market interest rates. Increased interest rates may have a material impact on our results of operations and financial condition. Historically, we have been charged annual interest rates of generally between 3.2% and 6.55% on average on our bank loans. Increased interest rates will have a direct impact on us by increasing our interest expenses and in turn decreasing our cash. As of September 30, 2022, we had RMB1,893.8 million (US$266.2 million) in short-term bank borrowings. For illustrative purposes, if the interest rate charged on such bank borrowings were to increase by 1%, our interest expenses would increase by approximately RMB18.9 million (US$2.7 million) on an annual basis. In addition, as increased interest rates would make it more costly for us to fund our operations by borrowing, we would need to

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take additional measures to maintain a healthy cash flow, such as by tightening our control over inventories, accounts payable and accounts receivable. We may do so by, for example, deploying additional sales efforts to increase inventory turnover and further negotiating credit terms with customers and suppliers. As a result, our inventories and accounts receivable may decrease and our accounts payable may increase to offset the impact of higher borrowing costs.

After completion of this offering, we may invest the net proceeds that we receive from this offering 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.

**Internal Control Over Financial Reporting** 

Prior to this offering, we have been a private company with limited accounting and financial reporting personnel and other resources to address our internal control and procedures. In connection with the audits of our consolidated financial statements included in this prospectus, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting. As defined in the standards established by the PCAOB, a "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified are our (i) lack of sufficient accounting and financial reporting personnel with the requisite knowledge, skills and experience in the application of U.S. GAAP and SEC reporting requirement, (ii) lack of financial accounting and reporting policies and procedures that are commensurate with U.S. GAAP and SEC reporting requirements and (iii) ineffective control environment and monitoring to support the U.S. GAAP and SEC financial reporting process.

To remediate our identified material weaknesses, we have adopted measures to improve our internal control over financial reporting, including, among others: (i) hiring additional qualified accounting and financial reporting personnel with appropriate knowledge, skills and experience in U.S. GAAP accounting and SEC reporting, (ii) organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements. In 2021, we hired two employees dedicated to the preparation of consolidated financial statements and SEC reporting, both of whom have prior work experience in audit firms and the finance departments of public companies. Moreover, in order to enhance the centralized management of the financial records of our group, we established a financial shared service center in Wuhan in 2021 with 35 employees as of September 30, 2022. Together with our Chengdu financial shared service center, as of September 30, 2022, our financial shared service centers had a total of 187 employees. We also set up a financial data center with three employees to integrate the financial information of our group with business operations through a systematic approach. In addition, in March 2022, we hired a new deputy financial director with seven years of prior work experience in the finance departments of multinational enterprises, including over five years of managerial experience, for our Chengdu financial shared service center. Going forward, we plan to continue to enhance the centralized management of our financial records and the quality control of our financial reporting, and provide our accounting and financial reporting staff with extensive training resources. We have been training our accounting and financial reporting staff primarily through on-the-job trainings. In July 2022, we purchased relevant online courses and memberships for these employees to facilitate their training and self-learning. We mandate a minimum of 40 hours of learning of these courses per annum for each of the senior members of our accounting and financial reporting team. As of September 30, 2022, the senior members of our accounting and financial reporting team have completed an aggregate of 150 hours of learning. We plan to organize regular internal training sessions related to U.S. GAAP and SEC reporting starting from September 2022. We also plan to adopt additional measures to improve our internal control over financial reporting, including, among others, (i) creating a U.S. GAAP accounting and reporting policies and procedures manual, which will be maintained,

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reviewed and updated, on a regular basis, to the latest US GAAP accounting standards, (ii) further hiring executive accounting personnel with strong knowledge and experience in U.S. GAAP accounting and SEC reporting as necessary, (iii) establishing "tone at the top" entity level controls, including but not limited to an audit committee with at least one qualified financial expert and an internal audit department, with the oversight of the board of directors with proper composition; and (iv) identify the relevant controls that address the quality of the information generated and used in the performance of key controls supporting the financial statement line items and footnote disclosure. Our internal control team, consisting of nine members as of September 30, 2022, oversees the establishment of the internal control system of our group, the formulation and implementation of internal control process, identification and resolution of key issues and risk management relating to internal control. At the end of 2021, we hired an internal control consulting firm to conduct a comprehensive review and evaluation of our financial management process in terms of management system, internal control process, operating procedures, information system and others. Based on the review and recommendations of the internal control consultants, we have formulated a detailed optimization plan for our internal control and financial reporting system, and have prepared an initial draft of the U.S. GAAP accounting and reporting policies and procedures manual for internal approval. We plan to adopt such manual and complete the optimization plan by the end of 2022. We also plan to embed internal control responsibility into the fabric of our culture, business, processes, and procedures by implementing a control self-assessment program as part of our ongoing evaluations. We will also establish an audit committee with at least one qualified financial expert immediately upon the effectiveness of our registration statement on Form F-1, of which this prospectus is a part.

The process of designing and implementing an effective financial reporting system and internal control over financial reporting is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation. See "Risk Factors—Risks Related to Our Business and Industry— If we fail to implement and maintain an effective system of internal controls to remediate our material weaknesses over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market price of our ADSs may be materially and adversely affected."

As a company with less than US$1.235 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.

**Taxation** 

***Enterprise income tax***

*Cayman Islands* 

We are incorporated in the Cayman Islands and conducts our primary business operations through the subsidiaries in the PRC and Hong Kong. Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gain arising in Cayman Islands. Additionally, upon payments of dividends by us to our shareholders, no Cayman Islands withholding tax will be imposed.

*Hong Kong* 

Our subsidiaries incorporated in Hong Kong are subject to income tax at the rate of 16.5% on the estimated assessable profits arising in Hong Kong. For the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, we did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.

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*The PRC* 

The current enterprise income tax law ("EIT Law") applies a uniform 25% EIT rate to both foreign invested enterprises and domestic enterprises.

All PRC enterprises are subjected to such 25% rate, except for enterprises qualified as small and micro enterprises ("MSME"). An enterprise can qualify as an MSME if it is engaged in industries which are not restricted or prohibited in the PRC, its annual taxable income does not exceed RMB3 million, the number of employees does not exceed 300, and total assets does not exceed RMB50 million. If the entity qualified as an MSME, then its taxable income will be taxed gradually at a lower rate.

The EIT Law treats enterprises established outside of the PRC with "effective management and control" located in the PRC as PRC resident enterprises for tax purposes. The term "effective management and control" is generally defined as exercising management and control over the business, personnel, accounting and properties, etc. of an enterprise. Our company is located in jurisdictions outside of the PRC; however, if our company is considered a PRC resident enterprise for tax purposes, we would be subject to the PRC enterprise income tax rate of 25% on our worldwide income commencing on January 1, 2008. For the tax years ended December 31, 2020 and 2021, we have not accrued for PRC tax on such basis as our non-PRC entities had zero assessable profits in the PRC for the period after January 1, 2008. We will continue to monitor the tax status with regards to the PRC tax resident enterprise regulation of our non-PRC entities.

***Withholding tax on undistributed dividends***

The EIT law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise ("FIE") to its immediate holding company outside of China, unless there is 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). We did not record any dividend withholding tax, as we have no retained earnings for any of the periods presented. Substantially all of our loss before income tax was derived from the PRC for all periods presented.

***Uncertain Tax Position***

Our company did not identify any material unrecognized tax benefits for each of the periods presented. In general, the PRC tax authority has up to five years to conduct examinations of our tax filings. Accordingly, the PRC subsidiaries' tax years of 2015 through 2020 remain open to examination by the taxing jurisdictions.

**Critical Accounting Policies and Estimates** 

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.

We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.

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The following descriptions of several critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included in this prospectus. When reviewing our financial statements, you should consider (i) our selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions.

***Business combinations***

We account for our business combinations using the purchase method of accounting which requires that the consideration transferred to be allocated to the identifiable assets acquired and liabilities assumed by us based on their fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost 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 earnings.

For the years ended December 31, 2020 and 2021 and the nine-month period ended September 30, 2022, the majority of our business combinations were small and simple operations that were subsequently integrated into our hospital network and customer management IT system, and from where we were able to unlock synergies and develop our loyal customer base through targeted marketing campaigns and promotions as well as customer incentives, i.e. discounts. As the acquirees lacked the requisite customer onboarding processes to obtain specific information about customers such as a membership scheme and customer management IT system to store its customer data, we did not recognize any significant customer relationship assets for these respective acquisitions. Such customer base represented acquired groups of customers that were not known or identifiable to us. Due to the inability to separate a customer base, and the fact that the customer base relationship is not contractual, the customer base is not considered to be an asset separable from goodwill.

In a business combination achieved in stages, we remeasure our previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in earnings.

The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions used in valuation methodologies, i.e. income and market approaches, along with certain judgment from us.

**The following are significant assumptions used in the income approach:** 

*Revenue growth rate:* We make assumptions about the demand for our services and product offering in the marketplace. These assumptions are derived using external market and industry data.

*Discount rates:* To determine discount rates used in the valuation of the equity value of the acquiree in a business combination achieved in stages, we used the weighted average cost of capital ("WACC") model by considering certain inputs from an industry perspective. To determine discount rates for acquired intangible assets, we considered a certain risk premium over WACC for the higher risk profile of the intangible assets. Moreover, a weighted average rate of return ("WARR") test was performed to cross check the overall reasonableness of discount rates used in the intangible assets valuations.

*Terminal growth rate:* Terminal growth rate is calculated based on the actual inflation rate of China in the recent 10 years adjusted for the expected rate in the long-term.

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*Useful lives:* The length of useful lives of identifiable intangible assets acquired reflects our best estimate of use of the typical market participant.

***The following are significant assumptions used in the market approach:***

Selection of comparable companies and revenue multiples: We made selection of listed comparable companies and appropriate revenue multiples by taking into account the business and financial performance of these companies.

Discount for lack of marketability (DLOM): DLOM is the difference in value between freely marketable securities and securities that are restricted or otherwise cannot be freely traded. We use the Finnerty method to calculate the DLOM.

***Goodwill***

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events that are considered to be indicators of impairment.

We have the option to assess qualitative factors first to determine whether it is necessary to perform the quantitative impairment test. In the qualitative assessment, we primarily consider factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. If we believe, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is required. Otherwise, no further testing is required. We early adopted ASU No. 2017-04, *Simplifying the Test for Goodwill Impairment*. Therefore, when we perform the quantitative impairment test we compare the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess.

We elected to choose to bypass the qualitative assessment and proceeded directly to perform the quantitative test for the reporting units for the years ended December 31, 2020 and 2021 and the nine months ended September 30, 2022, with the assistance of a third-party appraiser. The judgment in estimating the fair value of the reporting units includes forecasts of the amount and timing of expected future cash flows, which are based on our best estimates of forecasted revenue, gross profit, operating expenses, future capital expenditures, working capital levels and discount rate.

***Share-based Compensation***

We determine whether a share-based award should be accounted for as a liability award or equity award. All of our share-based awards to employees were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values. For awards only with service conditions, we have elected to recognize compensation expense using the straight-line method for awards granted with graded vesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant date value of the shares that are vested at that date. For awards with performance and service conditions, we use the accelerated method for awards granted with graded vesting. We account for forfeitures as they occur.

A change in the terms or conditions of the awards is accounted for as a modification of the award. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, we recognize incremental compensation cost in the period the modification occurs. For unvested awards, we recognize over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized

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compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost we recognize is the cost of the original award.

***Methodologies and significant estimates utilized in determining the fair value of our ordinary shares for share based compensation***

To estimate the fair value of 60 million ordinary shares which were granted as share based compensation to our employees in June 2021, we first used the discounted cash flow method of the income approach to determine our underlying equity value, by using the projected cash flows based on our best estimate as of the valuation date. Then, a hybrid return method was used in the fair value assessment of ordinary shares granted. In detail:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Hybrid Return Method :* The hybrid return method is a blended approach using aspects of both the
Probability-Weighted Expected Return Method (PWERM) and Option Pricing Method (OPM).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *PWERM :* The PWERM is a scenario-based analysis that estimates value per share based on the
probability-weighted present value of expected future values, considering each of the possible outcomes available to us, as well as the rights of each share class. The PWERM included non-IPO scenario which is based on liquidation and redemption
events and IPO scenario, and were weighted based on our estimate of the probability of each event occurring.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *OPM :* Under the OPM, shares are valued by creating a series of call options with exercise prices
based on the liquidation preferences/redemption preferences and conversion terms of each equity class under respective scenarios. The estimated fair values of the redeemable ordinary and ordinary shares are inferred by analyzing these options.

There are significant judgments and estimates inherent in the determination of our equity value and the fair value of ordinary shares, such as those regarding our expected future cash flows, discount rate, probability of possible future events, risk-free rate, equity volatility, and discount for lack of marketability. Such estimates involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our share-based compensation could be materially different. Changes in the following assumptions could have a material impact on our results of operation.

*Future cash flow assumptions:* The projections for future cash flows utilized in the models are derived from historical experience and assumptions regarding future growth and profitability of each reporting unit. These projections are consistent with our operating budget and strategic plan. Cash flows for the nine years subsequent to the valuation date were utilized in the determination of the fair value of each reporting unit. The growth rates assumed a gradual increase in revenue based on new acquisition and market expansion. Beyond nine years a terminal value was determined using a perpetuity growth rate based on long-term inflation rates.

*Discount rate:* The discount rate is calculated based on the weighted average cost of capital (WACC) and capital asset pricing model (CAPM) determined after considering factors including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors.

*Risk-Free Rate:* The risk-free rate is based on the implied yield currently available on U.S. Government debt with a remaining term consistent with the time to exit event based on IPO, liquidation and redemption scenarios.

*Equity Volatility:* The equity volatility was derived from the historical stock volatilities of comparable peer public companies within our industry in periods consistent with the time to exit event based on IPO, liquidation and redemption scenarios, respectively.

*Discount for lack of marketability (DLOM):* DLOM is the difference in value between freely marketable securities and securities that are restricted or otherwise cannot be freely traded. Finnerty method was adopted in the calculation of the DLOM.

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***Revenue recognition***

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods or services, net of value-added tax ("VAT"). We follow a five-step approach for revenue recognition: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as or when we satisfy a performance obligation.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. We have determined that our contracts do not include a significant financing component because we expect the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

For all contracts with customers, we evaluate whether we are the principal (i.e. to report revenue on a gross basis) or agent (i.e. to report revenue on a net basis). Generally, we are the principal in our contracts with customers as we control the related goods or services before they are transferred to the customer.

Timing of revenue recognition may differ from the timing of invoicing to customers. For certain services, customers are required to pay before the services are delivered to the customer. When either party to a revenue contract has performed, we recognize a contract asset or a contract liability in the consolidated balance sheet, depending on the relationship between our performance and the customer's payment. Our contract liabilities primarily relate to services not yet completed and products not yet delivered. We classify contract liabilities as current based on the timing of when we expect to recognize revenue, which typically occurs within one year. This revenue recognized was driven primarily by performance obligations of medical cards, membership prepayments, and grooming services being satisfied. We did not have any material contract assets as of December 31, 2020 or 2021 or September 30, 2022.

For the year ended December 31, 2020, the increase in the contract liabilities balance was primarily driven by the sales of medical cards and membership prepayments and contract liabilities of RMB10.7 million assumed from business combinations, partially offset by revenue of RMB96.7 million recognized that was included in the contract liabilities balance as of January 1, 2020.

For the year ended December 31, 2021, the increase in the contract liabilities balance was primarily driven by the sales of medical cards and membership prepayments and contract liabilities of RMB42.9 million (US$6.0 million) assumed from business combinations, partially offset by revenue of RMB214.9 million (US$30.2 million) recognized that was included in the contract liabilities balance as of January 1, 2021.

For the nine months ended September 30, 2021, the increase in the contract liabilities balance was primarily driven by the increase in sales of medical cards and membership prepayments and contract liabilities of RMB38.1 million assumed from business combinations, partially offset by revenue of RMB178.7 million recognized that was included in the contract liabilities balance as of January 1, 2021.

For the nine months ended September 30, 2022, the decrease in the contract liabilities balance was primarily driven by the decrease in sales of medical cards and membership prepayments and contract liabilities of RMB1.7 million (US$232 thousand) assumed from business combinations, partially offset by revenue of RMB292.5 million (US$41.1 million) recognized that was included in the contract liabilities balance as of January 1, 2022.

<u>Pet care services</u> 

Pet care services is primarily comprised of pet medical and grooming services. Pet medical services mainly include routine services such as deworming, vaccination, physical examination and sterilization, and specialized

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care for pets; grooming services mainly include pet bathing and salon services. The duration of this type of outpatient pet medical and grooming services is short, and most of the services are completed within one day. Revenues are recognized when our obligation to provide pet care services is satisfied. Revenue for grooming services and outpatient services are recognized at a point in time because the performance obligations are generally satisfied over a period of less than one day. For inpatient services, the performance obligation is satisfied over time as the patient simultaneously receives and consumes the benefits of the inpatient services provided. We have a right to consideration from our patients in an amount that corresponds directly with the value to the patient of our performance completed to date (calculated based on fixed pre-determined treatment plan). Therefore, revenues for inpatient services are recognized in the amount to which we have a right to invoice. We typically request payment before providing the services but payment may also be due upon completion of the services.

We sell different pet medical cards in fixed amounts that include a package of pet services including physical exam, vaccines, deworming and also provide discounts for future medical and grooming services. For service arrangements that include multiple performance obligations, we evaluate all the performance obligations in the pet medical cards to determine whether each performance obligation is distinct. Consideration is allocated to each performance obligation based on its standalone selling price. We generally determine standalone selling prices based on the prices charged to customers on a standalone basis. We recognize revenue from pet medical cards when the underlying promised goods or services are redeemed by the medical card holders. The medical card holders are also allowed discounts on future medical and grooming services during the card validity period of one year which is accounted for as a material right. The relative standalone selling price of future services is deferred and included as part of contract liabilities in the consolidated balance sheets based on the amount of services that are expected to be provided.

We provide animal diagnostic testing services such as pathology, molecular diagnosis and allergenic testing to customers. Our contracts have a single performance obligation which is satisfied upon the rendering of the diagnostic tests and delivery of the test results to the customer at a point in time. Our payment terms are typically 30 to 60 days upon acceptance of the test results from customers. We also provide advertising services for customers to enhance the customer's brand and image, by tailoring and displaying the customers' advertisements on our various online platforms and arranging signage at physical events such as awards ceremony (collectively "marketing activities"). As we use the marketing activities to deliver an integrated advertising campaign for the customers, the individual marketing activities are not distinct and the combined marketing activities are considered to be one performance obligation to enhance the customer's brand and image. The length of the advertising campaigns are generally within 3 months or less and revenues from such arrangements are recognized ratably over the service period, as the customer simultaneously consumes the benefits when we provide the services.

<u>Supply chain</u> 

We sell pet food, medicine and supplies directly or through third-party online channels to both corporate and individual customers. For sales through third-party online channels, we deliver inventory on a consignment basis to third-party online channels but they are not required to pay until the product is sold to end customers. Under such arrangements, we retain the title to the products and the third-party online channels act as selling agents. The third-party online channels earn commissions on the products sold to end customers and periodically remit the cash proceeds from sales, less the commission earned, to us. In addition, consigned products that are not sold can be returned to us. Revenue from supply chain is recognized when control passes, which generally occurs at a point in time when direct customers or end customers for consignment sales through third-party online channels accept the products upon delivery. Our payment terms are typically 30 to 45 days upon acceptance from customers. Inventory on consignment is not material as of December 31, 2020, December 31, 2021 and September 30, 2022.

We offer discounts, and a right of return for a short period upon the customer's receipt of the products. Returns are estimated using the expected value method based on historical return patterns. We recognize

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revenues net of discounts and estimated returns, and records a refund liability included in "Accrued expenses and other liabilities" in the consolidated balance sheets. As of December 31, 2020 and 2021 and September 30, 2022, estimated returns were not significant.

<u>Local services</u> 

Local services are primarily comprised of product sales through online platforms and offline channels. Revenue from local services is recognized when control passes, which generally occurs at a point in time when customers accept the products in the hospital or upon delivery. We offer discounts, and a right of return for a short period upon the customer's receipt of the products. Returns are estimated using the expected value method based on historical return patterns. Subsequent sales return is not allowed for product sales from hospitals. We recognize revenues net of discounts and estimated returns, and records a refund liability included in "Accrued expenses and other liabilities" in the consolidated balance sheets. As of December 31, 2020 and 2021 and September 30, 2022, estimated returns were not significant. We also provide online coupons to our customers that can only be used with concurrent purchases, and recognize them as a reduction of revenues when they are utilized by customers in a sales transaction.

***Recent accounting pronouncements***

A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 "Recent accounting pronouncements" to our consolidated financial statements included elsewhere in this prospectus.

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**INDUSTRY** 

*The information presented in this section has been derived from an industry report issued in May 2022, commissioned by us and prepared by Frost & Sullivan, an independent research firm, to provide information regarding our industry and our market position in China.*

**Overview of China's Pet Market**

China is the second largest pet market in the world in terms of pet-related spending, according to Frost & Sullivan. China's pet market is mainly comprised of pet food, supplies, pet care services and live animal purchases. The size of China's pet market increased from RMB94.3 billion in 2015 to RMB265.6 billion in 2021, representing a CAGR of 18.8%. It is expected to further increase to RMB537.6 billion in 2026, representing a CAGR of 15.1% from 2021.

China's pet market has experienced prolonged expansion and is expected to enter into a new phase of strong growth, underpinned by increasing urbanization, growing demand and awareness of pets in younger generations and increasing need for companionship. The total number of pets reached 338.2 million in 2021 and is expected to further grow at a CAGR of 8.0% to 497.1 million by 2026, according to Frost & Sullivan. The total number of companion pets, which include companion dogs and companion cats, reached 183.7 million in 2021 and is expected to further grow at a CAGR of 7.5% to 264.0 million by 2026, according to Frost & Sullivan.

**Market Size of China's Pet Market**![LOGO](g148072g13t22.jpg)

*Source: Frost & Sullivan Report*

***Key Drivers of China's Pet Market***

According to Frost & Sullivan, the growth of China's pet market is driven by multiple factors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Increasing urbanization rate and rising per capita income in China**. The urbanization rate in China reached
approximately 65% in 2021 and is expected to reach 72% in 2026. In addition, disposable income per capita of urban households in China is expected to increase to approximately RMB67,600 in 2026 from approximately RMB47,400 in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Growing demand and health awareness of pets among younger generation**. In 2021, approximately 42% of the
pet owners in China were below the age of thirty. They have a higher awareness of pet

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health management and are consequently more willing to spend on pet care services, including preventive measures such as regular physical examinations, vaccination and deworming. Pets have also become one of the most shared content genres on social media platforms among younger generation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pets becoming part of family**. Young couples today tend to get married late and get pets before they have
kids. The marriage registration rate for 20- to 24-year-olds fell from 47.0% in 2005 to 17.1% in 2021. The number of children per woman has dropped from 1.3 in 2005 to 1.0 in 2021, showcasing a lowered willingness to give birth. In addition, married
couples with children also increasingly see pets as an important part of family life. Furthermore, the percentage of people older than 65 is expected to grow from 14.2% in 2021 to 16.2% in 2026, and the growing need for companionship of the elderly
who do not live with their children will further drive the growth of the number of pets in China.

Compared to the United States, China's pet market is under-penetrated with tremendous potential:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• China has huge potential in pet penetration. China's household pet ownership rate was 23.7% in 2021,
compared with 69.7% in the United States, which leaves room for rapid growth in China's pet industry. The household pet ownership rate in China is expected to reach 31.9% in 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In 2021, the average annual spending per companion pet in first-tier cities in China was approximately RMB4,700,
which was only 58.0% of the average annual spending per companion pet of approximately RMB8,100 in the United States in 2021.

In addition, China's pet market has been affected by the COVID-19 pandemic. Some of the offline pet stores were temporarily closed in the first half of 2020 due to the pandemic, most of which resumed normal operations in the second half of 2020 as the COVID-19 pandemic became largely controlled in China. The operation of offline pet stores has been further affected by the recent resurgence of COVID-19 and the lock-down and other measures taken in response. Online segments including online sales of pet food and pet products grew stably during the pandemic. The number of pets in China is expected to resume growth after the pandemic, and offline stores and pet hospitals are likely to witness a relatively rapid growth.

***Key Trend of China's Pet Market***

According to Frost & Sullivan, key trends of China's pet market include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Extending lifespan of pets**. Pet parents are more willing to spend on quality pet food and supplies, as
well as regular physical examinations and pet care services, which tend to extend pets' lifespan. The expected lifetime spending for companion pets in urban regions in first-tier cities in China was approximately RMB63,400 in 2021 and is
expected to increase to approximately RMB87,900 in 2026 at a CAGR of 6.8%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Wider variety of pet product and service offerings**. With the increasingly diverse demand for pet products
and services, participants in China's pet market have been competing to introduce a wider variety of pet products and services to cater to pet parents' needs.

**Overview of China's Pet Care Market** 

The pet care industry in China is highly fragmented with an aggregate pet care market share of 13.9% for the top five players in 2021, according to Frost & Sullivan. Compared to mature subsectors such as pet food and products with higher concentration, the pet care services industry in China is going through rapid consolidation, with market leaders likely to take a higher market share in the foreseeable future, according to Frost & Sullivan.

According to Frost & Sullivan, the pet care industry in China is expected to grow the fastest among all subsectors. Its market size grew from RMB20.0 billion in 2015 to RMB54.5 billion in 2021 at a CAGR of 18.2%, and is expected to further increase to RMB135.6 billion in 2026 at a CAGR of 20.0%, higher than that of

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the overall pet industry. Pet care market can be further divided into pet hospital and others including animal husbandry and veterinary stations, pet stores with certifications and other institutions and stores that could provide pet care. In 2021, size of pet hospital reached RMB30.3 billion and the market is expected to reach RMB78.9 billion with a CAGR of 21.1% from 2021 to 2026.

**Size of Pet Care Market in China, 2015-2026E**![LOGO](g148072g15a11.jpg)

*Source: Frost & Sullivan*

***Key Drivers of China's Pet Care Market***

*Demand side drivers* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improving health awareness of pets**. Pet parents of the younger generation are highly aware of pet health
management in order to extend pet lifespan, indicating huge growth potentials in the frequency and annual spending of pet care services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Pet aging and increasing number of aging-associated diseases**. Pet life expectancy in China is expected to
be extended. In 2021, only 34.7% of dogs in China were above six years old. The percentage is expected to rise to 48.3% in 2026. According to Frost & Sullivan, the same trend applies to cats. Average annual spending per companion pet for pet
care services is expected to be RMB1,100 for pets below six years old and RMB2,200 for pets above six years old in 2026, representing a 100% increase, due to a higher incidence rate of age-associated diseases such as dental diseases, arthritis and
cancer. Increased prevalence of diseases also calls for needs of in-depth and high-end pet care services.

*Supply side drivers* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Advanced pet care technology and evolving veterinary referral system**. Advanced pet care technology can
significantly increase pet service spending across the lifetime of a pet. Pet care services spending across the lifetime of a dog, for instance, is expected to rise with the increased adoption of diagnostics, application of smart prescription and
follow-on systems and lifetime patient tracking. Market leaders are spearheading the effort of building mature referral systems that efficiently allocate veterinary resources by referring patients to pet hospitals with more advanced veterinarian
skills and technologies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Rapidly growing pool of veterinarian talents**. Pet care market leaders are progressing further with
universities and vocational institutions to secure talents and provide internship or training opportunities. With more veterinarians joining the workforce and their increased experience, the quality of pet care services will be greatly improved as
well.

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China's pet care market has huge growth potentials, compared with that of the United States, as illustrated by the data set forth below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual pet care services spending per companion pet in 2021 was RMB1,100 in China, as compared to RMB3,600 in the
United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Pet care services penetration rate in 2021 was approximately 21% in China and approximately 50% in the United
States. Annual veterinary visits per urban companion pet in 2021 was 1.9 times in China, compared to 3.6 times in the United States. Pet care services penetration rate refers to the result of dividing the number of companion pets that received pet
care services during a certain period by the total number of companion pets during the same period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• China's pet care market is expected to undergo greater growth than that of the United States. The CAGR of
the China pet care market from 2021 to 2026 is expected to be 20.0%, as compared to 4.3% for that of the United States.

In addition, the pet care industry is showing outstanding resilience against the COVID-19 pandemic compared to other offline businesses due to the indispensability of pet care services. For China's pet care industry, though the growth rate dropped from 17.8% in 2019 to 5.7% in 2020 due to the spread of COVID-19, a significant rebound was seen in 2021, at a growth rate of 27.6%.

***Competitive Landscape of China's Pet Care Market***

China's pet care industry has experienced rapid development with a relatively low entry barrier to open new pet hospitals, which are primarily single-store pet clinics and small pet hospital chains. In 2021, there were approximately 23,400 pet clinics and hospitals in China, with only 15 to 20 pet hospital chains operating over 10 hospitals.

China's pet care market is much more fragmented than that of the United States. In China, the largest market player in terms of revenue in 2021 accounted for a 9.8% pet care market share, and the top ten players had less than 15% pet care market share in terms of revenue. In contrast, in the United States, the largest market player accounted for a 20% market share in terms of revenue in 2021 and the top ten players had approximately one third of the market share in terms of revenue.

The diagram below illustrates the competitive landscape of China's pet care industry.

**Top 10 Players in China Pet Care Industry**![LOGO](g148072g17s44.jpg)

*Source: Frost & Sullivan* 

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***Key Competitive Barriers in China's Pet Care Industry***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Brand recognition**. For a participant in the pet market, its brand recognition mainly comes from its
history, proven track record and quality of products and services. Pet care service are a long-term business with a focus on building customer trust and deepening the moat, an industry where people appreciate benefits of scale and proven track
records.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Specialized and high-end talents**. With a long history of brand building and network expansion, market
leaders are significantly more appealing to specialized and high-end talents in the industry as compared with new comers, as they offer better opportunities of career development and more systematic skills training.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Sophisticated management systems**. Market leaders need to operate a nationwide multi-tier network of
hospitals, facing substantial challenges such as complex decision making and supply chain management integrating local operation and centralized knowledge and expertise. Those players without sophisticated management systems will find it extremely
challenging to expand their geographic coverage, and usually fail to get to a meaningful scale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **High-level digitalization**. Leveraging the large scale of pet care data and pet parents' transaction
data, market leaders are able to build highly digitalized platforms consisting of functions such as digital medical record system, intelligent consultation and image diagnostics. New players to the industry typically lack the data and technology
infrastructure to build digital systems and therefore find it challenging in building the same level of technology capabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Established customer base**. Leading companies have first-mover advantage by accumulating large customer
bases in China's pet market. They have already cultivated their customers' stickiness and brand loyalty through marketing and advertising campaigns as well as sales promotion activities.

**Overview of Pet Products Supply Market**

The pet products supply market includes supplies of pet food and other pet products. In China's pet market, supply chain plays a fundamental role in fulfilling pet parents' demand by ensuring product availability for pet product retailers and improving the efficiency in their store operations. It is critical to downstream retailers to ensure that their stores are well-stocked and can provide pet owners access to a wider range of pet products. Supply chain service can help lower retailer's overall costs and boost profitability through inventory control and logistics management. China's pet product supply chain is still at an early stage, with only a few sizable players having the capabilities to provide integrated services. In 2021, the pet product supply chain market in China was relatively fragmented with approximately 20,000 to 30,000 pet product supply chain service providers.

Overall, China's pet products supply market grew from RMB48.7 billion in 2015 to RMB140.2 billion in 2021, and is projected to increase to RMB260.7 billion in 2026 with a CAGR of 13.2% from 2021. The offline pet products supply market has witnessed a significant growth from RMB35.7 billion in 2015 to RMB73.6 billion in 2021, and is projected to increase to RMB123.5 billion in 2026 with a CAGR of 10.9% from 2021 as a result of continuous comprehensive consumption upgrades and diversification of pet products offerings, as well as increasing opportunities captured by the application of big data technology in China's retail business. The offline pet products supply market accounted for a majority of pet products supply market in China in terms of revenue in 2021.

At the same time, online pet retail is playing an important role in the pet products supply market. The online pet products supply market accounted for approximately 47.5% of the total pet products retail market in terms of revenue in 2021. The market size of China's online pet products retail market has drastically increased from RMB13.0 billion in 2015 to RMB66.6 billion in 2021, and is expected to grow to RMB137.2 billion in 2026 with a CAGR of approximately 15.6% from 2021. The rapid growth of the online pet products retail market is primarily driven by increasing internet and mobile internet penetration, continuous business expansion of various market participants and growing consumer base with more spending power. In addition, the well-established e-commerce infrastructure in China and the COVID-19 pandemic have further fueled the growth of online pet product retail and the development of new business models including online order with offline pick-up.

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**BUSINESS** 

**Our Mission** 

Be the trusted partner for animal well-being and bring happiness to pet families.

**Our Vision** 

We aspire to build a world-leading comprehensive pet services platform and an integrated pet ecosystem.

**Our Business** 

***Who We Are***

We are the largest pet care platform in China and the second largest globally in terms of number of hospitals and revenue from pet care services in both 2020 and 2021, according to Frost & Sullivan. As of December 31, 2021, we had 23 pet hospital brands and 1,887 pet hospitals, approximately three times the sum of pet hospitals of our competitors that ranked the second through the tenth in China. By September 30, 2022, we had further increased our number of pet hospitals in China to 1,942. As of December 31, 2021, we had operations in 31 provinces and 111 cities, and we had an approximately 30% pet care market share in first-tier cities across China in 2021, according to Frost & Sullivan. As of September 30, 2022, we operated in 114 cities across China. We operate pet care services, supply chain services, and local services as three pillars, and have expanded into other business segments including third-party diagnosis, continued veterinary education and marketing-as-a-service. We have thus become the leading one-stop pet care platform in China in terms of number of pet hospitals, revenue and service scope, according to Frost & Sullivan, providing integrated services to pets and pet parents.

We are a pioneer in China's pet care industry. We have operated in the pet care industry for over 20 years and are the oldest national pet hospital chain operator in China according to Frost & Sullivan. Since our inception, we have built a digitalized pet care platform covering the full lifecycle of pets, and remained true and dedicated to making pets healthier and providing superior pet care services. Through operation experience accumulated over the years, we have achieved rapid network expansion across pet care services, supply chain services and local services through a combination of organic growth and acquisitions.

Our pet care services primarily consist of pet medical services and grooming services. In the nine months ended September 30, 2022, our total revenues were RMB4,315.1 million (US$606.6 million), of which pet care services accounted for 52.9%, including 47.8% contributed by pet medical services and 5.1% by grooming services. In 2021, our total revenues were RMB4,783.7 million (US$672.5 million), of which pet care services accounted for 62.2%, including 56.7% contributed by pet medical services and 5.5% by grooming services. In 2020, our total revenues were RMB3,008.3 million, of which pet care services accounted for 68.3%, including 62.4% contributed by pet medical services and 5.9% by grooming services. Our pet care services also include third-party diagnosis and continued veterinary education services, which were immaterial in terms of revenues generated in 2020, 2021 and the nine months ended September 30, 2022. Our supply chain services consist primarily of sales of pet food, medicine, medical equipment and materials, and other pet products to third-party pet hospitals, pet clinics and pet stores. In 2020, 2021 and the nine months ended September 30, 2022, supply chain services accounted for 19.7%, 26.8% and 36.5% of our revenues, respectively. Our local services, on the other hand, consist primarily of sales of pet products through our own and third-party online platforms and offline channels to individual customers. In 2020, 2021 and the nine months ended September 30, 2022, local services accounted for 12.0%, 11.0% and 10.6% of our revenues, respectively. Local services also include marketing-as-a service, which was immaterial in terms of revenues generated in 2020, 2021 and the nine months ended September 30, 2022.

We pursue organic growth through the integration of our nationwide pet hospitals, warehouses and retail channels and by leveraging our rich and replicable operating experience and our large talent pool. We also achieve robust growth and expansion through strategic acquisitions of suitable targets within the industry. Upon

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***Our Opportunities***

China is the second largest pet market in the world in terms of pet-related spending, according to Frost & Sullivan. It has experienced rapid growth over the past few years. The size of China's pet market increased from RMB94.3 billion in 2015 to RMB265.6 billion in 2021 in terms of pet-related spending, representing a CAGR of approximately 18.8%. However, China's pet market is still at an early stage of development as compared to that of the United States. For example, the average annual spending per companion pet in first-tier cities in China was approximately RMB4,700, only 58.0% of the average annual spending per companion pet of approximately RMB8,100 in the United States in 2021, according to Frost & Sullivan. Despite our market position in China's pet market, the average annual net revenues generated from each active customer for our pet care services was RMB1,194 in 2020 and increased to RMB1,203 (US$169) in 2021. China's household pet ownership rate was 23.7% in 2021, as compared with 69.7% in the United States, which leaves ample room for rapid growth in China's pet industry. According to Frost & Sullivan, the size of China's pet market is expected to further increase to RMB537.6 billion in 2026, representing a CAGR of 15.1% from 2021.

We see vast opportunities for pet care in China and believe we are well-positioned to capture them. The size of China's pet care market grew from RMB20.0 billion in 2015 to RMB54.5 billion in 2021, representing a CAGR of approximately 18.2%. Driven by pet parents' growing awareness of pet healthcare, longer pet life expectancy and more aging-associated pet diseases, the need for in-depth pet care services is expected to grow rapidly. The size of China's pet care market is expected to reach RMB135.6 billion in 2026, according to Frost & Sullivan. However, the pet care industry is highly fragmented and has become increasingly competitive as existing market players expand their pet-related service and product offerings and new players enter into the market.

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***What We Offer and Our Value Propositions***

We offer comprehensive services to pets, pet parents and participants of the pet services value chain under a closed-loop business model.

![LOGO](g148072g10p63.jpg)

We believe that our core business, namely pet care services, supply chain services and local services, are complementary and synergistic to each other. On the customer front, our well-developed pet care services form a high entry barrier, helping us accumulate a sizable customer base through top-notch pet medical services. Our pet care services and local services segments generate mutual traffic referrals and cross-selling. The supply chain services, on the other hand, empower pet care services and local services by lowering procurement costs and improving operating efficiency, which is made possible by our strong brand and centralized procurement capabilities. On the foundation of these three business pillars, we have expanded into third-party diagnosis, continued veterinary education services and marketing-as-a-service. We are committed to constructing a world-leading comprehensive pet services platform and a mutually beneficial and integrated pet ecosystem.

***Value Proposition to Pet Parents***

*Pet Care Services*. Our extensive pet hospital network provides pet parents with a trusted one-stop platform for comprehensive pet care services, including general and specialized treatments and advanced diagnosis. We are able to provide full-lifecycle healthcare services for pets from their birth. In 2020, 2021 and the nine months ended September 30, 2022, we provided pet care services to approximately 1.7 million, 2.5 million and 2.2 million active customers and treated approximately 4.3 million, 5.8 million and 4.7 million medical cases, respectively. We have established a "1+P+C" ("1": comprehensive pet hospitals; "P": specialty pet hospitals; "C": community pet hospitals) pet hospital network and referral system, which brings us closer to the community of pet parents and enables us to serve diverse medical needs with our diagnosis and treatment expertise.

*Local Services*. Our local services and new retail initiatives further strengthen our engagement with pets and pet parents. Pet parents can purchase pet goods and services through our proprietary online platform "Rvet" (阿闻) and our partner platforms, enjoying timely delivery of products and services. In addition, we operate offline stores through the JackPet brand targeting the high-end market. Our stores provide customers with a one-stop superior and personalized experience across the full spectrum of pet-related services.

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***Value Proposition to Our Business Partners and Pet Industry*** 

*Supply Chain*. We are one of the few supply chain integrators with advanced centralized procurement capabilities in China's pet industry. As of September 30, 2022, leveraging our 7 regional distribution centers, 58 provincial and municipal warehouses and 50 trade subsidiaries, we have established an efficient supply chain network that covers over 100 major cities. In the nine months ended September 30, 2022, we provided services to more than 45,000 pet stores, hospitals, clinics and others nationwide. Our centralized supply chain system gives us a stronger bargaining power and better access to popular and sought-after drugs and other pet products. Leveraging big data analysis, we are also able to accurately monitor product demands and optimize logistics and inventory management for pet product manufacturers, pet stores, hospitals and clinics.

*Third-party Diagnosis*. Our third-party diagnosis business enhances the treatment and diagnosis capabilities of pet hospitals. We provide diagnosis services to both our own hospitals and third-party hospitals. Assisted by cutting-edge technology and advanced equipment, we deliver comprehensive and professional diagnosis services to our clients. As of September 30, 2022, our laboratories had cumulatively served more than 4,700 pet hospitals.

*Continued Veterinary Education*. We have the largest veterinary talent training platform in the industry, according to Frost & Sullivan. Our continued veterinary education services foster general veterinarians and specialists in the pet care industry. As of December 31, 2021, we had built a talent pool of over 5,200 licensed and experienced veterinarians led by an expert team representing more than 60% of veterinary experts in China. Our continued veterinary education courses complement veterinary practice and empower the industry. We had 726 well qualified local instructors, 300 international lecturers and approximately 131,000 trainees as of September 30, 2022.

*Marketing-as-a-Service*. We have built a pet care platform with a multi-channel network to reach pet parents through our comprehensive online and offline product and service offerings and our efforts of branding and pet culture promotion. In particular, we have a wide and growing pool of KOLs who have gained a large, vibrant and loyal fan base. Our broad access to pet parents well positions us to offer marketing services to pet brands. Through us, our brand partners gain access to a highly efficient marketing network and a massive base of potential customers.

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***Our Scale***

The chart below shows some highlights of our business.

![LOGO](g148072g25j25.jpg)

Our total revenues increased by 59.0% from RMB3,008.3 million in 2020 to RMB4,783.7 million (US$672.5 million) in 2021, and increased by 26.9% from RMB3,399.7 million in the nine months ended September 30, 2021 to RMB4,315.1 million (US$606.6 million) in the nine months ended September 30, 2022. Our gross profit increased significantly from RMB142.5 million in 2020 to RMB223.2 million (US$31.4 million) in 2021, and increased by 27.6% from RMB171.4 million in the nine months ended September 30, 2021 to RMB218.8 million (US$30.8 million) in the nine months ended September 30, 2022, respectively. Our net losses amounted to RMB999.8 million and RMB1,311.3 million (US$184.3 million), RMB856.6 million and RMB1,109.4 million (US$156.0 million) in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively, while net losses as a percentage of total revenues decreased from 33.2% in 2020 to 27.4% in 2021, and further decreased to 25.7% in the nine months ended September 30, 2022. As a testimony to our improving operational efficiency, our operating expenses as a percentage of total revenues also decreased from 37.3% in 2020 to 33.0% in 2021, and further decreased to 29.7% in the nine months ended September 30, 2022. Our Adjusted EBITDA was negative RMB615.4 million, negative RMB852.4 million (negative US$119.8 million), negative RMB517.7 million and negative RMB749.6 million (negative US$105.4 million) in 2020, 2021 and the nine months ended September 30, 2021 and 2022, respectively, and our Adjusted EBITDA Margin improved from negative 20.5% in 2020 to negative 17.8% in 2021, and further improved to negative 17.4% in the nine months ended September 30, 2022. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures."

**Our Competitive Strengths** 

***The Largest One-Stop Pet Care Platform Representing Scarcity Value in a High-Growth and Recession-Resilient Market***

We are the largest pet care platform in China and the second largest globally, both in terms of number of pet hospitals and revenue from pet care services in both 2020 and 2021, according to Frost & Sullivan. We operated the most extensive pet hospital network in China with 1,942 pet hospitals covering 31 provinces and 114 cities as

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of September 30, 2022. As of December 31, 2021, we owned approximately 70% of the top 100 single pet hospitals ranked by revenue in China in 2021. While China's pet care services market is highly fragmented, we have a leading pet care market share of 9.8% in terms of pet care services revenue, larger than the combined market share of our competitors that ranked the second through the tenth, according to Frost & Sullivan. China's pet care market rapidly grew from RMB20.0 billion in 2015 to RMB54.5 billion in 2021 at a CAGR of approximately 18.2%. According to Frost & Sullivan, the pet care market is generally resilient to economic downturns. We believe we are well-positioned to capture the vast opportunities for pet care in China.

We have witnessed and actively participated in the consolidation of China's pet care industry. We have a diverse portfolio of brands covering the full scope of pet care specialties, with which we are able to serve a large number of pets and their parents. As of December 31, 2021, we owned 13 of the top 20 pet hospital brands in China, according to Frost & Sullivan. We are the go-to pet care services brand and are widely recognized by pet parents in China. In addition, we maintained a customer repurchase rate of approximately 56% in 2021 for pet care services, as compared to the industry average of between 30% and 40%.

We are the dominant leader in China's pet care industry in terms of talents, expertise, facilities and technologies. As of December 31, 2021, we had established a talent pool of over 5,200 licensed and experienced veterinarians led by an expert team representing more than 60% of veterinary experts in the industry. We are a trailblazer in China's pet care specialty services and operate one of the few pet hospital networks in China covering the full spectrum of 15 veterinary specialties.

We have a proven track record in executing and integrating acquisitions to unlock synergies and have become an established acquirer of choice for independent pet hospitals and clinics in China's highly fragmented pet care industry. Since 2019, we have acquired over 1,290 pet hospitals. Our scale and strong brand have brought us a large number of loyal customers and a massive pool of medical case data, helping us form in-depth insights on pets and pet parents behavior. Driven by our strong brand, advanced veterinary technologies and services, and rich talent resources, our customer base has been expanding rapidly and organically through word-of-mouth referrals and the high-quality pet care services we provide.

***Unique Business Model With Significant Network Effect Propelling Operational Excellence***

We operated 1,887 pet hospitals in China as of December 31, 2021, the largest pet care platform in China and the second largest globally. By September 30, 2022, we had further increased our number of pet hospitals in China to 1,942. With over 20 years of experience, we have accumulated extensive operation experience in the pet care industry and established a well-known diversified brand portfolio. We were honored as "2020 Fastest-growing Emerging Company" by China Entrepreneur in 2020. Through serving a large base of customers, we have gained deep insights on pets and pet parents behavior and improved medical capability and service quality. As a result, we are able to strengthen our brand image and attract more talents and customers, creating solid competitive moats through this virtuous cycle. Meanwhile, we have established a unique business model through continuous innovation to maintain our scale effects and existing advantages.

*Our business model allows us to dive into pet care services and to increase penetration*. Leveraging our three-tier hierarchical system of hospitals ("1+P+C"), we have established a highly integrated pet care services solution platform to satisfy various customer needs. Our community pet hospitals bring us close to the communities and pet parents and help us realize extensive geographic coverage to provide convenient pet care services for each pet parent. Through our well-established inter-hospital case referral mechanism, more complicated medical cases accepted at our community pet hospitals are referred to our comprehensive and specialty hospitals with strong diagnosis and treatment expertise. We manage the three tiers of pet hospitals closely, with a highly standardized approach, to ensure efficient collaboration and high-quality services. In May 2020, we launched the "One City One Network" initiative, aiming to strengthen our exposure and market position in the top 21 cities of China by carrying out a series of in-depth development plans covering talent development, customer acquisition, data and digitalization and pet hospital operational management to integrate

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resources and facilitate the interaction among different types of hospitals. As an example, in Nanjing, from May 2020 to September 2022, the number of active customers increased by 155.9%. In June 2022, we further upgraded "One City One Network" to a new "One City One Strategy" initiative, under which detailed and comprehensive analyses of various aspects of a city are performed in order for us to further explore market opportunities and improve local operations in that city. For more details, see "Our Integrated Nationwide Hospital Network—One City One Network and One City One Strategy."

*Our business model allows us to strengthen our leading position through strategic expansion*. We have accumulated vast experience and industry know-how on service network expansion through both organic growth and external acquisition. We analyze the supply and demand of districts of each core city and form an effective expansion plan. For example, in Nanjing, from May 2020 to September 2022, we increased the number of pet hospitals from 39 to 70 after the launch of the "One City One Network" initiative.

*Our business model allows us to accumulate and share data insights within our extensive hospital network*. We have gained in-depth insights and understanding of pets and pet parents on a local basis, on the back of accumulative data on customer behavior, medical treatment, transactions, and customer feedback. Leveraging the data we amassed, we are able to provide customized services and optimize our offerings and thus enhance customer experience.

*Our business model allows us to achieve scalable and sustainable growth*. First, we have lowered our procurement cost by sharing our supply chain infrastructure among our local hospital networks through centralized procurement and clustered warehousing and delivery. We are also able to optimize inventory management and SKU structure of pet hospitals and stores through flexible deployment of pet goods and equipment. Second, we have adopted an advanced talent training and development plan within our "1+P+C" system, and each veterinarian is provided with a clear career path. New veterinarians receive practical training at our community pet hospitals and further improve their skills by practicing at our specialty pet hospitals. We are able to shorten the cultivation period of our veterinarian talents through flexible transfers within our system, which in turn enables us to achieve rapid expansion of pet hospitals and retain and attract veterinarian talents. Compared with May 2020 when we launched the "One City One Network" initiative, the total sales volume of our pet hospitals in the top 21 cities had increased by 15.6% as of September 2022. Our "One City One Network" initiative and the new "One City One Strategy" initiative are standardized and can be quickly replicated into other cities.

***Integrated Ecosystem Empowering the Pet Service Value Chain and Capturing Pet Lifetime Value***

Rooted in pet care services, we have built and are operating the leading integrated pet care platform in scale in China in terms of number of pet hospitals, revenue and service scope, according to Frost & Sullivan, that offers diversified services covering pet parents' essential and growing demand. Through years of operations, we have extended our reach into supply chain, local services, continued veterinary education, third-party diagnosis and marketing-as-a-service. These service lines support and empower each other, seamlessly connecting the entire pet service value chain through our nationwide pet hospital network.

We have built a highly-efficient warehousing and distribution network, not only securing cost-efficient procurement, but also providing strong logistical support for local services. We also empower the whole pet industry through our supply chain services, covering the full value chain:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For upstream pet food and supplies manufacturers, we have built a highly efficient channel, enabling the rapid
circulation of their products. We serve as the bond between them and downstream participants including pet stores, pet hospitals and customers. We collect and transfer the feedback from downstream participants and assist manufacturers to optimize
their product designs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• For downstream pet stores and pet hospitals, our supply chain network is able to secure high-quality products and
supplies in a cost-efficient way, further reducing their procurement costs. Meanwhile, we

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capture pet parents and customers' demand precisely by leveraging the data and information gathered from our nationwide hospital network. We can predict product demand in different regions and enable smart procurement, efficient inventory management and optimized SKU structure for our pet store customers. <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We source pet products from top Chinese and global pet product brands and had distributed to more than 49,000
third-party pet stores, hospitals and clinics as of December 31, 2021, accounting for approximately 38% of the total pet stores, hospitals and clinics in China according to Frost & Sullivan. In the nine months ended September 30, 2022, we
distributed pet products to more than 45,000 third-party pet stores, hospitals and clinics.

In addition, in 2020, we further strengthened our engagement with pets and pet parents by launching local services and new retail initiatives. They help attract traffic for pet care services as well as expand our service scope into comprehensive pet care services. We are able to cover the full-lifecycle healthcare needs of pets beginning from their birth. We are also well positioned to capture the opportunities arising from the trend of pet aging. We have gained deep insights of pet parents behavior and a full understanding of pet health conditions and have maintained close communications and frequent touch points with pet parents. By analyzing pet parents behavior, we are able to meet the demands of different pet parents and pets at different ages by providing tailor-made recommendations of products and services through self-operated platform "Rvet" and third-party platforms. In 2021, more than 38% of the active customers at our pet hospitals also consumed in our other channels.

Furthermore, we have launched a third-party diagnosis business to provide timely, accurate and efficient diagnosis for complicated cases, including histopathologic diagnosis, microbiologic diagnosis, pathogen nucleic acid detection, immunity and allergy diagnosis, and hereditary disease gene diagnosis which many pet hospitals and clinics cannot handle independently. Our diagnosis business helps with the in-depth diagnosis and treatment of clinical diseases within our own hospitals. It also empowers external pet hospitals and clinics, providing comprehensive, precise and professional diagnosis services leveraging our advanced technologies and equipment. As of December 31, 2021, we had cumulatively provided diagnosis services to more than 3,200 pet hospitals, ranking first in China according to Frost & Sullivan. By September 30, 2022, we had cumulatively provided diagnosis services to more than 4,700 pet hospitals.

Our service lines are complementary to each other and constitute our comprehensive ecosystem. We have achieved strong cross-selling among different business segments, which allows us to enjoy low customer acquisition costs, enhance customer stickiness and boost the growth of customer lifetime value. We thus create enormous network effects from the scale, engagement and trust of our customers. We believe we are well positioned to further expand our market share and create more monetization opportunities as we continue to unleash the power of our integrated pet care platform and lead the evolution of China's pet industry.

***Large Pool of Top-Notch and Committed Talents Supported by Our Well-Rounded Continued Veterinary Education Services***

Leveraging our strong brand recognition and proven track record, we are of great appeal to top veterinary talents. Our talent resource is essential to the delivery of high-quality pet care services, and our network expansion allows us to serve the various needs of pet parents. As of December 31, 2021, we had established a large pool of more than 5,200 well-qualified and experienced veterinarians. Through our cooperation with more than 90% of universities and colleges with veterinary related majors in China, systematic training and various clinical practice, we are able to lock in the best talents in the industry. For example, as part of our internal talent development, we have introduced the "Zhuanxin Plan," a program designed for veterinary specialists, with an aim to enhance our competitiveness in specialty pet care, explore frontier techniques in specialty pet care, and lead the standardization of specialist training, development and evaluation in China.

Our medical capability is backboned by our strong expert team. As of December 31, 2021, we had approximately 142 national veterinary experts, representing more than 60% of the veterinary experts in China.

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Dr. Lang Liu, director, Qingshan Pan, general manager of pet care techniques and Dr. Degui Lin, head of expert committee, are among the senior members of our expert team and have each served in the pet care industry for more than 30 years. We have also established a full-cycle training program modeled on the international DVM (Doctor of Veterinary Medicine) system designed for every role and position in pet care based on 20 years of experience, applying a comprehensive and systematic assignment mechanism to develop the expertise of our veterinarians and providing them with promising career paths. As a result, we are able to retain these talents for the long term.

Compared with developed countries such as the United States and Japan, China's pet industry is still nascent and lacks quality continued veterinary talent development in various aspects, including clinical medicine, knowledge base, curricula and, most importantly, field training. We have established a continued veterinary education business to fill the gap of continued education in the industry. Our education business had 726 well qualified local instructors, 300 international lecturers and approximately 131,000 trainees through online and offline channels as of September 30, 2022. We have hosted free themed lectures and training sessions. Our continued veterinary education services cover all aspects of talent development in the pet industry to deal with the shortage of talents fundamentally, leading and reshaping China's pet industry talent training system. We aspire to contribute to the development of China's pet industry through our dedication to educational infrastructure.

***Proprietary Data and Technology Infrastructure Empowering Digitalization***

Data insight is one of our core competencies and we generate a large amount of unique data from our large-scale day-to-day operations, including pet health condition data, pet parent behavior data and pet products and services transactional data. This gives us valuable insight into the entire pet service value chain and helps us optimize the operating efficiency of our hospital network, the capability of our supply chain services and our engagement with customers through our local services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *For veterinarians*: We are committed to innovations and aspire to lead the technology advancement of
China's pet industry and have reshaped the process of pet care. We have been maintaining an electronic medical record system since 2009 as the source of massive medical case data, enabling veterinarians to access pets' medical records
conveniently. In the nine months ended September 30, 2022, we accumulated approximately 4.7 million medical cases. We have developed an in-depth understanding of pets based on the numerous treatment data we amassed, which enables us to provide
targeted service and extraordinary experience for pets and pet parents. We were one of the few in the industry to develop a clinical decision support system (CDSS) for pet care services, which provides recommendations on diagnosis based on an
analysis of symptoms, identifies potential diseases based on multi-dimensional test results and provides diagnosis or treatment recommendations, and intelligently recommends treatment and medication plans for common diseases. Our CDSS thus
significantly enhances the efficiency of our services and reduces the risk of malpractice. We are also able to provide the full spectrum of smart treatment by adopting cutting-edge technologies such as an identification protocol applicable to dog
noses and cat faces and intelligent consultation robot. As of September 30, 2022, we had implemented and applied approximately 98.5 million recommendations made by our CDSS, which is increasingly recognized and adopted by veterinarians and is
well-received by universities and other participants in and the industry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *For pet hospitals*: Applying our strong data analytics and AI capability to the training system of our
veterinarians, we are able to help veterinarians improve their know-how by reviewing the cases they have treated and providing customized training curriculum. Through data analytics and AI, we have also strengthened our information system and
improved our operating efficiency of pet hospitals. For example, we streamlined the process for chain operations by tracking selective operational data and adopting standardized management chain for our nationwide hospital network; we have also
grinded down to astounding granularity in business planning and budgeting, providing clear guidance and uniform goals for our hospitals, departments and employees.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *For pet parents*: We also provide comprehensive after-treatment check-in for our
patients, establishing a continuous connection with the pets and their parents and further enhancing the retention and life-time value of our customers. We have gained an in-depth understanding of pet parents through years of operations, which
empowers the local services we offer through big data analytic technologies. We are able to provide personalized goods, service recommendations, advice and healthcare management plans facilitated through our own or partner platforms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *For industry participants*: We continue to impact the entire pet industry and pioneer in setting industry
standard based on our advanced technology capabilities. Our electronic medical record system generates multi-dimensional information, which is of great importance to understanding the overall health status of pets in China and the academic research
of pets. Our smart treatment system is able to alleviate the shortage of quality medical resources in the pet care industry, reduce medical risks and promote industry development. Through our strong supply chain business, we are also able to
accurately monitor the demand of goods and optimize the logistics and achieve more efficient inventory management for pet product manufacturers, pet stores and pet hospitals.

***Visionary Management Team with Strong Execution Capabilities, Extensive Industry Experience and an Inspiring Corporate Culture***

We have a visionary management team and group of pet enthusiasts with over 20 years of experience in the pet industry or Fortune Global 500 companies and a proven track record of pioneering and evolving the pet care industry in China. Our founder, co-chairman of the board of directors and president, Mr. Yonghe Peng, with approximately 30 years' and international experience in the animal health industry, has been leading the successful execution of our development and growth strategies since inception. Our entrepreneur management team equips us with strong execution capabilities. After a series of industry consolidations, the senior management team has taken our company to a new height by redefining our strategic vision and helping us continuously gaining market share and capture new and attractive growth opportunities.

In addition, under the leadership of our management team, we have built an inspiring and collaborative corporate culture. We place special emphasis on the building of an inspiring organizational culture by not only focusing on the improvement of employees' professional development, but also making efforts to incentivize our employees to have a "sense of belonging," "sense of teamwork" and "sense of fulfillment." We have established a comprehensive system for employee training and development, collaboration among employees and communication with management. We believe such efforts strengthen our New Ruipeng culture, which is essential to our continued success.

**Our Strategies** 

***Strengthen Leadership in the Pet Care Industry in China and Further Upgrade the Scope and Quality of Our Pet Care Services***

We intend to deepen and broaden our pet care services and strengthen our brand recognition through:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• consolidating and upgrading our pet care resources across the value chain to enhance the quality of our pet care
offerings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• providing more tailored treatment to address the dynamic needs of our customers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enhancing our one-stop solution to pet parents covering the full lifecycle of pets by expanding the service
coverage including in-depth management of chronic diseases.

In addition, we plan to strategically expand our three-tier hierarchical system of pet hospitals to satisfy the diverse diagnosis and treatment needs of more customers and continue to strengthen our leadership through:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• along with the implementation of our "One City One Network" and "One City One
Strategy" initiatives, expanding our network in an organized manner through a balanced mix of self-built hospitals and acquisitions to reinforce our leading position;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• focusing on strategic expansion in first-tier and other well-developed provincial capitals, cities, and regions,
to develop clusters of pet hospitals based on our proprietary location selection model; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• strategically acquiring selective targets and ensuring an efficient post-acquisition integration to further
consolidate the pet care industry.

Furthermore, we plan to expand our third-party diagnosis business leveraging our strong industry experience and insights and enhancing our pet care services and brand recognition.

***Enhance Supply Chain Services and Local Services Capabilities, and Integrate the Pet Service Value Chain to Empower Industry Growth and Build a Vibrant Ecosystem***

We intend to solidify the strategic importance of our supply chain business by further expanding the infrastructure and optimizing cost structure through procurement at scale to support other business segments such as pet care services and local services.

In addition, we plan to continue to invest in our local services segment to drive both online and offline traffic through innovative marketing. For example, we plan to continuously direct traffic and attention of customers to our brands and stores, and improve integration of online and offline capabilities.

Leveraging our pivot position in the pet care ecosystem, we intend to empower and upgrade the entire industry by integrating participants across the value chain providing a well-established platform with strong monetization capabilities.

We will continue to empower pet stores and pet hospitals and strive to further refine the ecosystem in the pet industry. Furthermore, we will strengthen the business cooperation and interactions among pet stores, hospitals and brands to create additional value.

***Continued Investment in Industry Talents to Build a Pool of Top-Notch Veterinary Talents***

We plan to leverage our competitive position in China's pet care industry to cultivate the next generation of industry talents in the following directions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• deepening our cooperation with leading vocational universities and colleges by investing in joint education
programs and reinforcing the talent recruiting efforts to meet our needs for fast expansion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• further improving our talent development system, internal promotion system and incentive protocols to attract and
retain top talents with diversified backgrounds across various related areas of our ecosystem;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• further enhancing our comprehensive training system that features knowledge and skill training programs tailored
to different experience levels, specialty trainings, on-site expert visits and clinical expert training, among other things;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• connecting and promoting exchanges of talents across various related areas globally to further extend the
international collaboration and strengthen our brand influence, such as hosting international academic conferences and introducing overseas experts to the China markets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• further growing the continued veterinary education business into a leading education group and building a pool of
top-notch talents for the pet care industry through our training program on the Doyue platform modeled on the international DVM (doctor of veterinary medicine) system that emphasizes practice and clinical application.

***Further Improve Operational Quality and Capabilities Through Digitalized Technology***

We intend to enhance our comprehensive smart treatment, education and supply chain systems to connect and consolidate our overall pet care data and resources globally. We plan to continue to leverage our data

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insights in customer behaviors to tailor our services through online-to-offline capabilities, and ultimately improve customer satisfaction and engagement.

In addition, we plan to continue to leverage our industry data insights and existing value chain coverage in developing a fully-integrated pet industry database and promoting the digitalization of the entire industry in China. Furthermore, we plan to improve operating efficiency through digitalization and automation with big data and intelligence solutions in our pet care business, driving the digital upgrade of the overall industry.

We also plan to establish a smart and efficient industry-wide supply chain platform that connects and expedites the flow of information, logistics, capital and transactions. This platform will promote the digital development of our supply chain. As part of such effort, we have developed Runhe Cloud Warehouse, a resource-sharing platform for the pet care industry that integrates resource providers such as transaction platforms, equipment makers and labor suppliers, and technology companies including software, data and hardware service providers. By doing so, Runhe Cloud Warehouse can facilitate transactions, generate multi-dimensional compound products, and provide technological support, and in turn, empower the various participants in the pet care value chain, from manufacturers to pet hospitals to logistics providers.

We will continue to develop our data capabilities, which will help us gain further insights into our customers' consumption behavior and the latest trends in the pet industry, leading future industry upgrades.

***Empower the Global Pet Industry, Develop Localized Pet Business Capabilities in Overseas Regions, and Construct a Pet Metaverse through the Existing Digitalization Functionalities***

We intend to establish our international pet hospital platform through strategic collaborations and alliances in the following directions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expanding our international brand awareness through strategic overseas investments and acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developing SaaS (software as a service) services and building localized functionality of technologies into the
overseas digital offerings through our digital system that connects pet hospitals, pet stores and laboratories;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• attracting attention from high-end customers and pet parent communities by establishing landmark central pet
hospitals with strong research capabilities in key international hubs and achieving strong branding effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expanding our global presence by incorporating high-end international pet services brand, and introducing
industry-leading veterinary resources into China; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• bridging pet parents, pets, and facilities with merchants and customers in the pet industry by leveraging
extended reality and digital twin technologies.

**Our Efforts to Enhance Our Corporate Social Responsibility** 

During the COVID-19 pandemic, we leveraged our supply chain network and collaborated with around 40 pet food companies and collectively donated over 160,000 kilograms of pet food, cat litter and other pet products through our supply chain hubs across China to pets and pet parents located within Wuhan, when the city was in lockdown. Over the 2021 Chinese New Year, we launched the "free Chinese New Year's Eve dinner" event for homeless pets at various rescue centers in China. We also led and executed the "TNR" (Trap-Neuter-Release) initiative by offering over 2,000 free sterilization surgeries across our hospitals nationwide. During the outbreak of COVID-19 in Shenzhen in March and April 2022, we formed a medical volunteer team and established China's first pet care station in Shenzhen. We took care of over 200 pets whose owners were quarantined in other places. Our care for pets and professional capabilities demonstrated in these efforts won praise from all over the country. On April 16, 2022, our medical volunteer team established the second pet care station in Guangzhou to

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care for the pets of many families living in areas under lockdown. We have shared our experience in building pet care stations in the hope of helping those with pet care needs across the country. During the lockdown in Shanghai that began in March 2022, we actively communicated with and organized 36 well-known brands in the pet industry to participate in efforts to combat the COVID-19 pandemic. We provided free delivery of pet supplies ordered through our proprietary online platform "Rvet" to over 2,000 residential compounds and over 1,900 communities. We delivered pet supplies for 60 consecutive days during the lockdown, covering 14 districts of the city and fulfilling approximately 7,800 group-buying orders. In addition, we organized more than 300 veterinarians to provide free online consultation services, serving almost 70,000 pet parents. Dozens of staff members of some of our pet hospitals in the Shanghai area voluntarily stayed on site during the lockdown and treated more than 700 medical cases during that time. We also organized 31 key opinion leaders in the pet industry to hold a live webcast for 12 hours and share their experience in dealing with the pandemic with an audience from around the country. The number of viewers of the live webcast reached over 60,000 and over 1 million likes were recorded. In addition, together with a foundation we collaborate with, we donated 7.8 tons of dog food to the stray animal rescue bases in Shanghai to alleviate the shortage of pet food.

We are also committed to promoting the commercialization of scientific research results in universities, supporting the training of young talents, and improving student research capabilities. We collaborated with multiple universities across the country in donations, scholarships and research funds, making contributions to the development of the industry and cultivating veterinary professionals.

**Our Business Model** 

Our business model is organized around our commitment to create a customer-centric, fully-integrated, and technology-enabled ecosystem that provides pet parents with a holistic solution for all their pet care needs. Today, we are the largest integrated, one-stop pet care platform capable of offering a full spectrum of pet care services in China. As of December 31, 2021, we operated China's largest pet hospital network, the largest pet product supply chain group, an integrated online-to-offline local services ecosystem, and our continued veterinary education group, among other things.

We began as a veterinary service provider but have over the years expanded into a variety of other pet care service offerings. Since our inception in 1998, we have developed a unique "1+P+C" ("1": comprehensive pet hospitals; "P": specialty pet hospitals; "C": community pet hospitals) structured medical system that serves as the foundation of our engagement with our customers. Built upon our successful pet care services, we have been continually developing innovative ways to engage with our customers and have successfully transformed from a trustworthy pet care services provider to a fully-integrated ecosystem that strives to meet all of the pet parents' needs and exceed their expectations through every interaction.

We provide our service and product offerings that serve pets' complete lifecycle and capture the entire pet care value chain. Our services cover pet care, supply chain, local services, continued veterinary education, third-party diagnosis and marketing-as-a-service. We believe this business model brings us the following key benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• By addressing all pet care needs and leveraging integrated technologies, our business model fosters long-term
customer relationship, facilitates significant cross-selling opportunities with our existing customers and positions us to attract new customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• By opening up significant opportunities for our partners to grow their brands and business on our fully
integrated platform, our business model offers a mutually beneficial value proposition to our partners, helping us attract and retain business partners.

segments, we have built a scalable and sustainable business model, which positions us to continue to enhance customer engagement, optimize our operating efficiency, expand our size and improve and broaden our offering faster and better than
competitors.

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**Our Integrated Nationwide Hospital Network** 

***Unique Multi-Brand "1+P+C" System***

Our extensive pet hospital network is the foundation of our superior services. "1+P+C," the three types of hospitals, have different levels of capabilities and together form a tiered and organically connected operational chain that works efficiently and effectively in satisfying the various needs of pet parents across China. Additionally, our hospital network is operated under a multi-level brand matrix, which as a whole symbolizes outstanding pet care services.

*"1+P+C"*![LOGO](g148072g30k97.jpg)

Each tier of our hospital system plays a unique and important role in our ecosystem of pet hospitals:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *"1" (Comprehensive pet hospitals)*. Comprehensive pet hospitals typically handle difficult cases
of diagnosis, treatment and rehabilitation. They have strong capabilities in the multidisciplinary approach to medical services and feature advanced and comprehensive testing, diagnosis and treatment that go beyond the apparent health problems for
which the pet parents have brought their pets to us and combine different treatment methods as appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *"P" (Specialty pet hospitals)*. A specialty pet hospital is a hospital with one or more
established specialties and the relevant specialists. Such hospitals offer specialized medical services and can handle relatively complex medical cases, many of which are referred from community pet hospitals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *"C" (Community pet hospitals)*. Community pet hospitals are basic pet care units providing
general pet care services and are conveniently accessible by pet parents. They feature standardized diagnosis and operation processes and are typically the first stop for pet parents in need, providing them with basic care services that are
essential, recurring and high-frequency in nature.

The "1+P+C" system enables us to achieve a complementary and virtuous cycle of supply and demand, thus building a core barrier for our pet care services and enhancing the brand recognition of all our network hospitals. Within the "1+P+C" system, we divide hospitals, cases and veterinarians into different categories. With tools such as scheduling, guidance, referral, consultation, remote treatment and smart treatment, we manage to match each pet with the most suitable service level. Our strong comprehensive and specialty pet hospitals establish brand awareness in the market and attract pet parents to our community pet hospitals. Our community pet hospitals, which spread across China and are conveniently accessible to a large number of pet parents, drive

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traffic to comprehensive or specialty hospitals through referrals. The high-quality medical and other services received from our comprehensive and specialty hospitals in turn help improve customer satisfaction for our community pet hospitals which are at the forefront of maintaining customer relationships.

*Extensive and Rapidly-Growing Hospital Network* 

As of September 30, 2022, our pet hospital network consisted of 1,942 pet hospitals covering 31 provinces and 114 cities across China. According to Frost & Sullivan, as of December 31, 2021, we owned approximately 70% of the top 100 single pet hospitals ranked by revenue in China in 2021, and our pet care market share of 9.8% in terms of pet care services revenue was larger than the combined market share of our competitors that ranked the second through the tenth in 2021.

We achieve rapid hospital network expansion through a combination of organic growth and external acquisition. As of December 31, 2019, we integrated 693 pet hospitals operated by Skyfield Group with our own hospital network of 388 pet hospitals in connection with the acquisition of Skyfield Group. As of December 31, 2020 and 2021 and September 30, 2022, we had 1,224, 1,887 and 1,942 pet hospitals, respectively.

For organic growth, we leverage our mature and replicable operating experience accumulated in the past, as well as our large talent pool and a well-developed tool to select sites to expand self-built hospitals nationwide. Led by our management team with rich operational experience, we have been able to rapidly integrate the newly built hospitals into our ecosystem and achieve solid financial performance. In 2020, 2021 and the nine months ended September 30, 2022, we built 196, 275 and 54 new hospitals, respectively.

To fulfill external growth, we rely on acquisitions to consolidate suitable targets within the industry. Since 2019, we have acquired over 1,290 pet hospitals. We rely on a well-developed system for selecting potential acquisition targets in a systematic manner. Our landmark acquisition in 2016 of Meilianzhonghe, one of the most influential and iconic brands in the pet care industry, laid a solid foundation for our subsequent growth. Our acquisition of Skyfield in 2019, which at the time owned a wide network of pet hospitals comparable to ours, led to the new group with an extensive and prestigious hospital network that we are today. We empower the acquired hospitals with unified management, professional talents and centralized procurement measures, incorporate them into our ecosystem and enhance their brands. For example, the number of pet hospitals under the Meilianzhonghe brand grew from 12 as of December 31, 2015 before the acquisition to more than 240 as of September 30, 2022.

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*Multi-Level Brand Matrix* 

Our pet hospital network is operated under a multi-level brand matrix. According to Frost & Sullivan, as of December 31, 2021, we owned 23 pet hospital brands, including 13 of the top 20 brands in China in terms of number of hospitals. Our family of brands is divided into three levels: national brands, each with a national presence and comprehensive capabilities; regional flagship brands, which are major pet hospitals in their respective provinces or municipalities; and high-end/specialty brands, which cater to the different needs and spending levels of different pet parents. Within our big family of pet hospital brands, we have established a well-developed system to manage the integration and internal competition among our own brands.

![LOGO](g148072g29a01.jpg)

***One City One Network and One City One Strategy***

In May 2020, we launched the "One City One Network" initiative in 20 top cities in China aiming to strengthen our competitive position and market share in those cities. We studied the pet care market and competition landscape of each city so that we could develop customized strategies for implementing the initiative.

At the core of the "One City One Network" initiative is our vision of an integrated and enhanced pet care network within each city. To achieve economies of scale, we first ramp up our presence through self-building and external acquisitions. Then we seek to carry out a series of tailor-made resource sharing and empowering plans within each city including hospital network expansion, customer acquisition, talent development and data sharing to fully optimize our operations there. As a result, we can strengthen our competitiveness and achieve a better position to increase our market share. For example, in Nanjing, from May 2020 to September 2022, we grew the number of pet hospitals from 39 to 70 after the launch of the "One City One Network" initiative.

In June 2022, we further upgraded "One City One Network" to a new "One City One Strategy" initiative. Under the "One City One Strategy" initiative, we perform in-depth analyses of a city's regulatory environment,

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economic conditions, market conditions, culture, technological development, consumer demographics, and competitive landscape, aiming to gain more insight in the existing and future pet care market opportunities in that city and enable our local operations to develop localized and nuanced strategies and achieve higher efficiency and growth. We also aim to customize our talent development, specialist training and investment in medical technologies based on the conditions and needs of each city.

***One Hundred Cities, Ten Thousand Pet Stores*** 

In response to the major challenges faced by many pet stores in China, such as low entry barrier and intense competition, high costs and unprofitability, and talent loss, as well as the fact that there is a large number of pet stores in China located close to potential customers, we launched the "One Hundred Cities, Ten Thousand Pet Stores" initiative in 2021, with the goal of empowering a large number of pet stores spread all over China with our resources, capabilities and experience.

This initiative is built on the various value propositions we are able to offer to pet stores. By building partnerships with pet stores, sharing our deep expertise in pet care, offering our high-quality pet care services including referral services, and supporting them with our centralized supply chain, we empower the medical, grooming and supply chain capabilities of pet stores to help them attract pet parents, lower risks associated with services for pets, and improve customer experience and satisfaction. Relying on our operational expertise, pet stores can also enhance the efficiency of store management and strengthen their marketing efforts. In addition, through this initiative, we help pet stores expand their online presence on third-party platforms and achieve higher exposure, traffic and revenue from digital channels, and help them digitalize their operations. Furthermore, with our experience in talent development and access to a large talent pool, we help pet stores find, select, retain and train their employees by empowering their talent supply and internal training. We believe that our sustained efforts under the "One Hundred Cities, Ten Thousand Pet Stores" initiative will help improve the front-end experience of China's pet care customers, raise awareness and improve public perception of pet care practitioners and in turn the overall pet care industry, and also help us reach more customers, increase product sales and deepen our influence in the industry. By the end of September 2022, over 10,000 pet stores had signed letters of intent to cooperate with us through the "One Hundred Cities, Ten Thousand Pet Stores" initiative.

**Our Comprehensive and High-Quality Service and Product Offerings** 

Our services cover pet care, supply chain, local services, continued veterinary education, third-party diagnosis and marketing-as-a-service. Leveraging our nationwide hospital network, expertise and reputation in pet care, our pet care services serve as the entry point of engaging with our customers. Centered around pet care services, all of our other service and product offerings help drive new customer acquisition, retain and expand the spending of existing customers, increase customer visits and enhance digital engagement, and build long-term loyalty.

***Pet Care Services***

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In addition to the wide array of specialties and extensive expertise, our pet care services have the following key features.

*Intelligent Care Management* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Pre-Examination Stage.* At the pre-examination stage, we have developed and started implementing an identification protocol applicable to dog noses and cat faces, which, by scanning the face or nose pattern, attaches a unique virtual tag to
the pet and records individualized and comprehensive data for that pet, including its breed, age, medical history and consumption records. Our doctors therefore have access to a wealth of information about the pet patient even before examination and
can benefit from such knowledge of the patient during examination and treatment. Our identification technology has an accuracy rate of over 99%. Our intelligent consultation robot, on the other hand, provides detailed consultation services at the pre-examination stage. We have developed the robot using our proprietary deep learning model and knowledge graph technology, which greatly enhance the robot's knowledge of pet care and ability to answer
questions. Pet parents can speak to the robot and ask questions about pet diet, training, medication, surgery and immunization, among other things, and the robot can respond instantly with an average accuracy rate of 96%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *In-Examination Stage.* Our intelligent imaging diagnosis tool
applies advanced imaging technologies to the diagnosis of cardiological, respiratory and other diseases. It intelligently identifies the abnormal body parts of a pet and determines the type of diseases based on the comprehensive and profound
knowledge of pet diseases it has accumulated through deep learning. In addition, the tool can automatically read a test report and generate test results, helping the veterinarian understand test results efficiently and accurately. Our clinical
decision support system (CDSS), on the other hand, combines the veterinarian's judgment with the biochemical test results and testing images, and recommends treatment plans and subsequent care to the veterinarian based on the pet's reason
for the visit, medical history, weight, information from pet parents and the testing results and images, among other things. Its knowledge of pet diseases and the efficacy and side effects of pet medicines, which are displayed on its interface,
ensures the reliabilities of its recommendations. To make sure our pet patients receive the best treatment, after the veterinarian confirms the recommendations and prescribes accordingly, we have a quality monitoring team that reviews the diagnosis
and treatment plan again to further ensure quality. Currently, CDSS is applied to 170 common pet diseases.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Post-Examination Stage.* For the post-examination stage, we have developed a smart return visit system.
Based on the specific disease and treatment plan, the system generates future examination dates and lists of examination items for return visits and assigns return visits to doctors. When a patient comes back for a follow-up visit, an intelligent follow-up interface is formed on the hospital CRM system informing the veterinarian of the diagnosis, treatment plan, visiting records,
payment records and other information about the re-visiting patient.

*Commitment to Customer Service* 

Everything about our pet care services is organized around our commitment to provide an exceptional customer experience. We do our best to make each visit to our hospitals an easy and enjoyable experience.

We engage our customers on a personalized level. The veterinarians and other professionals that work at our hospitals share a common bond — they love pets. This shared passion is evident in every interaction they have with our customers. We empower them to go above and beyond for our customers, and they do so with the

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knowledge that our commitment to our customers is our number one priority. We engage with pet parents numerous times each day, and we embrace the opportunity to impress our customers each time with our professionalism and hospitality. In addition, we have developed data analytics tools that enable us to capture personalized profiles for each pet so that we may provide them with personalized recommendations. The expertise of our professionals, combined with the powerful tools that we provide them, allows us to deliver a high-touch and high-quality experience to our customers, which we believe results in higher repurchase rates.

*Top-notch Veterinarian Team and Advanced Veterinary Equipment* 

Our top veterinary team consisting of more than 60% of industry experts and the advanced medical equipment we have in place in our hospitals ensure the high professional standards of our services. We also have strong capabilities in multidisciplinary teams. As of December 31, 2021, we employed more than 5,200 licensed veterinarians. Several of our experts participated in the establishment of industry standards and are key members of veterinary professional associations. We have established a well-developed internal talent management system to continuously improve the capabilities of our veterinarians. Our hospitals are also equipped with advanced devices for use by different specialty departments, including almost 500 high-end medical devices such as superconductive MRI, 64-slice CT, small animal ICU system, color doppler ultrasound machines, endoscopes, ultrasound scalpels and real-time PCR instruments as of December 31, 2022.

*Complementary Services of High Frequency in Nature* 

We offer a variety of complementary services at our hospitals in conjunction with our veterinary services. For example, we offer diversified grooming services at our hospitals through multiple regional brands. To address different grooming needs, our grooming services are offered at different levels by professional groomers of different experience and skill levels from assistant groomers to premier groomers. The large demand from pet parents for grooming services makes our services not only a rich source of monetization, but also a great channel for building long-term relationships with a large number of pet parents across China. Such trusted customer relationships present opportunities for referral to our medical services and in-hospital pet product sales.

*Entry Point for Our Holistic Engagement with Customers* 

Our industry-leading pet care services serve as an entry point for our engagement with customers, helping us foster long-term customer relationship, facilitating significant cross-selling opportunities with our existing customers and positioning us to attract new customers. Pet parents who are attracted to our platform for one service are expected to continue to engage us for more of our services and products. We connect the in-person offerings at our hospitals with our online retail channels, which creates a virtuous loop that drives greater online and offline visits, in turn creating more opportunities for cross-selling our services and products. Furthermore, we strategically place our hospitals close to our customers and are able to provide our comprehensive product and service offerings in a localized manner with a meaningful last-mile advantage over our competitors. Our business model centering around pet care services has proven successful on this front. In 2021, we achieved a customer repurchase rate for pet care services of approximately 56%, as compared with the industry average of between 30% and 40%.

***Pet Product Supply Chain Services***

We are the largest supply chain service provider in China's pet industry in terms of revenue, according to Frost & Sullivan. We have comprehensive and advanced supply chain capabilities covering the entire value chain, including upstream procurement, warehousing spanning 34 provinces or municipalities as of September 30, 2022, distribution, and online and offline retail. These capabilities enable us to interlink the upstream, midstream and downstream players across the industry value chain and form an industry-wide platform, on which we are able to provide a more expansive and less costly offering of product and drug supplies, including pet food, drugs, medical equipment, consumables and other pet supplies. Our supply chain services include the following key features.

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*Efficient Warehousing and Distribution Network* 

Our highly efficient warehousing and distribution network provides exceptional warehousing and delivery with ongoing cost advantages and superior customer service. We currently operate a warehousing system comprised of 7 regional distribution centers, 58 provincial and municipal warehouses and 50 trade subsidiaries, covering over 100 major cities across China as of September 30, 2022. Our strategic placement of our regional distribution centers and warehouses across China enables us to cost-efficiently ship to our customers. Shipping is a critical part of our supply chain services. We have almost 130 shipping trucks of our own and also use third-party national and regional logistics providers to deliver products and supplies as of December 31, 2022. We are able to offer 24- or 48-hour delivery services in the core regions of our business.

Notably, our technology platform and information system empower the entire supply chain from inventory management to order fulfillment for our supply chain services, thereby ensuring we have appropriate inventory levels and placement, efficient order picking and packing, and optimized order routing aimed at minimizing shipping time and transportation costs. Our inventory management expertise enables us to turn our inventory rapidly, which in turn drives our working capital efficiency.

*Centralized Merchandise Sourcing and Wide Product Assortment* 

Our national presence makes us the largest player in China's pet care industry with centralized procurement capabilities. Our centralized purchasing enables us to leverage the nationwide purchasing power of our operations, reduces our dependence on any one supplier and gives us a strong bargaining position to lower costs. Our centralized merchandise sourcing contains the following characteristics.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Streamlined central procurement by standard operating procedures ("SOP")*. To streamline our
centralized merchandise sourcing process, we have put in place a strict standard operating procedure ("SOP"), covering supplier selection, product selection, warehousing, shipping and delivery. All branches and personnel within our supply
chain services business follow the SOP in their sourcing and supply chain activities. Our unified implementation of the SOP, together with our centralized purchasing, reduces the price of the products and supplies we offer, and thus increases our
profitability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Strict supplier selection and management.* We select our suppliers based on qualification, brand,
reliability and volume. We have also put in place stringent rules governing the operations of suppliers to ensure that the pet product supplies we procure from comply with applicable PRC laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Wide product assortment including our private labels.* Leveraging our central procurement
capabilities, we are able to lock in new products and advanced pet care equipment by gaining early access to the latest pet food, medicine, equipment and other products developed by top pet product brands. As a result, we typically secure supply of
new products six months to one year ahead of the general market and have exclusive access to popular products from premium brands, which gives us a clear advantage over our competitors and strengthens our reputation as the market leader. In
addition, we offer a wide assortment of pet products at competitive prices, carrying more than 100 carefully selected brands which represent the best and most popular products. We are also the exclusive distributor for the Chinese market for a
number of top brands in the global pet product industry and have developed private labels of our own. Our insight in consumer behavior and trends gained through our supply chain business allows us to accurately design, market and sell products under
our private labels and deliver a compelling customer experience.

*Broad Base of Customers* 

Our product offering leverages a strong portfolio of high-quality food and pet care supplies. We have built a large and diverse customer base for our supply chain services. We source pet products from top Chinese and global pet product brands and distribute to more than 45,000 third-party pet stores, hospitals and clinics in the nine months ended September 30, 2022.

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***Local Services***

We have established an integrated and innovative online-to-offline local services ecosystem. We cooperate with major third-party online local services platforms and also provide comprehensive online services covering the full life cycle of pet parentship through Rvet, our own Weixin mini-program. The expansive network of our front distribution centers (FDCs), which are warehouses that stock products in high demand for nearby areas and strategically located closer to end customers, ensures our last-mile capabilities in support of our online platform. In addition, we provide offline retail services at our hospitals and have been seeking innovative ways to expand our local services, including through JackPet, our high-end offline pet shopping and entertainment brand.

*Online Platform* 

Rvet is our core, closed-loop online program that offers not only pet products, but all-round online medical services that together cover the entire life cycle of pets. Since the launch in February 2020, "Rvet" had attracted approximately 4.9 million registered users as of September 30, 2022, and had approximately 820,000 and 1,350,000 and 957,000 active customers in 2020, 2021 and the nine months ended September 30, 2022, respectively.

Personalized services are a key feature of Rvet. Utilizing our recommendation algorithms, Rvet generates customized product and service recommendations to pet parents on the basis of the pets' breed, age, gender, size, weight, medical and vaccination history, health condition and previous purchases at our hospitals or on Rvet, among other things. Such personalized recommendations improve the shopping experience and efficiency of our customers, save their time, and facilitate our product sales. Customers can conveniently select and pay for the products they like on Rvet, and we can generally deliver within one hour.

Rvet is also a pet health management platform with customer relationship management at its core. On Rvet, customers can make hospital appointments, inquire about health and other pet-related questions, consult pet experts, and review medical records of their pet, all from the comfort of their home. Customers can subscribe for monthly pet care packages, upon which they will receive customized pet care information and suggestions on Rvet on a regular basis, which are generated by an intelligent analysis of various information about the pet.

![LOGO](g148072g63j70.jpg)

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To support our local services, we have built FDCs across China with an extensive selection of pet products in stock. Each of our FDCs had in stock almost 450 SKUs (stock-keeping units) on average in the nine months ended September 30, 2022. Customers can order pet supplies on Rvet or local services platforms and have deliverymen pick up the ordered goods from the nearby FDC and deliver to them at door. We generally deliver under 1 hour within a 3-kilometer radius in some major cities. The gross merchandize value (GMV) of our online retail almost doubled from 2020 to 2021.

*Offline Services* 

We have been seeking innovative ways to expand and improve our local services. JackPet, our unique and high-end pet chain store brand, offers a new form of pet shopping and entertainment with increasing popularity. JackPet is dedicated to providing a rich and high-end experience to customers. Visitors to a JackPet store can not only shop for all kinds of pet supplies, but also adopt pets, groom their pets, see a veterinarian, enjoy display of unconventional pets, and relax with a coffee.

![LOGO](g148072g90a90.jpg)

The first JackPet store in Nanjing, for example, is a seven-floor 4,200-square-meter super amusement park for pets and pet enthusiasts. It featured over 3,400 SKUs as of September 30, 2022, more than any other offline pet store in China. The selection of SKUs is constantly adjusted based on sales volume and market needs. On the opening day, the Nanjing JackPet store received approximately 4,000 visitors, who spent an average of two hours at the store, setting a record in China in terms of opening-day number of visitors. The store also recorded one of the highest single-offline-pet-store revenues in China in 2020.

Furthermore, we sell pet products at our hospitals so that our hospital customers can conveniently purchase the pet food, drugs and other supplies they need while visiting us for medical or grooming services. Our strong supply chain capabilities allow us to provide a diversified and cost-effective product offering.

***Continued Veterinary Education Services***

We believe that our long-term success as well as the future growth of China's pet care industry depends on the education of pet care professionals. Internally, we have built the largest talent platform in the industry, with systematic talent assessment, training and promotion mechanisms and offering the best career path and development opportunities for veterinarians in China, allowing the best among them to grow from apprentice veterinarian assistants to senior professionals such as chief veterinarians, senior technicians or head nurses. For

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example, we have introduced the "Zhuanxin Plan," a program designed for veterinary specialists, with an aim to enhance our competitiveness in specialty pet care, explore frontier techniques in specialty pet care, and lead the standardization of specialist training, development and evaluation in China. The plan focuses on, among other things, the development of specialist clinical skills, formulation of specialist training and examination systems, standardization of specialist training and development, and standardization of the evaluation of specialists and specialty hospitals. But our efforts go well beyond internal talent development. Doyue Education and Technology Group (铎悦教育科技集团) ("Doyue") is our own continued veterinary education group with its business covering the full development path of veterinary talents. Today, the Doyue platform offers comprehensive online-to-offline continued veterinary education services to veterinary professionals, making valuable contribution to China's veterinary education and the future of the pet care industry.

*Our Education Institutions and Training Bases* 

We have built our own veterinary academies within Doyue, including Meilian Wuzhou Advanced Veterinary College (美联五洲高级兽医学苑) which focuses on junior general veterinarian training and New Edge International Veterinary College (维特新锐国际兽医学苑) which provides advanced veterinary specialist training. Together, our education institutions had provided over 97,000 hours of veterinary courses taught by 726 well qualified local instructors, 300 international lecturers and approximately 131,000 trainees and offered a variety of courses as of September 30, 2022.

In addition, we provide practical training bases for over 110 major vocational universities and colleges across the nation. We have established about 1,900 training bases at our pet hospitals across China as of December 31, 2022. At our training bases, trainees are able to observe and practice day-to-day pet care services and thereby gain valuable practical experience and skills.

*Training Program Modeled on DVM* 

Doyue now offers a training program modeled on the international DVM (doctor of veterinary medicine) system. We have created this program in response to the weaknesses that we have observed over the years in China's veterinary education, compared with education in countries such as the United States. Most importantly, we have seen deficiencies in training on clinical knowledge and skills, especially with respect to pets. By introducing elements of the international DVM system and adapting to Chinese veterinary realities, we offer a rigorous program customized for nurturing the next generation of veterinary professionals who are well-equipped to attend to the growing needs and expectations of Chinese pet parents. This full-cycle training program is designed for every role and position in pet care and is focused on clinical work, with a curriculum tailored for developing clinical knowledge and skills necessary for pet care and taught by international experts and professors as well as top Chinese clinicians.

*Our Online Education* 

Zhiyue, our mobile application operated by Doyue, is home to various online courses and articles on pet care authored by Chinese and foreign experts. Eager to obtain quality online lessons and teaching materials, many instructors and students of veterinary medicine in China have relied on the resources on Zhiyue to supplement and enrich their classroom education. As of September 30, 2022, Zhiyue had more than 109,000 registered users.

After the COVID-19 outbreak in China, we were one of the first in the industry to offer online live trainings as part of our continued veterinary education. From January 1, 2020 to September 30, 2022, we hosted a total of over 1,200 online training sessions. Our training sessions focus on practical skills and are well-received by the participants.

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*Other Initiatives* 

By collaborating with multiple universities across China, we launched the "Ruipeng Talent" project to promote the commercialization of university academic research and improve the training of university researchers and students. In addition, as of September 30, 2022, we have held two special training camp for instructors and lecturers, seven talent development summit forums, seven Eagle Cup Small Animal Doctor Skills Competitions, as well as three overseas summer camps and two online summer camps.

***Third-Party Diagnosis Services***

Dedicated to enhancing the diagnosis capabilities of pet hospitals and veterinarians, we provide diagnosis services to hospitals and veterinarians within our group and also to third-party hospitals, colleges, laboratories and other institutions to improve the quality of their diagnosis. Our services cover more than 100 diagnosis items, such as histopathology, cytology, immunology, microbiology and molecular diagnosis. On the other hand, given the increased breadth and depth of knowledge required for the practice of veterinary medicine, many pet hospitals and veterinarians solicit our knowledge and experience to interpret test results, consult on the diagnosis of illnesses and suggest treatment programs.

We have founded independent medical laboratories such as pathology laboratories and microbiology laboratories to meet various clinical testing needs and improve the accuracy of the diagnosis of clinical diseases. Our laboratories are located in Beijing and Shanghai, and we are expanding to other major cities such as Chengdu, Wuhan and Shenzhen. Each laboratory has an internal R&D department engaged in cutting-edge research in the veterinary diagnosis sphere such as studies on cancer cells, in-hospital nucleic acid testing, and post-surgery rehabilitative medication for pet patients with cancer. The laboratories offer a broad spectrum of standard and customized tests, convenient sample pick-up times, rapid test reporting and access to professional consulting services provided by trained specialists. We have engaged more than 10 experts in veterinary pathology from internationally renowned veterinary academies and institutions. As of September 30, 2022, our laboratories had cumulatively served more than 4,700 pet hospitals.

Diagnostic accuracy is critical to the success of a pet diagnosis laboratory. We have invested heavily in quality assurance in our third-party diagnosis services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We use special diagnostic media for collecting and storing specimens to ensure that the active ingredients in the
specimens are kept intact and that the specimens are stable and well protected against bacteria, high temperature, water and high pressure, among other things.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our precision instruments for diagnostic use have received the China Inspection Body and Laboratory Mandatory
Approvals (CMA) and are certified by the China National Accreditation Services for Conformity Assessment (CNAS) for their precise measurements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We monitor and check the relevant threshold values on the diagnostic equipment software in real time. Diagnosis
results (e.g., positive or negative) are generated automatically based on the testing data, and we review the results with the help of our experts to further improve accuracy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We make sure that our laboratorial personnel are qualified and have been vigorously trained and that they follow
the strict and detailed procedures we have in place for each step of the testing and diagnosis process, such as specimen culturing and dilution.

software and automation technologies. Our comprehensive quality control system not only meets the ISO 17025 standard published by the International Organization for Standardization, but can connect and exchange data with the information systems of
the hospitals and other institutions we serve.

We believe that our third-party diagnosis services will provide a new driver for our revenue growth going forward. There remains a significant unmet need for third-party diagnosis services in China. With the use of our

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third-party diagnosis, veterinary practices in China will significantly improve the quality of pet care provided to their patients, increase staff efficiencies, and effectively communicate the value of this medical care to the pet parent. In addition, we believe that our continued investment in enhancing our third-party diagnosis, particularly in areas such as intelligentization and AI diagnostic reading, as well as the seamless integration of our other service and product offerings, provides us with a unique competitive advantage.

***Marketing-as-a-Service***

Our established and broad access to pet parents makes us uniquely well-positioned to offer marketing services to pet product brands. Through us, they have access to an enormous and highly efficient marketing network and a massive base of potential customers. We have started providing sales and marketing services to global pet product brands to capture the commercial opportunities provided by our broad access to pet parents. During the nine months ended September 30, 2022, we provided marketing services to over 800 pet product brands and kept continuous and mutually beneficial relationships with them.

**Our Technology** 

We have developed a big data-driven information technology system consisting of robust digital capabilities, which is made possible by a strong research and development team consisting of 272 members as of September 30, 2022. In 2020, 2021 and the nine months ended September 30, 2022, our research and development expenses were RMB52.3 million, RMB82.7 million (US$11.6 million) and RMB92.7 million (US$13.0 million), respectively.

Over the years, we have been strengthening our technological innovation and applications in various aspects of our services and operations. We have built a comprehensive information technology system capable of digital operations and intelligent decision-making.

***Operation Digitalization***

Over the past few years, we have implemented a digital transformation of our information technology system that covers all of our business processes. Today, our digitalized operation system enables online review and centralized management of our key processes, including inventory management, accounting, human resources, procurement, and sales and order fulfillment. Our system allows us to efficiently digitalize and visualize our business processes, monitor daily operational data, respond swiftly, and enhance and optimize data-driven operation. Each acquired hospital is integrated into our digital ecosystem, including its daily operations and system support.

Our digitalized system also includes an enterprise-wide management information system to support our hospital operations and daily operations. In addition, we are able to track performance of hospitals on a

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per-service, per-veterinarian and per-customer basis. All of our financial data, customer records and service records are stored in encrypted computer databases.

Furthermore, we have developed a broad array of intelligent tools to digitalize the operation of our hospitals. We believe such tools can substantially enhance the efficiency of our operation and the quality of our services. By applying data analytics and AI technologies, we have streamlined the process for chain operations by tracking selective operational data and adopting standardized management chain for our hospital network nationwide, allowing detailed business planning, budgeting and goal setting for our hospitals, departments and employees. Our electronic medical record system generates multi-dimensional information for each pet patient, which helps us enhance our services.

***Data Insight***

We have built a proprietary database leveraging information collected across our digital and physical network to construct data insights of pets and pet parents behavior. Through our integrated platform that connects all participants in the pet care industry, we have gained access to an enormous amount of transaction data related to pets and pet parents. We take a customer-centric approach to such data, striving to use it to better understand customer needs, improve customer experience, customize care plans for pets of different ages, deliver personalized products and services and contribute to the entire pet industry.

Another representative application of our intelligent decision-making capabilities is in hospital location selection. Our location selection tool helps us select the optimal locations for new hospitals and optimize the location of existing hospitals based on the distribution of pet stores and hospitals and the density of pet parents in each city. Our location selection tool tracks the key operational data of each hospital such as number of customers and monthly turnover, presents the management of each hospital with a clear view of the performance of the hospital and assists them in formulating growth plans.

We endeavor to build a digital ecosystem for the entire industry. Our platform will serve as the infrastructure, empowering upstream and downstream partners and enabling customers to participate in the design, development, delivery and optimization of pet products and services.

**Pet Culture Cultivation, Marketing and Branding** 

***Pet Culture Cultivation***

Developing China's pet culture, helping society better understand pets, harmonizing human-pet relationships, and fostering healthy pet parentship has always been among our corporate missions. We further that mission by hosting large offline events with pet-related themes, producing documentaries and promote pet culture on social media. We host the Pet Carnival each year since 2019, which integrates pet-related themes including shopping, entertainment and welfare, with millions of pet parents visiting our featured pages, interacting with us on social media and watching our curated online live events. In 2020, partnering with Phoenix TV, we launched the documentary *Amazing Veterinarians*, telling stories about Chinese veterinarians and the history and current conditions of China's pet care industry. Through the documentary, we sought to promote society's understanding of the pet care industry, respect for veterinary workers and pet protection and welfare in general.

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In addition, we have organized 41 veterinarians and pet care experts to create accounts on a popular live streaming platform in China to share their knowledge and experience in pet care. These accounts have received an aggregate of over 5.8 million subscriptions, and accumulated an aggregate of over 710 million views as of September 30, 2022.

***Sales and Marketing***

We provide veterinary and other services to our consumers from our hospitals and also provide fully integrated product and service offerings through online and other offline channels such as Rvet and JackPet. For our upstream suppliers, we rely on our strong brand name and platform to gain their trust and build partnerships with them. For pet hospitals and pet stores, we provide a wide offering of products and supplies through our online-to-offline platform.

We have a strong sales and marketing team responsible for the promotion and sales of our existing and new products and services and maintaining partner relationship. We have adopted a variety of marketing approaches and attract potential customers and partners not only through large offline events, industry forums and symposiums, but also through the creation and promotion of high-quality pet raising contents on social media to a large number of pet parents and other pet enthusiasts, thereby building a potential customer base. In addition, customer referrals are an important source of our new customer acquisition.

***Branding***

We care strongly about our brands. We have a dedicated team within our organization responsible for branding and public relations. We promote our brands through multiple online and offline marketing channels.

As of September 30, 2022, we owned 23 pet hospital brands that together symbolize professional and outstanding service. Emphasis is continually placed on promoting and protecting our brands, a key component of our assets. We believe that the most effective form of marketing our brands is to continually enhance our customer experience. We will carry on with our efforts to enhance our brand value through higher service quality and other marketing initiatives.

**Data Privacy and Protection** 

We have a team of highly qualified professionals dedicated to securing information about pets and our customers and protecting our customers' and employees' privacy, and we strive to provide a safe, secure online environment for our customers. We are committed to compliance with applicable information security laws, regulations and industry standards in all material respects. We have developed a company-wide policy on data security to preserve individual personal information and privacy and we do not distribute or sell our customers' personal data for any purpose. We encrypt customer data in network transmissions and in backend storage to ensure confidentiality.

Our network configuration is secured at multiple layers to protect our databases from unauthorized access. We use sophisticated security protocols for communications among our mobile app, WAP website and plug-ins. To prevent unauthorized access to our system, we utilize a system of firewalls and maintain a demilitarized zone to separate our external-facing services from our internal systems. To minimize the risk of data loss, we conduct regular data backup and data recovery tests. Our database can only be accessed by certain designated and authorized personnel after assessment and approval procedures, whose actions are recorded and monitored.

We have data disaster recovery procedures in place. We back up data frequently so as to have the ability to restore from a local copy for immediate restoration if needed. Our data is transmitted daily to a secure offsite cloud storage service for disaster recovery needs. Our systems are decoupled and based on advanced software designing principles. We believe that this ensures that the infrastructure of our systems is scalable and can support our future growth.

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**Intellectual Property** 

We regard our trademarks, copyrights, patent, domain names, know-how, proprietary technologies, and similar intellectual property as critical to our success, and we rely on copyright, trademark and patent law and confidentiality, invention assignment and non-compete agreements with our employees and others to protect our proprietary rights. As of September 30, 2022, we had (i) 2,612 granted trademarks; (ii) 71 issued patent; (iii) 145 granted copyrights and copyright applications; and (iv) 49 granted domain names and domain name applications.

Our granted trademarks are mainly for our pet hospital chains. The current registrations of these trademarks are effective for varying periods of time and may be renewed periodically, provided that we, as the registered owner, or our licensees where applicable, comply with all applicable renewal requirements including, where necessary, the continued use of the trademarks in connection with similar goods. We expect to pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective.

In addition to trademark protection, we own numerous domain names, including https://www.ruipengpet.com. We also enter into, and rely on, confidentiality and proprietary rights agreements with our employees, consultants, contractors and business partners to protect our trade secrets, proprietary technology, and other confidential information. We further control the use of our proprietary technology and intellectual property through provisions in both our customer terms of use on our website and in our vendor terms and conditions.

We vigorously protect our technology and proprietary rights. We have employed internal policies, confidentiality agreements, encryption and data security measures to protect our proprietary rights. However, there can be no assurance that our efforts will be successful. Even if our efforts are successful, we may incur significant costs in defending our rights. From time to time, third parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual property rights. See "Risk Factors—Risks Related to Our Business—Failure to establish, maintain, protect, and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of our technology or our brands could harm our competitive position or require us to incur significant expenses to enforce our rights."

**Competition** 

We believe that we are positioned favorably against our competitors in the highly competitive pet care industry. We compete with a number of pet care services providers, specialty pet store chains and independent pet stores. We also compete with online retailers, supermarkets, warehouse clubs and mass merchants. The pet care industry has become increasingly competitive due to the expansion of pet-related services and product offerings by certain supermarkets, warehouse clubs, other retail merchandisers, and online retailers, and the entrance of additional independent pet stores with unique service and product offerings and other pet specialty retailers into the pet care and pet product supply markets.

We may face greater competition from national, regional, local and online pet care services providers in the future. In particular, if any of our major competitors seeks to gain or retain market share by reducing prices or by introducing additional products or services, we may be required to reduce prices on our key products or services or introduce new offerings in order to remain competitive, which may negatively affect our profitability and require a change in our operating strategies.

We believe that our ability to compete effectively depends on various factors, including the expanse of our pet hospital network, the breadth and depth of our products and service offerings, our pricing competitiveness, customer experience, our ability to form and retain a closed-loop business model, our supply chain capabilities, our technological capabilities, quality control of our product and service offerings, our partnership with third parties, our marketing efforts, and the strength and reputation of our brand.

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In addition, as our business continues to grow rapidly, we face significant competition for highly skilled personnel, including management, veterinarians and other pet care professionals. The success of our growth strategy depends in part on our ability to retain existing personnel and attract additional highly skilled employees.

Furthermore, if consumer preferences change and thereby decrease the attractiveness of what we believe to be our competitive advantages, including high-quality service offerings, our extensive product assortment, premium product offerings, competitive pricing, and a unique customer experience, or if we fail to otherwise positively differentiate our customer experience from that of our competitors, our business and results of operations could be adversely affected.

**Employees** 

As of December 31, 2020 and 2021 and September 30, 2022, we had a total of 14,419, 20,972 and 19,237 employees, respectively. The following is a breakdown of our employees as of September 30, 2022 by function:

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| | | |
|:---|:---|:---|
|  | **As of September 30,<br>2022** | **As of September 30,<br>2022** |
| **Function** | **Number of**<br>**Employees** | **% of<br>Total** |
|  Pet hospital staff<sup>1</sup> | 12957 | 67.3 |
|  General and administrative<sup>2</sup> | 6008 | 31.2 |
|  Research & development | 272 | 1.5 |
|  **Total** | **19237** | **100.0** |

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1 Pet hospital staff primarily include veterinarians, medical assistants and groomers.

2 General and administrative personnel across our business segments primarily include employees in regional managerial functions, finance and other back office operations.

Along with a strong reputation among customers and the general public, we are widely acknowledged as a great place to work in China. At New Ruipeng, it is our people, in particular our veterinarians — our greatest asset — that give us our strong reputation.

We have always striven to provide employees with comprehensive social benefits, a diverse work environment and a wide range of career development opportunities. We are committed to providing a safe and healthy workplace, which is backed by strict policies, systematic training and safety recognition awards, along with continued investments in technology. In addition, we are committed to establishing competitive and fair remuneration. In order to effectively motivate our staff, we continually refine our remuneration and incentive policies through market research. We conduct performance evaluations for our employees monthly to provide feedback on their performance.

We participate in various employee social security plans that are organized by municipal and provincial governments, including, among other things, pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan. We also make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our staff, up to a maximum amount specified by the local government from time to time.

We typically enter into standard employment agreements and confidentiality agreements or clauses with our senior management and core personnel. These contracts include a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her employment and typically for one or two years after termination of his or her employment. We maintain a good working relationship with our employees, and we have not experienced any material labor disputes.

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**Facilities** 

Our headquarters is in Shenzhen, Guangdong, where we leased and occupied our office space with an aggregate floor area of over 6,000 square meters as of September 30, 2022. As of September 30, 2022, we also leased and occupied office buildings in 61 other cities of 31 provinces across China, such as Guangdong, Beijing, Hunan, Jiangxi and Henan, with an aggregate floor area of over 36,000 square meters. These leases have expiration dates ranging from 2022 to 2032 and all of these leases contain renewal options.

As of September 30, 2022, we leased all of our pet hospitals, FDCs and warehouses in 114 cities of 31 provinces across China, such as Guangdong, Fujian, Yunnan, Jiangsu and Shanghai, with an aggregate floor area of over 586,000 square meters. These leases have expiration dates ranging from 2022 to 2041 and all of these leases contain renewal options.

**Insurance** 

We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased insurance covering our inventory and fixed assets such as equipment, furniture and office facilities. ****We also provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees. We do not maintain business interruption insurance, product liability insurance, malpractice liability insurance or key-man life insurance. We consider our insurance coverage to be in line with the industry norm in China.

**Legal Proceedings** 

We are not currently a party to any legal or administrative proceedings that we believe to be material to our business or financial condition. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, including patent, commercial, professional liability, product liability, employment, infringement liability, contract disputes, class action, and other litigation and claims, as well as governmental and other regulatory investigations and proceedings. In addition, third parties may from time to time assert claims against us in the form of letters and other communications. The results of any future litigation or administrative proceeding cannot be predicted with certainty, and regardless of the outcome, litigation and administrative proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

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**REGULATION** 

This section sets forth a summary of the most significant PRC laws and regulations that affect our business activities in China. As of the date of this prospectus, we comply with these applicable currently effective PRC laws and regulations in all material respects, except as disclosed in this section and the section titled "Risk Factors."

**Regulations on Foreign Investment** 

The *Foreign Investment Law of the PRC*, or the Foreign Investment Law, was formally adopted by the National People's Congress on March 15, 2019 and became effective on January 1, 2020. The Foreign Investment Law is formulated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to negative list management system. The pre-entry national treatment means that the treatment given to foreign investors and their investments at the stage of investment access is not lower than that of domestic investors and their investments. The negative list management system means that the state implements special administrative procedures for access of foreign investment in specific fields. Foreign investors shall not invest in any forbidden fields stipulated in the negative list and shall meet the conditions stipulated in the negative list before investing in any restricted fields.

Foreign investors' investment, earnings and other legitimate rights and interests within the territory of China shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises. The state guarantees that foreign-invested enterprises participate in the formulation of standards in an equal manner. The state guarantees that foreign-invested enterprises participate in government procurement activities through fair competition in accordance with the law. The State shall not expropriate any foreign investment except under special circumstances. In special circumstances, the state may levy or expropriate the investment of foreign investors in accordance with the law for the needs of the public interest. The expropriation and requisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall be given. In carrying out business activities, foreign-invested enterprises shall comply with relevant provisions on labor protection, social insurance, tax, accounting, foreign exchange and other matters stipulated in laws and regulations.

From January 1, 2020, the *Wholly Foreign-Owned Enterprises Law of the PRC*, together with the *Law of the PRC on Sino-Foreign Equity Joint Ventures* and the *Law of the PRC on Sino-Foreign Cooperative Joint Ventures* shall be abolished. The organization form, organization and activities of foreign-invested enterprises shall be governed by the laws of the *Company Law of the PRC*, the *Partnership Enterprise Law of the PRC* and the Foreign Investment Law. Foreign-invested enterprises established before the implementation of the Foreign Investment Law may retain the original business organization and so on within five years after the implementation of the Foreign Investment Law.

On December 26, 2019, the State Council promulgated the *Regulations for Implementation the Foreign Investment Law of the PRC*, which came into effect on January 1, 2020, and it further requires that foreign-invested enterprises and domestic enterprises shall be treated equally with respect to policy making and implementation. Pursuant to the *Regulations for Implementation the Foreign Investment Law of the PRC*, if the existing foreign-invested enterprises fail to change their original forms as of January 1, 2025, the relevant market regulation departments will not process other registration matters for the enterprises, and may disclose their relevant information to the public.

On December 30, 2019, the MOFCOM and the SAMR jointly issued the *Measures for Reporting of Foreign Investment Information*, or the Foreign Investment Information Measures, which came into effect on January 1, 2020 and replaced the *Interim Measures for the Record-filing Administrative of the Establishment and Modification of Foreign-invested Enterprises*. Since January 1, 2020, for foreign investors carrying out

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investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall submit investment information through the Enterprise Registration System and the National Enterprise Credit Information Publicity System operated by the SAMR. Foreign investors or foreign-invested enterprises shall disclose their investment information by submitting reports for their establishments, modifications and cancelations and their annual reports in accordance with the Foreign Investment Information Measures. If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its establishment, modifications and cancelation and its annual reports, the relevant information will be shared by the competent market regulation department to the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately.

Investment in the PRC conducted by foreign investors and foreign-invested enterprises shall comply with the *Special Administrative Measures for Access of Foreign Investments (2021 Edition)* effective from January 1, 2022, or the Negative List and the *Catalog of Industries for Encouraged Foreign Investment (2020 Edition)* effective from January 27, 2021, or the Encouraging List, which may be amended from time to time. The Encouraging List and the Negative List classify businesses into three categories with regard to foreign investments: "encouraged" "restricted" and "prohibited." Industries that are not listed in either the Encouraging List or the Negative List are generally deemed as falling into the category of "permitted" unless otherwise provided in the PRC laws. According to the Negative List, the proportion of foreign investments in an entity engages in value-added telecommunications business that is open to foreign investment according to China's WTO commitments (except for e-commerce, domestic multi-party communications, storage-forwarding and call centers) shall not exceed 50%. Investment in online publishing service, online transmission of audio-visual program service, internet culture activities (except for music) and internet information dissemination service (except for contents opened up in China's WTO commitments) shall be prohibited. Pursuant to the restrictions placed by other applicable PRC laws, no foreigner is permitted to independently establish any schools or other educational institutions within the PRC that aims to enroll mainly PRC citizens, and when foreign organizations or individuals invest in education institutions within the PRC, regulations on Sino-foreign cooperation in schools may still be applicable. Therefore, our business of online local services on "Rvet" platform, online continued veterinary education services and offline continued veterinary education services may be deemed as restricted or prohibited foreign-invested industries by competent authorities, which is a violation to foreign investment regulations in the PRC. Our pet care services and other services, on the other hand, are permitted foreign-invested industries. See "Risk Factors—Risks Related to Our Business and Industry—Certain of our products and solutions in relation to online local services and online and offline continued education services may be subject to value-add telecommunications-related regulations, other internet-related regulations or education-related regulations, which are foreign prohibited or restricted areas, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition."

**Regulations on Animal Diagnosis and Treatment Activities** 

On July 3, 1997, the Standing Committee of the NPC of the PRC promulgated the Animal Epidemic Prevention Law of the PRC, as last amended on January 22, 2021 and came into effect on May 1, 2021 for the purpose of strengthening the administration of animal epidemic prevention, preventing, controlling, decontaminating and eliminating animal epidemics, promoting the development of the breeding industry, preventing and controlling zoonosis and ensuring public health security and human health. Under the Animal Epidemic Prevention Law of the PRC, any entities and individuals engaged in animal raising, slaughtering, marketing, isolation and transportation as well as in animal product manufacturing, marketing, processing and storing shall properly carry out animal epidemic prevention, including immunization, disinfection, testing, isolation, decontamination, elimination and innocuous treatment and bear the liability related to animal epidemic prevention. An institution conducting animal diagnosis and treatment activities shall obtain the License for Animal Diagnosis and Treatment.

Ministry of Agriculture (currently known as Ministry of Agriculture and Rural Affairs of the PRC) promulgated the *Measures for the Administration of Animal Diagnosis and Treatment Institutions*, which came

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into effect on January 1, 2009, amended on June 1, 2016 and November 30, 2017 which was further amended on September 7, 2022 and became effective on October 1, 2022, regulates animal diagnosis and treatment activities, namely, operational activities such as prevention, diagnosis and treatment of animal diseases and animal sterilization in the PRC. According to these measures, the Ministry of Agriculture and Rural Affairs shall be responsible for the supervision and administration of animal diagnosis and treatment institutions nationwide, while at local levels, governmental agriculture and rural affairs authorities at or above the county level shall be responsible for the supervision and administration of animal diagnosis and treatment institutions. An animal diagnosis and treatment institution shall meet various conditions and requirements prescribed by these measures before its establishment, and shall obtain the License for Animal Diagnosis and Treatment and carry out animal diagnosis and treatment activities within the prescribed scope of such license. To change its working place or the scope of diagnosis and treatment activities, an animal diagnosis and treatment institution shall go through once again the formalities for licensing for animal diagnosis and treatment and apply for a new license. It also shall obtain a separate animal diagnosis and treatment license to set up any branch. These measures also provides requirements on use of veterinary drugs, concurrent operation of pet products, use of radioactive medical equipment, disposal of medical waste and other activities of animal diagnosis and treatment institutions. For example, animal diagnosis and treatment institutions shall not use fake or inferior veterinary drugs, drugs or other chemical compounds that are banned from using by the relevant laws and regulations. Where an animal diagnosis and treatment institution concurrently trades in pet articles, pet food, pet beauty, and other items, the sideline area and the animal diagnosis and treatment area shall be separately set up. If an animal diagnosis and treatment institution installs and uses the radioactive equipment for diagnosis and treatment, the installation and use shall be subject to approval by the environmental protection department in accordance with the relevant laws and regulations. In addition, animal diagnosis and treatment institutions shall report to the license issuing authority on information of their animal diagnosis and treatment activities for the previous year.

Each of our hospitals is required to obtain the License for Animal Diagnosis and Treatment. The majority of our hospitals have obtained the License for Animal Diagnosis and Treatment. However, as of the date of this prospectus, we are in the process of applying for the License for Animal Diagnosis and Treatment for some of the newly-established hospitals, and we have failed to submit the application to change the information listed on the licenses for some hospitals in a timely manner. Further, some of our hospitals have not fully complied with the applicable laws and regulations on animal diagnosis and treatment institutions, such as use of veterinary drugs, use of radioactive medical equipment and disposal of medical waste and others. See "Risk Factors—Risks Related to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things." "Risk Factors—Risks Related to Our Business and Industry—Animal health products and medications used on animals are subject to safety, quality or efficacy concerns, which may have a material and adverse effect on our reputation, financial condition and results of operations" and "Risk Factors—Risks Related to Our Business and Industry—If we fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material and adverse effect on the success of our business."

**Regulations on Veterinary Drugs Operation** 

On April 9, 2004, State Council promulgated the *Regulation on Veterinary Drug Administration*, which was most recently amended on March 27, 2020. These regulations apply to the research and development, production, marketing, import and export, use as well as supervision and administration of veterinary drugs within the PRC. Pursuant to the *Regulation on Veterinary Drug Administration*, any enterprise which deals in veterinary drugs requires a Veterinary Drug Operation License. The Veterinary Drug Operation License shall indicate such details as the scope of business, place of business, validity period, name of the legal representative, and domicile. The validity period of a Veterinary Drug Operation License is five years. For purchase of any veterinary drug, a

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veterinary drug operator shall check the veterinary drug product against the label or instructions and the quality certificate of the product. Any veterinary drug operator is prohibited from distributing drugs for human use or fake or inferior veterinary drugs.

The veterinary drug operators in the PRC shall also comply with the *Norms for the Business Operation and Quality Management of Veterinary Drugs*, which was promulgated by the Ministry of Agriculture on January 15, 2010 and amended on November 30, 2017. It is a set of standards regulating the quality management of veterinary drugs operators in the PRC, including but not limited to operation sites, equipment, personnel, bylaws, purchases, warehousing, distribution and freight.

On March 17, 2021, the Ministry of Agriculture and Rural Affairs of the PRC promulgated a new version of the *Measures for the Administration of the Business Operation of Veterinary Biological Products* with an effective date of May 15, 2021, governing the distribution, operation, supervision and administration of veterinary biological products within the RPC. According to these measures, any enterprise that engages in the business operation of biological products for veterinary use shall obtain a Veterinary Drug Operation License. The business scope of the Veterinary Drug Operation License shall specifically state the categories of biological products for national compulsory immunity use, biological products not for national compulsory immunity use, and the name of the entrusted production enterprise of biological products for veterinary use.

As of the date of this prospectus, we have obtained the Veterinary Drug Operation License for all the PRC subsidiaries which are engaged in veterinary drug distribution business, except that some of our PRC subsidiaries that have changed their business names and/or business addresses have not renewed their Veterinary Drug Operation Licenses to reflect the up-to-date status. For those entities, we have paused their business operations and plan to resume once they have received the updated licenses and permits. However, we cannot assure you that we can renew such licenses in a timely manner, or at all, in the future, or that we will be able to obtain such licenses in a timely and cost-effective manner, or at all, if we expand our veterinary drug distribution business in the future. See "Risk Factors—Risks Related to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things."

**Regulations on Feeds and Feed Additives** 

The State Council promulgated the *Administrative Regulations on Feed and Feed Additives* on May 29, 1999, which was most recently amended on March 1, 2017. Pursuant to the *Administrative Regulations on Feed and Feed Additives*, the operators of feed and feed additives shall inspect product labels, product quality inspection certificates and the corresponding licensing documents when purchasing such products and no operator of feed or feed additives may unpack or repack any feed or feed additives, or reprocess or add any other substance into any feed or feed additives.

On April 27, 2018, the Ministry of Agriculture and Rural Affairs promulgated a series of announcements, including the *Administrative* Measures *for Pet Feed,* the *Permit Conditions for Pet Feed Manufacturers,* the *Pet Feed Labeling Regulations,* the *Pet Feed Hygienic Regulations,* the *Requirements for Pet Compound Feed Production Licensing Application Materials and* the *Requirements for Pet Additive Premix Feed Production License Application Materials*, which further set forth detailed provisions concerning the production, operation and usage of animal feed and feed additives.

According to the *Administrative Measures for Pet Feed* in 2018 and the *Administrative Measures for the Production Licensing of Feed and Feed Additives* amended on January 7, 2022, where a production enterprise of feed or feed additives entrusts another enterprise of feed or feed additives with the production, the entrusting

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enterprise may be required to obtain the Production License for Pet Feeds/Additives itself. However, in practice, it is unclear whether we are required to obtain such license. See "Risk Factors—Risks Related to Our Business and Industry—We outsource the manufacturing of our private label products. As a result, we may be subject to additional regulatory requirements, and our business, results of operations, financial conditions and reputation may be affected by issues relating to our manufacturers."

**Regulations on Value-added Telecommunications Services** 

On September 25, 2000, the State Council issued the *Regulations on Telecommunications of the PRC*, or the Telecommunications Regulations, as last amended on February 6, 2016, to regulate telecommunications activities in China. The Telecommunications Regulations divided the telecommunications services into two categories, namely "infrastructure telecommunications services" and "value-added telecommunications services." Pursuant to the Telecommunications Regulations, operators of value-added telecommunications services, or VATS, must first obtain a Value-added Telecommunications Business Operating License, or VATS License, from the Ministry of Industry and Information Technology, or the MIIT, or its provincial level counterparts. On July 3, 2017, the MIIT promulgated the *Administrative Measures on Telecommunications Business Permits*, which set forth more specific provisions regarding the types of licenses required to operate VATS, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses.

The *Classified Catalog of Telecommunications Services (2015 Version)*, or the 2016 MIIT Catalog, which took effect on March 1, 2016, and amended on June 6, 2019, identifies Internet information services and online data processing and transaction processing as sub-categories of VATS.

Foreign direct investment in telecommunications companies in China is regulated by the *Administrative Provisions on Foreign-Invested Telecommunications Enterprises*, or the FITE Regulation, which was issued by the State Council on December 11, 2001, last amended in April 2022 and became effective on May 1, 2022. The FITE Regulation stipulates that a foreign-invested telecommunications enterprise in the PRC, or the FITE, must be established as a sino-foreign equity joint venture for operations in the PRC. Under the FITE Regulation, subject to WTO-related agreements, the foreign party investing in a FITE engaging in VATS may hold up to 50% of the ultimate equity interests of the FITE. Furthermore, the foreign party investing in e-commerce business, as a type of value-added telecommunications services (falling in the sub-category of online data processing and transaction processing), has been allowed to hold up to 100% of the equity interests of the FITE based on the *Circular of the Ministry of Industry and Information Technology on Removing the Restrictions on Shareholding Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business* issued on June 19, 2015 and the Negative List.

In addition to the Telecommunications Regulations and the other regulations discussed above, the provision of commercial internet information services on mobile internet applications is regulated by the *Administrative Provisions on Mobile Internet Applications Information Services*, which was promulgated by Cyberspace Administration of China on June 28, 2016 and came into effect on August 1, 2016 amended in June 2022 and became effective on August 1, 2022. The providers of mobile internet applications are subject to requirements under these provisions, including acquiring the qualifications and complying with other requirements provided by laws and regulations and being responsible for information security.

We are required to obtain a Value-added Telecommunications Business Operating License for online data processing and transaction processing services in order to operate our "Rvet" platform as an e-commerce platform. As of the date of this prospectus, we have obtained such license. We may also be required to apply for the Value-added Telecommunications Business Operating License (internet information services) issue by the MIIT for companies with foreign shareholders, to conduct our online pet-related services and online education services provided through the platforms "Rvet" and "Zhiyue", because some of such services may be deemed as internet information services. See "Risk Factors—Risks Related to Our Business and Industry—Certain of our products and

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solutions in relation to online local services and online and offline continued education services may be subject to value-add telecommunications-related regulations, other internet-related regulations or education-related regulations, which are foreign prohibited or restricted areas, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition."

**Regulations on E-Commerce** 

On January 26, 2014, the State Administration for Industry and Commerce, or the SAIC (which is the predecessor of the SAMR) promulgated the *Administrative Measures for Online Trading*, or the Online Trading Measures, which became effective on March 15, 2014, to regulate all operating activities for product sales and services provision via the internet (including mobile internet). It stipulates the obligations of online products operators and services providers and certain special requirements applicable to third-party platform operators. Furthermore, the MOFCOM promulgated the *Provisions on the Procedures for Formulating Transaction Rules of Third-Party Online Retail Platforms (Trial)* on December 24, 2014, which became effective on April 1, 2015, to guide and regulate the formulation, revision and enforcement of transaction rules by online retail third-party platforms operators. These measures impose more stringent requirements and obligations on third-party platform operators. For example, third-party platform operators are obligated to make public and file their transaction rules with MOFCOM or their respective provincial counterparts, examine and register the legal status of each third-party merchant selling products or services on their platforms and display on a prominent location on a merchant's webpage the information stated in the merchant's business license or a link to its business license. Where third-party platform operators also conduct self-operation of products or services on the platform, these third-party platform operators must make a clear distinction between their online direct sales and sales of third-party merchant products on their third-party platforms to avoid misleading the consumers. On March 15, 2021, the SAMR promulgated the *Measures for the Supervision and Administration of Online Transactions*, which will come into effect on May 1, 2021 and replace the Online Trading Measures. These new measures provide more detailed requirements for the platform operators, such as clarifying the specific acts infringing consumers' personal information in online transactions and the prohibited contents contained in the standard terms used by the operators.

On August 31, 2018, the SCNPC promulgated the *E-Commerce Law of the PRC*, or the E-Commerce Law, which became effective on January 1, 2019. The promulgation of the E-Commerce Law established the basic legal framework for the development of China's E-Commerce business and clarified the obligations of the operators of e-commerce platforms and the possible legal consequences if operators of e-commerce platforms are found to be in violation of legally prescribed obligations. For example, pursuant to the E-Commerce Law, all e-commerce operators shall (i) register themselves as market subjects according to the law, except for individuals selling self-produced agricultural and sideline products or family handicrafts, applying their own skills in labor activities that are exempted from registration, or engaged in odd small-amount transaction activities that do not require any license under the law; (ii) fulfill their tax obligations and enjoy tax incentives in accordance with the law; (iii) always have information about its own business license, the administrative license issued for its business, and its status as a party that is not required to register itself as a market subject, or the link to a webpage with such information published in a prominent position on its homepage; (iv) bear the likely risks and responsibilities when commodities are in transit, except when consumers select separate express logistics service providers; and (i) provide clear notice to consumers for tie-in sales and shall not set tie-in commodities or services as the default option. Further, e-commerce operators that possess dominant market positions shall not abuse their market dominance to eliminate or restrict competition.

In addition, the E-commerce Law provides that platform operators shall (i) verify and register the identity, address, contact and administrative license of e-commerce operators applying to sell commodities or provide services on its platform, establish registration archives and have them verified and updated regularly; (ii) record and save information released on its platform about commodities and services and deals concluded for a period of three years (unless otherwise stipulated), and ensure the completeness, confidentiality and availability of such information; (iii) use noticeable labels to clearly identify any business that it conducts on its own platform. A

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platform operator shall not impose unreasonable restrictions over or add unjustified conditions to transactions concluded on its platform by e-commerce operators, nor shall a platform operator charge e-commerce operators on its platform any unreasonable fees.

Violation of the provisions of the E-Commerce Law may entail being ordered to make corrections within a prescribed period of time, confiscation of gains illegally obtained, fines, suspension of business, inclusion of such violations in the credit records and possible civil liabilities. If a platform operator knows, or should have known, that an e-commerce operator has conducted acts infringing on the legitimate rights and interests of consumers, but the platform operator fails to take any necessary measure, the platform operator shall be held jointly and severally liable with the e-commerce operator. Where a platform operator fails to examine the qualifications of the e-commerce operators on its platform or fails to protect the safety of its consumers in respect of goods or services that may affect the consumer's health, the platform operator shall bear corresponding liability to the consumers. Where a platform operator fails to take necessary measures against violations of intellectual property rights by e-commerce operators on its platform, the relevant administrative departments of intellectual property may order the platform operator to make corrections within the required time limit; where it fails to make corrections within the required time limit, the platform operator may face administrative fines of up to RMB2,000,000.

**Regulations on Private Education** 

On December 28, 2002, the SCNPC promulgated the *Private Education Promotion Law of the PRC*, which was last amended on December 29, 2018. Under the Private Education Promotion Law of the PRC, the private schools shall obtain a private school operation permit issued by relevant government and registered with relevant registration authorities.

On April 7, 2021, the State Council published the Revised *Regulations on the Implementation of the Private Education Promotion Law of the PRC*, or the Revised Implementation Regulations effective on September 1, 2021. The Revised Implementation Regulations stipulates that the institutions using internet technology to implement educational and teaching activities need to obtain the corresponding internet operating permit, and the private schools using internet technology to implement educational and teaching activities should acquire the private school operation permit.

Upon consultation with the local education authorities, we understand that the local education authorities have never issued a private school operation permit to an institution which provide offline continued veterinary education like us, and they have no detailed interpretations or implementations to determine whether we shall be subject to the above private schools related laws and regulations. Further, the Revised Implementation Regulations are newly issued and remains uncertain how it will be interpreted and implemented as to the regulatory requirements for an institution providing online education, including, among others, whether a private school operation permit is required. As such, we are not certain that our offline and online continued veterinary education services will be deemed as private schools under the PRC laws. As of the date of this prospectus, we have not received any notice from any local education authorities to request us to obtain the private school operation permit. However, because the PRC laws in this regard are evolving, we cannot guarantee the relevant PRC education authorities will continue to hold the abovementioned interpretation and implementation, or that no new rules will be promulgated to the contrary. We will continuously follow up with the regulatory trend and communicate with the relevant local authorities, and will apply for the private school operation permit as soon as it is specified that we are subject to the private school operation permit. For potential risks, see "Risk Factors—Risks Related to Our Business and Industry—Certain of our products and solutions in relation to online local services and online and offline continued education services may be subject to value-add telecommunications-related regulations, other internet-related regulations or education-related regulations, which are foreign prohibited or restricted areas, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition."

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**Regulations on Educational Apps** 

On August 10, 2019, the Ministry of Education ("MOE"), jointly with certain other PRC government authorities, issued *Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps*, or the Opinions on Educational Apps, which require, among others, for mobile apps that provide services for school teaching, student learning and student life, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent provincial regulatory authorities for education before the end of 2019. The Opinions on Educational Apps also require, among others, that before such filing, the providers of Educational Apps shall have obtained ICP License or completed ICP License filing and obtained the certificate and grade evaluation report for graded protection of cybersecurity. On November 11, 2019, the MOE issued the *Management Rules on Filing of Educational Mobile Apps*, which supplement the filing requirements of the Educational Apps.

We operate Zhiyue, a mobile application containing various online courses and articles on pet care authored by Chinese and foreign experts. We have filed Zhiyue with the competent provincial regulatory authorities as an educational app.

**Regulations on Online Transmission of Audio-Visual Programs, Internet Culture Activities, Online publishing and Production and Operation of Radio and Television Programs** 

To regulate the provision of audio-visual program services to the public via the internet, including through mobile networks, within the territory of the PRC, the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently reformed into the National Press and Publication Administration (National Copyright Bureau)) and the MIIT jointly promulgated the *Administrative Provisions on Internet Audio- Visual Program Service*, or the Audio-Visual Program Provisions, which came into effect on January 31, 2008 and was last amended on August 28, 2015. Under the Audio-Visual Program Provisions, "online audio-visual program services" is defined as activities of producing, redacting and integrating audio-visual programs, providing them to the general public via internet, and providing service for other people to upload and transmit audio-visual programs, and providers of online audio-visual program services are required to obtain a License for Online Transmission of Audio-Visual Programs issued by the SAPPRFT, or complete certain registration procedures with the SAPPRFT. In general, providers of online audio-visual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by the SAPPRFT.

On February 17, 2011, the Ministry of Culture (currently reformed into the Ministry of Culture and Tourism of the PRC), or MOC, promulgated the *Interim Administrative Provisions on Internet Culture*, or the Internet Culture Provisions, which became effective on April 1, 2011 and was amended on December 15, 2017. The Internet Culture Provisions requires ICP services providers engaging in commercial "internet culture activities" to obtain the Internet Culture Operation License from the MOC or its provincial counterpart. "Internet cultural activities" is defined in the Internet Culture Provisions as an act of provision of internet culture products and related services, which includes (i) the production, duplication, importation, and broadcasting of internet cultural products; (ii) the online dissemination whereby cultural products are posted on the internet or transmitted via the internet to end-users, such as computers, fixed-line telephones, mobile phones, television sets and games machines, for online users' browsing, use or downloading; and (iii) the exhibition and comparison of internet cultural products.

On February 4, 2016, the SAPPRFT and the MIIT jointly issued the *Administrative Provisions on Online Publishing Services*, or the Online Publishing Provisions, which came into effect on March 10, 2016. Under the Online Publishing Provisions, any entity providing online publishing services shall obtain an Online Publishing Services Permit. "Online publishing services" refer to the provision of online publications to the public through information networks; and "online publications" refer to digital works with publishing features such as having been edited, produced or processed and are available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works

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containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.

The *Administrative Measures on the Production and Operation of Radio and Television Programs*, or the Radio and TV Programs Measures, promulgated by the SAPPRFT on July 19, 2004 and last amended on October 29, 2020 are applicable for establishing institutions that produce and distribute radio and television programs or for the production of radio and television programs like programs with a special topic, column programs, variety shows, animated cartoons, radio plays and television dramas and for activities like transactions and agency transactions of program copyrights. Pursuant to the Radio and TV Programs Measures, any entity that intends to produce or operate radio or television programs must first obtain the Production and Operation of Radio and TV Programs Permit from the SAPPRFT or its local branches.

We are not certain whether our operation of the online platforms, "Rvet" and "Zhiyue", shall be subject to the above regulations. As such, we currently do not hold any of the License for the Online Transmission of Audio-Visual Programs, the Internet Culture Operation License, the Online Publishing Service Permit Production or the Operation of Radio and TV Programs Permit. However, it is possible that the PRC government finds that our activities, such as production and provision of videos, articles, pictures and other products on the online platforms of "Rvet" or "Zhiyue" or any other content offered by us, fall within any of the above definitions and thus requires us to obtain the relevant license. We may, however, not be able to obtain such license in a timely manner or at all, because online transmission of audio-visual programs, internet culture activities, online publishing and production and operation of radio and TV programs are foreign prohibited. In particular, we are not eligible to apply for the Online Transmission of Audio-Visual Programs since we are not a state-owned or state-controlled entity. See "Risk Factors—Risks Related to Our Business and Industry—Certain of our products and solutions in relation to online local services and online and offline continued education services may be subject to value-add telecommunications-related regulations, other internet-related regulations or education-related regulations, which are foreign prohibited or restricted areas, and future legislative or regulatory actions could adversely affect our business, results of operations and financial condition."

**Regulations on Cyber Security and Privacy** 

The PRC Constitution states that the PRC laws protect the freedom and privacy of communications of citizens and prohibit infringement of such rights. PRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure, and which includes the *Decision of the Standing Committee of the National People's Congress on Internet Security Protection* enacted and amended by the SCNPC on December 28, 2000 and August 27, 2009, respectively, the *Provisions on the Technical Measures for Internet Security Protection* issued by the Ministry of Public Security on January 13, 2006 and took effect on March 1, 2006, the *Decision of the Standing Committee of the National People's Congress on Strengthening Network Information Protection* promulgated by the SCNPC on December 28, 2012, the *Several Provisions on Regulating the Market Order of Internet Information Services* promulgated by the MIIT on December 29, 2011, and the *Provisions on Protection of Personal Information of Telecommunication and Internet Users* released by the MIIT on July 16, 2013. Internet information in China is regulated and restricted from a national security standpoint.

*The Provisions on Protection of Personal Information of Telecommunication and Internet Users* regulate the collection and use of users' personal information in the provision of telecommunications services and Internet information services in the PRC. Telecommunication business operators and Internet service providers are required to institute and disclose their own rules for the collecting and use of users' information. Telecommunication business operators and Internet service providers must specify the purposes, manners and scopes of information collection and uses, obtain consent of the relevant citizens, and keep the collected personal information confidential.

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Telecommunication business operators and Internet service providers are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personal information. Telecommunication business operators and Internet service providers are required to take technical and other measures to prevent the collected personal information from any unauthorized disclosure, damage or loss. Once users terminate the use of telecommunications services or Internet information services, telecommunications business operators and Internet information service providers shall stop the collection and use of the personal information of users and provide the users with services for deregistering their account numbers.

The *Provisions on Protecting Personal Information of Telecommunication and Internet Users* further define the personal information of user to include user name, birth date, identification number, address, phone number, account number, passcode, and other information that may be used to identify the user independently or in combination with other information and the timing, places, etc. of the use of services by the users. Furthermore, according to the *Interpretations on Several Issues Concerning the Application of Law in* the *Handling of Criminal Cases Involving Infringement of Citizens' Personal Information*, or the Interpretations, issued by the Supreme People's Court and the Supreme People's Procuratorate on May 8, 2017 and took effect on June 1, 2017, personal information means various information recorded electronically or through other manners, which may be used to identify individuals or activities of individuals, including but not limited to the name, identification number, contact information, address, user account number and passcode, property ownership and whereabouts.

On November 1, 2015, the *Ninth Amendment to the Criminal Law of the People's Republic of China* issued by the SCNPC became effective, pursuant to which, any internet service provider that fails to comply with obligations related to internet information security administration as required by applicable laws and refuses to rectify upon order shall be subject to be punished by imprisonment for a term not exceeding three years, detention or control, and fine for (i) any large-scale dissemination of illegal information; (ii) any severe consequences due to the leakage of the user information; (iii) any serious loss of criminal evidence; or (iv) other severe circumstances. Furthermore, any individual or entity that (i) sells or distributes personal information in a manner which violates relevant regulations, or (ii) steals or illegally obtain any personal information is subject to criminal penalty in severe circumstances.

On June 1, 2017, the *Cyber Security Law of the PRC*, or the Cyber Security Law, promulgated by SCNPC took effect, which is formulated to maintain the network security, safeguard the cyberspace sovereignty, national security and public interests, protect the lawful rights and interests of citizens, legal persons and other organizations, and requires that a network operator, which includes, among others, internet information services providers, take technical measures and other necessary measures to safeguard the safe and stable operation of the networks, effectively respond to the network security incidents, prevent illegal and criminal activities, and maintain the integrity, confidentiality and availability of network data. The Cyber Security Law reaffirms the basic principles and requirements set forth in other existing laws and regulations on personal information protections and strengthens the obligations and requirements of internet service providers, which include but are not limited to: (i) keeping all user information collected strictly confidential and setting up a comprehensive user information protection system; (ii) abiding by the principles of legality, rationality and necessity in the collection and use of user information and disclosure of the rules, purposes, methods and scopes of collection and use of user information; and (iii) protecting users' personal information from being leaked, tampered with, destroyed or provided to third parties. Any violation of the provisions and requirements under the Cyber Security Law and other related regulations and rules may result in administrative liabilities such as warnings, fines, confiscation of illegal gains, revocation of licenses, suspension of business, and shutting down of websites, or, in severe cases, criminal liabilities.

On June 10, 2021, the Standing Committee of the National People's Congress of China promulgated the *Data Security Law*, which became effective in September 2021. The Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public

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interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor of important data shall designate the personnel and the management body responsible for data security, carry out risk assessments for its data processing activities and file the risk assessment reports with the competent authorities. In addition, the Data Security Law provides a national security review procedure for those data activities which may affect national security and imposes export restrictions on certain data and information. As the Data Security Law was recently promulgated and has not yet taken effect, we may be required to make further adjustments to our business practices to comply with this law.

On July 30, 2021, the State Council promulgated the Regulations on Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to the Regulations on Protection of Critical Information Infrastructure, critical information infrastructure shall mean any important network facilities or information systems of the important industry or field such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, which may endanger national security, people's livelihood and public interest in case of damage, function loss or data leakage. In addition, relevant administration departments of each critical industry and sector, or Protection Departments, shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators.

On November 14, 2021, the CAC issued the Administrative Regulations of Cyber Data Security (Draft for Comments), or the Draft Cyber Data Security Regulations, which provide that data processors conducting the following activities shall apply for cybersecurity review: (i) merger, reorganization or separation of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests affects or may affect national security; (ii) listing abroad of data processors processing over one million users' personal information; (iii) listing in Hong Kong which affects or may affect national security; (iv) other data processing activities that affect or may affect national security.

December 28, 2021, the CAC, the NDRC, the MIIT, the Ministry of Public Security, the Ministry of National Security, the Ministry of Finance, the MOFCOM, the People's Bank of China, the SAMR, the NRTA, the CSRC, the National Administration of State Secrets Protection and the State Cryptography Administration jointly released the Cybersecurity Review Measures, which took effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, network platform operators with personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before going to list abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk. See "Risk Factors—Risks Related to Doing Business in China—Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of operations."

With respect to the security of information collected and used by mobile apps, pursuant to the *Announcement of Conducting Special Supervision against the Illegal Collection and Use of Personal Information by Apps*, which was issued by the Cyberspace Administration of China, the MIIT, the Ministry of Public Security, and the State Administration for Market Regulation on January 23, 2019, app operators shall collect and use personal information in compliance with the Cyber Security Law and shall be responsible for the security of personal information obtained from users and take effective measures to strengthen personal information protection. Furthermore, app operators shall not force their users to make authorization by means of default settings, bundling, suspending installation or use of the app or other similar means and shall not collect personal information in violation of laws, regulations or breach of user agreements. Such regulatory requirements were

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emphasized by the *Notice on the Special Rectification of Apps Infringing upon User's Personal Rights and Interests*, which was issued by MIIT on October 31, 2019. On November 28, 2019, the Cyberspace Administration of China, the MIIT, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Methods of Identifying Illegal Acts of Apps to Collect and Use Personal Information. This regulation further illustrates certain commonly seen illegal practices of app operators in terms of personal information protection and specifies acts of app operators that will be considered as "collection and use of personal information without users' consent".

On May 28, 2020, the National People's Congress adopted the *Civil Code*, which came into effect on January 1, 2021. Pursuant to the *Civil Code*, the personal information of a natural person shall be protected by the law. Any organization or individual shall legally obtain such personal information of others when necessary and ensure the safety of such information, and shall not illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or disclose personal information of others.

On August 20, 2021, the SCNPC promulgated the *Personal Information Protection Law*, which integrates the scattered rules with respect to personal information rights and privacy protection and became effective on November 1, 2021. The Personal Information Protection Law applies to personal information processing activities within China, as well as certain personal information processing activities outside China, including those for provision of products and services to natural persons within China or for analyzing and assessing acts of natural persons within China. The Personal Information Protection Law provides the circumstances under which a personal information processor could process personal information, which include but not limited to, where the consent of the individual concerned is obtained and where it is necessary for the conclusion or performance of a contract to which the individual is a contractual party. It also stipulates certain specific rules with respect to the obligations of a personal information processor, such as to inform the purpose, the method of processing, the type of personal information processed and retention period to the individuals, and the obligation of the third party who has access to the personal information by way of co-processing or delegation etc. Processors processing personal information exceeding the threshold to be set by the relevant authorities and operators of key information infrastructure are required to store, within the territory of the PRC, the personal information collected and produced within the PRC. Furthermore, the Personal Information Protection Law also provides for the rights of natural persons whose personal information is processed, and takes special care of the personal information of children under 14 and sensitive personal information.

The recommended national standard, *Information Security Technology Personal Information Security Specification*, puts forward specific refinement requirements on the collection, preservation, use and commission processing, sharing, transfer, public disclosure, etc. Although it is not mandatory, in the absence of clear implementation rules and standards for the law on Cyber security and other personal information protection, it will be used as the basis for judging and making determinations. On July 7 2022, the CAC promulgated Measures for the Security Assessment of Outbound Data Transfer, which became effective on September 1, 2022. The Measures for the Security Assessment of Outbound Data Transfer specified that when data processors engage in outbound data transfer under any of the following circumstances, they shall apply for security assessment to the CAC in accordance with the relevant national regulations: (i) where a data processor transfers critical information abroad; (ii) where a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals transfers personal information abroad; (iii) where a data processor has transferred personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year, and (iv) other circumstances prescribed by the CAC for which declaration for security assessment for outbound data transfers is required.

As of the date of this prospectus, we have established policies and other documentation for the collection, processing, sharing, disclosure authorization and other aspects of data use and privacy and taken necessary measures to comply with all applicable currently-effective laws and regulations regarding cybersecurity, information security, privacy and data protection. As of the date of this prospectus, we believe that we have complied with the applicable currently-effective laws and regulations in all material aspects. However, we cannot

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guarantee the effectiveness of these policies and measures undertaken by us, our employees, vendors or other business partners. We may be from time to time required to rectify or further improve our measures regarding cybersecurity, information security, privacy and data protection. See "Risk Factors—Risks Related to Our Business and Industry—Our business generates and processes a large amount of data, and we are required to comply with PRC laws relating to cybersecurity, information security, privacy and data protection and other related laws and requirements. The improper use or disclosure of data could have a material and adverse effect on our business and prospects" and "Risk Factors—Risks Related to Doing Business in China—Any failure to comply with the various applicable laws and regulations related to data security, cybersecurity and personal information and privacy protection could affect our offshore listing and lead to liabilities, penalties or other regulatory actions, which could have a material and adverse effect on our business, financial condition and results of operations."

**Regulations on Product Quality** 

According to the *Product Quality Law of the PRC*, which was effective as from September 1, 1993 and last amended by the SCNPC on December 29, 2018, products for sale must satisfy relevant safety standards and sellers shall adopt measures to maintain the quality of products for sale. Sellers may not mix impurities or imitations into products, or pass counterfeit goods off as genuine ones, or defective products as good ones or substandard products as standard ones. For sellers, any violation of state or industrial standards for health and safety or other requirements may result in civil liabilities and administrative penalties, such as compensation for damages, fines, confiscation of products illegally manufactured or sold and the proceeds from the sales of such products illegally manufactured or sold and even revoking business license; in addition, severe violations may subject the responsible individual or enterprise to criminal liabilities.

Pursuant to the Civil Code of the PRC, which became effective on January 1, 2021, the infringed party may claim for compensation from the manufacturer or the seller of the relevant product in which the defects have caused damage. Where the product defects are caused by the producers, the sellers shall have the right to recover the same from the producers after paying compensation. If the products are defective due to the fault of the seller, the producer may, after paying compensation, claim the same from the seller.

**Regulations on Consumer Protection** 

According to the *Consumers Rights and Interests Protection Law of the PRC*, or the Consumers Rights and Interests Protection Law, which became effective on January 1, 1994 and was last amended by the SCNPC on October 25, 2013 respectively, business operators should guarantee that the products and services they provide satisfy the requirements for personal or property safety, and provide consumers with authentic information about the quality, function, usage and term of validity of the products or services. The consumers whose interests have been damaged due to the products or services that they purchase or accept on the internet trading platforms may claim damages to sellers or service providers. Where the operators of the online trading platforms are unable to provide the real names, addresses and valid contact details of the sellers or service providers, the consumers may also claim damages to the operators of the online trading platforms. Operators of online trading platforms that clearly knew or should have known that sellers or service providers use their platforms to infringe upon the legitimate rights and interests of consumers but fail to take necessary measures must bear joint and several liabilities with the sellers or service providers. Moreover, if business operators deceive consumers or knowingly sell substandard or defective products, they should not only compensate consumers for their losses, but also pay additional damages equal to three times the price of the goods or services.

On January 6, 2017, the SAIC issued the *Interim Measures for Seven-day Unconditional Return of Online Purchased Goods*, which became effective on March 15, 2017 and was amended by the SAMR on October 23, 2020, further clarifying the scope of consumers' rights to make returns without a reason, including exceptions, return procedures and online trading platform operators' responsibility to formulate seven-day unconditional return rules and related consumer protection systems, and supervise the merchants for compliance with these rules.

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**Regulations on Pricing** 

In China, the prices of a small number of products and services are guided or fixed by the government. According to the *Pricing Law of the People's Republic of China*, or the Pricing Law, promulgated by the SCNPC on December 29, 1997 and became effective on May 1, 1998, business operators must, as required by the government departments in charge of pricing, mark the prices explicitly and indicate the name, origin of production, specifications and other related particulars clearly. Business operators may not sell products at a premium or charge any fees that are not explicitly indicated. Business operators must not commit the specified unlawful pricing activities, such as colluding with others to manipulate the market price, using false or misleading prices to deceive consumers to transact, or conducting price discrimination against other business operators. Failure to comply with the Pricing Law may subject business operators to administrative sanctions such as warning, ceasing unlawful activities, compensation, confiscating illegal gains and fines. The business operators may be ordered to suspend business for rectification or have their business licenses revoked under severe circumstances.

**Regulations on Advertising** 

In 1994, the SCNPC promulgated the *Advertising Law of the PRC*, or the Advertising Law, which was recently revised on April 29, 2021 and became effective on the same date. The Advertising Law regulates commercial advertising activities in the PRC and sets out the obligations of advertisers, advertising operators, advertising publishers and advertisement endorser, and prohibits any advertisement from containing any obscenity, pornography, gambling, superstition, terrorism or violence-related content. Any advertiser in violation of such requirements on advertisement content will be ordered to cease publishing such advertisements and imposed a fine, the business license of such advertiser may be revoked, and the relevant authorities may revoke the approval document for advertisement examination and refuse to accept applications submitted by such advertiser for one year. In addition, any advertising operator or advertising publisher in violation of such requirements will be imposed a fine, and the advertisement fee received will be confiscated; in severe circumstances, the business license of such advertising operator or advertising publisher may be revoked.

The *Interim Measures for the Administration of Internet Advertising*, or the Internet Advertising Measures, regulating the internet-based advertising activities were adopted by the SAIC on July 4, 2016 and became effective on September 1, 2016. According to the Internet Advertising Measures, internet advertisers are responsible for the authenticity of the advertisements content and all online advertisements must be marked "Advertisement" so that viewers can easily identify them as such. Publishing and circulating advertisements through the Internet shall not affect the normal use of the Internet by users. It is not allowed to induce users to click on the content of advertisements by any fraudulent means, or to attach advertisements or advertising links in the emails without permission.

**Regulations on Foreign Trade and Customs** 

Pursuant to the *Foreign Trade Law of the PRC* which was promulgated by the SCNPC on May 12, 1994 and most recently amended on November 7, 2016 and the *Measures for the Record and Registration of Foreign Trade Operators* which was promulgated by the MOFCOM on June 25, 2004 and most recently amended on May 10, 2021, foreign traders engaging in import and export of goods or technology shall complete the filing and registration with the MOFCOM or its delegated agencies. Where a foreign trade operator fails to complete the filing and registration, the customs will refuse to handle customs declaration and the clearance of goods imported or exported by the operator.

Pursuant to the *Customs Law of the PRC* promulgated by the SCNPC on January 22, 1987 and most recently amended on April 29, 2021, unless otherwise stipulated, the declaration of import and export goods may be made by consignees and consignors themselves, and such formalities may also be completed by their entrusted customs brokers. The consignees and consignors for import or export of goods and the customs brokers engaged in customs declaration shall file with the Customs in accordance with the laws.

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Pursuant to the Administrative Provisions of the Customs of the PRC on the Record-filing of Customs Declaration Entities promulgated by the General Administration of Customs on November 19, 2021, which became effective on January 1, 2022, provides the detailed record-filing requirements for the consignor or consignee of imported and exported goods and the custom brokers who shall make such record-filings.

**Regulations on Environment Protection** 

Pursuant to the *Environmental Protection Law of the PRC* promulgated by the Standing Committee of the NPC, in December 1989, amended in April 2014 and effective in January 2015, any entity which discharges or will discharge pollutants during its course of operations or other activities must implement effective environmental protection safeguards and procedures to control and properly treat waste gas, waste water, waste residue, dust, malodorous gases, radioactive substances, noise vibrations, electromagnetic radiation and other hazards produced during such activities. According to the provisions of the Environmental Protection Law, in addition to other relevant laws and regulations of the PRC, the Ministry of Environmental Protection and its local counterparts take charge of administering and supervising said environmental protection matters.

Pursuant to the Environmental Protection Law, the environmental impact statement on any construction project must assess the pollution that the project is likely to produce and its impact on the environment, and stipulate preventive and curative measures; the statement shall be submitted to competent administrative department of environmental protection for approval. Installations for the prevention and control of pollution in construction projects must be designed, built and commissioned together with the principal part of the project.

Pursuant to the *Law of the People's Republic of China on Environment Impact Assessment*, which was promulgated in October 2002 and most recently amended in December 2018, the State implements a classification-based management on the environmental impact assessment of construction projects according to the impact of the construction projects on the environment. Construction units shall prepare an Environmental Impact Report or an Environmental Impact Statement, or fill out the Environmental Impact Registration Form.

Pursuant to the *Regulations on Urban Drainage and Sewage Disposal*, which came into effect in January 2014, and the *Measures for the Administration of Permits for the Discharge of Urban Sewage into the Drainage Network*, which came into effect in March 2015, drainage entities covered by urban drainage facilities shall discharge sewage into urban drainage facilities in accordance with the relevant provisions of the state. Where a drainage entity needs to discharge sewage into urban drainage facilities, it shall apply for a drainage license in accordance with the provisions of these Measures. The drainage entity that has not obtained the drainage license shall not discharge sewage into urban drainage facilities.

The *Regulations on the Management of Medical Waste* promulgated by the State Council on June 16, 2003 and further amended on January 8, 2011, and the *Implementation Measures for the Management of Medical Waste of Medical and Health Institutions*, promulgated on October 15, 2003, stipulate that healthcare institutions must categorize the medical waste in accordance with the *Classified Catalogue of Medical Waste* for management purpose and timely deliver medical waste to a medical waste disposal entity approved by the environmental protection administrative department at or above the county level for centralized disposal.

According to the *Regulations on the Safety and Protection of Radioisotopes and Radiation Devices*, which were promulgated by the State Council on September 14, 2005 and last revised on March 2, 2019, and the *Measures for Administration of the safety Licensing of Radioactive Isotopes and Radioactive Equipment*, which were promulgated by Ministry of Environmental Protection on January 18, 2006 and last revised on January 4, 2021, stipulate that any entity engaging in the production, sale or use of radioisotopes or radiation devices of different categories shall obtain a Radiation Safety License. If any entity is engaged in the production, sale or use of radioisotopes or radiation devices without a Radiation Safety License, the relevant department of ecology and environment at or above the county level may order such entity to stop the violation and take corrective measures within a prescribed time limit. If the entity fails to take any corrective actions within the prescribed time limit, the entity may be ordered to suspend production or business operation, or subject to fines.

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As of the date of this prospectus, we have not followed all the legal requirements on environment protection. See "Risk Factors—Risks Related to Our Business and Industry—If we fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material and adverse effect on the success of our business" and "Risk Factors—Risks Related to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things".

**Regulations on Fire Protection** 

The *Fire Prevention Law of the PRC*, or the Fire Prevention Law, was adopted in April 1998 and last amended in April, 2021. The Fire Prevention Law provides that fire control design and construction of a construction project shall comply with the State's fire control technical standards. Developers, designers, builders and project supervisors shall be responsible for the quality of the fire control design and construction of the construction project pursuant to the law. Development project fire safety design examinations and acceptance systems shall be implemented for development projects which are required to have fire safety design in accordance with the national fire protection technical standards.

According to the Interim Provisions on Administration of Fire Control Design Review and Acceptance of Construction Project promulgated by the Ministry of Housing and Urban-Rural Development on April 1, 2020, which became effective on June 1, 2020, the construction entity of non-special construction projects must complete the filing for the fire acceptance procedures within five business days after passing the construction completion inspection and acceptance. If the construction entity of non-special construction projects fails to complete the filing for the fire acceptance procedures, it may be subject to (i) an order to correct, and (ii) a fine of less than RMB5,000.

As of the date of this prospectus, we have not fulfilled all the legal requirements on fire protection. See "Risk Factors—Risks Related to Our Business and Industry—If we fail to comply with environmental, fire protection, drainage or health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material and adverse effect on the success of our business" and "Risk Factors—Risks Related to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business and results of operations. Certain aspects of our business were or currently are not in full compliance with the regulatory requirements, including certain of our hospitals' failure to obtain or renew the License for Animal Diagnosis and Treatment under their own names and many of our PRC entities' failure to obtain the Radiation Safety License before using or selling radioisotopes and radiation-emitting devices, among other things".

**Regulations on leasing** 

Pursuant to the *Law on Administration of Urban Real Estate* which took effect in January 1995 with the latest amendment effective on January 1, 2020, 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, rental price, liability for repair, and other rights and obligations of both parties. lessors and lessees are also required to file for registration and record the lease contract with the real estate administration department. Pursuant to implementing rules stipulated by certain provinces or cities, if the lessor and lessee fail to go through the registration procedures, both lessor and lessee may be subject to fines. According to the Civil Code, 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 ownership of the leased

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premises changes during the lessee's possession in accordance with the terms of the lease contract, the validity of the lease contract shall not be affected. Pursuant to the Civil Code, if the mortgaged property has been leased and transferred for occupation prior to the establishment of the mortgage right, the original tenancy shall not be affected by such mortgage right.

**Regulations on Intellectual Property** 

China has adopted comprehensive legislation governing intellectual property rights, including copyrights, trademarks, patents and domain names. China is a signatory to the primary international conventions on intellectual property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to the World Trade Organization on December 11, 2001.

***Copyright***

On September 7, 1990, the SCNPC promulgated the *Copyright Law of the People's Republic of China*, or the Copyright Law, effective on June 1, 1991, last amended on November 11, 2020 and became effective on June 1, 2021. The 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 Copyright Protection Center of China. According to the Copyright Law, Chinese citizens, legal persons, or other organizations shall, whether published or not, own copyright in their copyrightable works, which include, among others, works of literature, art, natural science, social science, engineering technology and computer software. Copyright owners enjoy certain legal rights, including right of publication, right of authorship and right of reproduction. An infringer of the copyrights shall be subject to various civil liabilities, which include ceasing infringement activities, apologizing to the copyright owners and compensating the loss of copyright owner. Infringers of copyright may also subject to fines and/or administrative or criminal liabilities in severe situations.

In order to further implement the *Regulations on Computer Software Protection*, promulgated by the State Council on December 20, 2001 and last amended on January 30, 2013, the National Copyright Administration issued the *Measures for the Registration of* Computer *Software Copyright* on February 20, 2002, which specify detailed procedures and requirements with respect to the registration of software copyrights.

***Trademark***

According to the *Trademark Law of the People's Republic of China* promulgated by the SCNPC on August 23, 1982, and last amended on April 23, 2019, the Trademark Office of the SAIC is responsible for the registration and administration of trademarks in China. The SAIC under the State Council has established a Trademark Review and Adjudication Board for resolving trademark disputes. Registered trademarks are valid for ten years from the date the registration is approved. A registrant may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant fails to apply in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the grace period expires, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. On April 29, 2014, the State Council issued the revised the *Implementing Regulations of the Trademark Law of the People's Republic of China*, which specified the requirements of applying for trademark registration and renewal.

***Patent***

According to the *Patent Law of the People's Republic of China*, or the Patent Law, promulgated by the SCNPC on March 12, 1984, last amended on October 17, 2020 and became effective on June 1, 2021, and the *Implementation Rules of the Patent Law of the People's Republic of China*, or the Implementation Rules of the Patent Law, promulgated by the State Council on December 21, 1992 and most recently revised on January 9, 2010, the patent administrative department under the State Council is responsible for the administration of patent-related work nationwide and the patent administration departments of provincial or autonomous regions or

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municipal governments are responsible for administering patents within their respective administrative areas. The Patent Law and Implementation Rules of the Patent Law provide for three types of patents, namely "inventions", "utility models" and "designs". Invention patents are valid for twenty years, utility model patents are valid for ten years, and design patents are valid for 15 years, each from the date of application. The Chinese patent system adopts a "first come, first 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 files the application first. An invention or a utility model must possess novelty, inventiveness and practical applicability to be patentable. Third Parties must obtain consent or a proper license from the patent owner to use the patent. Otherwise, the unauthorized use constitutes an infringement on the patent rights.

***Domain Names***

Domain names are protected under the *Administrative Measures on the Internet Domain Names,* which was promulgated by the MIIT in August 2017, and the *Implementing Rules on Registration of National Top-level Domain Names*, which was promulgated by China Internet Network Information Center and came into effect in June 2019. The MIIT is the main regulatory body responsible for the administration of PRC internet domain names. 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.

**Regulations on Foreign Exchange** 

The principal regulations governing foreign currency exchange in China are the *Administrative Regulations on Foreign Exchange of the PRC,* or the Foreign Exchange Administrative Regulation, which were promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and was subsequently amended on January 14, 1997 and August 5, 2008 and the *Administrative Regulations on Foreign Exchange Settlement, Sales and Payment* which was promulgated by the People's Bank of China, or the PBOC, on June 20, 1996 and became effective on July 1, 1996. Under these regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from State Foreign Exchange Administration of the People's Republic of China, or the SAFE, by complying with certain procedural requirements. By contrast, 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 account items such as the repayment of foreign currency denominated loans, direct investment overseas and investments in securities or derivative products outside of the PRC. FIEs are permitted to convert their after tax dividends into foreign exchange and to remit such foreign exchange out of their foreign exchange bank accounts in the PRC.

On March 30, 2015, SAFE promulgated the *Notice on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises,* or the SAFE Circular 19, which took effect on June 1, 2015 and was amended in December 2019. According to SAFE Circular 19, the foreign currency capital contribution to an FIE in its capital account may be converted into RMB on a discretional basis.

On June 9, 2016, the SAFE promulgated the *Circular on Reforming and Regulating Policies on the Management of the* Settlement *of Foreign Exchange of Capital Accounts*, or the SAFE Circular 16. The SAFE Circular 16 unifies the discretional foreign exchange settlement for all the domestic institutions. The Discretional Foreign Exchange Settlement refers to the foreign exchange capital in the capital account which has been confirmed by the relevant policies subject to the discretional foreign exchange settlement (including foreign exchange capital, foreign loans and funds remitted from the proceeds from the overseas listing) can be settled at the banks based on the actual operational needs of the domestic institutions. The proportion of Discretional Foreign Exchange Settlement of the foreign exchange capital is temporarily determined as 100%. Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties in accordance with the Foreign Exchange Administrative Regulation and relevant provisions.

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Furthermore, SAFE Circular 16 stipulates that the use of foreign exchange incomes of capital accounts by FIEs shall follow the principles of authenticity and self-use within the business scope of the enterprises. The foreign exchange incomes of capital accounts and capital in RMB obtained by the FIE from foreign exchange settlement shall not be used for the following purposes: (i) directly or indirectly used for the payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or financial schemes other than bank guaranteed products unless otherwise provided by relevant laws and regulations; (iii) used for granting loans to non-affiliated enterprises, unless otherwise permitted by its business scope; and (iv) used for the construction or purchase of real estate that is not for self-use (except for the real estate enterprises).

On October 23, 2019, the SAFE promulgated the *Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment*, or the SAFE Circular 28. The SAFE Circular 28 stipulates that non-investment FIEs may use capital to carry out domestic equity investment in accordance with the law under the premise of not violating the Negative list and the projects invested are true and in compliance with laws and regulations.

According to the Circular of SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business (the "SAFE Circular 8") promulgated and effective on April 10, 2020 by the SAFE, the reform of facilitating the payments of incomes under the capital accounts shall be promoted nationwide. Under the prerequisite of ensuring true and compliant use of funds and compliance and complying with the prevailing administrative provisions on use of income from capital projects, enterprises which satisfy the criteria are allowed to use income under the capital account, such as capital funds, foreign debt and overseas listing, etc., for domestic payment, without the need to provide proof materials for veracity to the bank beforehand for each transaction.

***Foreign Debts***

A loan made by foreign investors as shareholders in a foreign-invested enterprise is considered to be foreign debt in the PRC and is regulated by various laws and regulations, including the Foreign Exchange Administrative Regulation, the *Interim Provisions on the Management of Foreign Debts* promulgated by SAFE, the NDRC and the Ministry of Finance, or the MOF, and took effect on March 1, 2003, amended on July 26, 2022 and took effect on September 1, 2022 and the *Administrative Measures for Registration of Foreign Debts* promulgated by SAFE on April 28, 2013 and amended by the *Notice* of *the SAFE on Abolishing and Amending the Normative Documents Related to the Reform of the Registered Capital Registration System* on May 4, 2015. Under these rules, a shareholder loan in the form of foreign debt made to a Chinese entity does not require the prior approval of SAFE. However, such foreign debt must be registered with and recorded by SAFE or its local branch. The SAFE Circular 28 provides that a non-financial enterprise in the pilot areas may register the permitted amounts of foreign debts, which is as twice of the non-financial enterprise's net assets, at the local foreign exchange bureau. Such non-financial enterprise may borrow foreign debts within the permitted amounts and directly handle the relevant procedures in banks without registration of each foreign debt. However, the non-financial enterprise shall report its international income and expenditure regularly.

As we are an offshore holding company conducting our operations in China through our PRC subsidiaries, any loans to our PRC subsidiaries are subject to PRC regulations and foreign exchange loan registrations. See "Risk Factors—Risks Related to Doing Business in the PRC—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business."

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***Offshore Special Purpose Companies Held by PRC Residents***

SAFE promulgated *Notice on Issues Relating to Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles*, or the SAFE Circular 37, on July 4, 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 term of operation), capital increase or capital reduction, 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 Purposes Vehicles*.

SAFE further enacted the *Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment*, or the 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.

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.

We may not at all times be fully informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurance that these PRC residents will comply with our request to make or obtain any applicable registrations or continuously comply with all requirements under SAFE Circular 37 or other related rules. See "Risk Factors—Risks Related to Doing Business in the PRC—PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries' ability to change their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law."

***Stock Incentive Plans***

According to the *Notice of the State* Administration *of Foreign Exchange on Issues Relating to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Listed Company*, or the Share Option Rules, which was issued on February 15, 2012 and other regulations, directors, supervisors, senior management and other employees participating in any share incentive plan of an overseas publicly-listed company who are PRC citizens or non-PRC citizens residing in China for a continuous period of not less than one year, subject to certain exceptions, are required to register with the SAFE. All such participants need to authorize a qualified PRC agent, such as a PRC subsidiary of the overseas publicly-listed company to register with the SAFE and handle foreign exchange matters such as opening accounts, transferring and

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settlement of the relevant proceeds. The Share Incentive Rules further require an offshore agent to be designated to handle matters in connection with the exercise of share options and sales of proceeds for the participants of the share incentive plans. Failure to complete the said SAFE registrations may subject us, our participating directors, supervisors, senior management and other employees to fines and legal sanctions.

We adopted the 2021 plan for the purpose of granting share-based compensation awards to employees, directors, and consultants to incentivize their performance and align their interests with ours. As of December 31, 2022, options to purchase 175,626,852 ordinary shares and RMB30.0 million worth of ordinary shares based on the per share exercise price as specified in the award agreement have been granted under the 2021 Plan. For potential risks, see "Risk Factors—Risks Related to Doing Business in the PRC—Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions."

**Regulations on Outbound Direct Investment** 

On December 26, 2017, the NDRC promulgated the *Administrative Measures on Overseas Investments of Enterprises*, or NDRC Order No. 11, which took effect on March 1, 2018. According to NDRC Order No. 11, non-sensitive overseas investment projects are required to make record filings with the NDRC or its local branch. On September 6, 2014, MOFCOM promulgated the *Administrative Measures on Overseas Investments*, which took effect on October 6, 2014. According to such regulation, overseas investments of PRC enterprises that involve non-sensitive countries and regions and non-sensitive industries must make record filings with the MOFCOM or its local branch. *The Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment* was issued by SAFE on November 19, 2012 and last amended on December 30, 2019, under which PRC enterprises must register for overseas direct investment with local banks. The shareholders or beneficial owners who are PRC entities are required to be in compliance with the related overseas investment regulations. If they fail to complete the filings or registrations required by overseas direct investment regulations, the relevant authority may order them to suspend or cease the implementation of such investment and make corrections within a specified time.

**Regulations on Dividend Distributions** 

The principal regulations governing distribution of dividends of foreign-invested enterprise, or the FIE, include the PRC Company Law. Under these regulations, FIEs in China may pay dividends only out of their accumulated profits, if any, determined in accordance with the PRC accounting standards and regulations. In addition, FIEs in the PRC are required to allocate at least 10% of their accumulated profits each year, if any, to fund certain reserve funds unless these reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable as cash dividends.

**Regulations on Taxation** 

***Income tax***

According to the *Enterprise Income Tax Law of the PRC*, or the EIT Law, which was promulgated on March 16, 2007, became effective as from January 1, 2008 and was amended on February 24, 2017 and December 29, 2018, an enterprise established outside the PRC with de facto management bodies within the PRC is considered a resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. The *Implementing Rules of the Enterprise Income Law of the People's Republic of China*, or the Implementing Rules of the EIT Law, defines 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. Non-PRC resident enterprises without any branches in the PRC pay an enterprise income tax in connection with their income originating from the PRC at the tax rate of 10%.

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Enterprises that are recognized as high and new technology enterprises in accordance with the *Administrative Measures for the Determination of High and New Tech Enterprises* issued by the Ministry of Science, the Ministry of Finance and the SAT are entitled to enjoy a preferential enterprise income tax rate of approximately 15% and the validity period of the high and new technology enterprise qualification shall be three years from the date of issuance of the certificate. An enterprise can re-apply for such recognition as a high and new technology enterprise before or after the previous certificate expires.

On February 3, 2015, the SAT issued the *Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Transfer of Assets by Non-Resident Enterprises*, or the SAT Circular 7. The SAT Circular 7 repeals certain provisions in the *Notice of the State Administration of Taxation on* Strengthening *the Administration of Enterprise Income Tax on Income from Equity Transfer by Non-Resident Enterprises*, or the SAT Circular 698, issued by SAT on December 10, 2009 and the *Announcement on Several Issues Relating to the Administration of Income Tax on Non-resident Enterprises* issued by SAT on March 28, 2011 and clarifies certain provisions in the SAT Circular 698. The SAT Circular 7 provides comprehensive guidelines relating to, and heightening the Chinese tax authorities' scrutiny on, indirect transfers by a non-resident enterprise of assets (including assets of organizations and premises in PRC, immovable property in the PRC, equity investments in PRC resident enterprises) or the PRC Taxable Assets. For instance, when a non-resident enterprise transfers equity interests in an overseas holding company that directly or indirectly holds certain PRC Taxable Assets and if the transfer is believed by the Chinese tax authorities to have no reasonable commercial purpose other than to evade enterprise income tax, the SAT Circular 7 allows the Chinese tax authorities to reclassify the indirect transfer of PRC Taxable Assets into a direct transfer and therefore impose a 10% rate of PRC enterprise income tax on the non-resident enterprise. The SAT Circular 7 lists several factors to be taken into consideration by tax authorities in determining if an indirect transfer has a reasonable commercial purpose. However, regardless of these factors, the overall arrangements in relation to an indirect transfer satisfying all the following criteria will be deemed to lack a reasonable commercial purpose: (i) 75% or more of the equity value of the intermediary enterprise being transferred is derived directly or indirectly from PRC Taxable Assets; (ii) at any time during the one year period before the indirect transfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments in the PRC, or during the one year period before the indirect transfer, 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks assumed by the intermediary enterprise and any of its subsidiaries and branches that directly or indirectly hold the PRC Taxable Assets are limited and are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer of the PRC Taxable Assets is lower than the potential PRC tax on the direct transfer of those assets. On the other hand, indirect transfers falling into the scope of the safe harbors under the SAT Circular 7 may not be subject to PRC tax under the SAT Circular 7. The safe harbors include qualified group restructurings, public market trades and exemptions under tax treaties or arrangements.

On October 17, 2017, SAT issued the *Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises*, or the SAT Circular 37, which took effect on December 1, 2017. Certain provisions of the SAT Circular 37 were repealed by the *Announcement of the State Administration of Taxation on Revising Certain Taxation Normative* Documents. According to the SAT Circular 37, the balance after deducting the equity net value from the equity transfer income shall be the taxable income amount for equity transfer income. Equity transfer income shall mean the consideration collected by the equity transferor from the equity transfer, including various income in monetary form and non-monetary form. Equity net value shall mean the tax computation basis for obtaining the said equity. The tax computation basis for equity shall be: (i) the capital contribution costs actually paid by the equity transferor to a Chinese resident enterprise at the time of investment and equity participation, or (ii) the equity transfer costs actually paid at the time of acquisition of such equity to the original transferor of the said equity. Where there is reduction or appreciation of value during the equity holding period, and the gains or losses may be confirmed pursuant to the rules of the finance and tax authorities of the State Council, the equity net value shall be adjusted accordingly. When an enterprise computes equity transfer income, it shall not deduct the amount in the shareholders' retained earnings such as undistributed profits etc. of the investee enterprise, which may be distributed in accordance with the said equity. In the event of partial

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transfer of equity under multiple investments or acquisitions, the enterprise shall determine the costs corresponding to the transferred equity in accordance with the transfer ratio, out of all costs of the equity.

Under the SAT Circular 7 and the *Law of the People's Republic of China on the Administration of Tax Collection* promulgated by the SCNPC on September 4, 1992 and newly amended on April 24, 2015, in the case of an indirect transfer, entities or individuals obligated to pay the transfer price to the transferor shall act as withholding agents. If they fail to make withholding or withhold the full amount of tax payable, the transferor of equity shall declare and pay tax to the relevant tax authorities within seven days from the occurrence of tax payment obligation. Where the withholding agent does not make the withholding, and the transferor of the equity does not pay the tax payable amount, the tax authority may impose late payment interest on the transferor. In addition, the tax authority may also hold the withholding agents liable and impose a penalty of ranging from 50% to 300% of the unpaid tax on them. The penalty imposed on the withholding agents may be reduced or waived if the withholding agents have submitted the relevant materials in connection with the indirect transfer to the PRC tax authorities in accordance with the SAT Circular 7.

***Withholding tax on dividend distribution***

The EIT Law prescribes a standard withholding tax rate of 20% on dividends and other China-sourced income of non-PRC resident enterprises which have no establishment or place of business in the PRC, or if established, the relevant dividends or other China-sourced income are in fact not associated with such establishment or place of business in the PRC. However, the Implementing Rules of the EIT Law reduced the rate from 20% to 10%, effective from January 1, 2008. However, a lower withholding tax rate might be applied if there is a tax treaty between China and the jurisdiction of the foreign holding companies, for example, 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 the Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends that the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approval from the tax authority in charge.

Based on the *Notice on Relevant Issues Relating to the Enforcement of Dividend Provisions in Tax Treaties* issued on February 20, 2009 by the SAT, if the relevant PRC tax authorities determine, at 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. The *Announcement of the State Administration of Taxation on Issues concerning "Beneficial Owners" in Tax Treaties*, promulgated by the SAT on February 3, 2018 and took effect on April 1, 2018, further clarified the analysis standard when determining one's qualification for beneficial owner status.

***Value-Added Tax***

Pursuant to the *Interim Regulations on Value-Added Tax of the People's Republic of China*, which was promulgated by the State Council on December 13, 1993 and amended on November 5, 2008, February 6, 2016 and November 19, 2017, and the *Implementation Rules for the Interim Regulations on Value-Added Tax of the People's Republic of China*, which was promulgated by the MOF, and SAT on December 15, 2008 and became effective on January 1, 2009 and as amended on October 28, 2011, entities or individuals engaging in sale of goods, provision of processing services, repairs and replacement services or importation of goods within the territory of the PRC shall pay value-added tax, or the VAT. Unless provided otherwise, the rate of VAT is 17% on sales and 6% on the services. On April 4, 2018, MOF and SAT jointly promulgated the *Circular of the Ministry of Finance and the State Administration of Taxation on Adjustment of Value-Added Tax Rates*, or the Circular 32, according to which (i) for VAT taxable sales acts or import of goods originally subject to VAT rates of 17% and 11% respectively, such tax rates shall be adjusted to 16% and 10%, respectively; (ii) for purchase of agricultural products originally subject to tax rate of 11%, such tax rate shall be adjusted to 10%; (iii) for

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purchase of agricultural products for the purpose of production and sales or consigned processing of goods subject to tax rate of 16%, such tax shall be calculated at the tax rate of 12%; (iv) for exported goods originally subject to tax rate of 17% and export tax refund rate of 17%, the export tax refund rate shall be adjusted to 16%; and (v) for exported goods and cross-border taxable acts originally subject to tax rate of 11% and export tax refund rate of 11%, the export tax refund rate shall be adjusted to 10%. Circular 32 became effective on May 1, 2018 and shall supersede existing provisions which are inconsistent with Circular 32.

Since November 16, 2011, the MOF and the SAT have implemented the *Pilot Plan for Imposition of Value- Added Tax to Replace Business Tax*, or the VAT Pilot Plan, which imposes VAT in lieu of business tax for certain "modern service industries" in certain regions and eventually expanded to nation-wide application in 2013. According to the *Implementation Rules for the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax* released by the MOF and the SAT on the VAT Pilot Program, the "modern service industries" include research, development and technology services, information technology services, cultural innovation services, logistics support, lease of corporeal properties, attestation and consulting services. The *Notice on Comprehensively promoting the Pilot Plan of the Conversion of Business Tax to Value-Added Tax*, which was promulgated on March 23, 2016, became effective on May 1, 2016 and was amended on July 11, 2017, January 1 2018 and March 20, 2019, sets out that VAT in lieu of business tax be collected in all regions and industries.

On March 20, 2019, MOF, SAT and the General Administration of Customs jointly promulgated the *Announcement on Relevant Policies for Deepening Value-Added Tax Reform*, which became effective on April 1, 2019 and provides that (i) with respect to VAT taxable sales acts or import of goods originally subject to VAT rates of 16% and 10% respectively, such tax rates shall be adjusted to 13% and 9%, respectively; (ii) with respect to purchase of agricultural products originally subject to tax rate of 10%, such tax rate shall be adjusted to 9%; (iii) with respect to purchase of agricultural products for the purpose of production or consigned processing of goods subject to tax rate of 13%, such tax shall be calculated at the tax rate of 10%; (iv) with respect to export of goods and services originally subject to tax rate of 16% and export tax refund rate of 16%, the export tax refund rate shall be adjusted to 13%; and (v) with respect to export of goods and cross-border taxable acts originally subject to tax rate of 10% and export tax refund rate of 10%, the export tax refund rate shall be adjusted to 9%.

**Regulations on Employment and Social Welfare** 

According to the *Labor Contract Law of the People's Republic of China*, or the Labor Contract Law, promulgated by the SCNPC on June 29, 2007 and amended on December 28, 2012, respectively, and the *Implementation Rules of the Labor Contract Law of the People's Republic of China*, or the Implementation Rules of the Labor Contract Law, promulgated by the State Council on September 3, 2008, a written employment contract shall be concluded in the establishment of an employment relationship. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee's salary for the period from the day following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations. In addition, if an employer intends to enforce a non-compete provision in an employment contract or non-competition agreement with an employee, it has to compensate the employee on a monthly basis during the term of the restriction period after the termination or expiry of the labor contract. Employers in most cases are also required to provide severance payment to their employees after their employment relationships are terminated.

Pursuant to the *Social Insurance Law of the People's Republic of China*, which was promulgated by the SCNPC on October 28, 2010, effective on July 1, 2011 and last amended on December 29, 2018, the *Interim Regulations on the Collection of Social Insurance Fees,* issued by the State Council on January 22, 1999 and last amended on March 24, 2019, and the *Regulations on the Administration of Housing Provident Funds*, issued by the State Council on April 3, 1999 and last amended on March 24, 2019, enterprises in China are required to

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participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located.

As of the date of this prospectus, our PRC subsidiaries have not made adequate social insurance and housing fund contributions for all employees. We had accrued our payable for contributions to certain employee benefit plans including social welfare and housing fund for our employees based on their minimum salary base according to the existing PRC laws and regulations for the years ended December 31, 2019, 2020 and 2021 and for the nine months ended September 30, 2022. See "Risk Factors—Risks Related to Doing Business in the PRC—Failure to make adequate contributions to certain employee benefit plans as required by PRC regulations may subject us to penalties."

**Regulations on Anti-Monopoly** 

The Anti-Monopoly Law, as last amended by the Standing Committee of the National People's Congress on June 24, 2022 and took effect on August 1, 2022, prohibits monopolistic conduct such as entering into monopoly agreements, abuse of dominant market position and concentration of undertakings that have the effect of eliminating or restricting competition.

Pursuant to the Anti-Monopoly Law, competing business operators may not enter into monopoly agreements that eliminate or restrict competition, such as by fixing or changing the price of commodities, limiting the production quantity or sale quantity of commodities, fixing the price of commodities for resale to third party, or conducting jointly boycotting transactions. Such acts are prohibited unless the underlying agreements satisfy the regulatory exemptions for, among others, improving technologies, increasing the efficiency and competitiveness of small and medium-sized undertakings, or safeguarding legitimate interests in cross-border trade and economic cooperation with foreign counterparts. Sanctions for violation of such prohibitions include an order to cease the relevant activities, and confiscation of illegal gains and fines ranging from 1% to 10% of the sales revenues from the previous year, or if no sales revenue was made in the previous year, a fine of not more than RMB5,000,000, or RMB3,000,000 if the intended monopoly agreement has been entered into but not been performed.

In addition, under the Anti-Monopoly Law, a business operator with a dominant market position may not abuse its dominant market position to, among others, (i) sell commodities at unfairly high prices or purchase commodities at unfairly low prices; (ii) sell products at prices below cost without any justifiable cause; and (iii) refuse to trade with a trading party without any justifiable cause. Sanctions for such abuses include an order to cease the relevant activities, and confiscation of the illegal gains and fines ranging from 1% to 10% of sales revenues from the previous year.

Furthermore, where a concentration of undertakings reaches the declaration threshold stipulated by the State Council, a declaration must be approved by the anti-monopoly authority before the parties implement the concentration. Under the relevant provisions, concentration refers to (i) mergers; (ii) acquisition of control over other undertakings by acquiring equities or assets; or (iii) acquisition of control over or the possibility of exercising decisive influence on an undertaking by contract or by any other means. If business operators fail to comply with the mandatory declaration requirement, the anti-monopoly authority is empowered to terminate and/or unwind the transaction, dispose of relevant assets and shares or businesses within certain periods, as well as impose a fine of not more than 10% of sales revenues from the previous year if the concentration of undertakings has or may have an effect of excluding or limiting competition, or a fine of not more than RMB5,000,000 if the concentration of undertakings does not have an effect of excluding or limiting competition.

On February 7, 2021, the Anti-Monopoly Committee of the State Council promulgated the Anti-Monopoly Guidelines for the Internet Platform Economy Sector, aiming to provide guidelines for supervising and

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prohibiting monopolistic conduct in connection with the internet platform business operations and further elaborate on the factors for recognizing such monopolistic conduct in the internet platform industry. Pursuant to these guidelines, the methods used by an internet platform collecting or using the private information of internet users may also be one of the factors to be considered when analyzing and recognizing monopolistic conducts. For example, whether the relevant business operator compulsorily collects unnecessary user information may be considered when analyzing whether there is a bundled sale or additional unreasonable trading condition, which are behaviors that constitute abuse of dominant market position. In addition, providing differentiated transaction prices or imposing other transaction conditions for consumers with different payment ability based on consumption preferences and usage habits through big data and algorithms analysis is also one of the behaviors that constitute abuse of dominant market position. Furthermore, whether the relevant business operators are required to choose conclusively among the internet platform and its competitive platforms may be considered when analyzing whether such internet platform operator abuses its dominant market position and excludes or restricts market competition. However, as these guidelines were only issued recently, there are still substantial uncertainties as to their interpretation and implementation in practice.

**Regulations on Anti-Unfair Competition** 

According to the Anti-Unfair Competition Law promulgated by the Standing Committee of the National People's Congress on September 2, 1993, which was amended on April 23, 2019, operators are prohibited from engaging in unfair competition activities such as market confusion, commercial bribery, misleading false publicity, infringement on trade secrets, price dumping, and illegitimate premium sales. Any operator in violation of the Anti-Unfair Competition Law may be ordered to cease illegal activities, eliminate the adverse effect thereof or compensate for the damages caused to any other party. The competent authorities may also confiscate any illegal gains or impose fines on these operators.

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**MANAGEMENT** 

**Directors and Executive Officers** 

The following table sets forth information regarding our directors and executive officers as of the date of this prospectus.

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| | | |
|:---|:---|:---|
| **Directors and Executive Officers** | **Age** | **Position/Title** |
|  Yonghe Peng | 53 | Director, Co-Chairman and President |
|  Liang Li\* | 50 | Director and Co-Chairman |
|  Lang Liu | 59 | Director |
|  Yanzhong Zhang\* | 44 | Director |
|  Liesheng Wang\* | 43 | Director |
|  Tieming Yu\* | 41 | Director |
|  Shanwei Wei | 42 | Director |
|  Bing Xiao\* | 54 | Director |
|  Shenghao Shi\* | 54 | Director |
|  Chenguang Zhou | 46 | Chief Financial Officer |
|  Guoqiang Li | 67 | Independent Director |
|  Sheng Huang\*\* | 45 | Independent Director Appointee |
|  Zhanqing Liu\*\* | 57 | Independent Director Appointee |

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\* Each of these directors will resign from our board of directors, effective upon the SEC's declaration of the effectiveness of our registration statement on Form F-1, of which this prospectus is a part.

\*\* Each of Mr. Sheng Huang and Mr. Zhanqing Liu has accepted our appointment to be a director of the company, effective upon the SEC's declaration of the effectiveness of our registration statement on Form F-1, of which this prospectus is a part.

*Yonghe Peng* has served as our director since the inception of our company, co-chairman of our board of directors since December 2019 and our president since June 2019. Mr. Peng founded Ruipeng Pet Hospital in December 1998 and has served as the chairman of the board of directors since November 2013 and president of Ruipeng Pet Healthcare Group Co., Ltd. since February 2016. Mr. Peng also served as the general manager of Shenzhen Sunsmile Biotechnology Co., Ltd. from May 2005 to October 2011. From September 1997 to November 1998, Mr. Peng worked as a veterinarian at the Institute of Pest Control in Guangdong Shenzhen Animal and Plant Inspection and Quarantine Bureau. From December 1994 to August 1997, Mr. Peng worked as a lecturer at Qinghai Vocational and Technical Institute of Animal Husbandry and Veterinary. From September 1991 to November 1994, Mr. Peng worked as a veterinarian at Xining Diary Farm of Qinghai Province in China. Mr. Peng received his bachelor's degree in veterinary medicine from Qinghai University in 1991.

*Liang Li* has served as our director and co-chairman of our board of directors since March 2020. Mr. Li has served as a partner at Hillhouse Investment since November 2005. From March 2001 to November 2005, Mr. Li worked as the general manager at State Research Internet and Data (Beijing) Co., Ltd. From July 1997 to March 2001, Mr. Li worked as the vice-general manager at State Research Information and Technology Co., Ltd. Mr. Li received his bachelor's degree in automation in 1994 and his master's degree in systems engineering in 1997 from Tsinghua University.

*Lang Liu* has served as our director since the inception of our company. Dr. Liu joined our group in December 2016. From 2006 to 2016, Dr. Liu served as the chairman of the board of directors at Beijing Community and Asset Management Co., Ltd. Dr. Liu received his bachelor's, master's and doctoral degrees in veterinary medicine from China Agricultural University in 1986, 2004 and 2009, respectively.

*Yanzhong Zhang* has served as our director since the inception of our company. Mr. Zhang joined our group in 2002 and has held several positions, including a veterinarian of Ruipeng Pet Hospital, and the director, general

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manager and the vice president of Ruipeng Pet Healthcare Group Co., Ltd. From July 2001 to February 2002, Mr. Zhang worked as a veterinarian at Fujian Changfu Group. Mr. Zhang graduated from Fujian Agriculture and Forestry University in 2001 and received his master's degree in veterinary medicine from South China Agricultural University in 2010.

*Liesheng Wang* has served as our director since the inception of our company. Mr. Wang joined our group in April 2010 and has held several positions, including the director of human resources department at Ruipeng Pet Hospital and the vice president and director of the board of Ruipeng Pet Healthcare Group Co., Ltd. Prior to joining us, Mr. Wang worked as the human resources director at Shenzhen Minhua Furniture Manufacturing Co., Ltd. from September 2008 to April 2010. From July 2007 to July 2008, Mr. Wang worked as the human resources manager at Shenzhen Yekalon Hardware Development Co., Ltd. From May 2004 to June 2007, Mr. Wang worked as the head of human resources department at Huawei Technologies Co., Ltd. From July 2003 to May 2004, Mr. Wang worked at human resources department at Foxconn Technology Group. Mr. Wang received his bachelor's degree in human resources management from Guizhou University in 2003.

*Tieming Yu* has served as our director since March 2021. Mr. Yu currently serves as a Partner of Hillhouse Investment. Prior to joining Hillhouse Investment in February 2016, Mr. Yu worked as a senior associate at Keytone Ventures from May 2014 to February 2016. Prior to that, Mr. Yu worked as manager of capital market and accounting consulting service group at PricewaterhouseCoopers from October 2011 to May 2014 and as the manager of its global capital market group from August 2006 to October 2011. Mr. Yu received both his bachelor's degree in management in 2003 and his master's degree in accounting in 2006 from Beijing Jiaotong University.

*Shanwei Wei* has served as our director since July 2022. Mr. Wei has been a managing director of Hillhouse Investment since April 2021. Prior to that, Mr. Wei worked as the co-head of the investment banking department of China Renaissance and the chief executive officer of Huaxing Securities (formerly known as Huajing Securities) from April 2015 to March 2021. From December 2012 to March 2015, Mr. Wei was the chief executive officer and the chairman of the board of directors of China Pingan Securities (Hong Kong). From May 2010 to November 2012, he served as a vice president of the investment banking department of Credit Suisse Founder Securities Ltd. From July 2006 to April 2010, Mr. Wei was a vice president of the investment banking department of CITIC Securities Company Limited. Mr. Wei obtained his bachelor's degree in finance in 2002, and his master's degree in finance in 2006, both from Renmin University of China.

*Bing Xiao* has served as our director since the inception of our company. Mr. Xiao has worked as the vice president and chief executive officer at Shenzhen Fortune Wisdom Venture Capital Co., Ltd. since December 2008. From December 2002 to April 2018, Mr. Xiao worked as the chief executive officer at Shenzhen Fortune Venture Capital Co., Ltd. Mr. Xiao received his bachelor's degree in economics from Renmin University of China in 1990 and his master's degree in economics from Jinan University in 1995.

*Shenghao Shi* has served as our director since November 2021. Mr. Shi has over 30 years' experience in operation, investment and management, mostly in the healthcare industry. Mr. Shi currently serves as a managing director of Riverhead Capital, a private equity investment fund. Prior to joining Riverhead Capital in January 2020, Mr. Shi worked as a managing director of Sinopharm Capital Investment Management Co., Ltd. from July 2015 to December 2019. Prior to that, Mr. Shi worked as the general manager of the greater China region of Dentsply Group from September 2013 to June 2015. From July 2011 to September 2013, Mr. Shi worked as a vice president at Wego Group. From January 2008 to July 2011, Mr. Shi worked as the general manager of the greater China region of Bayer Group. From August 2006 to January 2008, Mr. Shi worked as the regional manager of Taiwan and Hong Kong at Bard Medical. Mr. Shi received his bachelor's degree in English from Capital Normal University in 1990, and his EMBA from China Europe International Business School in 2005.

*Chenguang Zhou* has served as our chief financial officer since the inception of our company. Prior to joining us in May 2019, Mr. Zhou worked at China National Cereals, Oils and Foodstuffs Corporation from late

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2006 to 2019, holding several positions, including chief financial officer at China Foods Limited from 2015 to 2018, director at China Foods Limited from 2017 to 2018, and general manager of audit department at COFCO Meat Investment Co., Ltd. from 2011 to 2015. Prior to that, Mr. Zhou worked as the Deputy Finance Director at American International Assurance Co., Ltd. in late 2006, and as the Finance Manager at Lafarge Shui On Cement Limited from 2004 to early 2006. Mr. Zhou received his bachelor's degree in accounting from Northeastern University of Finance and Economics in 1999 and his master's degree in management from University of Waikato in 2002. Mr. Zhou is a Certified Internal Auditor and a certified member of the Institute of Financial Accountants at FFA level and Australia Institute of Public Accountants. Mr. Zhou also obtained the Certification in Risk Management Assurance.

*Guoqiang Li* has served as our director since March 2020. Mr. Li worked as the chairman of the supervisor of board at Lepu Medical Technology (Beijing) Co., Ltd., a leading medical device and pharmaceuticals company in China, from 2017 to 2020, and as the secretary to its board from 2007 to 2012. From 2012 to 2015, Mr. Li worked as the deputy general manager at CSIC Science and Technology Investment Development Co., Ltd. and as its general manager from 2003 to 2007. From 1994 to 2004, Mr. Li worked as the general manager at CSIC Yuanzhou (Beijing) Technology Co, Ltd., formerly known as Shenzhen Yuanzhou Technology Industrial Co., Ltd. From 1982 to 1996, Mr. Li worked as the deputy director and director at China State Shipbuilding Corporation. Mr. Li received his bachelor's degree in shipping engineering from Harbin Marine Engineering College in 1982.

*Sheng Huang* will serve as our independent director upon the SEC's declaration of the effectiveness of our registration statement on Form F-1, of which this prospectus is a part. Mr. Huang has worked as an Associate Professor of Finance in China Europe International Business School since July 2017. Mr. Huang also serves as a director at Bank SinoPac (China) Ltd., Guangzhou Lango Electronics Technology Company Limited, Beijing Zhidemai Technology Co., Ltd. (SZSE: 300785) and China Reform Culture Holdings Co., Ltd. (SSE: 600636). Prior to joining China Europe International Business School, Mr. Huang worked as a program officer at Peking University Education Foundation from July 1999 to August 2002 and Assistant Professor of Finance at Singapore Management University from July 2009 to June 2017. Mr. Huang received his bachelor's degree in history and economics from Peking University in 1999, his master's degree in economics from the University of Cambridge in 2003 and his Ph.D. degree in economics from Washington University in St. Louis in 2009.

*Zhanqing Liu* will serve as our independent director upon the SEC's declaration of the effectiveness of our registration statement on Form F-1, of which this prospectus is a part. Mr. Liu has served as an independent non-executive director at Sunshine Insurance Group Company Limited since December 2018 and a founding partner and managing partner at Beijing QZJ Investments and Management Center, L.P. since November 2016. He also serves as vice president at Beijing Private Equity Association and chief supervisor at Zhanjiang Chamber of Commerce. From November 2014 to September 2016, Mr. Liu worked as a vice general manager at China Agricultural Development Group Co., Ltd. Mr. Liu held several positions in China National Fisheries Co. Ltd. (formerly known as China National Aquatic Products Corporation) from July 1986 to September 2016, with his last position being the chairman of the board of directors of China National Fisheries Co. Ltd. Mr. Liu received his bachelor's degree in marine fisheries from Guangdong Ocean University (formally know as Zhanjiang Ocean University) in 1986, and his EMBA from China Europe International Business School in 2006.

**Board of Directors** 

Under the amended and restated shareholders agreement of our company, dated September 25, 2020, certain management members of our company, including Mr. Yonghe Peng, are entitled to appoint four directors; HH Skyfield Holdings Inc., and Tianjin GLNY Enterprise Management Consultation, L.P., together referred to as Hillhouse Entities in this prospectus, are entitled to appoint four directors. Each of Shenzhen Dachen Chuanglian Investment Fund Partnership (Limited Partnership) and Riverhead Capital I, L.P. is entitled to appoint one director as long as it continues to hold no less than 70% of the number of shares in our company held by it on December 3, 2019. The right of these shareholders to appoint directors under the amended and restated

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shareholders agreement will terminate upon the completion of this offering. Immediately prior to the completion of this offering, our board of directors will consist of ten directors, among whom: (i) Mr. Yonghe Peng, Mr. Lang Liu, Mr. Yanzhong Zhang and Mr. Liesheng Wang were appointed by certain management members of our company; (ii) Mr. Liang Li, Mr. Guoqiang Li, Mr. Tieming Yu and Mr. Shanwei Wei were appointed by Hillhouse Entities; (iii) Mr. Bing Xiao was appointed by Shenzhen Dachen Chuanglian Investment Fund Partnership (Limited Partnership); and (iv) Mr. Shenghao Shi was appointed by Riverhead Capital I, L.P.

Our board of directors will consist of six directors upon the SEC's declaration of effectiveness of our registration statement on Form F-1, of which this prospectus forms a part. 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 or transaction, proposed contract or transaction in which he is interested, provided that (a) such director has declared the nature of his or her interest at the earliest meeting of the board at which it is practicable for him or her to do so, either specifically or by way of a general notice and (b) 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 our company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of our company or of any third party. None of our directors who are not our executive officers has a service contract with us that provides for benefits upon termination of service.

**Committees of the Board of Directors** 

We will establish three committees under the board of directors immediately upon the effectiveness of our registration statement on Form F-1, of which this prospectus forms a part: an audit committee, a compensation committee and a nominating and corporate governance committee. We will adopt a charter for each of the three committees. Each committee's members and functions are described below.

*Audit Committee*. Our audit committee will consist of Mr. Sheng Huang, Mr. Zhanqing Liu. and Mr. Guoqiang Li. Mr. Sheng Huang will be the chairman of our audit committee. We have determined that each of Mr. Sheng Huang, Mr. Zhanqing Liu and Mr. Guoqiang Li satisfies the "independence" requirements of Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Mr. Sheng Huang qualifies as an "audit committee financial expert." The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee will be responsible for, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing with the independent auditors any audit problems or difficulties and management's response;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discussing the annual audited financial statements with management and the independent auditors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and approving all proposed related party transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• meeting separately and periodically with management and the independent auditors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 will consist of Mr. Sheng Huang, Mr. Zhanqing Liu. and Mr. Guoqiang Li Mr. Zhanqing Liu will be the chairman of our compensation committee. We have determined that each of Mr. Sheng Huang, Mr. Zhanqing Liu and Mr. Guoqiang Li satisfies the "independence"

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requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our president may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and approving, or recommending to the board for its approval, the compensation for our president and
other executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and recommending to the board for determination with respect to the compensation of our directors who
are not our employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing periodically and approving any incentive compensation or equity plans, programs or similar
arrangements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• selecting compensation consultant, legal counsel or other adviser only after taking into consideration all
factors relevant to that person's independence from management.

*Nominating and Corporate Governance Committee*. Our nominating and corporate governance committee will consist of Mr. Sheng Huang, Mr. Zhanqing Liu and Mr. Guoqiang Li. Mr. Sheng Huang will be the chairman of our nominating and corporate governance committee. We have determined that each of Mr. Sheng Huang, Mr. Zhanqing Liu and Mr. Guoqiang Li satisfies the "independence" requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules. The nominating and corporate governance committee will assist 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 will be responsible for, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing annually with the board the current composition of the board with regards to characteristics such as
independence, knowledge, skills, experience and diversity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• making recommendations on the frequency and structure of board meetings and monitoring the functioning of the
committees of the board; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

**Duties of Directors** 

Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise skills they actually possess and with such care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than what may reasonably be expected from a person of his or her 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. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended from time to time, and the class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by our directors is breached. A shareholder may in certain limited circumstances have the right to seek damages in our name if a duty owed by the directors is breached.

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Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• convening shareholders' annual general meetings and reporting its work to shareholders at such meetings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• declaring dividends and other distributions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appointing officers and determining the term of office of the officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exercising the borrowing powers of our company and mortgaging the property of our company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approving the transfer of shares in our company, including the registration of such shares in our share register.

**Terms of Directors and Officers** 

Our directors may be elected by an ordinary resolution of our shareholders. In addition, our board of directors may, by the affirmative vote of a simple majority of the directors present and voting at a board meeting appoint any person as a director to fill a casual vacancy on our board. Notwithstanding the foregoing, (i) for so long as certain management members of our company, including Mr. Yonghe Peng, and their affiliates collectively hold any shares in our company, they shall be entitled to appoint, remove and replace three directors, consisting of two executive directors (including the chairman of the board of directors) and one independent director; (ii) for so long as Hillhouse Entities and their affiliates collectively hold any shares in our company, they shall be entitled to appoint, remove and replace two directors, including one independent director; (iii) for so long as Shenzhen Dachen Chuanglian Investment Fund Partnership (Limited Partnership) and Riverhead Capital I, L.P. and their respective affiliates collectively beneficially own no less than 593,425,000 ordinary shares or ADSs in our company, these entities shall collectively and jointly be entitled to appoint, remove and replace one independent director. Our directors are not automatically subject to a term of office and hold office until such time as they are removed from office by an ordinary resolution of our shareholders. In addition, a director will cease to be a director if he or she (i) becomes bankrupt or makes any arrangement or composition with his or her creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his or her office by notice in writing; (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his or her office be vacated; or (v) is removed from office pursuant to any other provision of our articles of association.

Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors.

**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 a 60-day prior 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 60-day prior 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

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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.

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.

**Compensation of Directors and Executive Officers** 

For the fiscal year ended December 31, 2021, we paid an aggregate of approximately RMB3.0 million (US$0.4 million) in cash to our executive officers, and we did not pay any compensation to our directors who are not our executive officers. 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 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.

**Share Incentive Plan** 

***2021 Share Incentive Plan***

In June 2021, our shareholders and board of directors adopted the 2021 Share Incentive Plan, or the 2021 Plan, to attract and retain the best available personnel, provide additional incentives to directors, officers, employees and consultants, and promote the success of our business. The maximum aggregate number of ordinary shares which may be issued pursuant to all awards under the 2021 Plan is 500 million. The 2021 Plan replaced any share incentive plans or similar arrangements previously adopted by us.

The following paragraphs describe the principal terms of the 2021 Plan.

*Types of Awards.* The 2021 Plan permits the awards of options approved by the committee.

*Plan Administration.* Our board of directors or a committee of one or more members of the board of directors and/or one or more executive officers administers the 2021 Plan. The committee or the board of directors determines, among other things, the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award.

*Award Agreement.* Awards granted under the 2021 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event that the participant's employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.

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*Eligibility.* We may grant awards to employees, consultants and directors of our company.

*Vesting Schedule.* In general, the committee determines the vesting schedule, which is specified in the relevant award agreement.

*Exercise of Awards.* The exercise price per share subject to an option shall be determined by the committee and set forth in the award agreement which may be a fixed price or a variable price related to the fair market value of the shares.

*Transfer Restrictions.* Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2021 Plan, such as transfers to us or any subsidiary of us, the immediate family members of the eligible participant by gift, by will or the laws of descent and distribution, or as approved by the committee or an executive officer or director authorized by the committee.

*Termination and Amendment of the 2021 Plan.* Unless terminated earlier, the 2021 Plan has a term of 5 years. Our board of directors has the authority to amend or terminate the plan. However, no such action may adversely affect in any material way any awards previously granted unless agreed by the participant.

The following table summarizes, as of the date of this prospectus, the number of ordinary shares under outstanding options that we granted to our directors and executive officers.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Ordinary<br>Shares<br>Underlying<br>Options** | **Exercise<br>Price<br>(US$/<br>Share)** | **Date of<br>Grant** | **Date of Expiration** |
|  Liesheng Wang | \* | 0.05 | 8/1/2021 | The fourth anniversary of (i) the date of our company's initial public offering; or (ii) the date of grant, whichever is earlier |
|  Chenguang Zhou | \* | 0.05 | 8/1/2021 | The fourth anniversary of (i) the date of our company's initial public offering; or (ii) the date of grant, whichever is earlier |
|  **All directors and executive officers as a group** | 17000000 |  |  |  |

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\* Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this prospectus 

As of December 31, 2022, our employees other than directors and executive officers as a group held options to purchase 158,626,852 ordinary shares, with exercise prices ranging from US$0.05 per share to US$0.14 per share. In addition, one employee holds options to purchase RMB30.0 million worth of ordinary shares, the number of which is calculated based on either the trading price of our securities or the valuation of our company in the most recent round of financing, depending on whether we are a public company or a private company at each vesting date.

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**PRINCIPAL SHAREHOLDERS** 

Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of the date of this prospectus by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each of our directors and executive officers; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each person known to us to own beneficially 5% or more of our ordinary shares.

The calculations in the table below are based on 13,564,280,460 ordinary shares on an as-converted basis outstanding as of the date of this prospectus, and ordinary shares outstanding immediately after the completion of this offering and the concurrent conversion of the IPO Conversion Amount of the Nestlé Convertible Note, assuming the underwriters do not exercise their option to purchase additional ADSs.

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.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Ordinary Shares**<br>**Beneficially Owned<br>Prior to This Offering** | **Ordinary Shares**<br>**Beneficially Owned<br>Prior to This Offering** | **Ordinary Shares**<br>**Beneficially Owned Immediately<br>After This Offering** | **Ordinary Shares**<br>**Beneficially Owned Immediately<br>After This Offering** |
|  | **Number** | **%** | **Number** | **%** |
|  **Directors and Executive Officers:** |  |  |  |  |
|  Yonghe Peng<sup>(1)</sup> | 4311732141 | 31.8% |  |  |
|  Liang Li<sup>(2)</sup> |  |  |  |  |
|  Lang Liu<sup>(3)</sup> | \* | \* |  |  |
|  Yanzhong Zhang<sup>(4)</sup> | 294640035 | 2.2% |  |  |
|  Liesheng Wang<sup>(5)</sup> | \* | \* |  |  |
|  Tieming Yu<sup>(6)</sup> |  |  |  |  |
|  Shanwei Wei<sup>(7)</sup> |  |  |  |  |
|  Bing Xiao<sup>(8)</sup> | \* | \* |  |  |
|  Shenghao Shi<sup>(9)</sup> |  |  |  |  |
|  Chenguang Zhou |  |  |  |  |
|  Guoqiang Li<sup>(10)</sup> |  |  |  |  |
|  Sheng Huang\*\* |  |  |  |  |
|  Zhanqing Liu\*\* |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All Directors and Executive Officers as a Group<sup>(11)</sup> | 4331062141 | 31.9% |  |  |
|  **Principal Shareholders:** |  |  |  |  |
|  Hillhouse Entities<sup>(12)</sup> | 4860984913 | 35.8% |  |  |
|  Entities affiliated with Yonghe Peng<sup>(1)</sup> | 4311732141 | 31.8% |  |  |

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Notes:

\* Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this prospectus. 

\*\* Each of Mr. Sheng Huang and Mr. Zhanqing Liu has accepted our appointment to be a director of the company, effective upon the SEC's declaration of the effectiveness of our registration statement on Form F-1, of which this prospectus is a part.

\*\*\* Except as otherwise indicated below, the business address of our directors and executive officers is 11F, Building B, Kingkey Timemark, No.9289 Binhe Boulevard, Futian District, Shenzhen, Guangdong Province 518042, People's Republic of China.

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(1) Represents 4,311,732,141 ordinary shares issuable upon the conversion of 4,311,732,141 Class A ordinary
shares, consisting of the following: (i) 253,762,948 Class A ordinary shares held by Vet Leap Eternity Limited, a BVI business company wholly owned by Mr. Yonghe Peng; (ii) 101,817,950 Class A ordinary shares held by Vet Great Dream
Limited, a BVI business company wholly owned by Mr. Yanzhong Zhang. While Mr. Yanzhong Zhang has sole dispositive power with respect to the shares held by Vet Great Dream Limited, Vet Great Dream Limited has designated the sole voting
power with respect to the shares it holds in our company to Mr. Yonghe Peng; (iii) 2,066,969,460 Class A ordinary shares held by entities that own shares in our company for the benefit of certain directors, officers and other individuals
that contributed to the development of our company, including (A) 758,843,690 Class A ordinary shares, representing 5.7% of our total issued and outstanding shares as of the date of this prospectus, held by RP Chen Rui Enterprise Management
Company Limited, a BVI business company; (B) 635,770,514 Class A ordinary shares held by RP Rui You Enterprise Management Company Limited, a BVI business company; (C) 465,452,291 Class A ordinary shares held by RP Ye Bei Enterprise
Management Company Limited, a BVI business company; (D) 56,527,566 Class A ordinary shares held by RP Sheng Peng Enterprise Management Company Limited, a BVI business company; (E) 78,563,129 Class A ordinary shares held by RP Peng Cheng
Enterprise Management Company Limited, a BVI business company; and (F) 71,812,270 Class A ordinary shares held by Vet Time Enterprise Management Company Limited, a BVI business company; and (iv) 1,889,181,783 Class A ordinary shares held
indirectly by previous owners of some of the pet hospitals we acquired in the PRC, including (A) 541,069,195 Class A ordinary shares held by RP Pulse Holdings Limited, a BVI business company; (B) 502,174,623 Class A ordinary shares held by
Vet Harvest Enterprise Management Company Limited, a BVI business company; (C) 121,296,465 Class A ordinary shares held by Vet Cloudpet Intermediate Limited, a BVI business company; (D) 60,562,750 Class A ordinary shares held by Vet Aino
Family Limited, a BVI business company; (E) 14,086,089 Class A ordinary shares held by Puppytown Holdings Limited, a BVI business company; (F) 8,260,246 Class A ordinary shares held by Aino Brothers Holding Limited, a BVI business company;
and (G) 641,732,415 Class A ordinary shares held by RP Passion Enterprise Management Company Limited, a BVI business company. Mr. Yonghe Peng has sole voting power with respect to the 2,036,969,460 Class A ordinary shares as described in
(iii) and the Class A ordinary shares as described in (iv)(A), (iv)(B) and (iv)(G), pursuant to the amended and restated shareholders agreement of our company, dated September 25, 2020 and certain deeds of adherence thereto. The
entities described in (iv)(C), (iv)(D), (iv)(E) and (iv)(F) have granted Mr. Yonghe Peng irrevocable voting proxy with respect to the shares they hold in our company.

The registered address of Vet Aino Family Limited is Tricor Services (BVI) Limited, 2/F, Palm Grove House, P.O. Box 3340, Road Town, Tortola, British Virgin Islands. The registered address of each of Puppytown Holdings Limited and Aino Brothers Holding Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. The registered address of each of Vet Cloudpet Intermediate Limited, Vet Leap Eternity Limited, Vet Great Dream Limited, RP Chen Rui Enterprise Management Company Limited, RP Rui You Enterprise Management Company Limited, RP Ye Bei Enterprise Management Company Limited, RP Sheng Peng Enterprise Management Company Limited, RP Peng Cheng Enterprise Management Company Limited, RP Pulse Holdings Limited, Vet Harvest Enterprise Management Company Limited, Vet Time Enterprise Management Company Limited and RP Passion Enterprise Management Company Limited is Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands.

(2) The business address of Mr. Liang Li is Floor 27, Building B, PingAn International Financial Center, Chaoyang
District, Beijing 100027, PRC.

(3) Represents ordinary shares issuable upon the conversion of Class A ordinary shares that are indirectly
owned by Dr. Lang Liu through his direct shareholding in RP Ye Bei Enterprise Management Company Limited. Mr. Yonghe Peng has sole voting power with regard to these shares. See Note (1).

(4) Represents 294,640,035 ordinary shares issuable upon the conversion of 294,640,035 Class A ordinary
shares, consisting of (i) 101,817,950 Class A ordinary shares held by Vet Great Dream Limited, a BVI business company wholly owned by Mr. Yanzhong Zhang. While Mr. Yanzhong Zhang has sole dispositive

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power with respect to the shares in our company held by Vet Great Dream Limited, Vet Great Dream Limited has designated the sole voting power with respect to these shares to Mr. Yonghe Peng; and (ii) 192,822,085 Class A ordinary shares Mr. Yanzhong Zhang owns indirectly through his direct shareholding in RP Chen Rui Enterprise Management Company Limited, RP Peng Cheng Enterprise Management Company Limited, RP Rui You Enterprise Management Company Limited and RP Sheng Peng Enterprise Management Company Limited. Mr. Yonghe Peng has sole voting power with regard to these shares. See Note (1).

(5) Represents ordinary shares issuable upon the conversion of Class A ordinary shares that are indirectly owned by
Mr. Liesheng Wang through his direct shareholding in RP Chen Rui Enterprise Management Company Limited and RP Rui You Enterprise Management Company Limited. Mr. Yonghe Peng has sole voting power with regard to these shares. See Note (1).

(6) The business address of Mr. Tieming Yu is Floor 27, Building B, PingAn International Financial Center,
Chaoyang District, Beijing 100027, PRC.

(7) The business address of Mr. Shanwei Wei is Floor 27, Building B, PingAn International Financial Center,
Chaoyang District, Beijing 100027, PRC.

(8) The business address of Mr. Bing Xiao is 23/F, Special Zone Press Building, Shenzhen, PRC.

(9) The business address of Mr. Shenghao Shi is 27th Floor, North Tower of CP Center, No. 20 Jin He East Avenue,
Chaoyang District, Beijing, PRC.

(10) The business address of Mr. Guoqiang Li is 3rd Floor, Unit B, Building 2, No. 29 Shangdi East Road,
Haidian District, Beijing, PRC.

(11) In order to avoid double counting, the total number of ordinary shares owned by all directors and executive
officers as a group only reflects ordinary shares that are owned directly or indirectly by all directors and executive officers without taking into account the related voting proxies granted to Mr. Yonghe Peng. See Note (1) for a detailed
description of the related voting proxy arrangements.

(12) Represents 4,860,984,913 ordinary shares issuable upon the conversion of 4,860,984,913 Class A ordinary
shares, consisting of (i) 4,301,955,077 Class A ordinary shares held by HH Skyfield Holdings Inc. ("HH Skyfield"), a limited liability company incorporated in the Cayman Islands; and (ii) 559,029,836 Class A ordinary shares held
by Tianjin GLNY Enterprise Management Consultation, L.P. ("Tianjin GLNY"), a limited partnership established under the laws of the PRC. HH Skyfield is owned by HH AVT Holdings L.P. and HH AVT Holdings II L.P. HH AVT GP, Ltd. acts as the
sole general partner of both HH AVT Holdings L.P. and HH AVT Holdings II L.P. The sole limited partner of HH AVT Holdings L.P. is Hillhouse Fund III, L.P. The sole limited partner of HH AVT II L.P. is Hillhouse Fund IV, L.P. Both Hillhouse Fund III,
L.P. and Hillhouse Fund IV, L.P. are managed and controlled by Hillhouse Investment Management, Ltd. ("HIM"). HIM is deemed to be the beneficial owner of, and to control the voting power of, the Class A ordinary shares in our company held
by HH Skyfield. Mr. Lei Zhang may be deemed to have controlling power over HIM. Mr. Lei Zhang disclaims beneficial ownership of all of the Class A ordinary shares held by HH Skyfield, except to the extent of his pecuniary interest therein, if any.
The general partner of Tianjin GLNY is Zhuhai Gaoling Tiancheng Investment Management Co., Ltd., and the limited partner of Tianjin GLNY is Zhuhai Gaoling Tiancheng Equity Investment Fund, L.P. Ms. Cuifang Ma, Ms. Xiuhua Zhu and Mr. Wei Cao may be
deemed to have controlling power over Zhuhai Gaoling Tiancheng Investment Management Co., Ltd. Each of Ms. Cuifang Ma, Ms. Xiuhua Zhu and Mr. Wei Cao disclaims beneficial ownership of all of the Class A ordinary shares held by Tianjin GLNY, except
to the extent of his or her pecuniary interest therein, if any. Zhuhai Gaoling Tiancheng Investment Management Co., Ltd. is deemed to be acting in concert with HIM through shared personnel, policies and resources. The registered address of HH
Skyfield is 89 Nexus Way, Camana Bay, P.O. Box 31106, George Town, Grand Cayman KY1-1205, Cayman Islands. The registered address of Tianjin GLNY is Room 1204A-23, Baozheng Tower, No. 637 Jinchang Road, China (Tianjin) Pilot Free Trade Zone (Central Business District), PRC.

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To our knowledge, as of the date of this prospectus, a total of 92,245,808 Class B ordinary shares and 63,741,111 Class A ordinary shares are held by five holders of record in the United States, representing approximately 1.1% of our total ordinary shares issued and outstanding on an as-converted basis.

The ADSs that we issue in this offering will represent ordinary shares.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See "Description of Share Capital—History of Securities Issuances" for historical changes in our shareholding structure.

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**RELATED PARTY TRANSACTIONS** 

**Private Placements** 

See "Description of Share Capital—History of Securities Issuances."

**Shareholders Agreement** 

See "Description of Share Capital—History of Securities Issuances—Shareholders Agreement."

**Employment Agreements and Indemnification Agreements** 

See "Management—Employment Agreements and Indemnification Agreements."

**Share Incentive Plan** 

See "Management—Share Incentive Plan."

**Other Related Party Transactions with Our Shareholders and Affiliates** 

*Transactions with Zhejiang JiaWen Pet Hospital Management Co., Ltd*. In 2020, Zhejiang JiaWen Pet Hospital Management Co., Ltd., or Zhejiang JiaWen, was an equity investee of Shenzhen Ruipeng Pet Hospital Co., Ltd., one of our subsidiaries. In 2021, Zhejiang Jiawen became a wholly-owned subsidiary of our company. In March 2019, we entered into a loan agreement with Zhejiang JiaWen, pursuant to which we extended a RMB4.0 million unsecured, interest-free loan to Zhejiang JiaWen. As of December 31, 2020 and 2021, we had amounts due from Zhejiang JiaWen of RMB4.0 million and nil, respectively. For the years ended December 31, 2020 and 2021, we also sold goods to Zhejiang JiaWen in the amount of RMB0.1 million and RMB3.3 million (US$0.5 million), respectively.

*Transactions with Xiamen Anchong Pet Hospital Co., Ltd*. In 2020, Xiamen Anchong Pet Hospital Co., Ltd., or Xiamen Anchong, was an equity investee of Skyfield (Shanghai) Investment Co., Ltd., one of our subsidiaries. In 2021, Xiamen Anchong became a wholly-owned subsidiary of our company. In October 2017, we entered into a loan agreement with Xiamen Anchong, pursuant to which we extended a RMB3.0 million unsecured loan with an annual interest rate of 6.0% to Xiamen Anchong. For the years ended December 31, 2020 and 2021, interest income of RMB281.0 thousand and nil was earned from Xiamen Anchong, respectively. As of December 31, 2020 and 2021, we had amounts due from Xiamen Anchong of RMB3.3 million and nil, respectively. For the years ended December 31, 2020 and 2021, we also sold goods to Xiamen Anchong in the amount of RMB0.7 million and nil, respectively.

*Transactions with Beijing SiWei Enterprise Management Co., Ltd*. Beijing SiWei Enterprise Management Co., Ltd., or Beijing SiWei, was an equity investee of Shenzhen Ruipeng Pet Hospital Co., Ltd., one of our subsidiaries. We extended unsecured, interest-free cash advances of approximately RMB1.0 million to Beijing SiWei in support of its working capital needs for business operations. As of December 31, 2020 and 2021, we had amounts due from Beijing SiWei of RMB1.0 million and RMB0.9 million (US$0.1 million), respectively. Beijing SiWei was dissolved in early 2022.

*Transactions with Kunming Dongfang Animal Hospital Co., Ltd*. Kunming Dongfang Animal Hospital Co., Ltd., or Kunming Dongfang, was an equity investee of Shenzhen Ruipeng Pet Hospital Co., Ltd., one of our subsidiaries. In 2021, Kunming Dongfang became a wholly-owned subsidiary of our company. For the years ended December 31, 2020 and 2021, we sold goods to Kunming Dongfang in the amount of RMB1.3 million and nil, respectively.

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*Transactions with Nanjing Aibr Pet Co., Ltd*. Nanjing Aibr Pet Co., Ltd., or Nanjing Aibr, was an equity investee of our subsidiaries Skyfield Holdings Limited (Hong Kong) and Skyfield (Shanghai) Investment Co., Ltd. This equity investee was consolidated after a step-up acquisition during the year ended December 31, 2020.

*Transactions with Ningbo Puppy Town Love Animal Hospital Co., Ltd*. Ningbo Puppy Town Love Animal Hospital Co., Ltd., or Ningbo Puppy Town, was an equity investee of Yunchong (Beijing) Animal Hospital Technology Co., Ltd., one of our subsidiaries. This equity investee was consolidated after a step-up acquisition during the year ended December 31, 2020.

For more information, please see Note 18 to our audited consolidated financial statements for the years ended December 31, 2020 and 2021 included elsewhere in this prospectus.

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**DESCRIPTION OF SHARE CAPITAL** 

We are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and articles of association, the Companies Act, Cap. 22 (Act 3 of 1961, as consolidated and revised), as amended, of the Cayman Islands, which is referred to as the Companies Act below, and the common law of the Cayman Islands.

As of the date of this prospectus, our authorized share capital is US$50,000 divided into 50,000,000,000 shares, comprising of: (i) 47,847,597,810 Class A ordinary shares of a nominal or par value of US$0.000001 each, and (ii) 2,152,402,190 Class B ordinary shares of a nominal or par value of US$0.000001 each. As of the date of this prospectus, 11,845,433,566 Class A ordinary shares and 1,718,846,894 Class B ordinary shares are issued and outstanding. All of our issued and outstanding shares are fully paid.

Subject to shareholder approval, immediately prior to the completion of this offering, our authorized share capital will be changed into US$250,000 divided into 250,000,000,000 ordinary shares of a par value of US$0.000001 each.

Subject to shareholder approval, immediately prior to the completion of this offering, all of our issued and outstanding Class A ordinary shares and Class B ordinary shares will be converted into, and/or re-designated and re-classified, as ordinary shares on a one-for-one basis. Following such conversion and/or re-designation, we will have ordinary shares issued and outstanding. All of our shares issued and outstanding prior to the completion of the offering are and will be fully paid, and all of our shares to be issued in the offering will be issued as fully paid.

**Our Post-Offering Memorandum and Articles of Association** 

Subject to shareholder approval, a tenth amended and restated memorandum and articles of association will be adopted, which we refer to below as our post-offering memorandum and articles of association and which will become effective and replace our current ninth amended and restated memorandum and articles of association in its entirety immediately prior to the completion of this offering. The following is a summary of the material provisions of the post-offering memorandum and articles of association and of the Companies Act, insofar as they relate to the material terms of our ordinary shares.

*Objects of Our Company*. Under our post-offering memorandum and articles of association, the objects of our company are unrestricted and we have the full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.

*Ordinary Shares*. Our ordinary shares are issued in registered form and are issued when registered in our register of members. We may not issue shares to bearers. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.

*Dividends*. Our directors may from time to time declare dividends (including interim dividends) and other distributions on our shares in issue and authorize payment of the same out of the funds of our company lawfully available therefor. In addition, our shareholders may declare dividends by ordinary resolution, but no dividend shall exceed the amount recommended by our directors. Our post-offering memorandum and articles of association provide that dividends may be declared and paid out of the funds of our company lawfully available therefor. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or a share premium account; provided that in no circumstances may a dividend be paid out of the same premium account if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.

*Voting Rights*. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one shareholder holding not less than 10% of the votes attaching to the shares present in person or by proxy.

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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 at a meeting, while a special resolution requires the affirmative vote of (i) in respect of any amendment to the memorandum and articles of association, no less than 85% of the votes cast attaching to the issued and outstanding ordinary shares at a general meeting of our company; or (ii) in respect of any matters requiring a special resolution other than any amendment to the memorandum and articles of association, such as a change of name or reduction of share capital, no less than two-thirds of the votes cast attaching to the issued and outstanding ordinary shares at a meeting. Our shareholders 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 Act to call shareholders' annual general meetings. Our post-offering 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 the chairman of our board of directors or by our directors (acting by a resolution of our board). Advance notice of at least seven 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 the time when the meeting proceeds to business, one or more of our shareholders holding shares which carry in aggregate (or representing by proxy) not less than one-third of all votes attaching to all of our shares in issue and entitled to vote at such general meeting.

The Companies Act does not provide shareholders with any right to requisition a general meeting, nor any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our post-offering memorandum and articles of association provide that upon the requisition of any one or more of our shareholders holding shares which carry in aggregate not less than one-third of all votes attaching to all issued and outstanding shares of our company entitled to vote at general meetings, our board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our post-offering 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 set out in our post-offering 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. The directors shall promptly approve the registration of any transfer of ordinary shares where an instrument of transfer validly executed by the transferor is provided, accompanied by any certificate for the ordinary shares to which it relates, if required by the board of directors.

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, be suspended and the register 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 closed for more than 30 days in any year as our board may determine.

*Liquidation*. On 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

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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, such 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 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, before the issue of such shares, by our board of directors or by our 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 Cayman Islands law, any redemption or repurchase of shares by our company may be made out of profits of our company, out of our company's share premium account or out of the proceeds of a fresh issue of shares made for the purpose of the repurchase or, if so authorized by the articles of association and subject to provisions of the Companies Act, out of capital. Any premium payable on a redemption or repurchase over the par value of the shares to be repurchased must be provided for out of profits of our company or from sums standing to the credit of the share premium account of our company or, if authorized by the articles of association and subject to the provisions of the Companies Act, out of capital. At no time may a company redeem or repurchase its shares unless they are fully paid. A company may not redeem or repurchase any of its shares if, as a result of the redemption or repurchase, there would no longer be any issued shares of the company other than shares held as treasury shares. In addition, our company may accept the surrender of any fully paid share for no consideration.

*Variations of Rights of Shares*. Whenever the capital of our company is divided into different classes the rights attached to any such class may, subject to any rights or restrictions for the time being attached to any class, only be varied with the consent in writing of the holders of all of the issued shares of that class or with the sanction of an ordinary resolution passed at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the shares of that class, be deemed to be varied by the creation, allotment or issue of further shares ranking *pari passu* with such existing class of shares.

*Issuance of Additional Shares*. Our post-offering memorandum and articles of association authorize our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine. In particular, with respect to any issuance of ordinary shares of our company and any entities within our group with net assets value of no less than RMB30,000,000 million that are not pursuant to agreements entered into by the Company under a share incentive scheme with specific conditions as specified in our post-offering memorandum and articles of association, such issuance shall be approved at a validly convened meeting of the board of directors with the affirmative vote of at least five directors, or a Supermajority Board Resolution.

Our post-offering memorandum and articles of association also authorize our board of directors to issue from time to time one or more series of preferred shares and to, by Supermajority Board Resolution, determine, with respect to any series of preferred shares, the terms and rights of that series, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the designation of the series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of shares of the series;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the dividend rights, dividend rates, conversion rights, voting rights; and

the rights and terms of redemption and liquidation preferences.

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Our board of directors may issue preferred shares without action by our shareholders. Issuance of these shares may dilute the voting power of holders of ordinary shares.

*Inspection of Books and Records*. Shareholders have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (other than our memorandum and articles of association, register of mortgages and charges and any special resolutions of our shareholders). However, we intend to provide our shareholders with annual audited financial statements. See "Where You Can Find Additional Information."

*Anti-Takeover Provisions*. Some provisions of our post-offering 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorize our board of directors to, by a Supermajority Board Resolution, issue preferred shares in one or more
series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 post-offering 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 Act. The Companies Act 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• does not have to file an annual return of its shareholders with the Registrar of Companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• is not required to open its register of members for inspection;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• does not have to hold an annual general meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may issue negotiable or bearer shares or shares with no par value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for
20 years in the first instance);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may register as a limited duration company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 the 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).

*Exclusive Forum*. Unless we consent in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint

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asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than us. Any person or entity purchasing or otherwise acquiring any share or other securities in our company, or purchasing or otherwise acquiring American depositary shares issued pursuant to deposit agreements, shall be deemed to have notice of and consented to the provisions of this article. Without prejudice to the foregoing, if the provision in this article is held to be illegal, invalid or unenforceable under applicable law, the legality, validity or enforceability of the rest of articles of association shall not be affected and this article shall be interpreted and construed to the maximum extent possible to apply in the relevant jurisdiction with whatever modification or deletion may be necessary so as best to give effect to our intention.

**Differences in Corporate Law** 

The Companies Act is modeled after that of England but does not follow recent English statutory enactments and differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.

*Mergers and Similar Arrangements*. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) "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 (b) 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 of merger or consolidation 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 list of 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 or her shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provided that the dissenting shareholder complies strictly with the procedures set out in the Companies Act. 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 Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of

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schemes of arrangement, provided that the arrangement is approved by (a) 75% in value of the shareholders or class of shareholders, as the case may be, or (b) a majority in number representing 75% in value of the creditors or each class of creditors, as the case may be, with whom the arrangement is to be made, that are, in each case, 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 court can be expected to approve the arrangement if it determines that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the statutory provisions as to the required majority vote have been met;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the arrangement is such that may be reasonably approved by an intelligent and honest man or woman of that class
acting in respect of his interest; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the arrangement is not one that would more properly be sanctioned under some other provision of the Companies
Act.

The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the "squeeze out" of dissentient minority shareholder upon a tender offer. When a takeover offer is made and accepted by holders of 90% of the shares 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 takeover 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 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 courts can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which may permit a minority shareholder to commence a class action against, or derivative actions in the name of, our company to challenge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an act which is ultra vires or illegal and is therefore incapable of ratification by the shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an act which constitutes a fraud against the minority where the wrongdoers are themselves in control of the
company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an act which requires a resolution with a qualified (or special) majority (i.e., more than a simple majority)
which has not been obtained.

*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 post-offering memorandum and articles of association permit indemnification of officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such persons 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

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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 post-offering 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 or she reasonably believes to be in the best interests of the corporation. He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests 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 the company and therefore it is considered that he or she owes the following duties to the company—a duty to act in good faith in the best interests of the company, a duty not to make a personal profit based on his or her position as director (unless the company permits him or her to do so), a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interest or his or her 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 the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her 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. Cayman Islands law and our post-offering articles of association provide that 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.

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The Companies Act does not provide shareholders with any right to requisition a general meeting, nor any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our post-offering articles of association allow our shareholders holding in aggregate not less than one-third 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 post-offering articles of association do not provide our shareholders with any other right to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands 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 post-offering 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 post-offering articles of association, directors that are not appointed by certain management members of our company, Hillhouse Entities and their affiliates, or Shenzhen Dachen Chuanglian Investment Fund Partnership (Limited Partnership) and Riverhead Capital I, L.P. and their respective affiliates pursuant to our post-offering memorandum and articles of association may be removed with or without cause, by an ordinary resolution of our shareholders. Directors appointed by management members of our company, Hillhouse Entities and their affiliates, or Shenzhen Dachen Chuanglian Investment Fund Partnership (Limited Partnership) and Riverhead Capital I, L.P. and their respective affiliates pursuant to our post-offering memorandum and articles of association may only be removed by the person(s) and/or entities appointing the director. An appointment of a director may be on terms that the director shall automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision. In addition, a director's office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his or her creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his or her office by notice in writing to the 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 or her office be vacated; or (v) is removed from office pursuant to any other provisions of our post-offering 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

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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, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

*Restructuring*. A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) is or is likely to become unable to pay its debts; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the
Companies Act, the law of a foreign country or by way of a consensual restructuring.

The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, with such powers and to carry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with or commenced against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against the company, except with the leave of the court. However, notwithstanding the presentation of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring officer appointed.

*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, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its 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. Under the Companies Act and our post-offering articles of association, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders.

*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 Cayman Islands law and our post-offering articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class with the written consent of the holders of at least two-thirds 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. As permitted by Cayman Islands law, our post-offering

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memorandum and articles of association may only be amended with a special resolution that is passed by not less than 85% of the votes cast by voting shareholders at a general meeting of our company or by approval in writing signed by all of the shareholders entitled to vote at a general meeting.

*Rights of Non-resident or Foreign Shareholders*. There are no limitations imposed by our post-offering 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 post-offering memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

**History of Securities Issuances** 

The following is a summary of our securities issuances in the past three years.

***Ordinary Shares***

On December 3, 2019, we issued (i) 121,749,999 ordinary shares to Great Dream Of Veterinarian Management Limited for an aggregate purchase price of US$121.75, and (ii) 298,523,727 ordinary shares to Goldenway Capital Management Limited for an aggregate purchase price of US$298.52, (iii) 19,329,999 ordinary shares to Bing Xiao Enterprise Management Company Limited for an aggregate purchase price of US$19.33, (iv) 303,439,999 ordinary shares to Leap Eternity Enterprise Management Company Limited for an aggregate purchase price of US$303.44, (v) 55,839,999 ordinary shares to PD Company Limited for an aggregate purchase price of US$55.84, (vi) 3,193,130,000 ordinary shares to HH Skyfield Holdings Inc. in consideration of certain equity interest in Skyfield Group, (vii) 341,870,000 ordinary shares to Jing An Holdings Limited in consideration of certain equity interest in Skyfield Group, (viii) 69,200,000 ordinary shares to AnAn Brothers Holdings Limited in consideration of certain equity interest in Skyfield Group, (ix) 65,180,000 ordinary shares to Aino Family Holding Limited in consideration of certain equity interest in Skyfield Group, (x) 8,890,000 ordinary shares to Aino Brothers Holding Limited in consideration of certain equity interest in Skyfield Group, (xi) 897,730,000 ordinary shares to RP Chen Rui Enterprise Management Company Limited for an aggregate purchase price of US$897.73, (xii) 760,230,000 ordinary shares to RP Rui You Enterprise Management Company Limited for an aggregate purchase price of US$760.23, (xiii) 556,570,000 ordinary shares to RP Yei Pei Enterprise Management Company Limited for an aggregate purchase price of US$556.57, (xiv) 529,640,000 ordinary shares to Riverhead Capital I, L.P. for an aggregate purchase price of approximately RMB64.8 million, (xv) 202,160,000 ordinary shares to Shenzhen Fortune Chuanglian Equity Investment Fund Limited Partnership for an aggregate purchase price of approximately RMB24.7 million, (xvi) 115,950,000 ordinary shares to Shenzhen Fortune Chuangfeng Equity Investment Limited Partnership for an aggregate purchase price of approximately RMB14.2 million, (xvii) 67,593,496 ordinary shares to RP Sheng Peng Enterprise Management Company Limited for an aggregate purchase price of US$67.59, (xviii) 93,942,776 ordinary shares to RP Peng Cheng Enterprise Management Company Limited for an aggregate purchase price of US$93.94, (xix) 52,630,000 ordinary shares to HAO's Holdings, Inc. for an aggregate purchase price of approximately US$6.4 million, (xx) 15,650,000 ordinary shares to Ningbo Meishan Highbury Investment Partnership (Limited Partnership) for an aggregate purchase price of approximately RMB1.9 million, (xxi) 14,490,000 ordinary shares to New Hope Healthcare Nanjing Investment Center (Limited Partnership) for an aggregate purchase price of approximately RMB1.8 million, (xxii) 839,620,000 ordinary shares to Tianjin GLNY Enterprise Management Consultation, L.P. for an aggregate purchase price of approximately RMB109.6 million, (xxiii) 261,120,000 ordinary shares to HCBN Investment Holdings, Ltd. for an aggregate purchase price of approximately US$41.0 million.

On December 12, 2019, we issued 761,984,136 ordinary shares to HH Skyfield Holdings Inc. for an aggregate purchase price of a combination of US dollar equivalent of RMB750 million and approximately US$1.7 million.

On May 13, 2020, we issued (i) 170,544,000 ordinary shares to Cloudpet Holdings Limited for an aggregate purchase price of US$170.544, and (ii) 15,160,000 ordinary shares to Puppytown Holdings Limited for an aggregate purchase price of US$15.160.

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On September 3, 2020, we issued (i) 88,740,300 ordinary shares to AnAn Brothers Holdings Limited for an aggregate purchase price of US$88.75, (ii) 8,700,000 ordinary shares to RP Chen Rui Enterprise Management Company Limited for an aggregate purchase price of US dollar equivalent of RMB7.5 million, (iii) 452,182,700 ordinary shares to Vet Harvest Enterprise Management Company Limited for an aggregate purchase price of US$452.19, and (iv) 45,000,000 ordinary shares to Vet Time Enterprise Management Company Limited for an aggregate purchase price of US$45.

On September 25, 2020, we effected a 1-for-1 share reclassification and re-designation, whereby all of the then issued and outstanding ordinary shares were reclassified and re-designated as Class A ordinary shares, and in particular, (i) 109,580,460 ordinary shares held by Great Dream Of Veterinarian Management Limited were reclassified and re-designated as the same number of Class A ordinary shares, (ii) 278,523,728 ordinary shares held by Goldenway Capital Management Limited were reclassified and re-designated as the same number of Class A ordinary shares, (iii) 19,330,000 ordinary shares held by Bing Xiao Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (iv) 273,109,610 ordinary shares held by Leap Eternity Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (v) 55,840,000 ordinary shares held by PD Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (vi) 4,065,114,136 ordinary shares held by HH Skyfield Holdings Inc. were reclassified and re-designated as the same number of Class A ordinary shares, (vii) 341,870,000 ordinary shares held by Jing An Holdings Limited were reclassified and re-designated as the same number of Class A ordinary shares, (viii) 157,940,300 ordinary shares held by AnAn Brothers Holdings Limited were reclassified and re-designated as the same number of Class A ordinary shares, (ix) 65,180,000 ordinary shares held by Aino Family Holding Limited were reclassified and re-designated as the same number of Class A ordinary shares, (x) 8,890,000 ordinary shares held by Aino Brothers Holding Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xi) 816,697,260 ordinary shares held by RP Chen Rui Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xii) 684,241,093 ordinary shares held by RP Rui You Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xiii) 500,937,960 ordinary shares held by RP Ye Bei Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xiv) 529,640,000 ordinary shares held by Riverhead Capital I, L.P. were reclassified and re-designated as the same number of Class A ordinary shares, (xv) 312,160,000 ordinary shares held by Shenzhen Fortune Chuanglian Equity Investment Fund Limited Partnership were reclassified and re-designated as the same number of Class A ordinary shares, (xvi) 115,950,000 ordinary shares held by Shenzhen Fortune Chuangfeng Equity Investment Limited Partnership were reclassified and re-designated as the same number of Class A ordinary shares, (xvii) 60,837,177 ordinary shares held by RP Sheng Peng Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xviii) 84,552,712 ordinary shares held by RP Peng Cheng Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xix) 52,630,000 ordinary shares held by HAO's Holdings, Inc. were reclassified and re-designated as the same number of Class A ordinary shares, (xx) 15,650,000 ordinary shares held by Ningbo Meishan Highbury Investment Partnership (Limited Partnership) were reclassified and re-designated as the same number of Class A ordinary shares, (xxi) 14,490,000 ordinary shares held by New Hope Healthcare Nanjing Investment Center (Limited Partnership) were reclassified and re-designated as the same number of Class A ordinary shares, (xxii) 839,620,000 ordinary shares held by Tianjin GLNY Enterprise Management Consultation, L.P. were reclassified and re-designated as the same number of Class A ordinary shares, (xxiii) 261,120,000 ordinary shares held by HCBN Investment Holdings, Ltd. were reclassified and re-designated as the same number of Class A ordinary shares, (xxiv) 130,544,000 ordinary shares held by Cloudpet Holdings Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xxv) 15,160,000 ordinary shares held by Puppytown Holdings Limited were reclassified and re-designated as the same number of Class A ordinary shares, (xxvi) 120,000,000 ordinary shares held by Huimeikangcheng (Tianjin) Enterprise Management Consulting Partnership (Limited Partnership) were reclassified and re-designated as the same number of Class A ordinary shares, (xxvii) 452,182,700 ordinary shares held by Vet Harvest Enterprise Management Company Limited were reclassified and re-designated as the same number of

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Class A ordinary shares, and (xxviii) 45,000,000 ordinary shares held by Vet Time Enterprise Management Company Limited were reclassified and re-designated as the same number of Class A ordinary shares.

On September 25, 2020, we also issued (i) 307,486,028 Class B ordinary shares to Tencent Mobility Limited for an aggregate purchase price of US$100 million, (ii) 614,972,056 Class B ordinary shares to Boehringer Ingelheim Animal Health Participations GmbH for an aggregate purchase price of US$200 million, (iii) 38,973,854 Class B ordinary shares to Snow Lake Asia Master Fund Limited for an aggregate purchase price of approximately US$12.7 million, and (iv) 114,769,160 Class B ordinary shares to Snow Lake China Master Fund, Ltd. for an aggregate purchase price of approximately US$37.3 million.

On September 28, 2020, we issued (i) 307,486,028 Class B ordinary shares to GRACIOUS RHYTHM LIMITED for an aggregate purchase price of approximately US$100 million, (ii) 50,735,194 Class B ordinary shares to WORLDWIDE HEALTHCARE TRUST PLC for an aggregate purchase price of US$16.5 million, (iii) 24,598,882 Class B ordinary shares to OrbiMed Partners Master Fund Limited for an aggregate purchase price of US$8 million, (iv) 9,224,581 Class B ordinary shares to OrbiMed New Horizons Master Fund, L.P. for an aggregate purchase price of US$3 million, (v) 7,687,151 Class B ordinary shares to OrbiMed Genesis Master Fund, L.P. for an aggregate purchase price of US$2.5 million, and (vi) 61,497,205 Class B ordinary shares to Aspex Master Fund for an aggregate purchase price of US$20 million.

On October 14, 2020, we issued (i) 46,122,904 Class B ordinary shares to LBC Sunshine Healthcare Fund L.P. for an aggregate purchase price of US$15 million, (ii) 92,245,808 Class B ordinary shares to AIG DECO Fund I, LP for an aggregate purchase price of US$30 million, and (iii) 43,048,043 Class B ordinary shares to ABCI Global Opportunities SPC for the account and on behalf of ABCI CHINA RISING PRIVATE EQUITY 4 SP for an aggregate purchase price of US$14 million.

On January 6, 2021, we issued 541,069,195 Class A ordinary shares to RP Pulse Holdings Limited for an aggregate purchase price of US$541.07.

On January 21, 2021, we issued 26,895,864 Class A ordinary shares to GRACIOUS RHYTHM LIMITED upon exercise of warrant at an aggregate exercise price of approximately US$27, which warrant was transferred to it by Tianjin GLNY Enterprise Management Consultation, L.P.

On May 28, 2021, we issued 28,990,000 Class A ordinary shares to Ronghui Ruijia (Tianjin) Asset Management Partnership (Limited Partnership) for an aggregate purchase price of US dollar equivalent of RMB28,990,000.

On May 29, 2021, we issued 227,203,755 Class A ordinary shares to RP Passion Enterprise Management Company Limited for an aggregate purchase price of US$227.2.

On June 26, 2021, we issued 56,820,000 Class A ordinary shares to Jin Rui Investment Co. Limited for an aggregate purchase price of US$10,730,000.

On June 30, 2021, we issued (i) 11,111,111 Class A ordinary shares to HAO's Holdings, Inc. for an aggregate purchase price of US dollar equivalent of RMB25,000,000; (ii) 29,196,375 Class A ordinary shares to Vet Harvest Enterprise Management Company Limited for an aggregate purchase price of US$29.2; and (iii) 194,618,321 Class A ordinary shares to RP Passion Enterprise Management Company Limited for an aggregate purchase price of US$194.6.

On August 16, 2021, we issued (i) 219,910,339 Class A ordinary shares to RP Passion Enterprise Management Company Limited for an aggregate purchase price of US$219.9; and (ii) 32,643,087 Class A ordinary shares to Vet Harvest Enterprise Management Company Limited for an aggregate purchase price of US$32.64.

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On October 11, 2021, we issued 20,184,383 Class A ordinary shares to Vet Harvest Enterprise Management Company Limited for an aggregate purchase price of US$20.18.

On December 28, 2021, we issued 30,000,000 Class A ordinary shares to Vet Time Enterprise Management Company Limited for an aggregate purchase price of US$30.00.

***Warrants***

On December 3, 2019, we issued a warrant to purchase up to 26,895,864 ordinary shares to Tianjin GLNY Enterprise Management Consultation, L.P. at the exercise price of US$0.000001 per share. Such warrant was transferred to and fully exercised by GRACIOUS RHYTHM LIMITED on January 21, 2021.

***Options*** 

We have granted options to purchase our ordinary shares to certain of our directors, executive officers and employees. See "Management—Share Incentive Plan."

***Convertible Note*** 

Pursuant to a convertible note purchase agreement entered into with a subsidiary of Nestlé S.A., or the purchaser, we issued to the purchaser a convertible note dated January 17, 2023, or the Note, for an aggregate purchase price and with a principal amount of US$50,000,000.

Subject to the terms and conditions of and exceptions provided in the Note, concurrently with, and subject to, the completion of this offering, half of the principal amount (i.e., US$25,000,000), or the IPO Conversion Amount, will be automatically converted into a number of our ordinary shares at a conversion price equal to the initial public offering price (adjusted for the ADS-to-ordinary share ratio), unless this share number falls below 65,082,399, the minimum number of conversion shares provided in the Note, or the Minimum Number, in which case the IPO Conversion Amount will be converted into the Minimum Number of shares. Subject to the terms and conditions of and exceptions provided in the Note, the remaining half of the principal amount will be automatically converted, on the first day immediately after the lock-up period applicable to this offering, into a number of our ordinary shares at a conversion price equal to the average closing price of our ADSs during the last five trading days of the lock-up period (adjusted for the ADS-to-ordinary share ratio) (or the Minimum Number as applicable), provided, among other things, that such average price is higher than the initial public offering price.

In addition to the automatic conversions described above, the purchaser may also elect to convert the Note in certain other circumstances. For example, subject to the applicable automatic conversion described above and other terms and conditions of the Note, the purchaser may elect to convert half of the principal amount at any time after this offering into a number of shares equal to the higher of (i) the quotient obtained by dividing such amount by the average closing price of the previous five trading days (adjusted for the ADS-to-ordinary share ratio), or if the conversion is to take place on or prior to the fifth trading day following the completion of this offering, by the initial public offering price (adjusted for the ADS-to-ordinary share ratio), and (ii) the Minimum Number. Upon the maturity date, the purchaser also has an option to convert the outstanding amount of the Note (if any) into shares at a conversion price determined in accordance with the Note.

The initial maturity date of the Note is January 16, 2024, subject to extensions in accordance with the Note. In limited circumstances such as at our final repayment or voluntary prepayment or upon an event of default, we are obligated to pay an interest accrued on the outstanding amount at a simple rate of 7% per annum. No interest accrues on any amount that has been converted into shares.

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**Shareholders Agreement** 

We entered into our amended and restated shareholders agreement on September 25, 2020 with our shareholders.

The amended and restated shareholders agreement provides for certain special rights, including right of first refusal, co-sale rights, preemptive rights, and contains provisions governing the board of directors and other corporate governance matters. Unless specifically noted, those special rights, as well as the corporate governance provisions, will automatically terminate upon the completion of a qualified initial public offering.

***Registration Rights***

Pursuant to our amended and restated shareholders agreement dated September 25, 2020, we have granted certain registration rights to our shareholders. Set forth below is a description of the registration rights granted under the agreement.

*Demand Registration Rights*. If we, at any time after the earlier of (i) the sixth anniversary of December 3, 2019, or (ii) six months after the closing of an initial public offering of our ordinary shares, receive a written request from the holders of at least thirty percent of the registrable securities then outstanding that we file a registration statement under the Securities Act covering the registration of a minimum of twenty percent of the registrable securities, then we shall, within ten business days of the receipt of such written notice, give written notice of such request to all holders, and use our best efforts to effect, as soon as practicable, the registration of all registrable securities that the holders request to be registered and included in such registration by written notice given by such holders to us within twenty days after receipt of the request notice. We are not obligated to effect any such registration if we have, within the six-month period preceding the date of such request, already effected a registration. We are not obligated to effect more than two demand registrations. This demand registration right is subject to the customary exclusion right of the underwriters. We have the right to defer filing of a registration statement for a period of not more than ninety days after receipt of the request of the initiating holders by furnishing to the holders requesting registration a certificate signed by our president or chief executive officer stating that our board of directors determines in good faith that filing of such registration statement at such time will be materially detrimental to us and our shareholders, but we cannot exercise the deferral right more than once during any twelve-month period and cannot register any other securities during such twelve-month period.

*Piggyback Registration Rights*. If we propose to register for a public offering of our securities (other than registration statements relating to demand registration, Form F-3 registration, any employee benefit plan or a corporate reorganization), we shall give written notice of such registration to all holders of registrable securities at least thirty days prior to filing any registration statement and afford each such holder an opportunity to be included in such registration. If a holder decides not to include all of its registrable securities in any registration statement thereafter filed by us, such holder shall nevertheless continue to have the right to include any registrable securities in any subsequent registration statement or registration statements as may be filed by us, subject to certain limitations. This piggyback registration right is subject to the customary exclusion right of the underwriters.

*Registration on Form F-3*. If any holder or holders of at least thirty percent of all registrable securities then issued and outstanding requests in writing that we effect a registration on Form F-3 (or an equivalent registration in a jurisdiction outside of the U.S.), we shall promptly give written notice of the proposed registration and as soon as practicable, effect such registration within twenty days after we provide the aforesaid written notice. We are not obligated to effect any such registration if (i) we are Form F-3 is not available for such offering by the holders; (ii) the holders, together with the holders of any other securities of ours entitled to inclusion in such registration, propose to sell registrable securities or such other securities (if any) at an aggregate price to the public of less than US$1,000,000, (iii) we furnish to the holders a certificate signed by our president or chief

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executive officer stating that our board of directors determines in good faith that filing of such registration statement at such time will be materially detrimental to us and our shareholders (in which event we can defer the filing of the Form F-3 for a period of no more than sixty days), (iv) we have, within the six-month period preceding the date of such request, already effected a registration other than a registration from which registrable securities of the holders have been excluded, or (v) in any particular jurisdiction we would be required to qualify to do business or to execute a general consent to service of process in effecting such registration.

*Expenses of Registration*. We will bear all registration expenses. Each holder, however, should bear its proportionate share of all of the underwriting discounts and selling commissions applicable to the sale of registrable securities or other amounts payable to underwriter(s) or brokers in connection with such offering by the holders.

*Termination of Obligations*. Our obligations to effect any demand, piggyback or Form F-3 registration shall terminate upon the fifth anniversary of our initial public offering.

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**DESCRIPTION OF AMERICAN DEPOSITARY SHARES** 

**American Depositary Receipts** 

JPMorgan Chase Bank, N.A. ("JPMorgan"), as depositary, will issue the ADSs which you will be entitled to receive in this offering. Each ADS will represent an ownership interest in a designated number of shares which we will deposit with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary, yourself as an ADR holder and all other ADR holders, and all beneficial owners of an interest in the ADSs evidenced by ADRs from time to time.

The depositary's office is located at 383 Madison Avenue, Floor 11, New York, NY 10179.

The ADS to share ratio is subject to amendment as provided in the form of ADR (which may give rise to fees contemplated by the form of ADR). In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which they have not distributed directly to you.

A beneficial owner is any person or entity having a beneficial ownership interest in ADSs. A beneficial owner need not be the holder of the ADR evidencing such ADS. If a beneficial owner of ADSs is not an ADR holder, it must rely on the holder of the ADR(s) evidencing such ADSs in order to assert any rights or receive any benefits under the deposit agreement. A beneficial owner shall only be able to exercise any right or receive any benefit under the deposit agreement solely through the holder of the ADR(s) evidencing the ADSs owned by such beneficial owner. The arrangements between a beneficial owner of ADSs and the holder of the corresponding ADRs may affect the beneficial owner's ability to exercise any rights it may have.

An ADR holder shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by the ADRs registered in such ADR holder's name for all purposes under the deposit agreement and ADRs. The depositary's only notification obligations under the deposit agreement and the ADRs is to registered ADR holders. Notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holder's ADRs.

Unless certificated ADRs are specifically requested, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In our description, references to American depositary receipts or ADRs shall include the statements you will receive which reflect your ownership of ADSs.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

As an ADR holder or beneficial owner, we will not treat you as a shareholder of ours and you will not have any shareholder rights. Cayman Island law governs shareholder rights. Because the depositary or its nominee will be the shareholder of record for the shares represented by all outstanding ADSs, shareholder rights rest with such record holder. Your rights are those of an ADR holder or of a beneficial owner. Such rights derive from the terms of the deposit agreement to be entered into among us, the depositary and all holders and beneficial owners from time to time of ADRs issued under the deposit agreement and, in the case of a beneficial owner, from the arrangements between the beneficial owner and the holder of the corresponding ADRs. The obligations of the depositary and its agents are also set out in the deposit agreement. Because the depositary or its nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf.

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The following is a summary of what we believe to be the material terms of the deposit agreement. 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 deposit agreement and the form of ADR which contains the terms of your ADSs. You can read a copy of the deposit agreement which is filed as an exhibit to the registration statement of which this prospectus forms a part. You may also obtain a copy of the deposit agreement at the SEC's Public Reference Room which is located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330. You may also find the registration statement and the attached deposit agreement on the SEC's website at http://www.sec.gov.

**Share Dividends and Other Distributions** 

*How will I receive dividends and other distributions on the shares underlying my ADSs?* 

We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars (if it determines such conversion may be made on a reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a division, branch or affiliate to direct, manage, and/or execute any public and/or private sale of securities under the deposit agreement. Such division, branch, and/or affiliate may charge the depositary a fee in connection with such sales, which fee is considered an expense of the depositary. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.

Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Cash*. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or
other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such
distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositary's and/or its agents' expenses in (1) converting any foreign currency to U.S. dollars to the
extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such
transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time, and (4) making
any sale by public or private means in any commercially reasonable manner. *If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Shares*. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the
number of ADSs representing such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Rights to receive additional shares*. In the case of a distribution of rights to subscribe for additional
shares or other rights, if we timely provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing such
rights. However, if we do not timely furnish such evidence, the depositary may:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders
entitled thereto; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if it is not practicable to sell such rights by reason of the non-transferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing and the rights may
lapse.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Other Distributions*. In the case of a distribution of securities or property other than those described
above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and
practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Elective Distributions.* In the case of a dividend payable at the election of our shareholders in cash or
in additional shares, we will notify the depositary at least 30 days prior to the proposed distribution stating whether or not we wish such elective distribution to be made available to ADR holders. The depositary shall make such elective
distribution available to ADR holders only if (i) we shall have timely requested that the elective distribution is available to ADR holders, (ii) the depositary shall have determined that such distribution is reasonably practicable and (iii) the
depositary shall have received satisfactory documentation within the terms of the deposit agreement including any legal opinions of counsel that the depositary in its reasonable discretion may request. If the above conditions are not satisfied, the
depositary shall, to the extent permitted by law, distribute to the ADR holders, on the basis of the same determination as is made in the local market in respect of the shares for which no election is made, either (x) cash or (y) additional ADSs
representing such additional shares. If the above conditions are satisfied, the depositary shall establish procedures to enable ADR holders to elect the receipt of the proposed dividend in cash or in additional ADSs. There can be no assurance that
ADR holders or beneficial owners of ADSs generally, or any ADR holder or beneficial owner of ADSs in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of shares.

If the depositary determines in its discretion that any distribution described above is not practicable with respect to any specific registered ADR holder, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.

Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the depositary in accordance with its then current practices.

*The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.* 

*There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. All purchases and sales of securities will be handled by the depositary in accordance with its then current policies, which are currently set forth on the "Disclosures" page (or successor page) of www.adr.com (as updated by the depositary from time to time, "ADR.com").* 

**Deposit, Withdrawal, and Cancellation** 

*How does the depositary issue ADSs?* 

The depositary will issue ADSs if you or your broker deposit shares or evidence of rights to receive shares with the custodian and pay the fees and expenses owing to the depositary in connection with such issuance. In the case of the ADSs to be issued under this prospectus, we will arrange with the underwriters named herein to deposit such shares.

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Shares deposited in the future with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be registered in the name of JPMorgan Chase Bank, N.A., as depositary for the benefit of holders of ADRs or in such other name as the depositary shall direct.

The custodian will hold all deposited shares (including those being deposited by or on our behalf in connection with the offering to which this prospectus relates) for the account and to the order of the depositary, in each case for the benefit of ADR holders, to the extent not prohibited by law. ADR holders and beneficial owners thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as "deposited securities".

Deposited securities are not intended to, and shall not, constitute proprietary assets of the depositary, the custodian or their nominees. Beneficial ownership in deposited securities is intended to be, and shall at all times during the term of the deposit agreement continue to be, vested in the beneficial owners of the ADSs representing such deposited securities. Notwithstanding anything else contained herein, in the deposit agreement, in the form of ADR and/or in any outstanding ADSs, the depositary, the custodian and their respective nominees are intended to be, and shall at all times during the term of the deposit agreement be, the record holder(s) only of the deposited securities represented by the ADSs for the benefit of the ADR holders. The depositary, on its own behalf and on behalf of the custodian and their respective nominees, disclaims any beneficial ownership interest in the deposited securities held on behalf of the ADR holders.

Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary's direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holder's name. An ADR holder can request that the ADSs not be held through the depositary's direct registration system and that a certificated ADR be issued.

*How do ADR holders cancel an ADS and obtain deposited securities?* 

When you turn in your ADR certificate at the depositary's office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges, and taxes, deliver the underlying shares to you or upon your written order. Delivery of deposited securities in certificated form will be made at the custodian's office. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in connection with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in
connection with voting at a shareholders' meeting, or the payment of dividends;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the payment of fees, taxes, and similar charges; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of
deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

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**Record Dates** 

The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as practicable to any corresponding record dates set by us) for the determination of the registered ADR holders who will be entitled (or obligated, as the case may be):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to receive any distribution on or in respect of deposited securities,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to give instructions for the exercise of voting rights at a meeting of holders of shares, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided
for in the ADR,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to receive any notice or to act in respect of other matters,

all subject to the provisions of the deposit agreement.

**Voting Rights** 

*How do I vote?* 

If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the shares which underlie your ADSs. As soon as practicable after receipt from us of notice of any meeting at which the holders of shares are entitled to vote, or of our solicitation of consents or proxies from holders of shares, the depositary shall fix the ADS record date in accordance with the provisions of the deposit agreement, provided that if the depositary receives a written request from us in a timely manner and at least 30 days prior to the date of such vote or meeting, the depositary shall, at our expense, distribute to the registered ADR holders a "voting notice" stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that each ADR holder on the record date set by the depositary will, subject to any applicable provisions of Cayman Islands law, be entitled to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the deposited securities represented by the ADSs evidenced by such ADR holder's ADRs, and (iii) the manner in which such instructions may be given or deemed to be given pursuant to the terms of the deposit agreement, including instructions for giving a discretionary proxy to a person designated by us. Each ADR holder shall be solely responsible for the forwarding of voting notices to the beneficial owners of ADSs registered in such ADR holder's name. There is no guarantee that ADR holders and beneficial owners generally or any holder or beneficial owner in particular will receive the notice described above with sufficient time to enable such ADR holder or beneficial owner to return any voting instructions to the depositary in a timely manner.

Following actual receipt by the ADR department responsible for proxies and voting of ADR holders' instructions (including, without limitation, instructions of any entity or entities acting on behalf of the nominee for DTC), the depositary shall, in the manner and on or before the time established by the depositary for such purpose, endeavor to vote or cause to be voted the deposited securities represented by the ADSs evidenced by such ADR holders' ADRs in accordance with such instructions insofar as practicable and permitted under the provisions of or governing deposited securities.

To the extent that (i) we have provided the depositary with at least 35 days' notice of the proposed meeting, (ii) the voting notice will be received by all ADR holders and beneficial owners no less than 10 days prior to the date of the meeting and/or the cut-off date for the solicitation of consents, and (iii) the depositary does not receive instructions on a particular agenda item from an ADR holder (including, without limitation, any entity or entities acting on behalf of the nominee for DTC) in a timely manner, such ADR holder shall be deemed, and in the deposit agreement the depositary is instructed to deem such ADR holder, to have instructed the depositary to give a discretionary proxy for such agenda item(s) to a person designated by us to vote the deposited securities represented by the ADSs for which actual instructions were not so given by all such ADR holders on such agenda item(s), provided that no such instruction shall be deemed given and no discretionary proxy shall be given unless

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(1) we inform the depositary in writing (and we agree to provide the depositary with such instruction promptly in writing) that (a) we wish such proxy to be given with respect to such agenda item(s), (b) there is no substantial opposition existing with respect to such agenda item(s), and (c) such agenda item(s), if approved, would not materially or adversely affect the rights of holders of shares, and (2) the depositary has obtained an opinion of counsel, in form and substance satisfactory to the depositary, confirming that (A) the granting of such discretionary proxy does not subject the depositary to any reporting obligations in the Cayman Islands, (B) the granting of such proxy will not result in a violation of the laws, rules, regulations or permits of the Cayman Islands, (C) the voting arrangement and deemed instruction as contemplated herein will be given effect under the laws, rules, and regulations of the Cayman Islands, and (D) the granting of such discretionary proxy will not under any circumstances result in the shares represented by the ADSs being treated as assets of the depositary under the laws, rules or regulations of the Cayman Islands.

The depositary may from time to time access information available to it to consider whether any of the circumstances described above exist, or request additional information from us in respect thereto. By taking any such action, the depositary shall not in any way be deemed or inferred to have been required, or have had any duty or responsibility (contractual or otherwise), to monitor or inquire whether any of the circumstances described above existed. In addition to the limitations provided for in the deposit agreement, ADR holders and beneficial owners are advised and agree that (a) the depositary will rely fully and exclusively on us to inform it of any of the circumstances set forth above, and (b) neither the depositary, the custodian nor any of their respective agents shall be obliged to inquire or investigate whether any of the circumstances described above exist and/or whether we complied with our obligation to timely inform the depositary of such circumstances. Neither the depositary, the custodian nor any of their respective agents shall incur any liability to ADR holders or beneficial owners (i) as a result of our failure to determine that any of the circumstances described above exist or our failure to timely notify the depositary of any such circumstances or (ii) if any agenda item which is approved at a meeting has, or is claimed to have, a material or adverse effect on the rights of holders of shares. Because there is no guarantee that ADR holders and beneficial owners will receive the notices described above with sufficient time to enable such ADR holders or beneficial owners to return any voting instructions to the depositary in a timely manner, ADR holders and beneficial owners may be deemed to have instructed the depositary to give a discretionary proxy to a person designated by us in such circumstances, and neither the depositary, the custodian nor any of their respective agents shall incur any liability to ADR holders or beneficial owners in such circumstances.

ADR holders are strongly encouraged to forward their voting instructions to the depositary as soon as possible. For instructions to be valid, the ADR department of the depositary that is responsible for proxies and voting must receive them in the manner and on or before the time specified, notwithstanding that such instructions may have been physically received by the depositary prior to such time. The depositary will not itself exercise any voting discretion in respect of deposited securities. The depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any voting instructions are given or deemed to be given in accordance with the terms of the deposit agreement, including instructions to give a discretionary proxy to a person designated by us, for the manner in which any vote is cast, including, without limitation, any vote cast by a person to whom the depositary is instructed to grant a discretionary proxy (or deemed to have been instructed pursuant to the terms of the deposit agreement), or for the effect of any such vote. Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by any law, regulation, or requirement of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of or solicitation of consents or proxies from holders of deposited securities, distribute to the registered holders of ADRs a notice that provides such ADR holders with or otherwise publicizes to such ADR holders instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

We have advised the depositary that under Cayman Islands law and our constituent documents, each as in effect as of the date of the deposit agreement, voting at any meeting of shareholders is by show of hands unless a

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poll is (before or on the declaration of the results of the show of hands) demanded. In the event that voting on any resolution or matter is conducted on a show of hands basis in accordance with our constituent documents, the depositary will refrain from voting and the voting instructions received by the depositary from ADR holders shall lapse. The depositary will not demand a poll or join in demanding a poll, whether or not requested to do so by ADR holders or beneficial owners.

There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

**Reports and Other Communications** 

*Will ADR holders be able to view our reports?* 

The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.

Additionally, if we make any written communications generally available to holders of our shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.

**Fees and Expenses** 

*What fees and expenses will I be responsible for paying?* 

The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities, or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADRs are cancelled or reduced for any other reason, U.S.$5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, or upon which a share distribution or elective distribution is made or offered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a share distribution, rights, and/or other distribution prior to such deposit to pay such charge.

The following additional fees, charges and expenses shall also be incurred by the ADR holders, the beneficial owners, by any party depositing or withdrawing shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a fee of U.S.$0.05 or less per ADS held for any cash distribution made, or for any elective cash/stock dividend
offered, pursuant to the deposit agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by
the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and
shall be payable in the manner described in the next succeeding provision);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an amount for the reimbursement of such charges and expenses as are incurred by the depositary and/or any of its
agents (including, without limitation, the custodian and charges and expenses incurred on

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behalf of ADR holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary's or its custodian's compliance with applicable law, rule or regulation (which charges and expenses may be assessed on a proportionate basis against ADR holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such ADR holders or by deducting such charge or expense from one or more cash dividends or other cash distributions); <br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee
being in an amount equal to the $ per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of
such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those ADR holders entitled thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• stock transfer or other taxes and other governmental charges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a transaction fee per cancellation request (including through SWIFT, telex and facsimile transmission) and any
applicable delivery expenses incurred at your request in connection with the deposit or delivery of shares, ADRs or deposited securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transfer or registration expenses for the registration of transfer of deposited securities on any applicable
register in connection with the deposit or withdrawal of deposited securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage, and/or
execute any public and/or private sale of securities under the deposit agreement.

To facilitate the administration of various depositary receipt transactions, including disbursement of dividends or other cash distributions and other corporate actions, the depositary may engage the foreign exchange desk within JPMorgan Chase Bank, N.A. (the "Bank") and/or its affiliates in order to enter into spot foreign exchange transactions to convert foreign currency into U.S. dollars. For certain currencies, foreign exchange transactions are entered into with the Bank or an affiliate, as the case may be, acting in a principal capacity. For other currencies, foreign exchange transactions are routed directly to and managed by an unaffiliated local custodian (or other third party local liquidity provider), and neither the Bank nor any of its affiliates is a party to such foreign exchange transactions.

The foreign exchange rate applied to an foreign exchange transaction will be either (a) a published benchmark rate, or (b) a rate determined by a third party local liquidity provider, in each case plus or minus a spread, as applicable. The depositary will disclose which foreign exchange rate and spread, if any, apply to such currency on the "Disclosures" page (or successor page) of ADR.com. Such applicable foreign exchange rate and spread may (and neither the depositary, the Bank nor any of their affiliates is under any obligation to ensure that such rate does not) differ from rates and spreads at which comparable transactions are entered into with other customers or the range of foreign exchange rates and spreads at which the Bank or any of its affiliates enters into foreign exchange transactions in the relevant currency pair on the date of the foreign exchange transaction. Additionally, the timing of execution of an foreign exchange transaction varies according to local market dynamics, which may include regulatory requirements, market hours and liquidity in the foreign exchange market or other factors. Furthermore, the Bank and its affiliates may manage the associated risks of their position in the market in a manner they deem appropriate without regard to the impact of such activities on the depositary, us, holders or beneficial owners. *The spread applied does not reflect any gains or losses that may be earned or incurred by the Bank and its affiliates as a result of risk management or other hedging related activity.*

Notwithstanding the foregoing, to the extent we provide U.S. dollars to the depositary, neither the Bank nor any of its affiliates will execute a foreign exchange transaction as set forth herein. In such case, the depositary will distribute the U.S. dollars received from us.

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*Further details relating to the applicable foreign exchange rate, the applicable spread and the execution of foreign exchange transactions will be provided by the depositary on ADR.com. Each holder and beneficial owner by holding or owning an ADR or ADS or an interest therein, and we, each acknowledge and agree that the terms applicable to foreign exchange transactions disclosed from time to time on ADR.com will apply to any foreign exchange transaction executed pursuant to the deposit agreement.* 

We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary.

The right of the depositary to receive payment of fees, charges, and expenses survives the termination of the deposit agreement, and shall extend for those fees, charges, and expenses incurred prior to the effectiveness of any resignation or removal of the depositary.

The fees and charges described above may be amended from time to time by agreement between us and the depositary.

The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to ADR holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.

**Payment of Taxes** 

ADR holders or beneficial owners must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If any taxes or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the custodian or the depositary with respect to any ADR, any deposited securities represented by the ADSs evidenced thereby or any distribution thereon, including, without limitation, any Chinese Enterprise Income Tax owing if the Circular Guoshuifa [2009] No. 82 issued by the Chinese State Administration of Taxation (SAT) or any other circular, edict, order or ruling, as issued and as from time to time amended, is applied or otherwise, such tax or other governmental charge shall be paid by the ADR holder thereof to the depositary and by holding or owning, or having held or owned, an ADR or any ADSs evidenced thereby, the ADR holder and all beneficial owners thereof, and all prior ADR holders and beneficial owners thereof, jointly and severally, agree to indemnify, defend and save harmless each of the depositary and its agents in respect of such tax or other governmental charge. Notwithstanding the depositary's right to seek payment from current and former beneficial owners, by holding or owning, or having held or owned, an ADR, the ADR holder thereof (and prior ADR holder thereof) acknowledges and agrees that the depositary has no obligation to seek payment of amounts owing from any current or former beneficial owner. If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities (by public or private sale) and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. If any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities until such payment is made. If any tax or governmental charge is required to be withheld on

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any cash distribution, the depositary may deduct the amount required to be withheld from any cash distribution or, in the case of a non-cash distribution, sell the distributed property or securities (by public or private sale) in such amounts and in such manner as the depositary deems necessary and practicable to pay such taxes and distribute any remaining net proceeds or the balance of any such property after deduction of such taxes to the ADR holders entitled thereto.

As an ADR holder or beneficial owner, you will be agreeing to indemnify us, the depositary, its custodian and any of our or their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

**Reclassifications, Recapitalizations, and Mergers** 

If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any distributions of shares or other property not made to holders of ADRs or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to, and shall if reasonably requested by us:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amend the form of ADR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• distribute additional or amended ADRs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• distribute cash, securities or other property it has received in connection with such actions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell any securities or property received and distribute the proceeds as cash; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• none of the above.

If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.

**Amendment and Termination** 

*How may the deposit agreement be amended?* 

We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days' notice of any amendment that imposes or increases any fees, charges or expenses (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, a transaction fee per cancellation request (including through SWIFT, telex or facsimile transmission), applicable delivery expenses or other such fees, charges or expenses), or otherwise prejudices any substantial existing right of ADR holders or beneficial owners. Such notice need not describe in detail the specific amendments effectuated thereby, but must identify to ADR holders and beneficial owners a means to access the text of such amendment. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder and any beneficial owner are deemed to agree to such amendment and to be bound by the deposit agreement as so amended. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.

Any amendments or supplements that (i) are reasonably necessary (as agreed by us and the depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by ADR holders, shall be deemed not to prejudice any substantial rights of ADR holders or beneficial owners. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the

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form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the deposit agreement in such circumstances may become effective before a notice of such amendment or supplement is given to ADR holders or within any other period of time as required for compliance.

Notice of any amendment to the deposit agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the ADR holders identifies a means for ADR holders and beneficial owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the SEC's, the depositary's or our website or upon request from the depositary).

*How may the deposit agreement be terminated?* 

The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the registered holders of ADRs at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered ADR holders unless a successor depositary shall not be operating under the deposit agreement within 60 days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders of ADRs unless a successor depositary shall not be operating under the deposit agreement on the 60th day after our notice of removal was first provided to the depositary. Notwithstanding anything to the contrary herein, the depositary may terminate the deposit agreement (a) without notifying us, but subject to giving 30 days' notice to the ADR holders, under the following circumstances: (i) in the event of our bankruptcy or insolvency, (ii) if the Shares cease to be listed on an internationally recognized stock exchange, (iii) if we effect (or will effect) a redemption of all or substantially all of the deposited securities, or a cash or share distribution representing a return of all or substantially all of the value of the deposited securities, or (iv) there occurs a merger, consolidation, sale of assets or other transaction as a result of which securities or other property are delivered in exchange for or in lieu of deposited securities, and (b) immediately without prior notice to us, any holder or beneficial owner or any other person if required by any law, rule or regulation or any governmental authority or body, or the depositary would be subject to liability under or pursuant to any law, rule or regulation or by any governmental authority or body, in each case as determined by the depositary in its reasonable discretion.

If the shares are not listed or quoted for trading on a stock exchange or in a securities market as of the date so fixed for termination, then after such date fixed for termination (i) all direct registration ADRs shall cease to be eligible for the direct registration system and shall be considered ADRs issued on the ADR register maintained by the depositary and (ii) the depositary shall use its reasonable efforts to ensure that the ADSs cease to be DTC eligible so that neither DTC nor any of its nominees shall thereafter be a holder of ADRs. At such time as the ADSs cease to be DTC eligible and/or neither DTC nor any of its nominees is a holder of ADRs, the depositary shall (i) instruct its custodian to deliver all shares and/or deposited securities to us along with a general stock power that refers to the names set forth on the ADR register maintained by the depositary and (ii) provide us with a copy of the ADR register maintained by the depositary. Upon receipt of such shares and/or deposited securities and the ADR register maintained by the depositary, we have agreed to use our best efforts to issue to each register ADR holder a share certificate representing the shares represented by the ADSs reflected on the ADR register maintained by the depositary in such registered ADR holder's name and to deliver such share certificate to the registered ADR holder at the address set forth on the ADR register maintained by the depositary. After providing such instruction to the custodian and delivering a copy of the ADR register to us, the depositary, and its agents will perform no further acts under the deposit agreement or the ADRs and shall cease to have any obligations under the deposit agreement and/or the ADRs. After we receive the copy of the ADR register and the shares and/or deposited securities from the depositary, we shall be discharged from all

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obligations under the deposit agreement except (i) to distribute the shares to the registered ADR holders entitled thereto and (ii) for its obligations to the depositary and its agents.

If the shares are listed or quoted for trading on a stock exchange or in a securities market as of the date so fixed for termination, then instead of the provisions in the prior paragraph, after the date so fixed for termination, the depositary and its agents will perform no further acts under the deposit agreement or the ADRs, except to receive and hold (or sell) distributions on shares and/or deposited securities and deliver shares and/or deposited securities being withdrawn. As soon as practicable after the date so fixed for termination, the depositary has agreed to use its reasonable efforts to sell the shares and/or deposited securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be a segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the deposit agreement, without liability for interest, in trust for the pro rata benefit of the registered ADR holders not theretofore surrendered. After making such sale, the depositary shall be discharged from all obligations in respect of the deposit agreement and the ADRs, except to account for such net proceeds and other cash. After the date so fixed for termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary and its agents.

Notwithstanding anything to the contrary, in connection with any such termination, the depositary may, in its sole discretion and without notice to us, establish an unsponsored American depositary share program (on such terms as the depositary may determine) for our shares and make available to ADR holders a means to withdraw the shares represented by the ADSs issued under the deposit agreement and to direct the deposit of such shares into such unsponsored American depositary share program, subject, in each case, to receipt by the depositary, at its discretion, of the fees, charges, and expenses provided for under the deposit agreement and the fees, charges, and expenses applicable to the unsponsored American depositary share program.

**Limitations on Obligations and Liability to ADR holders** 

*Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs* 

Prior to the issue, registration, registration of transfer, split-up, combination, or cancelation of any ADRs, or the delivery of any distribution in respect thereof, and from time to time in the case of the production of proofs as described below, we or the depositary or its custodian may require:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• payment with respect thereto of (i) any stock transfer or other tax or other governmental charge,
(ii) any stock transfer or registration fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any
signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial or other ownership of, or interest in, any securities, compliance with applicable law,
regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with such regulations as the depositary may establish consistent with the deposit agreement.

The issuance of ADRs, the acceptance of deposits of shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of shares, may be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the depositary; provided that the ability to withdraw shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of shares in connection with voting at a shareholders' meeting, or the payment of dividends, (ii) the payment of fees, taxes, and similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.

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The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents, provided, however, that no disclaimer of liability under the Securities Act of 1933 is intended by any of the limitations of liabilities provisions of the deposit agreement. The deposit agreement provides that each of us, the depositary and our respective agents will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur or assume no liability (including, without limitation, to holders or beneficial owners) if any present or
future law, rule, regulation, fiat, order or decree of the Cayman Islands, Hong Kong, the People's Republic of China, the United States or any other country or jurisdiction, or of any governmental or regulatory authority or securities exchange
or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, epidemic, pandemic, nationalization, expropriation, currency
restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, cyber, ransomware or malware attack, computer failure, or circumstance beyond our, the depositary's, or our respective agents' direct and immediate
control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective
agents (including, without limitation, voting);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur or assume no liability (including, without limitation, to holders or beneficial owners) by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or things which by the terms of the deposit agreement it is provided shall or may be done or performed or any exercise or failure to
exercise discretion under the deposit agreement or the ADRs including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• incur or assume no liability (including, without limitation, to holders or beneficial owners) if it performs its
obligations under the deposit agreement and ADRs without gross negligence or willful misconduct;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of the depositary and its agents, be under no obligation to appear in, prosecute or defend any
action, suit or other proceeding in respect of any deposited securities the ADSs or the ADRs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in the case of us and our agents, be under no obligation to appear in, prosecute or defend any action, suit or
other proceeding in respect of any deposited securities the ADSs or the ADRs, which in our or our agents' opinion, as the case may be, may involve it in expense or liability, unless indemnity satisfactory to us or our agent, as the case may be
against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be requested;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not be liable (including, without limitation, to holders or beneficial owners) for any action or inaction by it
in reliance upon the advice of or information from any legal counsel, any accountant, any person presenting shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information
and/or, in the case of the depositary, us; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• may rely and shall be protected in acting upon any written notice, request, direction, instruction or document
believed by it to be genuine and to have been signed, presented or given by the proper party or parties.

Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws,

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rules, regulations, administrative or judicial process, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of . Notwithstanding anything to the contrary contained in the deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any registered ADR holder has incurred liability directly as a result of the custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary and the custodian(s) may use third party delivery services and providers of information regarding matters such as, but not limited to, pricing, proxy voting, corporate actions, class action litigation, and other services in connection with the ADRs and the deposit agreement, and use local agents to provide services such as, but not limited to, attendance at any meetings of security holders of issuers. Although the depositary and the custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale.

The depositary has no obligation to inform ADR holders or beneficial owners about the requirements of the laws, rules or regulations or any changes therein or thereto of the Cayman Islands, Hong Kong, the People's Republic of China, the United States or any other country or jurisdiction or of any governmental or regulatory authority or any securities exchange or market or automated quotation system.

Additionally, none of the depositary, the custodian or us, or any of their or our respective directors, officers, employees, agents or affiliates shall be liable for the failure by any registered holder of ADRs or beneficial owner therein to obtain the benefits of credits or refunds of non-U.S. tax paid against such ADR holder's or beneficial owner's income tax liability. The depositary is under no obligation to provide the ADR holders and beneficial owners, or any of them, with any information about our tax status. Neither the depositary or us, or any of the respective directors, officers, employees, agents and affiliates of the depositary or us, shall incur any liability for any tax or tax consequences that may be incurred by registered ADR holders or beneficial owners on account of their ownership or disposition of ADRs or ADSs.

Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any voting instructions are given or deemed to be given pursuant to the terms of the deposit agreement, including instructions to give a discretionary proxy to a person designated by us, for the manner in which any vote is cast, including, without limitation, any vote cast by a person to whom the depositary is instructed to grant a discretionary proxy (or deemed to have been instructed pursuant to the terms of the deposit agreement), or for the effect of any such vote. The depositary may rely upon instructions from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from us. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary. Neither the depositary or us, nor any of the respective agents of the depositary or us shall be liable to the other for any indirect, special, punitive or consequential damages (excluding reasonable legal fees and expenses) or lost profits, in each case of any form (collectively, "special damages") incurred by any of them, or

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liable to any other person or entity (including, without limitation ADR holders or beneficial owners of the ADSs), whether or not foreseeable and regardless of the type of action in which such a claim may be brought; provided, however, that (i) notwithstanding the foregoing and, for the avoidance of doubt, the depositary and its agents shall be entitled to reasonable legal fees and expenses incurred by the depositary or its agents in defending against any claim for special damages and (ii) to the extent special damages arise from or out of a claim brought by a third party (including, without limitation, ADR holders or beneficial owners of the ADSs) against the depositary or any of its agents, the depositary and its agents shall be entitled to full indemnification from us for all such special damages, and reasonable fees and expenses of counsel in connection therewith, unless such special damages are found to have been a direct result of the gross negligence or willful misconduct of the depositary.

In the deposit agreement each party thereto (including, for avoidance of doubt, each ADR holder and beneficial owner) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or any other theory). No provision of the deposit agreement or the ADRs is intended to constitute a waiver or limitation of any rights which an ADR holder or any beneficial owner may have under the Securities Act of 1933 or the Securities Exchange Act of 1934, to the extent applicable.

The depositary and its agents may own and deal in any class of securities of our company and our affiliates and in ADRs.

**Disclosure of Interest in ADSs** 

To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of, or interest in, deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you as ADR holders or beneficial owners agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof. We reserve the right to instruct you to deliver your ADSs for cancellation and withdrawal of the deposited securities so as to permit us to deal with you directly as a holder of shares and, by holding an ADS or an interest therein, you and beneficial owners will be agreeing to comply with such instructions.

**Books of Depositary** 

The depositary or its agent will maintain a register for the registration, registration of transfer, combination, and split-up of ADRs, which register shall include the depositary's direct registration system. Registered holders of ADRs may inspect such records at the depositary's office at all reasonable times, but solely for the purpose of communicating with other ADR holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register may be closed at any time or from time to time, when deemed expedient by the depositary.

The depositary will maintain facilities for the delivery and receipt of ADRs.

**Appointment** 

In the deposit agreement, each registered holder of ADRs and each beneficial owner, upon acceptance of any ADSs or ADRs (or any interest in any of them) issued in accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs,

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR or ADRs,
to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and
ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acknowledge and agree that (i) nothing in the deposit agreement or any ADR shall give rise to a partnership
or joint venture among the parties thereto, nor establish a fiduciary or similar relationship among such parties, (ii) the depositary, its divisions, branches and affiliates, and their respective agents, may from time to time be in the
possession of non-public information about us, ADR holders, beneficial owners and/or their respective affiliates, (iii) the depositary and its divisions, branches and affiliates may at any time have
multiple banking relationships with us, ADR holders, beneficial owners and/or the affiliates of any of them, (iv) the depositary and its divisions, branches and affiliates may, from time to time, be engaged in transactions in which parties
adverse to us, ADR holders, beneficial owners and/or their respective affiliates may have interests, (v) nothing contained in the deposit agreement or any ADR(s) shall (A) preclude the depositary or any of its divisions, branches or
affiliates from engaging in any such transactions or establishing or maintaining any such relationships, or (B) obligate the depositary or any of its divisions, branches or affiliates to disclose any such transactions or relationships or to
account for any profit made or payment received in any such transactions or relationships, (vi) the depositary shall not be deemed to have knowledge of any information held by any branch, division or affiliate of the depositary and
(vii) notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holder's ADRs. For all purposes under the
deposit agreement and the ADRs, the ADR holders thereof shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by such ADRs.

**Governing Law** 

The deposit agreement, the ADSs and the ADRs are governed by and construed in accordance with the laws of the State of New York. In the deposit agreement, we have submitted to the non-exclusive jurisdiction of the courts of the State of New York and appointed an agent for service of process on our behalf. Any action based on the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby may also be instituted by the depositary against us in any competent court in the Cayman Islands, Hong Kong, the People's Republic of China, the United States and/or any other court of competent jurisdiction.

**Jury Trial Waiver** 

In the deposit agreement, each party thereto (including, for the avoidance of doubt, each holder and beneficial owner of, and/or holder of interests in, ADSs or ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of, based on or relating in any way to the shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or any other theory), including, without limitation any suit, action, claim or proceeding under the U.S. federal securities laws.

If we or the depositary were to oppose a jury trial demand based on such waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. The waiver to right to a jury trial in the deposit agreement is not intended to be deemed a waiver by any holder or beneficial owner of ADSs of our or the depositary's compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

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**Jurisdiction** 

Under the deposit agreement, by holding or owning an ADR or ADS or an interest therein, ADR holders and beneficial owners each irrevocably agree that any legal suit, action or proceeding against or involving ADR holders or beneficial owners brought by us or the depositary, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby, may be instituted in a state or federal court in New York, New York, irrevocably waive any objection that it may have to the laying of venue of any such proceeding, and irrevocably submit to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The deposit agreement also provides that, by holding or owning an ADR or ADS or an interest therein, you irrevocably agree that any legal suit, action or proceeding against or involving the depositary and/or us arising out of or based upon the deposit agreement, the ADSs, the ADRs, or the transactions contemplated thereby, including, without limitation, claims under the Securities Act of 1933, may only be instituted in the United States District Court for the Southern District of New York (or in the state courts of New York County in New York if either (i) the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute or (ii) the designation of the United States District Court for the Southern District of New York as the exclusive forum for any particular dispute is, or becomes, invalid, illegal or unenforceable), and by holding or owning an ADR or ADS or an interest therein you irrevocably waive any objection that you may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submit to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding.

Notwithstanding the foregoing, (i) the depositary may, in its sole discretion, elect to institute any dispute, suit, action, controversy, claim or proceeding directly or indirectly based on, arising out of or relating to the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby, including without limitation any question regarding its or their existence, validity, interpretation, performance or termination, against any other party or parties to the deposit agreement (including, without limitation, against ADR holders and beneficial owners of interests in ADSs), by having the matter referred to and finally resolved by an arbitration conducted under the terms described below, and (ii) the depositary may in its sole discretion require, by written notice to the relevant party or parties, that any dispute, suit, action, controversy, claim or proceeding against the depositary by any party or parties to the deposit agreement (including, without limitation, by ADR holders and beneficial owners of interests in ADSs) be referred to and finally settled by an arbitration conducted under the terms described below. Any such arbitration shall be conducted in the English language either in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association or in Hong Kong following the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL).

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**SHARES ELIGIBLE FOR FUTURE SALES** 

Upon completion of this offering and the concurrent conversion of the IPO Conversion Amount of the Nestlé Convertible Note, we will have ADSs outstanding, representing approximately % of our outstanding ordinary shares, assuming the underwriters do not exercise their option to purchase additional ADSs. All of the ADSs sold in this offering will be freely transferable by persons other than by our "affiliates" without restriction or further registration under the Securities Act. Sales of substantial amounts of our ADSs in the public market could adversely affect prevailing market prices of our ADSs. Prior to this offering, there has been no public market for our ordinary shares or the ADSs. We intend to apply to list the ADSs on the Nasdaq Global Select Market, but we cannot assure you that a regular trading market will develop in the ADSs. We do not expect that a trading market will develop for our ordinary shares not represented by the ADSs.

**[Lock-up Agreements** 

We have agreed, for a period of [180] days after the date of this prospectus, not to offer, sell, contract to sell, pledge, grant any option to purchase, or otherwise dispose of, except in this offering, any of our ordinary shares or ADSs, including, but not limited to, any options or warrants to purchase our ordinary shares, ADSs or any securities that are convertible into or exchangeable for, or that represent the right to receive, our ordinary shares or ADSs (other than pursuant to employee stock option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date the underwriting agreement was executed), without the prior written consent of the representatives of the underwriters.

Furthermore, [each of our directors, executive officers, existing shareholders and the holder of the Nestlé Convertible Note] has also entered into a similar lock-up agreement for a period of [180] days after the date of this prospectus, subject to certain exceptions, with respect to our ordinary shares or ADSs. These parties collectively own [all of] our outstanding ordinary shares, without giving effect to this offering.

Other than this offering, we are not aware of any plans by any significant shareholders to dispose of significant numbers of our ADSs or ordinary shares. However, one or more existing shareholders or owners of securities convertible or exchangeable into or exercisable for our ADSs or ordinary shares may dispose of significant numbers of our ADSs or ordinary shares in the future. We cannot predict what effect, if any, future sales of our ADSs or ordinary shares, or the availability of ADSs or ordinary shares for future sale, will have on the trading price of our ADSs from time to time. Sales of substantial amounts of our ADSs or ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the trading price of our ADSs.]

**Rule 144** 

All of our ordinary shares that will be outstanding upon the completion of this offering, other than those ordinary shares underlying the ADSs sold in this offering, are "restricted securities" as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 and Rule 701 promulgated under the Securities Act. In general, beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated) who at the time of a sale is not, and has not been during the three months preceding the sale, an affiliate of ours and has beneficially owned our restricted securities for at least six months will be entitled to sell the restricted securities without registration under the Securities Act, subject only to the availability of current public information about us, and will be entitled to sell restricted securities beneficially owned for at least one year without restriction. Persons who are our affiliates and have beneficially owned our restricted securities for at least six months may sell a number of restricted securities within any three-month period that does not exceed the greater of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1% of the then outstanding ordinary shares of the same class, represented by ADSs or otherwise, which immediately
after this offering and the concurrent conversion of the IPO Conversion Amount of the

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Nestlé Convertible Note will equal ordinary shares, assuming the underwriters do not exercise their option to purchase additional ADSs; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the average weekly trading volume of our ordinary shares of the same class, represented by ADSs or otherwise,
during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

Sales by our affiliates under Rule 144 are also subject to certain requirements relating to manner of sale, notice and the availability of current public information about us.

**Rule 701** 

In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants or advisors who purchases our ordinary shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell those ordinary shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.

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**TAXATION** 

The following summary of the material 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 prospectus, 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, China and the United States.

**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 levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or 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 to or 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 ADSs, nor will gains derived from the disposal of our ordinary shares or ADS be subject to Cayman Islands income or corporation tax.

No stamp duty is payable in respect of the issue of the ordinary shares or ADS or on an instrument of transfer in respect of an ordinary share or ADS.

**PRC Taxation** 

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside China with a "de facto management body" within China considered a "resident enterprise." 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 April 2009, the State Administration of Taxation issued 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 China; (ii) decisions relating to the enterprise's financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise's primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.

New Ruipeng Pet Group Inc. 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 China. As such we do not believe that our company meets all of the conditions of a "de facto management body" above or is a PRC resident enterprise for PRC tax purposes. 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

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"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 New Ruipeng Pet Group Inc. is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders (including our ADS holders) that are non-resident enterprises. 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 China. 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 determined 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% unless a reduced rate is available under an applicable tax treaty. Any PRC tax liability may be reduced under applicable tax treaties, but, it is also unclear whether non-PRC shareholders of New Ruipeng Pet Group Inc. would be able to obtain the benefits of any tax treaties between their country of tax residence and China in the event that New Ruipeng Pet Group Inc. is treated as a PRC resident enterprise. See "Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders."

**U.S. Federal Income Tax Considerations** 

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our ADSs or ordinary shares by a U.S. Holder (as defined below) that acquires our ADSs in this offering and holds our ADSs 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, and there can be no assurance that the Internal Revenue Service (the "IRS") or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift or other non-income tax considerations, minimum tax, the Medicare tax on certain net investment income, or any state, local or non-U.S. tax considerations, relating to the ownership or disposition of our ADSs or 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• banks and other financial institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• insurance companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pension plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cooperatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulated investment companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• real estate investment trusts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• broker-dealers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• traders that elect to use a mark-to-market method of accounting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• certain former U.S. citizens or long-term residents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• tax-exempt entities (including private foundations);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• holders who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as
compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive
sale or other integrated transaction for U.S. federal income tax purposes;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• investors that have a functional currency other than the U.S. dollar;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• persons that actually or constructively own ADSs or ordinary shares representing 10% or more of our stock (by
vote or value); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding
ADSs or 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 our ADSs or ordinary shares.

***General***

For purposes of this discussion, a "U.S. Holder" is a beneficial owner of our ADSs or ordinary shares that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated 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, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (iv) 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 our ADSs or 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 our ADSs or ordinary shares and their partners are urged to consult their tax advisors regarding an investment in our ADSs or ordinary shares.

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 shares represented by the ADSs. The remainder of this discussion assumes that a U.S. Holder of our ADSs will be treated in this manner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to U.S. federal income tax.

***Dividends***

Subject to the discussion below entitled "Passive Foreign Investment Company Rules," any cash distributions (including the amount of any PRC tax withheld) paid on our ADSs or 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 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, the full amount of any distribution we pay will generally be treated as a "dividend" for U.S. federal income tax purposes. Dividends received on our ADSs or ordinary shares will not be eligible for the dividends received deduction generally allowed to corporations. Dividends received by individuals and certain other non-corporate U.S. Holders may be subject to tax at the lower capital gain tax rate applicable to "qualified dividend income" provided that certain conditions are satisfied, including that (1) our ADSs or ordinary shares on which the dividends are paid are readily tradeable 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 benefits of the United States-PRC income tax treaty (the "Treaty"), (2) we are neither a PFIC nor treated as such with respect to such a U.S. Holder for the taxable year in which the dividend was paid and the preceding taxable year and (3) certain holding period requirements are met. We expect our ADSs (but not our ordinary shares)

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which we intend to apply to list on the Nasdaq Global Select Market, will be considered readily tradeable on an established securities market in the United States, although there can be no assurance in this regard.

In the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see "—PRC Taxation"), we may be eligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our ordinary shares, regardless of whether such shares are represented by the ADSs, would be eligible for the reduced rates of taxation described in the preceding paragraph.

Dividends paid on our ADSs or ordinary shares, if any, will generally be treated as income from foreign sources and will generally constitute passive category income for U.S. foreign tax credit purposes. Depending on the U.S. Holder's individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any nonrefundable foreign withholding taxes imposed on dividends received on our ADSs or ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign taxes withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such otherwise creditable foreign withholding taxes, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder's individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

***Sale or Other Disposition***

Subject to the discussion below entitled "Passive Foreign Investment Company Rules," a U.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of our ADSs or 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 ordinary shares. Any capital gain or loss will be long-term if the ADSs or ordinary shares have been held for more than one year and will generally be U.S. source gain or loss for U.S. foreign tax credit purposes. Long-term capital gain of individuals and certain other non-corporate U.S. Holders will generally be eligible for a reduced rate of taxation. In the event that gain from the disposition of the ADSs or ordinary shares is subject to tax in the PRC, a U.S. Holder that is eligible for the benefits of the Treaty may treat such gain as PRC-source gain under the Treaty. Pursuant to recently issued United States Treasury Regulations, however, if a U.S. Holder is not eligible for the benefits of the Treaty or does not elect to apply the Treaty, then such holder may not be able to claim a foreign tax credit arising from any PRC tax imposed on the disposition of the ADSs or Class A ordinary shares. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the availability of the foreign tax credit or deductions under their particular circumstances, their eligibility for benefits under the Treaty and the potential impact of the recently issued United States Treasury Regulations.

***Passive Foreign Investment Company Rules***

A non-U.S. corporation, such as our company, will be 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 (the "income test") or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income (the "asset test"). For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the company's goodwill and other unbooked intangibles are generally taken into account when determining the value of its assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We 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.

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Based upon our current and projected income and assets, including the expected cash proceeds from this offering, and projections as to the value of our assets, taking into account the projected market value of our ADSs following this offering, we do not expect to be a PFIC for the current taxable year. However, no assurance can be given in this regard because the determination of whether we are or become a PFIC for any taxable year is a fact intensive determination made annually that depends, in part, upon the composition and classification of our income and assets. Fluctuations in the market price of our ADSs may cause us to be or become a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account the expected cash proceeds from, and our anticipated market capitalization following this offering. If our market capitalization is less than anticipated or subsequently declines, we may be or become classified as a PFIC for the current taxable year or future taxable years.

If we are PFIC for any taxable year during which a U.S. Holder holds our ADSs or 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 distributions paid during a taxable year to a U.S. Holder in excess of 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 ordinary shares), and (ii) any gain realized on the sale or other disposition of ADSs or ordinary shares. Under the PFIC rules:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the excess distribution or gain will be allocated ratably over the U.S. Holder's holding period for the ADSs
or ordinary shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the 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 become a PFIC (each, a "pre-PFIC year"), will be taxable as ordinary income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the 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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an additional tax equal to the 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 ordinary shares and any of our subsidiaries 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.

As an alternative to the foregoing rules, a U.S. Holder of "marketable stock" in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock is regularly traded on a qualified exchange or other market, as defined in applicable United States Treasury Regulations. For those purposes, we expect that our ADSs, but not our ordinary shares, will be treated as marketable stock upon their listing on the Nasdaq Global Select Market, which is a qualified exchange for these purposes. However, no assurance can be given that our ADSs will qualify as being regularly traded for any relevant period. If a U.S. Holder makes this election, 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 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 a year when we are a PFIC and we subsequently cease to be 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 a PFIC. If a U.S. Holder makes a mark-to-market

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election, any gain such U.S. Holder recognizes upon the sale or other disposition of our 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, and any excess loss will be capital loss.

Because a mark-to-market election technically cannot be made for any lower-tier PFICs that we may own, a U.S. Holder that makes the mark-to-market election 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 the general tax treatment for PFICs described above.

If a U.S. Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax advisors regarding the U.S. federal income tax consequences of owning and disposing of our ADSs or ordinary shares if we are or become a PFIC.

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**UNDERWRITING** 

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley Asia Limited, Credit Suisse Securities (USA) LLC, China International Capital Corporation Hong Kong Securities Limited and UBS Securities LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of ADSs indicated below:

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| | |
|:---|:---|
| **Underwriter** | **Number of ADSs** |
|  Morgan Stanley Asia Limited |  |
|  Credit Suisse Securities (USA) LLC |  |
|  China International Capital Corporation Hong Kong Securities Limited |  |
|  UBS Securities LLC |  |
|  **Total** |  |

---

The underwriters and the representatives are collectively referred to as the "underwriters" and the "representatives," respectively. The underwriters are offering the ADSs subject to their acceptance of the ADSs from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the ADSs offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the ADSs offered by this prospectus if any such ADSs are taken. However, the underwriters are not required to take or pay for the ADSs covered by the underwriters' over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

The underwriters initially propose to offer part of the ADSs directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of US$ per ADS under the initial public offering price. After the initial offering of the ADSs, the offering price and other selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase on a pro rata basis up to additional ADSs at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. [The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the ADSs offered by this prospectus.] To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional ADSs as the number listed next to the underwriter's name in the preceding table bears to the total number of ADSs listed next to the names of all underwriters in the preceding table.

The following table shows the per ADS and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase up to an additional ADSs.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Per ADS** | **Per ADS** | **Total** | **Total** |
|  | **Without<br>Option to<br>Purchase<br>Additional<br>ADSs** | **With Option<br>to Purchase<br>Additional<br>ADSs** | **Without<br>Option to<br>Purchase<br>Additional<br>ADSs** | **With Option<br>to Purchase<br>Additional<br>ADSs** |
|  Public offering price | US$ | US$ | US$ | US$ |
|  Underwriting discounts and commissions paid by us | US$ | US$ | US$ | US$ |
|  Proceeds to us, before expenses | US$ | US$ | US$ | US$ |

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The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately US$ .

Carmignac Gestion, an asset manager established in France and licensed as a UCITS management company and alternative investment fund manager (AIFM), has indicated, on behalf of certain mutual funds it manages, an interest in subscribing for an aggregate of up to US$30 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. In addition, Snow Lake Management LP, an affiliate of certain of our existing shareholders, has indicated, on behalf of Snow Lake China Master Fund, Ltd. and Snow Lake China Master Long Fund, Ltd., an interest in subscribing for an aggregate of up to US$20 million worth of ADSs being offered in this offering at the initial public offering price and on the same terms as the other ADSs being offered in this offering. Assuming an initial public offering price of US$ per ADS, the midpoint of the estimated initial public offering price range, the number of ADSs to be purchased by these investors would be up to ADSs, which represents approximately % of the ADSs being offered in this offering, assuming the underwriters do not exercise their over-allotment option. Because the indications of interest are not binding agreements or commitments to purchase, such investors may determine to purchase more, fewer or no ADSs in this offering, and we and the underwriters are under no obligation to sell ADSs to them. The underwriters will receive the same underwriting discounts and commissions on any ADSs purchased by such investors as they will on any other ADSs sold to the public in this offering.

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of ADSs offered by them.

Certain of the underwriters are expected to make offers and sales both inside and outside the United States through their respective selling agents. Morgan Stanley Asia Limited will offer ADSs in the United States through its SEC-registered broker-dealer affiliate in the United States, Morgan Stanley & Co. LLC. China International Capital Corporation Hong Kong Securities Limited is not a broker-dealer registered with the SEC, and, to the extent that its conduct may be deemed to involve participation in offers or sales of ordinary shares in the United States, those offers or sales will be made through one or more SEC-registered broker-dealers in compliance with applicable laws and regulations.

We intend to apply for the listing of our ADSs on the Nasdaq Global Select Market under the trading symbol "RPET." ****

We, [our directors, executive officers, all of our existing shareholders and the holder of the Nestlé Convertible Note] have agreed that, subject to certain exceptions, without the prior written consent of the representatives on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus (the "restricted period"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any ordinary shares, ADSs or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs, or
enter into a transaction that would have the same effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• file any registration statement with the Securities and Exchange Commission relating to the offering of any
ordinary shares, ADSs or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of ordinary shares or ADSs,

whether any such transaction described above is to be settled by delivery of ordinary shares, ADSs or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of the representatives on behalf of the underwriters, we or such other person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration of any ordinary shares, ADSs or any security convertible into or exercisable or exchangeable for ordinary shares or ADSs.

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The restrictions described in the immediately preceding paragraph do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• [the sale of ordinary shares or ADSs to the underwriters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transactions by any person other than us relating to ordinary shares, ADSs or other securities acquired in open
market transactions after the completion of the offering of the shares; provided that no filing under Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is required or voluntarily made in connection
with subsequent sales of the ordinary shares, ADSs or other securities acquired in such open market transactions; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• facilitating the establishment of a trading plan on behalf of a shareholder, officer or director of our company
pursuant to Rule 10b5-1 under the Exchange Act for the transfer of ordinary shares or ADSs, provided that (i) such plan does not provide for the transfer of ordinary shares or ADSs during the restricted
period and (ii) to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by our company regarding the establishment of such plan, such announcement or filing shall include a statement to
the effect that no transfer of ordinary shares or ADSs may be made under such plan during the restricted period.]

The representatives, in their sole discretion, may release the ordinary shares, ADSs and other securities subject to the lock-up agreements described above in whole or in part at any time.

In order to facilitate the offering of the ADSs, the underwriters may engage in stabilizing transactions, over- allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Specifically, the underwriters may sell more ADSs than they are obligated to purchase under the underwriting
agreement, creating a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of ADSs over-allotted by the underwriters is not greater than the number of
ADSs available for purchase by the underwriters under the over-allotment option. In a naked short position, the number of ADSs involved is greater than the number of ADSs in the over-allotment option. The underwriters can close out a covered short
position by exercising the over-allotment option and/or purchasing ADSs in the open market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Syndicate covering transactions involve purchases of the ADSs in the open market after the distribution has been
completed in order to cover syndicate short positions. In determining the source of ADSs to close out a covered short position, the underwriters will consider, among other things, the open market price of ADSs as compared to the price available
under the over-allotment option. The underwriters may also sell ADSs in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing ADSs in the open market. A naked
short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ADSs in the open market after pricing that could adversely affect investors who purchase in this offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• As an additional means of facilitating this offering, the underwriters may bid for, and purchase, ADSs in the
open market to stabilize the price of the ADSs. Finally, the underwriters may reclaim selling concessions allowed to an underwriter or a dealer for distributing the ADSs in this offering, if the syndicate repurchases previously distributed ADSs to
cover syndicate short positions or to stabilize the price of the ADSs.

These activities may raise or maintain the market price of the ADSs above independent market levels or prevent or retard a decline in the market price of the ADSs. The underwriters are not required to engage in these activities and may end any of these activities at any time.

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We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of ADSs to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters' websites and any information contained in any other website maintained by any of the underwriters is not part of this prospectus, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

**Pricing of the Offering** 

Prior to this offering, there has been no public market for our ordinary shares or ADSs. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in businesses similar to ours.

We cannot assure you that the initial public offering price will correspond to the price at which our ordinary shares or ADSs will trade in the public market subsequent to this offering or that an active trading market for our ordinary shares or ADSs will develop and continue after this offering.

**Selling Restrictions** 

No action may be taken in any jurisdiction other than the United States that would permit a public offering of the ADSs or the possession, circulation or distribution of this prospectus in any jurisdiction where action for that purpose is required. Accordingly, the ADSs may not be offered or sold, directly or indirectly, and neither the prospectus nor any other offering material or advertisements in connection with the ADSs may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable laws, rules and regulations of any such country or jurisdiction.

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***Australia***

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission or ASIC, in relation to the offering.

This document:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) does not constitute a prospectus, product disclosure statement or other disclosure document under the
Corporations Act 2001 (Cth) or Corporations Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) has not been, and will not be, lodged with the Australian Securities & Investments Commission, as a
disclosure document for the purposes of Corporations Act and does not purport to include the information required of a prospectus, product disclosure document or other disclosure document for the purposes of the Corporations Act; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) may only be provided in Australia to select investors, or the Exempt Investor, who are "sophisticated
investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section
708 of the Corporations Act so that it is lawful to offer the ADSs without disclosure to investors under Chapter 6D of the Corporations Act.

The ADSs may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the ADSs may be issued, and no draft or definitive offering memorandum, advertisement or other offering material relating to any ADSs may be distributed in Australia, except where disclosure to investors is not required under Chapter 6D of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the ADSs, you represent and warrant to us that you are an Exempt Investor.

As any offer of ADSs under this document will be made without disclosure in Australia under Chapter 6D.2 of the Corporations Act, the offer of those securities for resale in Australia within 12 months may, under section 707 of the Corporations Act, require disclosure to investors under Chapter 6D.2 if none of the exemptions in section 708 applies to that resale. By applying for the ADSs you undertake to us that you will not, for a period of 12 months from the date of issue of the ADSs, offer, transfer, assign or otherwise alienate those ADSs to investors in Australia except in circumstances where disclosure to investors is not required under Chapter 6D.2 of the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.

Any person acquiring securities must observe such Australian on-sale restrictions. This document contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this document is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

***Canada***

The ADSs may be sold in Canada only to purchasers in the provinces of Ontario, Quebec, Alberta and British Columbia purchasing, or deemed to be purchasing on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of these securities are made, as principal that are accredited investors, as defined in National Instrument 45-106 *Prospectus Exemptions* or subsection 73.3(1) of the *Securities Act* (Ontario), and are permitted clients, as defined in National Instrument 31-103 *Registration Requirements, Exemptions and Ongoing Registrant Obligations.* Any resale of the ADSs must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the ADSs.

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By purchasing the ADSs in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to the underwriters and the dealers from whom the purchase confirmation is received that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the purchaser is entitled under applicable provincial securities laws to purchase the ADSs without the benefit
of a prospectus qualified under those securities laws as it is an "accredited investor" as defined under National Instrument 45-106—Prospectus Exemptions,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the purchaser is a "permitted client" as defined in National Instrument 31-103—Registration Requirements, Exemptions and Ongoing Registrant Obligations,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) where required by law, the purchaser is purchasing as principal and not as agent, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the purchaser has reviewed the text above under Resale Restrictions.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 *Underwriting Conflicts* or NI 33-105, the Canadian purchasers are hereby notified that the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

***Cayman Islands***

This prospectus does not constitute an invitation or offer to the public in the Cayman Islands of the ADSs, whether by way of sale or subscription. The underwriters have not offered or sold, and will not offer or sell, directly or indirectly, any ADSs in the Cayman Islands.

***Dubai International Finance Center, or DIFC***

This document relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority. This document is intended for distribution only to Persons, as defined in the Markets Rules 2012 of the Dubai Financial Services Authority, of a type specified in those rules. It must not be delivered to, or relied on by, any other Person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set forth herein and has no responsibility for this document. The ADSs to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the ADSs offered should conduct their own due diligence on the ADSs. If you do not understand the contents of this document, you should consult an authorized financial adviser.

In relation to its use in the DIFC, this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the ADSs may not be offered or sold directly or indirectly to the public in the DIFC.

***European Economic Area***

In relation to each Member State of the European Economic Area, each a Member State, no ADSs have been offered or will be offered pursuant to the offering to the public in that Member State prior to the publication of a prospectus in relation to the ADSs which has been approved by the competent authority in that Member

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State or, where appropriate, approved in another Member State and notified to the competent authority in that Member State, all in accordance with the Prospectus Regulation, except that offers of ADSs may be made to the public in that Member State at any time under the following exemptions under the Prospectus Regulation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus
Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in any other circumstances falling within Article 1(4) of the Prospectus Regulation.

provided that no such offer of shares shall require us or any of our representatives to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation and each person who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the representatives and us that it is a "qualified investor" as defined in the Prospectus Regulation.

In the case of any shares being offered to a financial intermediary as that term is used in Article 5 of the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a nondiscretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

For the purposes of this provision, the expression an "offer to the public" in relation to any ADSs in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe for any ADSs, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129 (as amended).

***Hong Kong***

The ADSs have not been offered or sold and will not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32, Laws of Hong Kong). No advertisement, invitation or document relating to the ADSs has been or may be issued or has been or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder.

***Israel***

This document does not constitute a prospectus under the Israeli Securities Law, 5728-1968, and has not been filed with or approved by the Israel Securities Authority. In Israel, this prospectus may be distributed only to, and is directed only at, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds; provident funds; insurance companies; banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange Ltd., underwriters, each purchasing for

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their own account; venture capital funds; entities with equity in excess of NIS 50 million and "qualified individuals," each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors. Qualified investors shall be required to submit written confirmation that they fall within the scope of the Addendum.

***Japan***

No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended), or the FIEL, has been made or will be made with respect to the solicitation of the application for the acquisition of the ADSs.

Accordingly, the shares of the ADSs have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.

<u>For Qualified Institutional Investors, or QII</u> 

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the ADSs constitutes either a "QII only private placement" or a "QII only secondary distribution" (each as described in Paragraph 1, Article he23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the ADSs. The ADSs may only be transferred to QIIs.

<u>For Non-QII Investors</u> 

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the ADSs constitutes either a "small number private placement" or a "small number private secondary distribution" (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the ADSs. The ADSs may only be transferred en bloc without subdivision to a single investor.

***Kingdom of Saudi Arabia***

This document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the board of the Capital Market Authority, or CMA, pursuant to resolution number 2-11-2004 dated October 4, 2004 as amended by resolution number 1-28-2008, as amended or the CMA Regulations. The CMA does not make any representation as to the accuracy or completeness of this document and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this prospectus, you should consult an authorized financial adviser. By accepting this prospectus and other information relating to the offering of the securities in the Kingdom of Saudi Arabia, each recipient represents that he is a "sophisticated investor", as set out in the prospectus.

***Korea***

The ADSs may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for reoffering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable

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laws and regulations of Korea, including the Korea Securities and Exchange Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The ADSs have not been and will not be registered under the Financial Investment Services and Capital Markets Act of Korea and the decrees and regulations thereunder, and the ADSs have been and will be offered in Korea as a private placement under the FSCMA. Furthermore, the purchaser of the ADSs shall comply with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with the purchase of the ADSs. By the purchase of the ADSs, the relevant holder thereof will be deemed to represent and warrant that if it is in Korea or is a resident of Korea, it purchased the ADSs pursuant to the applicable laws and regulations of Korea.

***Kuwait***

Unless all necessary approvals from the Kuwait Ministry of Commerce and Industry required by Law No. 31/1990 "Regulating the Negotiation of Securities and Establishment of Investment Funds," its Executive Regulations and the various Ministerial Orders issued pursuant thereto or in connection therewith, have been given in relation to the marketing and sale of the ADSs, these may not be marketed, offered for sale, nor sold in the State of Kuwait. Neither this prospectus (including any related document), nor any of the information contained therein is intended to lead to the conclusion of any contract of whatsoever nature within Kuwait.

***Malaysia***

No prospectus or other offering material or document in connection with the offer and sale of the securities has been or will be registered with the Securities Commission of Malaysia, or Commission, for the Commission's approval pursuant to the Capital Markets and Services Act 2007. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities may not be circulated or distributed, nor may the ADSs be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Malaysia other than to persons falling within the categories specified under Schedule 6 or Section 229(l)(b), Schedule 7 or Section 230(l)(b) and Schedule 8 or Section 257(3) of the Capital Market and Services Act, 2007 of Malaysia: (i) a closed end fund approved by the Commission; (ii) a holder of a Capital Markets Services License; (iii) a person who acquires the ADSs as principal, if the offer is on terms that the ADSs may only be acquired at a consideration of not less than RM250,000 (or its equivalent in foreign currencies) for each transaction; (iv) an individual whose total net personal assets or total net joint assets with his or her spouse exceeds RM3 million (or its equivalent in foreign currencies), excluding the value of the primary residence of the individual; (v) an individual who has a gross annual income exceeding RM300,000 (or its equivalent in foreign currencies) per annum in the preceding twelve months; (vi) an individual who, jointly with his or her spouse, has a gross annual income of RM400,000 (or its equivalent in foreign currencies), per annum in the preceding twelve months; (vii) a corporation with total net assets exceeding RM10 million (or its equivalent in a foreign currencies) based on the last audited accounts; (viii) a partnership with total net assets exceeding RM10 million (or its equivalent in foreign currencies); (ix) a bank licensee or insurance licensee as defined in the Labuan Financial Services and Securities Act 2010; (x) an Islamic bank licensee or takaful licensee as defined in the Labuan Financial Services and Securities Act 2010; and (xi) any other person as may be specified by the Commission; provided that, in the each of the preceding categories (i) to (xi), the distribution of the ADSs is made by a holder of a Capital Markets Services License who carries on the business of dealing in securities. The distribution in Malaysia of this prospectus is subject to Malaysian laws. This prospectus does not constitute and may not be used for the purpose of public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the registration of a prospectus with the Commission under the Capital Markets and Services Act 2007. The Securities Commission of Malaysia shall not be liable for any non-disclosure on the part of our company and assumes no responsibility for the correctness of any statements made or opinions or reports expressed in this prospectus.

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***Mexico***

None of the ADSs or the ordinary shares have been or will be registered with the National Securities Registry (Registro Nacional de Valores) maintained by the Mexican National Banking and Securities Commission (Commission Nacional Bancaria y de Valores), or CNBV, of Mexico and, as a result, may not be offered or sold publicly in Mexico. The ADSs and the ordinary shares may only be sold to Mexican institutional and qualified investors, pursuant to the private placement exemption set forth in the Mexican Securities Market Law (Ley del Mercado de Valores).

***People's Republic of China***

This prospectus has not been and will not be circulated or distributed in the PRC, and the ADSs may not be offered or sold, and will not be offered or sold to any person for re-offering or resale, directly or indirectly, to any resident of the PRC or for the benefit of, legal or natural persons of the PRC except pursuant to any applicable laws and regulations of the PRC. Neither this prospectus nor any advertisement or other offering material may be distributed or published in the PRC, except under circumstances that will result in compliance with applicable laws and regulations. Further, no legal or natural persons of the PRC may directly or indirectly purchase any of the ADSs or any beneficial interest therein without obtaining all prior PRC's governmental approvals that are required, whether statutorily or otherwise. Persons who come into possession of this prospectus are required by the issuer and its representatives to observe these restrictions.

***Singapore***

This prospectus or any other offering material relating to our ADSs has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our ADSs may not be circulated or distributed, nor may our ADSs be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, as modified or amended from time to time including by any subsidiary legislation as may be applicable at the relevant time (together, the "SFA"), (ii) to a relevant person or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Where our ADSs are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals , each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor; securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the ADSs pursuant to an offer made under Section 275 of the SFA, except: (1) to an institutional investor (for corporations under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; (2) where no consideration is or will be given for the transfer; (3) where the transfer is by operation of law; or (4) as specified in Section 276(7) of the SFA.

Notification under Section 309B(1)(c) of the SFA: We have determined that the ADSs shall be (A) prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and (B) Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

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***State of Qatar***

The ADSs described in this prospectus have not been, and will not be, offered, sold or delivered, at any time, directly or indirectly in the State of Qatar in a manner that would constitute a public offering. This prospectus has not been, and will not be, registered with or approved by the Qatar Financial Markets Authority or Qatar Central Bank and may not be publicly distributed. This prospectus is intended for the original recipient only and must not be provided to any other person. It is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.

***Switzerland***

This document is not intended to constitute an offer or solicitation to purchase or invest in the ADSs described herein. The ADSs may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document, any other offering or marketing material relating to the securities does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, nor our company or the ADSs have been or will be filed with or approved by any Swiss regulatory authority or be publicly distributed or otherwise made publicly available in Switzerland. In particular, this prospectus will not be filed with, and the offer of the ADSs will not be supervised by, the Swiss Financial Market Supervisory Authority, and the offer of the ADSs has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or the CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the ADSs.

***Taiwan***

The ADSs have not been and will not be registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that requires a registration, filing or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the ADSs in Taiwan.

***United Arab Emirates***

The ADSs have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates other than in compliance with the laws of the United Arab Emirates governing the issue, offering and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority or the Dubai Financial Services Authority. Prospective investors in the Dubai International Financial Centre should have regard to the specific notice to prospective investors in the Dubai International Financial Centre set out above.

***United Kingdom***

An offer to the public of any ADSs may not be made in the United Kingdom, except that an offer to the public in the United Kingdom of any ADSs may be made at any time under the following exemptions under the UK Prospectus Regulation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to any legal entity which is a "qualified investor" as defined under the UK Prospectus Regulation;

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##### [**Table of Contents**](#toc)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to fewer than 150 natural or legal persons (other than "qualified investors" as defined under the UK
Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) in any other circumstances falling within section 86 of the Financial Services and Markets Act 2000 (as
amended, "FSMA"),

provided that no such offer of ADSs shall result in a requirement for our company or any underwriter to publish a prospectus pursuant to section 85 of the FSMA or a supplemental prospectus pursuant to Article 23 of the UK Prospectus Regulation and each person who initially acquires any ADSs or to whom any offer is made will be deemed to have represented, warranted and agreed to and with each of the underwriters and our company that it is a qualified investor within the meaning of Article 2 of the UK Prospectus Regulation.

In the case of any ADSs being offered to a financial intermediary as that term is used in Article 1(4) of the UK Prospectus Regulation, each financial intermediary will also be deemed to have represented, warranted and agreed that the ADSs acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any ADSs to the public, other than their offer or resale in the United Kingdom to qualified investors as so defined or in circumstances in which the prior consent of the underwriters has been obtained to each such proposed offer or resale.

For the purposes of this provision, the expression an "offer to the public" in relation to any ADSs in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe for any ADSs, and the expression "UK Prospectus Regulation" means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

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##### [**Table of Contents**](#toc)
**EXPENSES RELATED TO THIS OFFERING** 

Set forth below is an itemization of the total expenses, excluding underwriting discounts and commissions, that we expect to incur in connection with this offering. With the exception of the SEC registration fee, the Financial Industry Regulatory Authority, Inc. ("FINRA") filing fee, and the [stock exchange application and listing fee], all amounts are estimates.

---

| | |
|:---|:---|
|  SEC Registration Fee | US$ |
|  FINRA Fee |  |
|  [Stock exchange application and listing fee] |  |
|  Printing and Engraving Expenses |  |
|  Legal Fees and Expenses |  |
|  Accounting Fees and Expenses |  |
|  Miscellaneous |  |
|  **Total** | US$ |

---

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##### [**Table of Contents**](#toc)
**LEGAL MATTERS** 

We are being represented by Skadden, Arps, Slate, Meagher & Flom LLP with respect to certain legal matters as to United States federal securities and New York State law. The underwriters are being represented by Davis Polk & Wardwell LLP with respect to certain legal matters as to United States federal securities and New York State law. The validity of the ordinary shares represented by the ADSs to be sold in this offering will be passed upon for us by Maples and Calder (Hong Kong) LLP. Certain legal matters as to PRC law will be passed upon for us by Haiwen & Partners and for the underwriters by Commerce & Finance Law Offices. Skadden, Arps, Slate, Meagher & Flom LLP may rely upon Maples and Calder (Hong Kong) LLP with respect to matters governed by Cayman Islands law and Haiwen & Partners with respect to matters governed by PRC law. Davis Polk & Wardwell may rely upon Commerce & Finance Law Offices with respect to matters governed by PRC law.

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##### [**Table of Contents**](#toc)
**EXPERTS** 

The consolidated financial statements of New Ruipeng Pet Group Inc. at December 31, 2020 and 2021 and for the years then ended, appearing in this prospectus and registration statement have been audited by Ernst & Young Hua Ming LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The office of Ernst & Young Hua Ming LLP is located at 50/F, Shanghai World Financial Center, 100 Century Avenue, Pudong New Area, Shanghai, the People's Republic of China.

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##### [**Table of Contents**](#toc)
**WHERE YOU CAN FIND ADDITIONAL INFORMATION** 

We have filed a registration statement, including relevant exhibits, with the SEC on Form F-1 under the Securities Act with respect to the underlying ordinary shares represented by the ADSs to be sold in this offering. We have also filed a related registration statement on Form F-6 with the SEC to register the ADSs. This prospectus, which constitutes a part of the registration statement on Form F-1, does not contain all of the information contained in the registration statement. You should read our registration statements and their exhibits and schedules for further information with respect to us and our ADSs.

Immediately upon the effectiveness of the registration statement on Form F-1 of which this prospectus forms a part, we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We maintain our website at https://www.ruipengpet.com.

As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we intend to furnish the depositary 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, if we so 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.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**<u>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</u>**

---

| | |
|:---|:---|
| **Consolidated Financial Statements** | **PAGE** |
|  [Report of Independent Registered Public Accounting Firm (PCAOB ID: 1408)](#fin148072_1) | F-2 |
|  [Consolidated Balance Sheets as of December 31, 2020 and 2021](#fin148072_2) | F-3-F-4 |
|  [Consolidated Statements of Net Loss for the Years Ended December 31, 2020 and 2021](#fin148072_3) | F-5 |
|  [Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2020 and 2021](#fin148072_4) | F-6 |
|  [Consolidated Statements of Redeemable Ordinary Shares and Other Shareholders' Equity (Deficit) for the Years Ended December 31, 2020 and 2021](#fin148072_5) | F-7 |
|  [Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2021](#fin148072_6) | F-8-F-9 |
|  [Notes to the Consolidated Financial Statements](#fin148072_7) | F-10-F-51 |
|  [Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2022](#fin148072_100) | F-52-F-53 |
|  [Unaudited Interim Condensed Consolidated Statements of Net Loss for the nine months ended September 30, 2021 and 2022](#fin148072_101) | F-54 |
|  [Unaudited Interim Condensed Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2021 and 2022](#fin148072_102) | F-55 |
|  [Unaudited Interim Condensed Consolidated Statements of Redeemable Ordinary Shares and Other Shareholders' Equity (Deficit) for the nine months ended September 30, 2021 and 2022](#fin148072_103) | F-56 |
|  [Unaudited Interim Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2022](#fin148072_104) | F-57-F-58 |
|  [Notes to Unaudited Interim Condensed Consolidated Financial Statements](#fin148072_105) | F-59-F-90 |

---

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**Report of Independent Registered Public Accounting Firm** 

To the Shareholders and the Board of Directors of New Ruipeng Pet Group Inc.

**Opinion on the Financial Statements** 

We have audited the accompanying consolidated balance sheets of New Ruipeng Pet Group Inc. (the Company) as of December 31, 2020 and 2021, the related consolidated statements of net loss, comprehensive loss, redeemable ordinary shares and other shareholders' equity (deficit) and cash flows for the years then ended, and 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 at December 31, 2020 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

**Basis for Opinion** 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's 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 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young Hua Ming LLP

We have served as the Company's auditor since 2020.

Shanghai, the People's Republic of China

May 17, 2022

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**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED BALANCE SHEETS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  |<br>**Notes** | **2020** | **2021** | **2021** |
|  | | **RMB** | **RMB** | **US$** |
|  **ASSETS** |  |  |  |  |
|  **Current assets:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents |  | 4024308 | 772640 | 108616 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted cash |  |  | 914725 | 128590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term investments | 5 |  | 893598 | 125620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net |  | 92713 | 125872 | 17695 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories |  | 423646 | 729935 | 102612 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 6 | 416920 | 720752 | 101322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties | 18 | 8246 | 916 | 129 |
|  **Total current assets** |  | **4965833** | **4158438** | **584584** |
|  **Non-current assets:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net | 7 | 805176 | 999218 | 140468 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net | 8 | 113389 | 129307 | 18178 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term investments | 9 | 97002 | 107390 | 15097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 10 | 2604859 | 3898947 | 548105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets |  | 110611 | 201392 | 28311 |
|  **Total non-current assets** |  | **3731037** | **5336254** | **750159** |
|  **Total assets** |  | **8696870** | **9494692** | **1334743** |
|  **LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT** |  |  |  |  |
|  **Current liabilities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term bank borrowings | 11 | 350000 | 1392280 | 195724 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  | 180654 | 237759 | 33423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable |  | 12244 | 1920 | 270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 234778 | 355722 | 50007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 12 | 1151283 | 1535527 | 215861 |
|  **Total current liabilities** |  | **1928959** | **3523208** | **495285** |
|  **Commitments and contingencies** | 21 |  |  |  |

---

The accompanying notes are an integral part of these consolidated financial statements.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED BALANCE SHEETS (CONTINUED)** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  |<br>**Notes** | **2020** | **2021** | **2021** |
|  | | **RMB** | **RMB** | **US$** |
|  **LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT (CONTINUED)** |  |  |  |  |
|  **Non-current liabilities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities | 13 | 5220 | 9418 | 1324 |
|  **Total non-current liabilities** |  | **5220** | **9418** | **1324** |
|  **Total liabilities** |  | **1934179** | **3532626** | **496609** |
|  **Redeemable ordinary shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redeemable ordinary shares - par value of US$0.000001 per share; 8,017,621,030 and 8,044,516,894 shares issued and outstanding; liquidation preference of RMB9,474,839 and RMB9,345,241 (US$1,313,733) as of December 31, 2020 and 2021 | 16 | 8361156 | 8243339 | 1158830 |
|  **Other shareholders' deficit:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ordinary shares - par value of US$0.000001 per share; 50,000,000,000 and 50,000,000,000 shares authorized, 4,128,017,000 and 5,519,763,566 shares issued and 4,068,017,000 and 5,422,013,363 outstanding (excluding those reflected as redeemable ordinary shares) as of December 31, 2020 and 2021 | 15 | 28 | 37 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital |  | 555679 | 1076616 | 151348 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasury shares - 60,000,000 and 97,750,203 shares as of December 31, 2020 and 2021 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income |  | 260326 | 420200 | 59071 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit |  | (2534595) | (3831748) | (538658) |
|  **Total New Ruipeng Pet Group Inc. shareholders' deficit** |  | **(1718562)** | **(2334895)** | **(328234)** |
|  **Non-controlling interests** |  | 120097 | 53622 | 7538 |
|  **Total other shareholders' deficit** |  | **(1598465)** | **(2281273)** | **(320696)** |
|  **TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT** |  | **8696870** | **9494692** | **1334743** |

---

The accompanying notes are an integral part of these consolidated financial statements.

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**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED STATEMENTS OF NET LOSS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **For the Years ended December 31,** | **For the Years ended December 31,** | **For the Years ended December 31,** |
|  |<br>**Notes** | **2020** | **2021** | **2021** |
|  | | **RMB** | **RMB** | **US$** |
|  **Revenues** | 19 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services |  | 2053955 | 2973521 | 418011 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain |  | 591732 | 1280311 | 179983 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services |  | 362598 | 529839 | 74484 |
|  **Total revenues** |  | **3008285** | **4783671** | **672478** |
|  **Cost of revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services |  | (1969207) | (2872948) | (403872) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain |  | (508356) | (1133886) | (159399) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services |  | (388241) | (553676) | (77835) |
|  **Total cost of revenues** |  | **(2865804)** | **(4560510)** | **(641106)** |
|  **Gross profit** |  | **142481** | **223161** | **31372** |
|  **Operating expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and marketing |  | (174720) | (357173) | (50211) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative |  | (895681) | (1136143) | (159716) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development |  | (52332) | (82656) | (11620) |
|  **Total operating expenses** |  | **(1122733)** | **(1575972)** | **(221547)** |
|  **Loss from operations** |  | **(980252)** | **(1352811)** | **(190175)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 18593 | 34493 | 4848 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | (12993) | (32631) | (4587) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain (loss) |  | 1471 | (390) | (55) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  | (290) | (626) | (88) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions | 9 | 6609 | 54337 | 7639 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | 2 | (21277) | (2123) | (298) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries |  |  | 509 | 72 |
|  **Loss before income taxes** |  | (988139) | (1299242) | (182644) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 13 | (11645) | (12014) | (1689) |
|  **Net loss** |  | **(999784)** | **(1311256)** | **(184333)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to non-controlling interests |  | 26375 | 14103 | 1983 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss on foreign currency denominated redeemable ordinary shares |  | (186396) | (74390) | (10458) |
|  **Net loss attributable to New Ruipeng Pet Group Inc.** |  | **(1159805)** | **(1371543)** | **(192808)** |
|  **Net loss per share attributable to ordinary shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 22 | (0.10) | (0.11) | (0.01) |
|  **Weighted average shares used to compute net loss per share attributable to ordinary shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 22 | 5179509953 | 5008056549 | 5008056549 |

---

The accompanying notes are an integral part of these consolidated financial statements.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"))** 

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years ended December 31,** | **For the Years ended December 31,** | **For the Years ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  **Net loss** | **(999784)** | **(1311256)** | **(184333)** |
|  **Other comprehensive loss, net of tax of nil:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation adjustments | 266154 | 159874 | 22474 |
|  **Comprehensive loss** | (733630) | (1151382) | (161859) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive loss attributable to non-controlling interests | 26375 | 14103 | 1983 |
|  **Comprehensive loss attributable to New Ruipeng Pet Group Inc.** | (707255) | (1137279) | (159876) |

---

The accompanying notes are an integral part of these consolidated financial statements.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED STATEMENTS OF REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' EQUITY (DEFICIT)** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares)** 

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | | |
|  | | **Redeemable ordinary<br>shares** | **Redeemable ordinary<br>shares** | **Ordinary shares** | **Ordinary shares** | **Additional**<br>**paid-in**<br>**capital** | **Treasury shares** | **Treasury shares** | **Accumulated<br>other**<br>**comprehensive**<br>**(loss) income** | **Accumulated**<br>**deficit** | **Total New Ruipeng**<br>**Pet Group Inc.**<br>**shareholders'**<br>**equity (deficit)** |<br>**Non-**<br>**controlling**<br>**interests** |<br>**Total**<br>**shareholders'**<br>**equity<br>(deficit)** |
|  |<br>**Notes** | **Number of<br>Shares** | **Amount** | **Number of<br>Shares** | **Amount** | | **Number of**<br>**Shares** | **Amount** | | | | | |
|  | | | **RMB** | | **RMB** | **RMB** | | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
|  Balance as of January 1, 2020 |  | 5063984136 | 3334530 | 4582480000 | 32 | 789142 |  |  | (5828) | (424621) | 358725 | 229362 | 588087 |
|  Issuance of redeemable ordinary shares | 16 | 1718846894 | 3813219 |  |  |  |  |  |  |  |  |  |  |
|  Acquisition of non-controlling interests | 15 |  |  | 127790240 | 1 | 20775 |  |  |  |  | 20776 | (86905) | (66129) |
|  Release of shares related to prior year's acquisition of subsidiaries | 4 |  |  | 592536760 | 4 | (4) |  |  |  |  |  |  |  |
|  Conversion from permanent equity to mezzanine equity | 16 | 1234790000 | 1481338 | (1234790000) | (9) | (344764) |  |  |  | (1136565) | (1481338) |  | (1481338) |
|  Net loss |  |  |  |  |  |  |  |  |  | (973409) | (973409) | (26375) | (999784) |
|  Foreign currency translation adjustments |  |  | (454327) |  |  |  |  |  | 266154 |  | 266154 |  | 266154 |
|  Foreign exchange loss on foreign currency denominated redeemable ordinary shares |  |  | 186396 |  |  | (186396) |  |  |  |  | (186396) |  | (186396) |
|  Acquisition of subsidiaries | 4 |  |  |  |  | 270965 |  |  |  |  | 270965 | 4015 | 274980 |
|  Share-based compensation | 17 |  |  |  |  | 5961 |  |  |  |  | 5961 |  | 5961 |
|  Issuance of shares to share based payment vehicles | 17 |  |  | 60000000 |  |  | (60000000) |  |  |  |  |  |  |
|  Balance as of December 31, 2020 |  | 8017621030 | 8361156 | 4128017000 | 28 | 555679 | (60000000) |  | 260326 | (2534595) | (1718562) | 120097 | (1598465) |
|  Acquisition of non-controlling interests | 15 |  |  | 366602362 | 3 | (15955) |  |  |  |  | (15952) | (92233) | (108185) |
|  Release of shares related to prior year's acquisition of subsidiaries | 4 |  |  | 475725334 | 3 | (3) |  |  |  |  |  |  |  |
|  Settlement of contingent consideration related to prior years' acquisitions | 2 |  |  | 28257722 |  | 29925 |  |  |  |  | 29925 |  | 29925 |
|  Net loss |  |  |  |  |  |  |  |  |  | (1297153) | (1297153) | (14103) | (1311256) |
|  Foreign currency translation adjustments |  |  | (192207) |  |  |  |  |  | 159874 |  | 159874 |  | 159874 |
|  Foreign exchange loss on foreign currency denominated redeemable ordinary shares |  |  | 74390 |  |  | (74390) |  |  |  |  | (74390) |  | (74390) |
|  Acquisition of subsidiaries | 4 |  |  | 348121471 | 2 | 549196 | 89335455 | 1 |  |  | 549199 | 65097 | 614296 |
|  Disposal of subsidiaries |  |  |  |  |  |  |  |  |  |  |  | (25236) | (25236) |
|  Share-based compensation | 17 |  |  | 30954019 |  | 32164 | 15000000 |  |  |  | 32164 |  | 32164 |
|  Issuance of shares to share based payment vehicles | 17 |  |  | 30000000 |  |  | (30000000) |  |  |  |  |  |  |
|  Issuance of redeemable ordinary shares under warrants | 16 | 26895864 |  |  |  |  |  |  |  |  |  |  |  |
|  Issuance of shares to vehicles for future acquisition of subsidiaries | 15 |  |  | 112085658 | 1 |  | (112085658) | (1) |  |  |  |  |  |
|  Balance as of December 31, 2021 |  | 8044516894 | 8243339 | 5519763566 | 37 | 1076616 | (97750203) |  | 420200 | (3831748) | (2334895) | 53622 | (2281273) |
|  Balance as of December 31, 2021, in US$ |  |  | 1158830 |  | 5 | 151348 |  |  | 59071 | (538658) | (328234) | 7538 | (320696) |

---

The accompanying notes are an integral part of the consolidated financial statements.

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**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"))** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **For the Years ended December 31,** | **For the Years ended December 31,** | **For the Years ended December 31,** |
|  |<br>**Notes** | **2020** | **2021** | **2021** |
|  | | **RMB** | **RMB** | **US$** |
|  **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |  |  |
|  Net loss |  | (999784) | (1311256) | (184333) |
|  Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation | 7 | 294542 | 335565 | 47173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization | 8 | 19401 | 21425 | 3012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Allowance for accounts and other receivables |  |  | 9635 | 1354 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of property and equipment |  | 9651 | 12185 | 1713 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  | 290 | 626 | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions | 9 | (6609) | (54337) | (7639) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration | 2 | 21277 | 2123 | 298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries |  |  | (509) | (72) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 17 | 5961 | 42114 | 5920 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax benefit | 13 | (1305) | (1414) | (199) |
|  Changes in operating assets and liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net |  | (5533) | (19072) | (2681) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories |  | (79483) | (206718) | (29060) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets |  | (24456) | (172492) | (24248) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties | 18 | (281) | 7330 | 1030 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  | 29131 | 20176 | 2837 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable |  | 1775 | (10323) | (1451) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 107585 | 78073 | 10975 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities |  | 151731 | 80096 | 11261 |
|  **Net cash used in operating activities** |  | **(476107)** | **(1166773)** | **(164022)** |
|  **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |  |  |
|  Acquisition of subsidiaries, equity method investments and equity investments without readily determinable fair value, net of cash acquired | 49 | (130733) | (657052) | (92367) |
|  Settlement of amounts due to the former shareholders of acquired entities |  | (18847) | (96376) | (13548) |
|  Purchase of property and equipment |  | (181728) | (425143) | (59766) |
|  Acquisitions of intangible assets |  | (7658) | (9818) | (1380) |
|  Proceeds from maturity of short-term investments |  |  | 1486969 | 209035 |
|  Purchase of short-term investments |  |  | (2397875) | (337088) |
|  **Net cash used in investing activities** |  | **(338966)** | **(2099295)** | **(295114)** |

---

The accompanying notes are an integral part of the consolidated financial statements.

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**NEW RUIPENG PET GROUP INC.** 

**CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"))** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **For the Years ended December 31,** | **For the Years ended December 31,** | **For the Years ended December 31,** |
|  |<br>**Notes** | **2020** | **2021** | **2021** |
|  | | **RMB** | **RMB** | **US$**  |
|  **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |  |  |
|  Proceeds from short-term borrowings |  | 349596 | 1491781 | 209711 |
|  Repayments of short-term borrowings |  | (40156) | (458341) | (64433) |
|  Proceeds from issuance of redeemable ordinary shares |  | 3813219 | **—** |  |
|  Acquisition of non-controlling interests |  | (89256) | (46188) | (6493) |
|  Payments of deferred initial public offering ("IPO") costs |  |  | (15403) | (2165) |
|  **Net cash provided by financing activities** |  | **4033403** | **971849** | **136620** |
|  Effect of exchange rate changes on cash, cash equivalents and restricted cash |  | (167373) | (42724) | (6006) |
|  Net increase in cash, cash equivalents and restricted cash |  | 3050957 | (2336943) | (328522) |
|  Cash, cash equivalents and restricted cash at the beginning of the year |  | 973351 | 4024308 | 565728 |
|  **Cash, cash equivalents and restricted cash at the end of the year** |  | **4024308** | **1687365** | **237206** |
|  **Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:** |  |  |  |  |
|  Cash and cash equivalents |  | 4024308 | 772640 | 108616 |
|  Restricted cash |  |  | 914725 | 128590 |
|  **Total cash, cash equivalents and restricted cash** |  | **4024308** | **1687365** | **237206** |
|  **Supplemental disclosures of cash flow information:** |  |  |  |  |
|  Interest paid |  | 12993 | 32631 | 4587 |
|  Income tax paid |  | 11175 | 23751 | 3339 |
|  **Supplemental disclosures of non-cash investing and financing activities:** |  |  |  |  |
|  Acquisition of property and equipment included in accrued expenses and other liabilities | 12 | 48446 | 33617 | 4726 |
|  Share consideration for acquisition of subsidiaries | 4 | 299691 | 549840 | 77295 |
|  Unpaid cash consideration to the former shareholders related to acquisition of subsidiaries | 12 | 77139 | 230120 | 32350 |
|  Unpaid cash consideration of acquisition of non-controlling interests | 12 | 18833 | 81559 | 11465 |
|  Amounts due to the former shareholders of acquired entities | 12 | 169355 | 28620 | 4023 |
|  Share consideration for acquisition of non-controlling interests | 15 | 35716 | 381983 | 53698 |

---

The accompanying notes are an integral part of the consolidated financial statements.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**1.** **ORGANIZATION** 

New Ruipeng Pet Group Inc. (the "Company", previously named "Ruipeng Pet Group Inc.") was incorporated in the Cayman Islands on June 14, 2019. The Company, through its subsidiaries (collectively referred to as the "Group"), is principally engaged in pet care service and sales of pet products in the People's Republic of China (the "PRC" or "China").

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

***Basis of presentation***

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") as determined by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). The consolidated financial statements and accompanying notes include all adjustments necessary for the fair presentation of the Company's consolidated financial position, results of operations and cash flows for the periods presented.

***Principles of consolidation***

The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. 

***Use of Estimates***

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant estimates reflected in the Company's consolidated financial statements include, but are not limited to, the useful lives of long-lived assets, the valuation of goodwill and long-lived assets, the valuation of contingent consideration, remeasurement gain on step acquisition, fair value of share based compensation, and assets and liabilities in connection with acquisitions. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.

***Foreign currency***

The functional currency of the Company and its overseas subsidiaries is the United States dollar ("US$"), whereas the functional currency of the Company's PRC subsidiaries is the Renminbi ("RMB"). The Company uses the RMB as its reporting currency.

Transactions denominated in foreign currencies are measured at the exchange rates prevailing on the transaction dates. Monetary assets, liabilities and redeemable ordinary shares denominated in foreign currencies are remeasured at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are remeasured using the exchange rates at the dates of the initial

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Foreign currency (continued)***

transactions. Exchange gains and losses are included in the consolidated statements of net loss except gains and losses on foreign denominated redeemable ordinary shares which are reflected in equity. The increase or decrease in the carrying amount of the redeemable ordinary shares reduces or increases net loss attributable to ordinary shareholders.

The Company uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive loss, a component of other shareholders' equity (deficit).

***Convenience translation***

Amounts in U.S. dollars are presented for the convenience of the reader and are translated at the noon buying rate of RMB7.1135 per US$1.00 on September 30, 2022 as published on the website of the Board of Governors of the Federal Reserve System. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

***Cash and cash equivalents***

Cash and cash equivalents consist of cash on hand and highly liquid investments placed with banks or other financial institutions which are unrestricted as to withdrawal or use, and have original maturities of three months or less when purchased.

***Restricted cash***

Restricted cash primarily consists of cash reserved in several bank accounts used as collateral for short-term bank borrowings. Restricted cash is expected to be released to cash within the next 12 months and therefore, classified as a current asset.

***Short-term investments***

Short-term investments consist of bank structured deposits with variable interest rates that are purchased from reputable financial institutions in the PRC, and time deposits with contractual maturities within twelve months. The fair value of the derivative assets bifurcated from the host contracts of bank structured deposits were insignificant during the year ended December 31, 2021.

***Accounts receivable, net***

Accounts receivable are stated at the invoiced amount, net of allowance for doubtful accounts. The Company estimates an allowance for doubtful accounts based upon the collectability of the receivables in light of historical trends, reasonable and supportable information of the customers' economic conditions that may affect the customers' ability to pay and prevailing economic conditions. This evaluation is done in order to identify issues that may impact the collectability of receivables and related estimated required allowance. Revisions to the allowance are recorded as an adjustment to bad debt expense. After appropriate collection efforts are exhausted, specific accounts receivable deemed to be uncollectible are charged against the allowance in the period they are

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Accounts receivable, net (continued)***

deemed uncollectible. Recoveries of accounts receivable previously written-off are recorded as credits to bad debt expense. Allowance for doubtful accounts of RMB3,079 and RMB4,154 (US$584) was provided as of December 31, 2020 and 2021.

***Inventories***

Inventories are comprised of merchandises and consumables. Merchandises consist of (i) essential pet supplies, such as food, treats, dietary supplements, apparel and accessories, cleaning and grooming products, carrier and traveling products, toys, smart litter box and its raw materials, and miscellaneous supplies to be sold in the Company's veterinary clinics, retail stores and online platforms, (ii) pet medicine, including prescriptions, over-the-counter drugs, vaccine, and parasite control products to be used during medical treatment or sold for home use; (iii) diagnostic equipment. Consumables consist of (i) medical consumables to be used during pet surgeries and operations and (ii) low value consumables for the Company's supply chain management services, clinic disinfection and daily operations. Inventories are stated at the lower of cost (computed using the weighted average method) and net realizable value. Provisions are made for excessive, slow moving, expired and obsolete inventories as well as for inventories with carrying values in excess of market.

***Property and equipment, net***

Property and equipment are stated at cost less accumulated depreciation and any recorded impairment. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life** | **Useful Life** |
| Diagnostic equipment |  | 3 - 5 years |
| Computer and electronic equipment |  | 3 - 5 years |
| Office equipment |  | 3 - 5 years |
| Motor vehicles |  | 3 - 5 years |
| Leasehold improvements |  | Over the shorter of the expected life of<br>leasehold improvements or the lease term |

---

Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the consolidated statements of net loss.

All direct and indirect costs that are related to the construction of property and equipment and incurred before assets are ready for their intended use are capitalized as construction in progress. Construction in progress is transferred to specific assets items and depreciation of these assets commences when they are ready for their intended use.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Intangible assets***

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value at the date of acquisition. Intangible assets are amortized using the straight-line method over the estimated useful lives of the assets.

The estimated useful lives of intangible assets are as follows:

---

| | | |
|:---|:---|:---|
|  | Estimated useful life | Estimated useful life |
|  Brands |  | 10 years |
|  Acquired technology |  | 10 years |
|  Customer relationships |  | 10 years |
|  Purchased software |  | 5 years |

---

***Operating leases***

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rental costs applicable to such operating leases are recognized on a straight-line basis over the lease term. Certain of the operating lease agreements contain rent holidays. Rent holidays are considered in determining the straight-line rent expense to be recorded over the lease term.

***Long-term investments***

Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting. Significant influence is generally considered to exist when the Company has an ownership interest in the voting stock of the investee between 20% and 50%. Other factors, such as representation on the investee's board of directors and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate.

Under the equity method, the Company initially records its investment at cost and the difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill included in equity method investments. The Company subsequently adjusts the carrying amount of its investment to recognize the Company's proportionate share of undistributed earnings or losses of these entities and subsequent investments. An impairment charge, being the difference between the carrying amount and the fair value of the equity investee, is recognized in the consolidated statements of net loss when the decline in value is considered other than temporary. The Company will discontinue applying the equity method if an investment (plus additional financial support provided to the investee, if any) has been reduced to zero.

For other equity investments without readily determinable fair values, the Company elects to use the measurement alternative to measure such investments at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer as of the date that the observable transaction occurred. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of net loss equal to the amount by which the carrying value exceeds the fair value of the investment.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Business combinations***

The Company accounts for its business combinations using the purchase method of accounting which requires that the consideration transferred to be allocated to the identifiable assets acquired and liabilities assumed by the Company, based on their fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost 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 earnings.

In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in earnings.

The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions used in valuation methodologies, i.e. income and market approaches, along with certain judgment from management.

The significant assumptions used in the income approach are revenue growth rates, discount rates, terminal growth rates and economic useful life of acquired intangible assets. To determine discount rates used in the valuation of the equity value of the acquiree in a business combination achieved in stages, the Company uses the weighted average cost of capital (WACC) by considering certain inputs from an industry perspective. To determine discount rates for acquired intangible assets, the Company considered a certain risk premium over WACC for the higher risk profile of the intangible assets. Moreover, a weighted average rate of return test was performed to cross check the overall reasonableness of discount rates used in the intangible assets valuations.

The significant assumptions used in the market approach include selections of comparable companies and revenue multiples and discount for lack of marketability.

***Goodwill***

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events that are considered to be indicators of impairment.

The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the quantitative impairment test. In the qualitative assessment, the Company primarily considers factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is required. Otherwise, no further testing is required. Therefore, when the Company performs the

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Goodwill (continued)***

quantitative impairment test it compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess.

The Company elected to bypass the qualitative assessment and proceeded directly to perform the quantitative test for the reporting units for the years ended December 31, 2020 and 2021, with the assistance of a third-party appraiser. The judgment in estimating the fair value of the reporting units includes forecasts of the amount and timing of expected future cash flows, which are based on management's best estimates of forecasted revenue, gross profit, operating expenses, future capital expenditures, working capital levels and discount rate.

***Impairment of long-lived assets other than goodwill***

The Company evaluates long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset or a group of long-lived assets may not be recoverable. When these events occur, the Company evaluates for impairment by comparing the carrying amount of the asset or asset group to future undiscounted net cash flows expected to result from the use of the asset or asset group and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the asset or asset group, the Company would recognize an impairment loss based on the excess of the carrying amount of the asset or asset group over its fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the asset or asset group, when market prices are not readily available for the long-lived assets.

***Fair value measurements of financial instruments***

U.S. GAAP established a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company's own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the assets or liability and are developed based on the best information available in the circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The Company uses a three-tiered fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Fair value measurements of financial instruments (continued)***

U.S. GAAP describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Cash and cash equivalents, restricted cash, short term investments and time deposits are classified within Level 1 because they are valued by using quoted market prices.

Contingent consideration for the acquisitions of certain subsidiaries in 2020 is classified within Level 3 as the fair value is measured based on inputs linked to the achievement of certain performance targets that are unobservable in the market. The valuation technique is based on market approaches and the significant unobservable inputs include performance targets. The following table presents a reconciliation of the contingent consideration measured at fair value on a recurring basis using Level 3 unobservable inputs for the years ended December 31, 2020 and 2021:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Years ended<br>December 31,** | **For the Years ended<br>December 31,** | **For the Years ended<br>December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  **Beginning balance** | **7433** | **54660** | **7685** |
|  Additions related to acquisitions | 25950 | **—** |  |
|  Fair value loss on contingent consideration | 21277 | 2123 | 298 |
|  Settlement of contingent consideration |  | (29925) | (4207) |
|  **Ending balance** | **54660** | **26858** | **3776** |

---

The Company's other financial instruments include accounts receivable and payable, short-term bank borrowings and certain amount of accrued expenses and other liabilities, as well as prepaid expenses and other current assets. The carrying values of these financial instruments approximate their fair values due to their short-term maturities and are classified within Level 3.

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.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Share-based compensation***

The Company determines whether a share based award should be accounted for as a liability award or equity award. All of the Company's share-based awards to employees were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values. For awards only with service conditions, the Company has elected to recognize compensation expense using the straight-line method for awards granted with graded vesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant date value of the shares that are vested at that date. For awards with performance and service conditions, the Company uses the accelerated method for awards granted with graded vesting. The Company accounts for forfeitures as they occur.

A change in the terms or conditions of the awards is accounted for as a modification of the award. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, the Company recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Company recognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Company recognizes is the cost of the original award.

***Revenue recognition***

Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services, net of value-added tax ("VAT"). The Company follows a five steps approach for revenue recognition: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as or when the Company satisfies a performance obligation.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. The Company has determined that its contracts do not include a significant financing component because the Company expects the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

For all contracts with customers, the Company evaluates whether it is the principal (i.e. to report revenue on a gross basis) or agent (i.e. to report revenue on a net basis). Generally, the Company is the principal in its contracts with customers as it controls the related goods or services before they are transferred to the customer.

Timing of revenue recognition may differ from the timing of invoicing to customers. For certain services customers are required to pay before the services are delivered to the customer. When either party to a revenue contract has performed, the Company recognizes a contract asset or a contract liability in the consolidated balance sheet, depending on the relationship between the Company's performance and the customer's payment. The Company's contract liabilities primarily relate to services not yet completed and products not yet delivered.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Revenue recognition (continued)***

The Company classifies contract liabilities as current based on the timing of when the Company expects to recognize revenue, which typically occurs within one year.

This revenue recognized was driven primarily by performance obligations of medical cards, membership prepayments, and grooming services being satisfied. The Company did not have any material contract assets as of December 31, 2020 or 2021.

For the year ended December 31, 2020, the increase in the contract liabilities balance was primarily driven by the sales of medical cards and membership prepayments and contract liabilities of RMB10,735 assumed from business combinations, partially offset by revenue of RMB96,656 recognized that was included in the contract liabilities balance as of January 1, 2020.

For the year ended December 31, 2021, the increase in the contract liabilities balance was primarily driven by the sales of medical cards and membership prepayments and contract liabilities of RMB42,871 (US$6,027) assumed from business combinations, partially offset by revenue of RMB214,918 (US$30,213) recognized that was included in the contract liabilities balance as of January 1, 2021.

<u>Pet care services</u> 

Pet care services is primarily comprised of pet medical and grooming services. Pet medical services mainly include routine services such as deworming, vaccination, physical examination and sterilization, and specialized care for pets; grooming services mainly include pet bathing and salon services. The duration of this type of outpatient pet medical and grooming services is short, and most of the services are completed within one day. Revenues are recognized when the Company's obligation to provide pet care services is satisfied. Revenue for grooming services and outpatient services are recognized at a point in time because the performance obligations are generally satisfied over a period of less than one day. For inpatient services, the performance obligation is satisfied over time as the patient simultaneously receives and consumes the benefits of the inpatient services provided. The Company has a right to consideration from its patients in an amount that corresponds directly with the value to the patient of the Company's performance completed to date (calculated based on fixed pre-determined treatment plan). Therefore, revenues for inpatient services are recognized in the amount to which the Company has a right to invoice. The Company typically requests payment before providing the services but payment may also be due upon completion of the services.

The Company sells different pet medical cards in fixed amounts that include a package of pet services including physical exam, vaccines, deworming and also provide discounts for future medical and grooming services. For service arrangements that include multiple performance obligations, the Company evaluates all the performance obligations in the pet medical cards to determine whether each performance obligation is distinct. Consideration is allocated to each performance obligation based on its standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers on a standalone basis. The Company recognizes revenue from pet medical cards when the underlying promised goods or services are redeemed by the medical card holders. The medical card holders are also allowed discounts on future medical and grooming services during the card validity period of one year which is accounted for as a material right. The relative standalone selling price of future services is deferred and included as part of contract liabilities in the consolidated balance sheets based on the amount of services that are expected to be provided.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Revenue recognition (continued)***

The Company provides animal diagnostic testing services such as pathology, molecular diagnosis and allergenic testing to customers. The Company's contracts have a single performance obligation which is satisfied upon the rendering of the diagnostic tests and delivery of the test results to the customer at a point in time. The Company's payment terms are typically 30 to 60 days upon acceptance of the test results from customers.

The Company also provides advertising services for customers to enhance the customer's brand and image, by tailoring and displaying the customers' advertisements on the Company's various online platforms and arranging signage at physical events e.g. awards ceremony (collectively "marketing activities"). As the Company uses the marketing activities to deliver an integrated advertising campaign for the customers, the individual marketing activities are not distinct and the combined marketing activities are considered to be one performance obligation to enhance the customer's brand and image. The length of the advertising campaigns are generally within 3 months or less and revenues from such arrangements are recognized ratably over the service period, as the customer simultaneously consumes the benefits when the Company provides the services.

<u>Supply chain</u> 

The Company sells pet food, medicine and supplies to corporate customers.

Revenue from supply chain is recognized when control passes, which generally occurs at a point in time when customers accept the products upon delivery. The Company's payment terms are typically 30 to 45 days upon acceptance from customers.

The Company offers discounts, and a right of return for a short period upon the customer's receipt of the products. Returns are estimated using the expected value method based on historical return patterns. The Company recognizes revenues net of discounts and estimated returns, and records a refund liability included in "Accrued expenses and other liabilities" in the consolidated balance sheets. As of December 31, 2020 and 2021, estimated returns were not significant.

<u>Local services</u> 

Local services are primarily comprised of product sales through online platforms and offline channels. Revenue from local services is recognized when control passes, which generally occurs at a point in time when customers accept the products in the hospital or upon delivery. The Company offers discounts, and a right of return for a short period upon the customer's receipt of the products. Returns are estimated using the expected value method based on historical return patterns. Subsequent sales return is not allowed for product sales from hospitals. The Company recognizes revenues net of discounts and estimated returns, and records a refund liability included in "Accrued expenses and other liabilities" in the consolidated balance sheets. As of December 31, 2020 and 2021, estimated returns were not significant. The Company also provides online coupons to its customers that can only be used with concurrent purchases, and recognizes them as a reduction of revenues when they are utilized by customers in a sales transaction.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Cost of Revenues***

Cost of revenues consist primarily of salaries and benefits, product costs, shipping related costs, rental costs, depreciation, utilities, urban maintenance and construction tax, education surcharges and other miscellaneous costs directly attributable to the Company's revenues.

***Research and development expenses***

Research and development expenses consist primarily of payroll and related personnel costs for the development and related enhancements of the Company's internal use software for its operation management. The Company expenses these costs as incurred, unless such costs qualify for capitalization as software development costs, including (i) preliminary project is completed, (ii) management has committed to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended, and (iii) they result in significant additional functionality in the Company's products. No costs were capitalized during any years presented as the Company has not met all of the necessary capitalization requirements.

***Advertising expenses***

Advertising expenses represents expenses relating to the marketing of the Company's online or offline sales channels. Advertising expenses are charged to sales and marketing expense as incurred which amounted to RMB101,945 and RMB165,189 (US$23,222) for the years ended December 31, 2020 and 2021, respectively.

***Deferred initial public offering ("IPO") costs***

Direct costs incurred by the Company attributable to its proposed IPO of ordinary shares in the United States have been deferred and recorded as deferred IPO costs in "Other non current assets" in the consolidated balance sheets and will be charged against the gross proceeds received from such offering.

***Income taxes***

The Company recognizes income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.

The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. The Company recognizes in the consolidated financial statements the benefit of a tax position which is "more-likely-than-not" to be sustained under examination based solely on the technical merits of the position assuming a review by tax authorities having all relevant information. Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. Interest and penalties arising from underpayment of income taxes shall be computed in accordance with the related tax law and are classified in the consolidated statements of net loss as income tax expense.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Comprehensive loss***

Comprehensive loss is defined as the decrease in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners.

***Segment Reporting***

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker ("CODM"), or decision making group, in deciding how to allocate resources and in assessing performance. The Company's CODM is the Chief Executive Officer and each of its business lines is a discrete operating and reportable segment.

***Employee benefits***

All eligible employees of the Company are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Company is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees' salaries. The Company recorded employee benefit expenses of RMB270,039 and RMB466,930 (US$65,640) for the years ended December 31, 2020 and 2021, respectively.

***Emerging Growth Company Status***

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

***Recent accounting pronouncements***

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 modifies existing guidance for off-balance sheet treatment of a lessees' operating leases by requiring lessees to recognize lease assets and lease liabilities. The Company is required to adopt ASU 2016-02 and the respective updates for annual reporting periods beginning after December 15, 2021. The Company will adopt this new standard from January 1, 2022 using a modified retrospective transition method and selects the transition option to continue to apply the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative periods presented and will apply the transition provisions at the beginning of the period of adoption by recording a cumulative adjustment to the opening balance of retained earnings in the year of adopting the new standard. The Company will also elect the package of practical expedients permitted under the transition guidance, which allows the

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Recent accounting pronouncements (continued)***

Company to carryforward historical lease classification, assessment on whether a contract is or contains a lease, and initial direct costs for any leases that exist prior to adoption of the new standard. The Company will also elect the short-term lease exemption for certain classes of underlying assets with a lease term of 12 months or less. The Company currently believes the most significant change will relate to the recognition of right-of-use assets and lease liabilities for the Company's pet hospitals, offices and warehouses on the Company's consolidated balance sheet. The Company does not expect any material impact on net assets and the consolidated statement of net loss as a result of adopting the new standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. The standard will replace "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. The standard is effective for the Company for fiscal years and interim periods within those years beginning after December 15, 2022, with early adoption permitted. The Company does not plan to early adopt the standard and it is in the process of evaluating the impact adopting this new standard will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies the accounting for income taxes as part of the FASB's overall initiative to reduce complexity in accounting standards. The amendments include removal of certain exceptions to the general principles of ASC 740, Income taxes, and simplification in several other areas such as accounting for a franchise

tax (or similar tax) that is partially based on income. The update will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. Certain amendments in this update should be applied retrospectively or modified retrospectively, while all other amendments should be applied prospectively. The Company does not expect the impact of this guidance to have a material impact on the Company's consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), The amendments require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments apply to all entities that enter into a business combination within the scope of ASC 805-10, Business Combinations—Overall. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and it should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company is in the process of evaluating the impact adopting this new standard will have on its consolidated financial statements.

**3.** **CONCENTRATION OF RISKS** 

***Liquidity risk and Capital Resources***

The Company has incurred net operating losses each period since inception. During the year ended December 31, 2021, the Company incurred a net loss of RMB1,311,256 (US$184,333). During the year ended December 31, 2021, the Company used RMB1,166,773 (US$164,022) of cash in operations. As of December 31, 2021, the Company had an accumulated deficit of approximately RMB3,831,748 (US$538,658). The Company expects to gradually mitigate operating losses in the foreseeable future by achieving economies of scale in its pet care hospitals, supply chain and local services businesses. To date, the Company has been able to fund its operations

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**3.** **CONCENTRATION OF RISKS (CONTINUED)** 

***Liquidity risk and Capital Resources (continued)***

through bank borrowings and private placements of redeemable ordinary shares. As of December 31, 2021, the Company had cash and cash equivalents of RMB772,640 (US$108,616), restricted cash of RMB914,725 (US$128,590) and short-term investments of RMB893,598 (US$125,620).

Management believes that the existing cash and cash equivalents and short-term investments, together with unused bank credit facilities, are sufficient for the Company to continue operating activities for at least the next 12 months from the date of issuance of its annual financial statements.

The Company plans to continuously fund its operations through public and private equity financings and bank borrowings. The Company's ultimate success depends on achieving economies of scale in its pet care hospitals, supply chain and local services businesses. Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending and investments could have a material adverse effect on the Company's ability to achieve its intended business objectives. These factors would have a material adverse effect on the Company's future financial results, financial position and cash flows.

***Concentration of credit risk***

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short term investments and accounts receivable. As of December 31, 2020, and 2021, RMB309,767 and RMB2,119,911 (US$298,012), respectively, of the Group's cash and cash equivalents, restricted cash and short term investments were primarily deposited in financial institutions located in the PRC, which management believes are of high credit quality.

Accounts receivable are typically unsecured and derived from revenue earned from customers in China, which are exposed to credit risk. The risk is mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring process of outstanding balances. The Company maintains reserves for estimated credit losses and these losses have generally been within its expectations. No customers had a receivable balance exceeding 10% of the total accounts receivable balance as of December 31, 2020 and 2021.

No customers generated greater than 10% of total revenues for the years ended December 31, 2020 and 2021.

Amounts due from related parties are typically unsecured. In evaluating the collectability of the amounts due from related parties, the Company considers many factors, including the related parties' repayment history and their credit-worthiness. An allowance for doubtful accounts is made when collection of the full amount is no longer probable.

***Business and economic risks***

The Company believes that changes in the following areas could have a material adverse effect on the Company's future financial position, results of operations or cash flows: changes in the overall demand for the Company's services; competitive pressures due to new entrants; advances and new trends in new technology; strategic relationships or customer relationships; regulatory considerations; and risks associated with the Company's ability to attract and retain employees necessary to support its growth.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**3.** **CONCENTRATION OF RISKS (CONTINUED)** 

***Currency convertibility risk***

The Company primarily transacts all of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People's Bank of China ("PBOC"). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into United States dollars or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers' invoices, shipping documents and signed contracts.

***Foreign currency exchange rate risk***

From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For RMB against US$, there was appreciation of approximately 6.5% and 2.3% in the years ended December 31, 2020 and 2021. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the US$ in the future. Any significant revaluation of RMB may materially and adversely affect the Company's cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, the American depositary shares ("ADS") in US$.

As of December 31, 2020 and 2021, the Company had US$ denominated cash, cash equivalents and restricted cash of US$569,368 and US$219,323, respectively.

***Impact of COVID-19***

The COVID-19 pandemic continues to evolve. There are still uncertainties of COVID-19's future impact, and the extent of the impact will depend on a number of factors, including the duration and severity of COVID-19, possibility of Delta and Omicron outbreak, the development and progress of distribution of COVID-19 vaccine and other medical treatment, the potential change in user behavior, especially on internet usage due to the prolonged impact of COVID-19, the actions taken by government authorities, particularly to contain the outbreak, including lockdown measures, stimulate the economy to improve business condition especially for small and medium enterprises ("SMEs"), almost all of which are beyond the Company's control. As a result, certain of the Company's estimates and assumptions, including the valuation of long-term investments and impairment assessments of goodwill and long-lived assets, require significant judgments and carry a higher degree of variabilities and volatilities that could result in material changes to the Company's current estimates in future periods.

***Interest rate risk***

The Company is exposed to interest rate risk on its interest-bearing assets and liabilities. As part of its asset and liability risk management, the Company reviews and takes appropriate steps to manage its interest rate exposures on its interest-bearing assets and liabilities. The Company has not been exposed to material risks due to changes in market interest rates, and has not used any stand-alone derivative financial instruments to manage the interest risk exposure during the years presented.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**4.** **BUSINESS COMBINATION** 

In order to consolidate and optimize the Group's capacity in certain geographic areas in the PRC for its business in Pet care services, Supply chain and Local services, the Group acquired 20 and 185 pet service groups or companies including 183 and 591 pet hospitals, and 10 and 17 supply chain companies in the year ended December 31, 2020 and 2021, respectively. Except for the supply chain companies which were acquired using the ordinary shares of the supply chain subsidiary (Runhe Supply Chain Group Co., Ltd. ("Runhe")), the other business combinations were acquired using the Company's shares. The Group accounted for these acquisitions as business combinations. Total consideration for the 2020 and 2021 acquisitions amounted to RMB674,142 and RMB1,455,715, respectively, including RMB203,931 and RMB761,292 of cash consideration, RMB299,691 and RMB549,840 of Company's shares, supply chain subsidiary's shares and contingent share consideration and RMB170,520 and RMB144,583 representing the fair value of pre-existing equity interests. RMB729 and RMB 64,457 represents the fair value of the non-controlling interests. The fair value of the net assets acquired were RMB106,384 and RMB226,084, respectively, including nil and RMB24,400 of intangible assets, respectively, resulting in goodwill of RMB568,487 and RMB1,294,088, respectively, for the years ended December 31, 2020 and 2021. Goodwill represents the expected synergies from the consolidation. Goodwill associated with these acquisitions are not tax deductible.

Further details regarding significant acquisitions the Company made during the years ended December 31, 2020 and 2021 are as follows:

*Nanjing Aibr Pet Co., Ltd* 

On January 1, 2020, the Company acquired the remaining 69.35% equity interests in Nanjing Aibr Pet Co., Ltd ("Nanjing Aibr") for a purchase consideration of RMB224,843, which included cash of RMB100,000, ordinary shares with fair value of RMB56,000 and the fair value of the 30.65% equity interest previously held of RMB68,843. No gain or loss was recognized on the remeasurement of the previously held equity interest.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:

---

| | |
|:---|:---|
|  | **RMB** |
|  Purchase consideration | 224843 |
|  Less: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | 10549 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 24577 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 34814 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets | 32960 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities | (51165) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities | (4485) |
|  Goodwill | 177593 |

---

The valuations used in the purchase price allocation described above were determined by the Company with the assistance of a third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**4.** **BUSINESS COMBINATION (CONTINUED)** 

*Zhejiang Jiawen Pet Hospital Management Co., Ltd.* 

On April 19, 2021, the Company acquired the remaining 74.51% equity interests in Zhejiang Jiawen Pet Hospital Management Co., Ltd. ("Zhejiang Jiawen") for a purchase consideration of RMB328,931, which included cash of RMB100,794, ordinary shares with fair value of RMB145,825 and the fair value of the 25.49% equity interest previously held of RMB82,312. A gain of RMB36,385 was recognized on the remeasurement of the previously held equity interest.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:

---

| | |
|:---|:---|
|  | **RMB** |
|  Purchase consideration | 328931 |
|  Less: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | 619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 167422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 28075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets | 20069 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities | (211164) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities | (25147) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current liabilities | (10797) |
|  Goodwill | 359854 |

---

The valuations used in the purchase price allocation described above were determined by the Company with the assistance of a third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches.

*Shanghai Catlink Intelligent Technology Co., Ltd* 

On October 1, 2021, the Company acquired a 50.67% equity interests in Shanghai Catlink Intelligent Technology Co., Ltd ("Catlink") for a purchase consideration of RMB66,528, which included cash of RMB60,000, ordinary shares with fair value of RMB6,528. The non-controlling interests of Liangchong was measured at the acquisition date at fair value of RMB48,295.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**4.** **BUSINESS COMBINATION (CONTINUED)** 

*Shanghai Catlink Intelligent Technology Co., Ltd (continued)* 

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:

---

| | |
|:---|:---|
|  | **RMB** |
|  Purchase consideration | 66528 |
|  Fair value of non-controlling interests | 48295 |
|  Less: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | 10465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 58429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 3304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | 19700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities | (22079) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current liabilities | (4531) |
|  Goodwill | 49535 |

---

The valuations used in the purchase price allocation and the fair value of the noncontrolling interest measurement described above were determined by the Company with the assistance of a third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches.

Supplemental unaudited pro forma information for all acquisitions has been excluded as they are not material to the consolidated financial statements of the Group.

**5.** **SHORT-TERM INVESTMENTS** 

Short-term investments consist of time deposits in commercial banks with maturities within twelve months and bank structured deposits with maturities within three months issued by commercial banks for which the Company has the positive intent and ability to hold those securities to maturity. Time deposits and bank structured deposits are carried at amortized cost which approximate their fair value due to their short-term nature and are classified as Level 2 and Level 3, respectively.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** |
|  | **Amortized cost** | **Gross unrecognized<br>holding gains** | **Gross unrecognized<br>gains** | **Fair value** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
|  Time deposits | 892598 |  |  | 892598 |
|  Bank structured deposits | 1000 |  |  | 1000 |
|  Total short-term investments | 893598 |  |  | 893598 |
|  Total short-term investments (US$) | 125620 |  |  | 125620 |

---

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**6.** **PREPAID EXPENSES AND OTHER CURRENT ASSETS** 

Prepaid expenses and other current assets consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Prepaid expenses | 183383 | 210651 | 29613 |
|  Rental and other deposits | 25821 | 23336 | 3281 |
|  Advance to suppliers | 84682 | 257945 | 36261 |
|  VAT recoverable | 24839 | 31689 | 4455 |
|  Staff advance | 13841 | 24373 | 3426 |
|  Rebate of purchase goods | 41316 | 78285 | 11005 |
|  Amounts due from the original shareholders of acquired businesses | 6381 |  |  |
|  Receivables from third party payment platforms | 20502 | 52040 | 7316 |
|  Interest receivable |  | 18212 | 2560 |
|  Others | 16155 | 24221 | 3405 |
|  | **416920** | **720752** | **101322** |

---

**7.** **PROPERTY AND EQUIPMENT, NET** 

Property and equipment consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Diagnostic equipment | 629600 | 869843 | 122281 |
|  Computer and electronic equipment | 44694 | 81674 | 11482 |
|  Office equipment | 40232 | 46707 | 6566 |
|  Motor vehicles | 8445 | 11874 | 1669 |
|  Leasehold improvements | 469918 | 637600 | 89632 |
|  | **1192889** | **1647698** | **231630** |
|  Less: Accumulated depreciation | 387713 | 648480 | 91162 |
|  | **805176** | **999218** | **140468** |

---

Depreciation expense for the years ended December 31, 2020 and 2021 were RMB294,542 and RMB335,565 (US$47,173), respectively.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**8.** **INTANGIBLE ASSETS, NET** 

Intangible assets consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Brands | 52200 | 71600 | 10065 |
|  Customer relationships | 69122 | 76733 | 10787 |
|  Purchased software | 28238 | 32350 | 4548 |
|  Acquired technologies |  | 5000 | 703 |
|  | 149560 | 185683 | 26103 |
|  Less: Accumulated amortization | 36171 | 56376 | 7925 |
|  | **113389** | **129307** | **18178** |

---

Amortization expense for the years ended December 31, 2020 and 2021 were RMB19,401 and RMB21,425 (US$3,012), respectively.

Estimated amortization expense relating to the existing intangible assets with finite lives for each of the next five years is as follows:

---

| | | |
|:---|:---|:---|
| **Year ending December 31,** | **RMB** | **US$** |
| 2022 | 19831 | 2788 |
| 2023 | 18171 | 2554 |
| 2024 | 16664 | 2343 |
| 2025 | 15248 | 2144 |
| 2026 | 14010 | 1969 |
|  | 83924 | 11798 |

---

No impairment losses were recognized for the years ended December 31, 2020 and 2021.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**9.** **LONG-TERM INVESTMENTS** 

The Company's percentage of ownership of their long-term investments and carrying values are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Percentage of<br>ownership** | **Percentage of<br>ownership** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
| **Investees** | **2020** | **2021** | **2020** | **2021** | **2021** |
|  |  |  | **RMB** | **RMB** | **US$** |
|  Equity method investments |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Zhejiang Jiawen | 25% |  | 48536 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Xiamen Anchong Pet Hospital Co., Ltd. ("Xiamen Anchong") | 44% |  | 18932 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Kunming Dongfang Animal Hospital Co., Ltd. ("Kunming Dongfang") | 30% |  | 15749 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shanghai Anqin Animal Clinic Co., Ltd. ("Shanghai Anqin") | 40% |  | 9801 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beijing Siwei Enterprise Management Consulting Co., Ltd. ("Beijing Siwei") | 25% | 25% | 984 | 994 | 140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beijing Kolobo Pet Hospital Co., Ltd. ("Beijing Kolobo") |  | 27% |  | 1262 | 177 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tianjin Ranova Petfood Co., Ltd. ("Ranova") |  | 20% |  | 52134 | 7329 |
|  Total equity method investments |  |  | 94002 | 54390 | 7646 |
|  Equity investments without readily determinable fair value |  |  |  |  |  |
|  Shenzhen Shenzhi Biological Technology Co., Ltd. ("Shenzhen Shenzhi") | 15% | 15% | 3000 | 3000 | 422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shanghai Hanvet Bio-Pharm Co., Ltd. ("Shanghai Hanvet") |  | 20% |  | 50000 | 7029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total equity investments without readily determinable fair value |  |  | 3000 | 53000 | 7451 |
|  |  |  | 97002 | 107390 | 15097 |

---

The equity method goodwill of the Company's equity method investments was RMB90,890 and RMB31,661 as of December 31, 2020 and 2021, respectively.

For the years ended December 31, 2020 and 2021, no impairment losses were recognized for long-term investments.

During the year ended December 31, 2021, the Company acquired the remaining equity interests in Zhejiang Jiawen, Xiamen Anchong, Kunming Dongfang and Shanghai Anqin. The Company gained a controlling interest and subsequently consolidated these entities. The transactions were considered step acquisitions and the Company remeasured its previously held equity interests in the investees at their acquisition-date fair values. For the year ended December 31, 2021, the Company recognized a gain of RMB54,337 (US$7,639) on the remeasurement of previously held equity interests for step acquisitions. For further information, refer to Note 4.

In May 2021, the Company acquired 20% equity interest in Shanghai Hanvet for a cash consideration of RMB50,000 (US$7,029). The terms of the investment include an embedded performance based contingent redemption option which did not qualify for derivative accounting as the underlying unlisted shares are not readily convertible into cash. The investment is accounted for as an equity investment without readily determinable fair value as the shares are not in-substance common stock.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**9.** **LONG-TERM INVESTMENTS (CONTINUED)** 

In October 2021, the Company acquired 20% equity interest in Ranova for a cash consideration of RMB50,000 (US$7,029). The Group accounts for the investment in Ranova as an equity method investment due to its significant influence over the entity.

As of December 31, 2020 and 2021, the carrying amounts of equity investments without readily determinable fair values for which the measurement alternative was elected were RMB3,000 and RMB53,000, respectively, after deductions of nil and nil of accumulated impairment. There were no unrealized gains (upward adjustments), unrealized losses (downward adjustments and impairment) or net unrealized gains or losses recognized for such equity investments during the years ended December 31, 2020 and 2021.

**10.** **GOODWILL** 

The changes in the carrying amount of goodwill by reporting segment were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Total** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
|  Balance as of January 1, 2020 | 1935675 | 50507 | 50190 | 2036372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions related to acquisitions | 474772 | 93715 |  | 568487 |
|  Balance as of December 31, 2020 | 2410447 | 144222 | 50190 | 2604859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions related to acquisitions | 1120716 | 173372 |  | 1294088 |
|  Balance as of December 31, 2021 | 3531163 | 317594 | 50190 | 3898947 |
|  Balance as of December 31, 2021, in US$ | 496402 | 44647 | 7056 | 548105 |

---

No impairment losses were recognized for the years ended December 31, 2020 and 2021.

**11.** **SHORT-TERM BANK BORROWINGS** 

Short-term bank borrowings represent RMB denominated term loans from various banks in the PRC that are due within one year.

The total deposits in restricted cash pledged for short-term bank borrowings was nil and RMB911,725 (US$128,168) as of December 31, 2020 and December 31, 2021, respectively. As of December 31, 2020 and 2021, the weighted average interest rate for short-term bank borrowings was 5.03% and 3.78%, respectively, and the aggregate amounts of unused lines of credit for short-term borrowings was RMB330,000 and RMB4,150,440 (US$583,460), respectively.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**12.** **ACCRUED EXPENSES AND OTHER LIABILITIES** 

Accrued expenses and other liabilities consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Accrued payroll and welfare benefits | 658767 | 966608 | 135884 |
|  Amounts due to the former shareholders of acquired entities | 169355 | 28620 | 4023 |
|  Accrued expenses | 80969 | 102102 | 14353 |
|  Unpaid cash consideration of acquisition of subsidiaries and non-controlling interests | 95972 | 311679 | 43815 |
|  Payables for property and equipment suppliers | 48446 | 33617 | 4726 |
|  Deposits and rental payables | 8649 | 18499 | 2601 |
|  Contingent consideration | 54660 | 26858 | 3776 |
|  Others | 34465 | 47544 | 6683 |
|  | **1151283** | **1535527** | **215861** |

---

**13.** **TAXATION** 

***Enterprise income tax ("EIT")***

<u>Cayman Islands</u> 

The Company is incorporated in the Cayman Islands and conducts its primary business operations through its subsidiaries in the PRC and Hong Kong. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains arising in the Cayman Islands. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.

<u>Hong Kong</u> 

The subsidiary incorporated in Hong Kong is subject to income tax at the rate of 16.5% on the estimated assessable profits arising in Hong Kong. For the years ended December 31, 2020 and 2021, the Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented.

<u>The PRC</u> 

The current enterprise income tax law ("EIT Law") applies a uniform 25% EIT rate to both foreign invested enterprises and domestic enterprises, except for domestic enterprises qualified as small and micro enterprises ("MSME") and High and New Technology Enterprise, or HNTE. An enterprise can qualify as a MSME if its annual taxable income does not exceed RMB3,000, the number of employees does not exceed three hundred, and total assets does not exceed RMB50,000. If the entity qualified as a MSME, then its taxable income will be taxed at 20% subject to certain taxable income exemptions. In accordance with the PRC Income Tax Law, an enterprise awarded with the HNTE certificate may enjoy a reduced EIT rate of 15%.

The EIT Law treats enterprises established outside of the PRC with "effective management and control" located in the PRC as PRC resident enterprises for tax purposes. The term "effective management and control" is

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**13.** **TAXATION (CONTINUED)** 

***Enterprise income tax ("EIT") (continued)***

generally defined as exercising management and control over the business, personnel, accounting and properties etc. of an enterprise. The Company is located in jurisdictions outside of the PRC; however, if the Company is considered a PRC resident enterprise for tax purposes, it would be subject to the PRC enterprise income tax rate of 25% on its worldwide income commencing on January 1, 2008. For the tax years ended December 31, 2020 and 2021, the Company has not accrued for PRC tax on such basis as the Company's non-PRC entities had zero assessable profits in the PRC for the period after January 1, 2008. The Company will continue to monitor the tax status with regards to the PRC tax resident enterprise regulation of its non-PRC entities.

**Withholding tax on undistributed dividends** 

The EIT law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise ("FIE") to its immediate holding company outside of China unless there is 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. Substantially all of the Company's loss before income tax was derived from the PRC for all periods presented.

The components of loss before income taxes are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  PRC | (956209) | (1274771) | (179204) |
|  Non-PRC | (31930) | (24471) | (3440) |
|  | **(988139)** | **(1299242)** | **(182644)** |

---

The current and deferred components of income tax expense appearing in the consolidated statements of net loss are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Current income tax | 12950 | 13428 | 1888 |
|  Deferred income tax | (1305) | (1414) | (199) |
|  | **11645** | **12014** | **1689** |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**13.** **TAXATION (CONTINUED)** 

***Enterprise income tax ("EIT") (continued)***

**Withholding tax on undistributed dividends** **(continued)**

The reconciliation of tax computed by applying the PRC statutory income tax rate of 25% for the years ended December 31, 2020 and 2021 to income tax expenses are as follows :

---

| | | | |
|:---|:---|:---|:---|
|  | **For the years ended December 31,** | **For the years ended December 31,** | **For the years ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Loss before income taxes | (988139) | (1299242) | (182645) |
|  Income tax computed at the statutory tax rate of 25% | (247035) | (324811) | (45661) |
|  Non-deductible expenses | 37600 | 71755 | 10087 |
|  Effect of different tax rates in different jurisdictions and preferential tax rate | (9353) | (9746) | (1370) |
|  Non-taxable income | (16259) | (25970) | (3651) |
|  Prior year tax true up |  | 2725 | 383 |
|  Change in valuation allowance | 246692 | 298061 | 41901 |
|  Income tax expenses | 11645 | 12014 | 1689 |

---

***Deferred Tax***

The significant components of deferred taxes were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Deferred tax assets |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred deductible advertising expense | 2466 | 9014 | 1267 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization expense of intangible assets | 275 | 440 | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-deductible bad debt provision | 770 | 1919 | 270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unpaid accrued social security | 111407 | 168280 | 23656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Donation | 500 | 638 | 90 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net operating losses carrying forward | 534622 | 767810 | 107937 |
|  Total deferred tax assets | 650040 | 948101 | 133282 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Valuation allowance | (643515) | (941576) | (132365) |
|  Total deferred tax assets net of valuation allowance | 6525 | 6525 | 917 |
|  Deferred tax liability |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets arising from acquisition | 11745 | 15943 | 2241 |
|  Net deferred tax liability | 5220 | 9418 | 1324 |

---

The net valuation allowance increased by RMB246,692 and RMB298,061(US$41,901) for the years ended December 31, 2020 and 2021, respectively.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**13.** **TAXATION (CONTINUED)** 

***Deferred Tax (continued)***

As of December 31, 2021 the Company has net operating losses ("NOLs") of approximately 3,071,241(US$431,748). If not utilized, the NOLs except for HNTE will expire at various times primarily between 2022 and 2026.

***Uncertain Tax Position***

The Company did not identify any material unrecognized tax benefits for each of the periods presented.

In general, the PRC tax authority has up to five years to conduct examinations of the Company's tax filings. Accordingly, the PRC subsidiaries' tax years 2016 through 2021 remain open to examination by the taxing jurisdictions.

**14.** **EMPLOYEE DEFINED CONTRIBUTION PLAN** 

Full time employees of the Company 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 employees. Chinese labor regulations require that the PRC subsidiaries of the Company make contributions to the government for these benefits based on certain percentages of the employees' salaries. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such employee benefits, which were expensed as incurred, were approximately RMB270,039 and RMB466,930 (US$65,640) for the years ended December 31, 2020 and 2021, respectively.

**15.** **OTHER SHAREHOLDERS' EQUITY** 

As of December 31, 2020, the Company had authorized capital of 50,000,000,000 shares of stock, consisting of 11,069,497,000 Class A ordinary shares, par value US$0.000001 per share, out of which 6,298,774,136 are classified as redeemable ordinary shares (see Note 16), and 2,152,402,190 Class B ordinary shares, par value US$0.000001 per share that are redeemable and are classified as redeemable ordinary shares (see Note 16), and 36,778,100,810 ordinary shares, par value US$0.000001.

Ordinary shares that are not redeemable consisted of the following as of December 31, 2020:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Carrying**<br>**value** |
|  | | | **RMB** | **RMB** |
|  Class A ordinary shares |  | 4068017000 |  | 28 |

---

As of December 31, 2021, the Company had authorized capital of 50,000,000,000 shares of stock, consisting of 47,847,597,810 Class A ordinary shares, par value US$0.000001 per share, out of which 6,325,670,000 are classified as redeemable ordinary shares (see Note 16), and 2,152,402,190 Class B ordinary shares, par value US$0.000001 per share that are redeemable and are classified as redeemable ordinary shares (see Note 16).

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**15.** **OTHER SHAREHOLDERS' EQUITY (CONTINUED)** 

Ordinary shares that are not redeemable consisted of the following as of December 31, 2021:

---

| | | | |
|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Carrying**<br>**value** |
|  | | **RMB** | **US$** |
|  Class A ordinary shares | 5422013363 | 37 | 5 |

---

For shares issued and outstanding as of December 31, 2020 and 2021, each holder of ordinary shares of the Company may exercise such holder's voting right based on the portion of the shares such shareholder holds. Each ordinary share entitles the holder to one vote. If the number of shares held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., exceeds the aggregate number of shares held, directly or indirectly, by former Ruipeng Group shareholders and management, HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., agree to vote in the manner that is consistent with Ruipeng Group's management's position with respect to the exceeding part of the shares, without prejudice to the interests of other shareholders.

As of December 31, 2020 and 2021, such ordinary shares of the Company were directly held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P..

Certain ordinary shares have preferential rights and are classified within mezzanine equity on the consolidated balance sheets as they may become redeemed at the option of the holders upon a deemed liquidation event and/or upon certain redemption trigger events that are outside of the Company's control. The details related to these redeemable ordinary shares as disclosed in Note 16.

During the year ended December 31, 2020, the Company purchased certain outstanding non-controlling interests through the issuance of ordinary shares amounting to RMB35,716, cash consideration of RMB65,618 and contingent consideration of RMB511. During the year ended December 31, 2021, the Company purchased outstanding non-controlling interests of 19 majority owned pet care hospitals and 28.94% equity interest in Runhe at total consideration of RMB500,164 (US$70,312), including cash consideration of RMB152,543 (US$21,444), share consideration of RMB381,983 (US$53,698) which was comprised of the issuance of 360,698,477 Class A ordinary shares and settlement of RMB44,358 (US$6,236) current liabilities. The acquisition of the outstanding non-controlling interests by the Company was accounted for as an equity transaction. The difference between the consideration transferred and the carrying amount of the non-controlling interests is recognized as an adjustment to additional paid-in capital.

As of December 31, 2020 and 2021, 475,725,334 and nil Class A ordinary shares as consideration for acquisitions of subsidiaries and non-controlling interests were not legally issued due to administrative reasons.

As of December 31, 2020 and 2021, the Group was committed to issue, subject to satisfaction of certain conditions, up to 52,368,833 and 24,000,000 ordinary shares, respectively, as a result of contingent consideration recorded in accrued expenses and other liabilities (see Note 12).

Furthermore as of December 31, 2021, 22,750,203 ordinary shares were held by Group level vehicles in relation to future acquisition of subsidiaries. These shares legally issued but not outstanding are accordingly presented as treasury shares as of December 31, 2021.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**16.** **REDEEMABLE ORDINARY SHARES** 

As of December 31, 2020, 6,298,774,136 Class A ordinary shares issued to designated shareholders and 26,895,864 Class A ordinary shares under warrant have liquidation preference and/or redemption rights as agreed in the shareholders agreements and are referred to as redeemable Class A ordinary shares. Class B ordinary shares are redeemable and are referred to as redeemable Class B ordinary shares. On January 21, 2021, the warrant was fully exercised.

Redeemable ordinary shares consisted of the following as of December 31, 2020:

---

| | | | |
|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Liquidation**<br>**value** |
|  | | **RMB** | **RMB** |
|  *Redeemable Class A ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RMB | 4725670000 | 3212096 | 3810873 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1573104136 | 1501585 | 1651744 |
|  | 6298774136 | 4713681 | 5462617 |
|  *Redeemable Class B ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1718846894 | 3647475 | 4012222 |
|  | 8017621030 | 8361156 | 9474839 |

---

As of December 31, 2021, 6,325,670,000 Class A ordinary shares issued to designated shareholders have liquidation preference and/or redemption rights as agreed in the shareholders agreements and are referred to as redeemable Class A ordinary shares. Class B ordinary shares are redeemable and are referred to as redeemable Class B ordinary shares.

Redeemable ordinary shares consisted of the following as of December 31, 2021:

---

| | | | |
|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Liquidation**<br>**value** |
|  | | **RMB** | **RMB** |
|  *Redeemable Class A ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RMB | 4725670000 | 3212096 | 3810873 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1600000000 | 1467227 | 1613950 |
|  | 6325670000 | 4679323 | 5424823 |
|  *Redeemable Class B ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1718846894 | 3564016 | 3920418 |
|  | 8044516894 | 8243339 | 9345241 |
|  | US$ | 1158830 | 1313733 |

---

The redeemable ordinary shares issued and outstanding in the tables above as of December 31, 2020 and 2021 are part of the authorized ordinary shares as described in Note 15.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**16.** **REDEEMABLE ORDINARY SHARES (CONTINUED)** 

As of December 31, 2020 and 2021, the redeemable Class A and Class B ordinary shares are not mandatorily redeemable financial instruments. However, the Company has classified certain ordinary shares as mezzanine equity on the consolidated balance sheets as they may become redeemed at the option of the holders upon a deemed liquidation event and/or upon certain redemption trigger events that are outside of the Company's control. The redeemable ordinary shares were initially measured at fair value.

For Class A ordinary shares that are only redeemable upon a deemed liquidation event, the carrying value of the ordinary shares has not been accreted to their liquidation value as a deemed liquidation event is not considered probable of occurrence. Subsequent adjustments of the carrying values to liquidation values will be made only if and when it becomes probable redemption will occur.

For Class A and Class B ordinary shares that have redemption rights, no accretion was recognized because the carrying amount of the ordinary shares was greater than the redemption value.

In September 2020, each ordinary share previously issued was exchanged for one Class A ordinary share. At the same time, the liquidation right on 5,063,984,136 shares of redeemable ordinary shares and 26,895,864 shares under warrant were amended and redemption rights were also given to such shareholders. The redeemable ordinary shares continued to be classified as mezzanine equity subsequent to the modification due to the liquidation right upon a deemed liquidation event and the redemption right. In determining whether the amendment was to be accounted for as an extinguishment or modification, the Company considered whether the change in terms was substantive. As the amendment is accounted for as a modification, the Company did not recognize the decrease in fair value.

Also in September 2020, 1,234,790,000 ordinary shares previously issued were exchanged for redeemable Class A ordinary shares. Such shares were converted from permanent equity to mezzanine equity at their fair value.

In September and October 2020, the Company issued 1,718,846,894 shares of redeemable Class B ordinary shares at a purchase price of US$0.32522 per share (RMB2.218475) for aggregate proceeds of approximately US$559,000 (RMB3,813,219).

The rights, preferences and privileges of the redeemable ordinary shares are as follows:

*•* *Voting rights* 

Each holder of redeemable ordinary shares (including warrant to purchase redeemable ordinary shares) of the Company may exercise such holder's voting right based on the portion of the shares such shareholder holds. Each redeemable ordinary share entitles the holder to one vote. If the number of shares held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., exceeds the aggregate number of shares held, directly or indirectly, by former Ruipeng Group shareholders and management, HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., agree to vote in the manner that is consistent with Ruipeng Group's management's position with respect to the exceeding part of the shares, without prejudice to the interests of other shareholders.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**16.** **REDEEMABLE ORDINARY SHARES (CONTINUED)** 

As of December 31, 2020 and 2021, such redeemable ordinary shares of the Company were directly held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P..

*•* *Distribution of profit* 

If the general meeting of the Company approves the distribution of profit of the Company, such distribution shall be made according to the proportion of shareholders' shareholding of the Company.

*•* *Liquidation preference* 

In the event of (i) a liquidation, dissolution or winding up of the Company and/or its subsidiaries, (provided that a liquidation, dissolution or winding up of the subsidiaries of the Company shall constitute a liquidation event only when the number of branches and subsidiaries of the Company that have been liquidated, dissolved or wound up during a financial year exceeds 10% of the total number of branches and subsidiaries of the Company at the end of the previous financial year) or (ii) any deemed liquidation event as defined in the shareholders agreement, distributions to the shareholders shall be made as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The holders of redeemable ordinary shares are entitled to receive an amount equal 110% of the investment amount
or issue price plus all dividends declared but unpaid with respect thereto for each redeemable ordinary share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If upon full payment of the preference amount, there are still remaining distributable assets available for
distribution to the shareholders, such distributable assets shall be distributed to the shareholders (including shareholders who have received preference amount) on a pro rata basis based on number of shares held by each such shareholder at the time
of such distribution.

*•* *Redemption rights* 

Class B ordinary shares are redeemable at the holders' option at any time after the earlier to occur of the following: (i) the fifth anniversary, if no qualified initial public offering (i.e. an IPO on the Hong Kong Stock Exchange, New York Stock Exchange, NASDAQ or any other recognized regional or national securities exchange, which public offering reflects the valuation of the Company immediately prior to such offering being not less than the post-Class B valuation with a simple rate of 15% per annum return calculated from the Class B ordinary shares closing date to the date that is immediately prior to such offering or US$4,948,640 (RMB 35,202,151) as of December 31, 2021 (December 31, 2020: US$4,324,790)) has occurred, and (ii) the occurrence of any material breach of the transaction documents by the Company or Ruipeng's management, at a redemption price per Class B ordinary share equal to (a) the Class B ordinary share issue price with an interest rate of 8% per annum calculated from the first date on which such holder becomes a Class B ordinary shareholder through the date on which the redemption price is paid, plus (b) all declared but unpaid dividend on such share.

If upon full payment of the redemption price to the Class B ordinary shareholders, there are still remaining funds available, 873,597,973 shares of Class A ordinary shares are redeemable at the holders' option at a redemption price per share ranging from RMB0.25867 to RMB0.65327. 720,760,000 of those shares are also entitled to an interest rate of 8% per annum calculated from an agreed date through the date on which the redemption price is paid.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**17.** **SHARE-BASED COMPENSATION** 

On May 8, 2020, the Board of Directors of the Company approved a supply chain subsidiary level employee shares purchase plan of the ordinary shares of Runhe. The purpose of the plan is to retain and motivate key supply chain subsidiary executives and core employees.

On June 29, 2020 (the "Grant Date"), Runhe entered into an equity classified employee share purchase agreement with its employee grantees. Each agreement listed out the percentage of ownership granted as well as a proportionate fixed exercise price to be paid within 30 days of the Grant Date. The total ordinary shares issued for the employee shares purchase plan accounted for 5.4% of the equity ownership of Runhe with a total exercise price of RMB1,239. The shares vest upon completion of a three-year vesting period. The shares purchased that have not vested are subject to forfeiture by the purchaser upon termination of the purchaser's employment or services. As of December 31, 2020, all of the rights to purchase ordinary shares issued under the plan were exercised.

The fair value of share purchase plan award granted to employees was measured using Grant Date enterprise fair value using a discounted cash flow method less exercise price. The Company is recognizing compensation expense using the straight-line method over the three-year vesting period. On August 16, 2021 ("Modification Date"), 3.97% of the equity ownership of Runhe under the share purchase plan were modified to be fully vested on the Modification Date and were replaced with 30,954,019 Class A ordinary shares of the Company and RMB9,950 in cash. The fair value of the shares immediately after the modification was lower than that immediately before the modification. Therefore, no incremental compensation cost was recognized on the Modification Date. On the Modification Date, the Company recognized share-based compensation expense of RMB18,281 (US$2,570) associated with these shares.

As of December 31, 2021, total unrecognized shared-based compensation expenses related to the remaining shares issued under the above plan was RMB3,577 (US$503) which will be recognized over the remaining requisite service period.

As of December 31, 2020, 60,000,000 Class A ordinary shares were held by Group level share based payment vehicles in relation to future share awards to employees. These shares legally issued but not outstanding were presented as treasury shares as there is no formal Group level share award plan.

On June 29, 2021, the Company granted 15,000,000 Class A ordinary shares to its employees which became vested immediately and 45,000,000 nonvested Class A ordinary shares to its employees which are not held by employees until certain service and performance conditions are met. The weighted-average grant-date fair value per share was RMB1.059 (US$0.16393). The total fair value of 15,000,000 shares immediately vested was RMB15,885 (US$2,459) for the year ended December 31, 2021. The 45,000,000 nonvested Class A ordinary shares will become vested as follows: 25% after the completion of the IPO and upon completion of nine months of service thereafter; 25% after the completion of the IPO and upon completion of one year of service thereafter; and 50% after the completion of the IPO and upon completion of two-years of service thereafter. Due to the IPO performance condition, the Company did not recognize any shared-based compensation expense related to the 45,000,000 nonvested Class A ordinary shares granted during the year ended December 31, 2021.

As of December 31, 2021, 75,000,000 Class A ordinary shares were held by Group level share based payment vehicles in relation to future share awards to employees, including the 45,000,000 non-vested shares discussed above and 30,000,000 Class A ordinary issued on December 28, 2021. These shares legally issued but not outstanding were presented as treasury shares as there is no formal Group level share award plan.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**17.** **SHARE-BASED COMPENSATION (CONTINUED)** 

As of December 31, 2021, total unrecognized share-based compensation expense related to the 45,000,000 nonvested Class A ordinary shares was RMB47,655 (US$6,699) which will be recognized over the remaining service requisite period using the accelerated method upon the completion of an IPO.

Total share-based compensation expense of RMB5,961 and RMB42,114 (US$5,920) was recognized during the years ended December 31, 2020 and 2021.

To determine the fair value of the ordinary shares of Runhe, the Company used the discounted cash flow (DCF) method of the income approach. The DCF analysis is performed based on the projected cash flows based on its best estimate as of the valuation date. The significant assumptions used in the DCF included projected cash flows, discount rate and discount for lack of marketability (DLOM) using the Finnerty method.

To determine the fair value of the ordinary shares of the Company, the Company first determined the underlying equity value of the Company and then allocated a portion of the equity value to the ordinary shares of the Company based on their particular rights and preferences using the hybrid return method. The hybrid return method is a combination of the probability-weighted expected return method and the option pricing method. To determine the equity value of the Company, the Company used the DCF method of the income approach as the primary valuation approach, and to cross check the reasonableness of the results derived from the income approach by the market approach. The DCF analysis is performed based on the projected cash flows based on its best estimate as of the valuation date. The significant assumptions used in the DCF included projected cash flows and discount rate. The significant assumptions used to determine the fair value of the ordinary shares included the probability of IPO exit event, risk-free rate, equity volatility based on historical volatility of selected peer companies and DLOM using the Finnerty method.

<u>2021 Plan</u> 

The Company's board of directors adopted a share incentive plan in June 2021, or the "2021 Plan", for the purpose of granting share-based compensation awards to employees, directors and consultants. Under the 2021 Plan, the Company is authorized to grant options and other types of awards. The maximum number of Class A ordinary shares that may be issued pursuant to all awards under the 2021 Plan is 500 million.

On August 1, 2021 (the "Issuance Date"), the Company issued 188,110,900 options to its employees under the 2021 Plan with service conditions ranging from three to four years and performance conditions based on the achievement of an IPO, annual individual employee performance and/or the Company's annual financial performance. These options will become vested as follows: first tranche of 25% or 33% on the earlier of the completion of an IPO or the first anniversary after the issuance date and achievement of the annual individual performance and/or the Company's annual financial performance; second tranche of 25% or 33% on the earlier of one year after the completion of an IPO or the second anniversary after the issuance date and achievement of the annual individual performance and/or the Company's annual financial performance; third tranche of 25% or 34% on the earlier of two years after the completion of an IPO or the third anniversary after the issuance date and achievement of the annual individual performance and/or the Company's annual financial performance; fourth tranche of 25% on the earlier of three years after the completion of an IPO or the fourth anniversary after the issuance date and achievement of the annual individual performance and/or the Company's annual financial performance. As of December 31, 2021, 1,705,200 options were forfeited upon employees' termination of services.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**17.** **SHARE-BASED COMPENSATION (CONTINUED)** 

Due to the subjectivity of the individual employee performance evaluation and certain performance targets (to measure the individual employee performance) which have not been established on Issuance Date, and/or due to the Company's annual financial performance targets which have not been established on Issuance Date, the grant date for accounting purposes will not occur until the annual individual employee performance evaluation is completed and/or the Company's annual financial performance measurement target is established. Therefore, the grant date for each tranche will be the beginning of the following year after completion of annual individual employee performance evaluation and/or determination of the Company's annual financial performance target. The related compensation costs for each tranche will be measured based on the fair value of the options on the respective grant date.

The employees can only exercise the first tranche of vested options 270 days after the completion of an IPO and can exercise the second, third and fourth tranche of vested options after the completion of an IPO. As the employees are unable to exercise the first tranche of vested options until 270 days after an IPO and are unable to exercise the second, third and/or fourth tranche of vested options until after the completion an IPO, this constitutes a performance condition that is not considered probable until the occurrence of an IPO. The Company did not recognize any share-based compensation expenses related to the 188,110,900 options issued during the year ended December 31, 2021 since the grant date did not occur. Upon an IPO, the Company will recognize the related share-based compensation expenses on the IPO date using the accelerated method as the exercise is not contingent on employment during the 270 days.

**18.** **RELATED PARTY TRANSACTIONS** 

The Group had the following related party transactions with equity method investees:

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Goods sold to: |  |  |  |
|  Kunming Dongfang<sup>(1)</sup> | 1306 |  |  |
|  Zhejiang Jiawen<sup>(2)</sup> | 120 | 3319 | 467 |
|  Xiamen Anchong<sup>(3)</sup> | 654 |  |  |
|  Total product revenue | 2080 | 3319 | 467 |

---

(1) During the year ended December 31, 2021, Kunming Dongfang became a wholly-owned subsidiary of the Company.
See Note 9.

(2) Interest free loan due on demand. During the year ended December 31, 2021, Zhejiang Jiawen became a
wholly-owned subsidiary of the Company.

(3) 6% interest loan due on demand. During the year ended December 31, 2021, Xiamen Anchong became a
wholly-owned subsidiary of the Company.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**18.** **RELATED PARTY TRANSACTIONS (CONTINUED)** 

The Company had the following amounts due from related parties at the end of the year:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** | **As of December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Beijing SiWei | 965 | 916 | 129 |
|  Zhejiang Jiawen<sup>(2)</sup>  | 4000 |  |  |
|  Xiamen Anchong<sup>(3)</sup> | 3281 |  |  |
|  | 8246 | 916 | 129 |

---

**19.** **SEGMENT REPORTING** 

The Company has determined that it operates in three operating segments, consisting of the pet care services, supply chain, and local services. The Company derives the results of the segments directly from its internal management reporting system.

As substantially all of the Company's long-lived assets are located in the PRC and substantially all of the Company's revenues are derived from the PRC, no geographical information is presented.

No separate segment assets information is provided to the Company's Chief Operating Decision Maker for use in allocating resources to or evaluating the performance of the segments.

The intersegment eliminations mainly consist of products sold by supply chain segment to pet care services segment and local services segment under cost plus a margin method.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SEGMENT REPORTING (CONTINUED)** 

The table below provides a summary of the Company's operating segment results:

**a)** **Year ended December 31, 2020 in RMB** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2053955 | 591732 | 362598 |  | 3008285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 517566 | 11057 | (528623) |  |
|  Total | 2053955 | 1109298 | 373655 | (528623) | 3008285 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 1969207 | 508356 | 388241 |  | 2865804 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 50566 | 444064 | 19834 | (514464) |  |
|  Less: Cost of revenues | 2019773 | 952420 | 408075 | (514464) | 2865804 |
|  Segment profit (loss) | 34182 | 156878 | (34420) | (14159) | 142481 |
|  Less: Total operating expenses |  |  |  |  | 1122733 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (5600) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange gain |  |  |  |  | (1471) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (6609) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration |  |  |  |  | 21277 |
|  Loss before income taxes |  |  |  |  | (988139) |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SEGMENT REPORTING (CONTINUED)** 

**b)** **Year ended December 31, 2021 in RMB** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2973521 | 1280311 | 529839 |  | 4783671 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 878585 | 7563 | (886148) |  |
|  Total | 2973521 | 2158896 | 537402 | (886148) | 4783671 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 2872948 | 1133886 | 553676 |  | 4560510 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 77332 | 780597 | 20317 | (878246) |  |
|  Less: Cost of revenues | 2950280 | 1914483 | 573993 | (878246) | 4560510 |
|  Segment (loss) profit | 23241 | 244413 | (36591) | (7902) | 223161 |
|  Less: Total operating expenses |  |  |  |  | 1575972 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (1862) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 390 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 626 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (54337) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration |  |  |  |  | 2123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries |  |  |  |  | (509) |
|  Loss before income taxes |  |  |  |  | (1299242) |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SEGMENT REPORTING (CONTINUED)** 

**c)** **Year ended December 31, 2021 in US$** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 418011 | 179983 | 74484 |  | 672478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 123510 | 1063 | (124573) |  |
|  Total | 418011 | 303493 | 75547 | (124573) | 672478 |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 403872 | 159399 | 77835 |  | 641106 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 10871 | 109735 | 2856 | (123462) |  |
|  Less: Cost of revenues | 414743 | 269134 | 80691 | (123462) | 641106 |
|  Segment (loss) profit | 3268 | 34359 | (5144) | (1111) | 31372 |
|  Less: Total operating expenses |  |  |  |  | 221547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (261) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (7639) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent consideration |  |  |  |  | 298 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries |  |  |  |  | (72) |
|  Loss before income taxes |  |  |  |  | (182644) |

---

**20.** **RESTRICTED NET ASSETS** 

The Company's ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company's PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company's PRC subsidiaries.

In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company's PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise's PRC statutory accounts. A foreign-invested enterprise is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise's PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign-invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends and are not transferable to the Company in the form of loans, advances, or cash dividends.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**20.** **RESTRICTED NET ASSETS (CONTINUED)** 

As of December 31, 2020 and 2021, the Company's PRC subsidiaries had appropriated RMB4,919 and RMB3,123 (US$439), respectively, in their combined statutory reserves.

As a result of these PRC laws and regulations subject to the limit discussed above that require annual appropriations of 10% of after-tax income to be set aside, prior to payment of dividends as general reserve fund, the Company's PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. Amounts restricted include paid-in capital, additional paid-in capital and statutory reserve funds of the Company's PRC subsidiaries, as determined pursuant to PRC generally accepted accounting principles, totaling an aggregate of RMB3,435,162 and RMB4,908,000 (US$689,956) as of December 31, 2020 and 2021, respectively.

**21.** **COMMITMENTS AND CONTINGENCIES** 

***Operating lease commitments***

The Company leases pet hospitals, offices and warehouses under operating leases. Leases for pet hospitals were negotiated for terms ranging from 1 to 20 years, those for offices were for terms ranging from 2 to 5 years and those for warehouses were for terms ranging from 1 to 5 years. Future minimum payments under non-cancelable operating leases with initial terms in excess of one year consist of the following as of December 31, 2021:

---

| | | |
|:---|:---|:---|
| **Years ending December 31,** | **RMB** | **US$** |
| 2022 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;580615 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;81622 |
| 2023 | 488923 | 68732 |
| 2024 | 398290 | 55991 |
| 2025 | 322820 | 45381 |
| 2026 | 234244 | 32930 |
|  2027 and thereafter | 458608 | 64469 |
|  | **2483500** | **349125** |

---

Payments under operating leases are expensed on a straight-line basis over the periods of their respective leases. Certain of the Group's lease arrangements have rent escalation clauses. For the years ended December 31, 2020 and 2021, total rental expenses for all operating leases amounted to RMB425,497 and RMB590,101 (US$82,955), respectively.

***Contingencies***

From time to time, the Group is subject to legal proceedings and claims in the ordinary course of business, including patent, commercial, professional liability, product liability, employment, infringement liability, contract disputes, class action, and other litigation and claims, as well as governmental and other regulatory investigations and proceedings incidental to the conduct of its business. In addition, third parties may from time to time assert claims against the Group in the form of letters and other communications. As legal proceedings and claims are immaterial and at an early stage, management considers the loss outcome to be remote. In the opinion of the Group's legal counsel, an estimate of the amount or range of reasonably possible losses cannot be made at time. Therefore, the Company does not meet both the probable and estimable criteria for loss contingencies.

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**22.** **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 for the period using the two-class method. Under the two-class method, net loss attributable to the Company is allocated between ordinary shares and other participating securities based on their participating rights on a proportionate basis. The Company's redeemable preferred shares are participating securities because they participate in both profits or losses. (Note 16).

Diluted loss per share is calculated by giving the effect of potential dilutive shares, if any. For the periods presented, the number of shares used to calculate diluted loss per share is the same as the number of shares used to calculate basic loss per share because the potentially dilutive shares would have been antidilutive if included in the calculation.

The computation of basic and diluted loss per ordinary share is as follows for the years ended December 31, 2020 and 2021.

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  **Numerator:** |  |  |  |
|  Net loss | (999784) | (1311256) | (184333) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to non-controlling interests | 26375 | 14103 | 1983 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss on foreign denominated redeemable ordinary shares | (186396) | (74390) | (10458) |
|  Net loss attributable to New Ruipeng Pet Group Inc. | (1159805) | (1371543) | (192808) |
|  Net loss attributable to holders of participating redeemable ordinary shares and warrant | 616825 | 845305 | 118831 |
|  Adjusted net loss attributable to ordinary shareholders | (542980) | (526238) | (73977) |
|  **Denominator:** |  |  |  |
|  Weighted average number of ordinary shares outstanding—Basic and diluted | 5179509953 | 5008056549 | 5008056549 |
|  Loss per ordinary share—Basic and diluted | (0.10) | (0.11) | (0.01) |

---

**23.** **SUBSEQUENT EVENTS** 

In preparing the audited consolidated financial statements, the Company has evaluated events and transactions for potential recognition and disclosure through May 17, 2022, the date the consolidated financial statements were available to be issued.

Subsequent to December 31, 2021 and through to May 17, 2022, the Company entered into agreements to obtain a controlling interest in pet hospitals and supply chain companies for aggregate cash consideration of RMB9,628 and 0.15% equity interest in Runhe.

In January 2022, the Company issued an option award to an employee under the 2021 Plan in which the employee would receive a variable number of shares with a market value equal to RMB30 million on the respective annual delivery dates. The award's exercise price is 30% of the share price based on the latest round of

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**23.** **SUBSEQUENT EVENTS (CONTINUED)** 

financing prior to the Company's IPO or after the Company's IPO 30% of the closing price on the last trading date, on the respective annual purchase dates. The award has a service conditions of four years and performance conditions based on the achievement of an IPO, annual individual employee performance and the Company's annual financial performance. Due to the subjectivity of the individual employee performance evaluation and certain performance targets (to measure the individual employee performance) which have not been established in January 2022, and due to the Company's annual financial performance targets which have not been established in January 2022, the grant date for accounting purposes will not occur until the annual individual employee performance evaluation is completed and the Company's annual financial performance measurement target is established.

In April 2022, 1,300,000 options were issued under the 2021 Plan. The options issued have a service conditions of three years and performance conditions based on the achievement of an IPO and annual individual employee performance. Due to the subjectivity of the individual employee performance evaluation and certain performance targets (to measure the individual employee performance) which have not been established in April 2022, the grant date for accounting purposes will not occur until the annual individual employee performance evaluation is completed.

Subsequent to December 31, 2021 and through to May 17, 2022, 2,315,000 options issued under the 2021 Plan were forfeited upon employees' termination of services.

**24.** **CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY** 

Pursuant to Rule 5-04 of Regulation S-X, the Group presents condensed financial information of its parent company for 2020 and 2021 as the restricted net assets of the Group's subsidiaries and equity method investees in the PRC exceed 25% of the Group's consolidated net assets. See note 20 "Restricted Net Assets".

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**24.** **CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED)** 

**Condensed Balance Sheets** 

---

| | | | |
|:---|:---|:---|:---|
|  | **As at December 31** | **As at December 31** | **As at December 31** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  **ASSETS:** |  |  |  |
|  **Current assets:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents | 3713733 | 485851 | 68300 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted cash |  | 911725 | 128168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term investments |  | 892598 | 125479 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets |  | 18194 | 2558 |
|  **Total current assets** | **3713733** | **2308368** | **324505** |
|  **Non-current assets:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non current assets |  | 16214 | 2280 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term investments | 2964499 | 3620617 | 508978 |
|  **Total non-current assets** | **2964499** | **3636831** | **511258** |
|  **Total assets** | **6678232** | **5945199** | **835763** |
|  **LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' EQUITY (DEFICIT)** |  |  |  |
|  **Liabilities:** |  |  |  |
|  **Current liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 35638 | 36755 | 5167 |
|  **Total current liabilities** | **35638** | **36755** | **5167** |
|  **Total liabilities** | **35638** | **36755** | **5167** |
|  **Redeemable ordinary shares:** |  |  |  |
|  Redeemable ordinary shares - par value of US$0.000001 per share; 8,017,621,030 and 8,044,516,894 shares issued and outstanding; liquidation preference of RMB9,474,839 and RMB9,345,241 (US$1,313,733) as of December 31, 2020 and 2021 | 8361156 | 8243339 | 1158830 |
|  **Other shareholders' deficit:** |  |  |  |
|  Ordinary shares - par value of US$0.000001 per share; 50,000,000,000 and 50,000,000,000 shares authorized, 4,128,017,000 and 5,519,763,566 shares issued and 4,068,017,000 and 5,422,013,363 outstanding (excluding those reflected as redeemable ordinary shares) as of December 31, 2020 and 2021 | 28 | 37 | 5 |
|  Additional paid-in capital | 555679 | 1076616 | 151348 |
|  Treasury shares - 60,000,000 and 97,750,203 shares as of December 31, 2020 and 2021 |  |  |  |
|  Accumulated other comprehensive income | 260326 | 420200 | 59071 |
|  Accumulated deficit | (2534595) | (3831748) | (538658) |
|  **Total other shareholders' deficit** | (1718562) | (2334895) | (328234) |
|  **TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT** | **6678232** | **5945199** | **835763** |

---

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"),** 

**except for number of shares and per share data)** 

**24.** **CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED)** 

**Condensed Statements of Comprehensive Loss** 

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  General and administrative expenses | (18300) | (13025) | (1831) |
|  Interest income | 6031 | 27066 | 3805 |
|  Foreign exchange loss (gain) | (74) | 58 | 8 |
|  Fair value gain of contingent liabilities |  | (2123) | (298) |
|  Share of losses in subsidiaries | (961066) | (1309129) | (184034) |
|  **Loss before income taxes** | (973409) | (1297153) | (182350) |
|  Income tax expense |  |  |  |
|  **Net loss** | (973409) | (1297153) | (182350) |
|  **Other comprehensive income, net of tax of nil:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation adjustments | 266154 | 159874 | 22474 |
|  **Comprehensive loss** | (707255) | (1137279) | (159876) |

---

**Condensed Statements of Cash Flows** 

---

| | | | |
|:---|:---|:---|:---|
|  | **For the year ended December 31,** | **For the year ended December 31,** | **For the year ended December 31,** |
|  | **2020** | **2021** | **2021** |
|  | **RMB** | **RMB** | **US$** |
|  Net cash used in operating activities | (1003) | (5911) | (831) |
|  Net cash used in investing activities | (443157) | (2252119) | (316598) |
|  Net cash provided by (used in) financing activities | 3813219 | (15403) | (2165) |
|  Effect of exchange rate changes on cash and cash equivalents and restricted cash | (167373) | (42724) | (6006) |
|  Net increase/(decrease) in cash and cash equivalents and restricted cash | 3201686 | (2316157) | (325600) |
|  Cash and cash equivalents and restricted cash at beginning of the year | 512047 | 3713733 | 522068 |
|  Cash and cash equivalents and restricted cash at end of the year | 3713733 | 1397576 | 196468 |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS** 

**(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),** 

**except for number of shares and per share data)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of** | **As of** | **As of** |
|  |<br>**Notes** | **December 31,<br>2021** | **September 30, 2022** | **September 30, 2022** |
|  | | **RMB** | **RMB** | **US$** |
|  **ASSETS** |  |  |  |  |
|  **Current assets:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents |  | 772640 | 855947 | 120327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restricted cash |  | 914725 | 1571701 | 220946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term investments | 5 | 893598 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net |  | 125872 | 122060 | 17159 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories |  | 729935 | 665445 | 93547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets |  | 720752 | 568096 | 79862 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties |  | 916 |  |  |
|  **Total current assets** |  | **4158438** | **3783249** | **531841** |
|  **Non-current assets:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment, net |  | 999218 | 907251 | 127539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets, net |  | 129307 | 121436 | 17071 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term investments | 6 | 107390 | 108572 | 15263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Goodwill | 7 | 3898947 | 3978920 | 559348 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease right-of-use assets | 8 |  | 2093834 | 294347 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets |  | 201392 | 152766 | 21475 |
|  **Total non-current assets** |  | **5336254** | **7362779** | **1035043** |
|  **Total assets** |  | **9494692** | **11146028** | **1566884** |
|  **LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT** |  |  |  |  |
|  **Current liabilities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term bank borrowings | 9 | 1392280 | 1893788 | 266225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  | 237759 | 227837 | 32029 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable |  | 1920 | 1697 | 239 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | 8 |  | 471100 | 66226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 355722 | 350891 | 49327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | 10 | 1535527 | 1518964 | 213532 |
|  **Total current liabilities** |  | **3523208** | **4464277** | **627578** |
|  **Commitments and contingencies** | 18 |  |  |  |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)** 

**(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),** 

**except for number of shares and per share data)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **As of** | **As of** | **As of** |
|  |<br>**Notes** | **December 31,<br>2021** | **September 30, 2022** | **September 30, 2022** |
|  | | **RMB** | **RMB** | **US$** |
|  **LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT (CONTINUED)** |  |  |  |  |
|  **Non-current liabilities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities | 8 |  | 1548879 | 217738 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax liabilities |  | 9418 | 8165 | 1148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current liabilities |  |  | 9937 | 1397 |
|  **Total non-current liabilities** |  | **9418** | **1566981** | **220283** |
|  **Total liabilities** |  | **3532626** | **6031258** | **847861** |
|  **Redeemable ordinary shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redeemable ordinary shares—par value of US$0.000001 per share; 8,044,516,894 and 8,044,516,894 shares issued and outstanding; liquidation preference of RMB9,345,241 and RMB9,973,789 (US$1,402,093) as of December 31, 2021 and September 30, 2022 | 13 | 8243339 | 8814747 | 1239158 |
|  **Other shareholders' deficit:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Ordinary shares—par value of US$0.000001 per share; 50,000,000,000 and 50,000,000,000 shares authorized, 5,519,763,566 and 5,519,763,566 shares issued and 5,422,013,363 and 5,422,013,363 outstanding (excluding those reflected as redeemable ordinary shares) as of December 31, 2021 and September 30, 2022 | 12 | 37 | 37 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital |  | 1076616 | 1451333 | 204025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treasury shares—97,750,203 and 97,750,203 shares as of December 31, 2021 and September 30, 2022 | 12 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive income (loss) |  | 420200 | (273250) | (38413) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated deficit |  | (3831748) | (4927072) | (692636) |
|  **Total New Ruipeng Pet Group Inc. shareholders' deficit** |  | **(2334895)** | **(3748952)** | **(527019)** |
|  **Non-controlling interests** |  | 53622 | 48975 | 6884 |
|  **Total other shareholders' deficit** |  | **(2281273)** | **(3699977)** | **(520135)** |
|  **TOTAL LIABILITIES, REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' DEFICIT** |  | **9494692** | **11146028** | **1566884** |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

------

##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS** 

**(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"),** 

**except for number of shares and per share data)** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Nine months ended September 30,** | **Nine months ended September 30,** | **Nine months ended September 30,** |
|  |<br>**Notes** | **2021** | **2022** | **2022** |
|  | | **RMB** | **RMB** | **US$** |
|  **Revenues** | 17 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services |  | 2147330 | 2284246 | 321115 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain |  | 880852 | 1573222 | 221160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services |  | 371479 | 457649 | 64335 |
|  **Total revenues** |  | **3399661** | **4315117** | **606610** |
|  **Cost of revenues** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Services** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pet care services |  | (2066671) | (2279401) | (320433) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Product** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply chain |  | (764012) | (1392209) | (195714) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Local services |  | (397544) | (424724) | (59707) |
|  **Total cost of revenues** |  | **(3228227)** | **(4096334)** | **(575854)** |
|  **Gross profit** |  | **171434** | **218783** | **30756** |
|  **Operating expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sales and marketing |  | (222616) | (282419) | (39702) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General and administrative |  | (796680) | (907933) | (127635) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Research and development |  | (57662) | (92727) | (13035) |
|  **Total operating expenses** |  | **(1076958)** | **(1283079)** | **(180372)** |
|  **Loss from operations** |  | **(905524)** | **(1064296)** | **(149616)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income |  | 30242 | 18491 | 2599 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense |  | (22479) | (55818) | (7847) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  | (585) | (6735) | (947) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net (loss) profit from equity method investments |  | (2778) | 2176 | 306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisition |  | 54337 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss on contingent consideration |  | (681) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long—term investments |  | 2861 | 217 | 31 |
|  **Loss before income taxes** |  | **(844607)** | **(1105965)** | **(155474)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax expense | 11 | (11984) | (3393) | (477) |
|  **Net loss** |  | **(856591)** | **(1109358)** | **(155951)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to non-controlling interests |  | 9452 | 14034 | 1973 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange (loss) gain on foreign currency denominated redeemable ordinary shares |  | (19450) | 339473 | 47722 |
|  **Net loss attributable to New Ruipeng Pet Group Inc.** |  | **(866589)** | **(755851)** | **(106256)** |
|  **Net loss per share attributable to ordinary shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 15 | (0.07) | (0.06) | (0.01) |
|  **Weighted average shares used to compute net loss per share attributable to ordinary shares:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Basic and diluted | 15 | 4868768293 | 5422013363 | 5422013363 |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS** 

**(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Nine months ended September 30,** | **Nine months ended September 30,** | **Nine months ended September 30,** |
|  |<br>**Notes** | **2021** | **2022** | **2022** |
|  | | **RMB** | **RMB** | **US$** |
|  **Net loss** |  | **(856591)** | **(1109358)** | **(155951)** |
|  **Other comprehensive loss, net of tax of nil:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign currency translation adjustments |  | 40987 | (693450) | (97484) |
|  **Comprehensive loss** |  | **(815604)** | **(1802808)** | **(253435)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive loss attributable to non-controlling interests |  | 9452 | 14034 | 1973 |
|  **Comprehensive loss attributable to New Ruipeng Pet Group Inc.** |  | **(806152)** | **(1788774)** | **(251462)** |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF** 

**REDEEMABLE ORDINARY SHARES AND OTHER SHAREHOLDERS' EQUITY (DEFICIT)** 

**(Amounts in thousands of Renminbi ("RMB") and US dollar ("US$"), except for number of shares)** 

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | | | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | **Attributable to New Ruipeng Pet Group Inc.** | | |
|  | | **Redeemable ordinary<br>shares** | **Redeemable ordinary<br>shares** | **Ordinary shares** | **Ordinary shares** | **Additional**<br>**paid-in**<br>**capital** | **Treasury shares** | **Treasury shares** | **Accumulated<br>other**<br>**comprehensive**<br>**(loss) income** | **Accumulated**<br>**deficit** | **Total New Ruipeng**<br>**Pet Group Inc.**<br>**shareholders'**<br>**equity (deficit)** |<br>**Non-**<br>**controlling**<br>**interests** |<br>**Total**<br>**shareholders'**<br>**equity<br>(deficit)** |
|  |<br>**Notes** | **Number of<br>Shares** | **Amount** | **Number of<br>Shares** | **Amount** | | **Number of**<br>**Shares** | **Amount** | | | | | |
|  | | | **RMB** | | **RMB** | **RMB** | | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** | **RMB** |
|  Balance as of January 1, 2021 |  | 8017621030 | 8361156 | 4128017000 | 28 | 555679 | (60000000) |  | 260326 | (2534595) | (1718562) | 120097 | (1598465) |
|  Acquisition of non-controlling interests |  |  |  | 366602362 | 3 | (15804) |  |  |  |  | (15801) | (92154) | (107955) |
|  Release of shares related to prior year's acquisition of subsidiaries |  |  |  | 475725334 | 3 | (3) |  |  |  |  |  |  |  |
|  Settlement of contingent consideration related to prior years' acquisitions |  |  |  | 28257722 |  | 29925 |  |  |  |  | 29925 |  | 29925 |
|  Net loss |  |  |  |  |  |  |  |  |  | (847139) | (847139) | (9452) | (856591) |
|  Foreign currency translation adjustments |  |  | (50699) |  |  |  |  |  | 40987 |  | 40987 |  | 40987 |
|  Foreign exchange loss on foreign currency denominated redeemable ordinary shares |  |  | 19450 |  |  | (19450) |  |  |  |  | (19450) |  | (19450) |
|  Acquisition of subsidiaries | 4 |  |  | 342288171 | 2 | 528509 | 85845701 | 1 |  |  | 528512 | 3627 | 532139 |
|  Disposal of subsidiaries |  |  |  |  |  |  |  |  |  |  |  | (17677) | (17677) |
|  Share-based compensation | 19 |  |  | 30954019 |  | 31568 | 15000000 |  |  |  | 31568 |  | 31568 |
|  Issuance of redeemable ordinary shares under warrants |  | 26895864 |  |  |  |  |  |  |  |  |  |  |  |
|  Issuance of shares to vehicles for future acquisition of subsidiaries |  |  |  | 97734575 | 1 |  | (97734575) | (1) |  |  |  |  |  |
|  Balance as of September 30, 2021 |  | 8044516894 | 8329907 | 5469579183 | 37 | 1110424 | (56888874) |  | 301313 | (3381734) | (1969960) | 4441 | (1965519) |
|  Balance as of January 1, 2022 |  | 8044516894 | 8243339 | 5519763566 | 37 | 1076616 | (97750203) |  | 420200 | (3831748) | (2334895) | 53622 | (2281273) |
|  Acquisition of non—controlling interests |  |  |  |  |  | 2279 |  |  |  |  | 2279 | (6819) | (4540) |
|  Net loss |  |  |  |  |  |  |  |  |  | (1095324) | (1095324) | (14034) | (1109358) |
|  Foreign currency translation adjustments |  |  | 910881 |  |  |  |  |  | (693450) |  | (693450) |  | (693450) |
|  Foreign exchange gain on foreign currency denominated redeemable ordinary shares |  |  | (339473) |  |  | 339473 |  |  |  |  | 339473 |  | 339473 |
|  Acquisition of subsidiaries | 4 |  |  |  |  | 31177 |  |  |  |  | 31177 | 15999 | 47176 |
|  Disposal of subsidiaries |  |  |  |  |  |  |  |  |  |  |  | 207 | 207 |
|  Share-based compensation | 19 |  |  |  |  | 1788 |  |  |  |  | 1788 |  | 1788 |
|  Balance as of September 30, 2022 |  | 8044516894 | 8814747 | 5519763566 | 37 | 1451333 | (97750203) |  | (273250) | (4927072) | (3748952) | 48975 | (3699977) |
|  Balance as of September 30, 2022, in US$ |  |  | 1239158 |  | 5 | 204025 |  |  | (38413) | (692636) | (527019) | 6884 | (520135) |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS** 

**(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Nine months ended September 30,** | **Nine months ended September 30,** | **Nine months ended September 30,** |
|  |<br>**Notes** | **2021** | **2022** | **2022** |
|  | | **RMB** | **RMB** | **US$** |
|  **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |  |  |
|  Net loss |  | (856591) | (1109358) | (155951) |
|  Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation |  | 245218 | 274523 | 38592 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization |  | 15384 | 17829 | 2506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of property and equipment |  | 3493 | 8869 | 1247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss on disposal of intangible assets |  |  | 782 | 110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease expense to reduce operating lease right-of-use assets |  |  | 396250 | 55704 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss (profit) from equity method investments |  | 2778 | (2176) | (306) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisition | 6 | (54337) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss on contingent consideration |  | 681 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  | (2861) | (217) | (31) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share-based compensation | 19 | 41518 | 1788 | 251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred tax benefit |  | (995) | (1253) | (176) |
|  Changes in operating assets and liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable, net |  | (6752) | 3836 | 539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories |  | (126228) | 81831 | 11504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets |  | (202989) | (7638) | (1074) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amounts due from related parties |  | 7270 | 916 | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |  | 82809 | 7266 | 1021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income tax payable |  | (6808) | (223) | (31) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities |  | 70182 | (4831) | (679) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities |  | (22683) | 165932 | 23327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities—Current |  |  | 25995 | 3654 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities—Non-current |  |  | (362217) | (50920) |
|  **Net cash used in operating activities** |  | **(810911)** | **(502096)** | **(70584)** |
|  **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |  |  |
|  Acquisition of subsidiaries and equity investments, net of cash acquired |  | (482013) | (119593) | (16812) |
|  Settlement of amounts due to the former shareholders of acquired entities |  | (95268) | (2956) | (415) |
|  Purchase of property and equipment |  | (279579) | (194942) | (27405) |
|  Acquisition of intangible assets |  | (5594) | (2270) | (319) |
|  Proceeds from maturity of short-term investments |  | 889563 | 891344 | 125303 |
|  Purchase of short-term investments |  | (2396875) |  |  |
|  **Net cash (used in) provided by investing activities** |  | **(2369766)** | **571583** | **80352** |
|  **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |  |  |
|  Proceeds from short-term borrowings |  | 826221 | 1676498 | 235678 |
|  Repayments of short-term borrowings |  | (356840) | (1174990) | (165177) |
|  Payment of deferred offering costs |  | (7505) | (324) | (46) |
|  Acquisition of non-controlling interests |  | (32770) | (60807) | (8548) |
|  Borrowings for machinery and electronic equipment |  |  | 18267 | 2568 |
|  Principal repayment of borrowings for machinery and electronic equipment loans |  |  | (3212) | (451) |
|  **Net cash provided by financing activities** |  | **429106** | **455432** | **64024** |
|  Effect of exchange rate changes in cash, cash equivalents and restricted cash |  | (24327) | 215364 | 30275 |
|  Net (decrease) increase in cash, cash equivalents and restricted cash |  | (2775898) | 740283 | 104067 |
|  Cash, cash equivalents and restricted cash at the beginning of the period |  | 4024308 | 1687365 | 237206 |
|  **Cash, cash equivalents and restricted cash at the end of the period** |  | **1248410** | **2427648** | **341273** |
|  **Reconciliation of cash, cash equivalents and restricted cash** |  |  |  |  |
|  Cash and cash equivalents |  | 447706 | 855947 | 120327 |
|  Restricted cash |  | 800704 | 1571701 | 220946 |
|  **Total cash, cash equivalents and restricted cash** |  | **1248410** | **2427648** | **341273** |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)** 

**(Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"))** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Nine months ended<br>September 30,** | **Nine months ended<br>September 30,** | **Nine months ended<br>September 30,** |
|  |<br>**Notes** | **2021** | **2022** | **2022** |
|  | | **RMB** | **RMB** | **US$** |
|  **Supplemental disclosures of cash flow information:** |  |  |  |  |
|  Interest expense paid |  | 22479 | 55818 | 7847 |
|  Income tax paid |  | 19789 | 4869 | 684 |
|  **Supplemental disclosures of non-cash information:** |  |  |  |  |
|  Acquisition of property and equipment included in accrued expenses and other liabilities | 10 | 47361 | 18481 | 2598 |
|  Share consideration for acquisition of subsidiaries | 4 | 529153 | 31177 | 4383 |
|  Unpaid cash consideration to the former shareholders related to acquisition of subsidiaries | 10 | 265295 | 140152 | 19702 |
|  Unpaid cash consideration of acquisition of non-controlling interests | 10 | 94746 | 26858 | 3776 |
|  Amounts due to the former shareholders of acquired entities | 10 | 29729 | 22586 | 3175 |
|  Share consideration for acquisition of non-controlling interests |  | 381983 |  |  |

---

*The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.* 

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**1.** **ORGANIZATION** 

New Ruipeng Pet Group Inc. (the "Company", originally named "Ruipeng Pet Group Inc.") was incorporated in the Cayman Islands on June 14, 2019. The Company, through its subsidiaries (collectively referred to as the "Group"), is principally engaged in pet care service and sales of pet products in the People's Republic of China (the "PRC" or "China").

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

***Basis of presentation***

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission regarding financial reporting that are consistent with those used in the preparation of the Group's audited consolidated financial statements for the years ended December 31, 2020 and 2021, except for the effect of the Group's adoption of Accounting Standards Update ("ASU") No. 2016-02 ("ASU 2016-02"), Leases (Topic 842) as of January 1, 2022 (Note 2—*Recently Adopted Standards*). As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.

In the opinion of the Company's management, the accompanying unaudited interim condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2022. The consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the years ended December 31 2020 and 2021.

***Principles of Consolidation***

The unaudited interim condensed consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

***Use of estimates***

The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant estimates reflected in the Company's unaudited interim condensed consolidated financial statements include, but are not limited to, the useful lives of long-lived assets, the valuation of goodwill and long-lived asset, the valuation of contingent consideration, remeasurement gain on step acquisition, assets and liabilities in connection with

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Use of estimates (continued)***

acquisitions and incremental borrowing rates for operating lease liabilities. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited interim condensed consolidated financial statements.

***Convenience translation***

Amounts in U.S. dollars are presented for the convenience of the reader and are translated at the noon buying rate of RMB 7.1135 per US$1.00 on September 30, 2022 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

***Restricted cash***

Restricted cash primarily consists of cash reserved in a bank account used as collateral for short-term bank borrowings. Restricted cash is expected to be released to cash within the next 12 months and therefore, classified as a current asset.

***Short-term investments***

Short-term investments consist of bank structured deposits with variable interest rates that are purchased from reputable financial institutions in the PRC, and time deposits with contractual maturities within twelve months. The fair value of the derivative assets bifurcated from the host contracts of bank structured deposits was insignificant during the nine months ended September 30, 2022.

***Revenue recognition***

Revenue is recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services, net of value-added tax ("VAT"). The Company follows a five step approach for revenue recognition: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue as or when the Company satisfies a performance obligation.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. The Company has determined that its contracts do not include a significant financing component because the Company expects the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Revenue recognition (continued)***

For all contracts with customers, the Company evaluates whether it is the principal (i.e. to report revenue on a gross basis) or agent (i.e. to report revenue on a net basis). Generally, the Company is the principal in its contracts with customers as it controls the related goods or services before they are transferred to the customer.

Timing of revenue recognition may differ from the timing of invoicing to customers. For certain services customers are required to pay before the services are delivered to the customer. When either party to a revenue contract has performed, the Company recognizes a contract asset or a contract liability in the consolidated balance sheet, depending on the relationship between the Company's performance and the customer's payment. The Company's contract liabilities primarily relate to services not yet completed and products not yet delivered. The Company classifies contract liabilities as current based on the timing of when the Company expects to recognize revenue, which typically occurs within one year.

This revenue recognized was driven primarily by performance obligations of medical cards, membership prepayments, and grooming services being satisfied. The Company did not have any material contract assets as of December 31, 2021 or September 30, 2022.

For the nine months ended September 30, 2021, the increase in the contract liabilities balance was primarily driven by the increase in sales of medical cards and membership prepayments and contract liabilities of RMB38,098 (US$5,913) assumed from business combinations, partially offset by revenue of RMB178,737 (US$27,740) recognized that was included in the contract liabilities balance as of January 1, 2021.

For the nine months ended September 30, 2022, the decrease in the contract liabilities balance was primarily driven by the decrease in sales of medical cards and membership prepayments and contract liabilities of RMB1,650 (US$232) assumed from business combinations, partially offset by revenue of RMB292,474 (US$41,115) recognized that was included in the contract liabilities balance as of January 1, 2022.

<u>Pet care services</u> 

Pet care services is primarily comprised of pet medical and grooming services. Pet medical services mainly include routine services such as deworming, vaccination, physical examination and sterilization, and specialized care for pets; grooming services mainly include pet bathing and salon services. The duration of this type of outpatient pet medical and grooming services is short, and most of the services are completed within one day. Revenues are recognized when the Company's obligation to provide pet care services is satisfied. Revenue for grooming services and outpatient services are recognized at a point in time because the performance obligations are generally satisfied over a period of less than one day. For inpatient services, the performance obligation is satisfied over time as the patient simultaneously receives and consumes the benefits of the inpatient services provided. The Company has a right to consideration from its patients in an amount that corresponds directly with the value to the patient of the Company's performance completed to date (calculated based on fixed pre-determined treatment plan). Therefore, revenues for inpatient services are recognized in the amount to which the Company has a right to invoice. The Company typically requests payment before providing the services but payment may also be due upon completion of the services.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Revenue recognition (continued)***

The Company sells different pet medical cards in fixed amounts that include a package of pet services including physical exam, vaccines, deworming and also provide discounts for future medical and grooming services. For service arrangements that include multiple performance obligations, the Company evaluates all the performance obligations in the pet medical cards to determine whether each performance obligation is distinct. Consideration is allocated to each performance obligation based on its standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers on a standalone basis. The Company recognizes revenue from pet medical cards when the underlying promised goods or services are redeemed by the medical card holders. The medical card holders are also allowed discounts on future medical and grooming services during the card validity period of one year which is accounted for as a material right. The relative standalone selling price of future services is deferred and included as part of contract liabilities in the unaudited condensed consolidated balance sheets based on the amount of services that are expected to be provided.

The Company provides animal diagnostic testing services such as pathology, molecular diagnosis and allergenic testing to customers. The Company's contracts have a single performance obligation which is satisfied upon the rendering of the diagnostic tests and delivery of the test results to the customer at a point in time. The Company's payment terms are typically 30 to 60 days upon acceptance of the test results from customers.

The Company also provides advertising services for customers to enhance the customer's brand and image, by tailoring and displaying the customers' advertisements on the Company's various online platforms and arranging signage at physical events e.g. awards ceremony (collectively "marketing activities"). As the Company uses the marketing activities to deliver an integrated advertising campaign for the customers, the individual marketing activities are not distinct and the combined marketing activities are considered to be one performance obligation to enhance the customer's brand and image. The length of the advertising campaigns is generally within 3 months or less and revenues from such arrangements are recognized ratably over the service period, as the customer simultaneously consumes the benefits when the Company provides the services.

<u>Supply chain</u> 

The Company sells pet food, medicine and supplies directly or through third-party online channels to both corporate and individual customers. For sales through third-party online channels, the Company delivers inventory on a consignment basis to third-party online channels but they are not required to pay until the product is sold to end customers. Under such arrangements, the Company retains the title to the products and the third-party online channels act as selling agents. The third-party online channels earn commissions on the products sold to end customers and periodically remit the cash proceeds from sales, less the commission earned, to the Company. In addition, consigned products that are not sold can be returned to the Company. Revenue from supply chain is recognized when control passes, which generally occurs at a point in time when direct customers or end customers for consignment sales through third-party online channels accept the products upon delivery. The Company's payment terms are typically 30 to 45 days upon acceptance from customers. Inventory on consignment is not material as of December 31, 2021 and September 30, 2022.

The Company offers discounts, and a right of return for a short period upon the customer's receipt of the products. Returns are estimated using the expected value method based on historical return patterns. The

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Revenue recognition (continued)***

Company recognizes revenues net of discounts and estimated returns, and records a refund liability included in "Accrued expenses and other liabilities" in the unaudited condensed consolidated balance sheets. As of December 31, 2021 and September 30, 2022, estimated returns were not significant.

<u>Local services</u> 

Local services are primarily comprised of product sales through online platforms and offline channels. Revenue from local services is recognized when control passes, which generally occurs at a point in time when customers accept the products in the hospital or upon delivery. The Company offers discounts, and a right of return for a short period upon the customer's receipt of the products. Returns are estimated using the expected value method based on historical return patterns. Subsequent sales return is not allowed for product sales from hospitals. The Company recognizes revenues net of discounts and estimated returns, and records a refund liability included in "Accrued expenses and other liabilities" in the unaudited condensed consolidated balance sheets. As of December 31, 2021 and September 30, 2022, estimated returns were not significant. The Company also provides online coupons to its customers that can only be used with concurrent purchases, and recognizes them as a reduction of revenues when they are utilized by customers in a sales transaction.

***Research and development expenses***

Research and development expenses consist primarily of payroll and related personnel costs for the development and related enhancements of the Company's internal use software for its operation management. The Company expenses these costs as incurred, unless such costs qualify for capitalization as software development costs, including (i) preliminary project is completed, (ii) management has committed to funding the project and it is probable that the project will be completed and the software will be used to perform the function intended, and (iii) they result in significant additional functionality in the Company's products. No costs were capitalized during the nine months ended September 30, 2021 and 2022 as the Company has not met all of the necessary capitalization requirements.

***Advertising expenses***

Advertising expenses represents expenses relating to the marketing of the Company's online or offline sales channels. Advertising expenses are charged to sales and marketing expense as incurred which amounted to RMB107,362 and RMB89,513 (US$12,584) for the nine months ended September 30, 2021 and 2022, respectively.

***Fair value measurements of financial instruments***

U.S. GAAP established a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company's own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the assets or liability and are

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Fair value measurements of financial instruments (continued)***

developed based on the best information available in the circumstances. Fair value is the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The Company uses a three-tiered fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

U.S. GAAP describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Cash, cash equivalents, restricted cash and time deposits are classified within Level 1 because they are valued by using quoted market prices. See Note 5 for the Company's short-term investments.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Fair value measurements of financial instruments (continued)***

Contingent consideration related to the acquisitions of subsidiaries (Note 10) is classified within Level 3 as the fair value is measured based on inputs linked to the probability of achieving certain performance targets that are unobservable in the market. The valuation technique is based on market approaches and the significant unobservable inputs include determining the probability of achieving certain performance targets. The following table presents a reconciliation of the contingent consideration measured at fair value on a recurring basis using Level 3 unobservable inputs for the nine months ended September 30, 2021 and 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **Nine months ended<br>September 30,** | **Nine months ended<br>September 30,** | **Nine months ended<br>September 30,** |
|  | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** |
|  **Beginning balance** | **54660** | **26858** | **3776** |
|  Fair value loss on contingent consideration | 681 |  |  |
|  Settlement of contingent consideration | (29925) |  |  |
|  **Ending balance** | **25416** | **26858** | **3776** |

---

The Company's other financial instruments include accounts receivable and payable, short-term bank borrowings and certain amounts of accrued expenses and other liabilities, as well as prepaid expenses and other current assets. The carrying values of these financial instruments approximate their fair values due to their short-term maturities and are classified within Level 3.

The Company measured its property and equipment, intangible assets and equity method investments at fair value on a nonrecurring basis whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable.

***Share-based compensation***

The Company determines whether a share based award should be accounted for as a liability award or equity award. Share-based awards to employees classified as equity awards are recognized in the unaudited condensed consolidated financial statements based on their grant date fair values. Share based options which an employee receives a variable number of shares with a fixed monetary value are to be classified as liability awards when the grant date definition is met and remeasured to fair value at the end of each reporting period until the date of settlement with an adjustment for fair value recorded to the current period expenses. For awards only with service conditions, the Company has elected to recognize compensation expense using the straight-line method for awards granted with graded vesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant date value of the shares that are vested at that date. For awards with performance and service conditions, the Company uses the accelerated method for awards granted with graded vesting. The Company accounts for forfeitures as they occur.

A change in the terms or conditions of the awards is accounted for as a modification of the award. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Share-based compensation (continued)***

the original award immediately before its terms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards, the Company recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Company recognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of the original award immediately before modification, the minimum compensation cost the Company recognizes is the cost of the original award.

***Recently Adopted Standards***

On January 1, 2022, the Company adopted ASU 2016-02, using the modified retrospective transition method and elected the transition option to use an effective date of January 1, 2021 as the date of initial application. As a result, the comparative periods were not restated.

The Company has elected the package of practical expedients permitted which allows the Company not to reassess the following at adoption date: (i) whether any expired or existing contracts are or contains a lease, (ii) the lease classification for any expired or existing leases, and (iii) initial direct costs for any expired or existing leases (i.e. whether those costs qualify for capitalization under ASU 2016-02). The Company also elected the short-term lease exemption for certain classes of underlying assets including pet hospitals, offices and warehouses, with a lease term of 12 months or less. For lease arrangement with lease and non-lease components, the Group made the policy election to combine the lease and non-lease components as one-single component under Topic 842.

The Company's accounting policy effective on the adoption date of ASU 2016-02 is as follows:

Leases are classified at the inception date as either a finance lease or an operating lease. The Company classifies a lease as a finance lease when the lease meets any one of the following criteria at lease commencement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. The lease term is for a major part of the remaining economic life of the underlying asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the Company at the end of the lease term.

The Company determines if an arrangement is a lease at inception. The Company classifies a lease as a finance lease or an operating lease at lease commencement date as appropriate under ASC 842. The Company has operating leases for pet hospitals, offices and warehouses and does not have any finance leases for the nine months ended September 30, 2021 and 2022.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Recently Adopted Standards (continued)***

For operating leases, the Company records a lease liability and corresponding right-of-use (ROU) asset at lease commencement. Lease terms are based on the non-cancellable term of the lease and may contain options to extend the lease when it is reasonably certain that the Company will exercise the option. Lease liabilities represent the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement.

The Company estimates its incremental borrowing rate for its leases at the commencement date to determine the present value of future lease payments when the implicit rate is not readily determinable in the lease. In estimating its incremental borrowing rate, the Company considers its credit rating and publicly available data of borrowing rates for loans of similar amount, currency and term as the lease.

Operating leases are presented as "operating lease ROU assets" and "operating lease liabilities" on the unaudited condensed consolidated balance sheet. Lease liabilities that become due within one year of the balance sheet date are classified as current liabilities. Operating lease ROU asset represents the right to use an underlying asset for the lease term and are recognized in an amount equal to the lease liability adjusted for any lease payments made prior to commencement date, less any lease incentives received and any initial direct costs incurred by the Company.

After lease commencement, operating lease liabilities are measured at the present value of the remaining lease payments using the discount rate determined at lease commencement. Operating lease ROU assets are measured at the amount of the lease liabilities and further adjusted for prepaid or accrued lease payments, the remaining balance of any lease incentives received, unamortized initial direct costs and impairment of the ROU assets, if any. Operating lease expense is recognized as a single cost on a straight-line basis over the lease term.

Leases that have a term of 12 months or less at the commencement date ("short-term leases") are not included in operating lease ROU assets and operating lease liabilities. Lease expense for the short-term leases is recognized on a straight-line basis over the lease term.

The cumulative effect of the changes made to the Company's unaudited condensed consolidated balance sheet as of January 1, 2022 for the adoption of ASU 2016-02 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Balance as of<br>December 31, 2021** | **Adjustments due to the<br>adoption of ASU 2016-02** | **Balance as of**<br>**January 1, 2022** |
|  Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 720752 | (154090) | 566662 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease ROU assets |  | 2248938 | 2248938 |
|  Liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities (current) |  | (445105) | (445105) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities (non-current) |  | (1669948) | (1669948) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | (1535527) | 20205 | (1515322) |

---

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**2.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** 

***Recently Adopted Standards (continued)***

The impact of adopting ASU 2016-02 on the Company's unaudited interim condensed consolidated balance sheet as of September 30, 2022 are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **As reported** | **Legacy<br>GAAP** | **Effect of the adoption of<br>ASU 2016-02<br>Higher/(lower)** |
|  Assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 568096 | 705557 | (137461) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease ROU assets | 2093834 |  | 2093834 |
|  Liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities (current) | (471100) |  | (471100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating lease liabilities (non-current) | (1548879) |  | (1548879) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses and other liabilities | (1518964) | (1524404) | 5440 |

---

The adoption of the standard did not have significant impact on the Company's current period net loss or cash flows.

***Recent accounting pronouncements***

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), The amendments require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments apply to all entities that enter into a business combination within the scope of ASC 805-10, Business Combinations—Overall. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and it should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company does not expect any material impact on the Company's unaudited interim condensed consolidated financial statements as a result of adopting the new standard.

In August 2020, the FASB issued ASU 2020-06 *, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)*. For convertible instruments, the new guidance simplifies an issuer's accounting for convertible instruments by eliminating the beneficial conversion and cash conversion accounting models in ASC 470-20 that require separate accounting for embedded conversion features. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. This standard is effective for the Company for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company early adopted ASU 2020-06 on January 1, 2022 and did not have any material impact on the Company's unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2022 as a result of adopting the new standard.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**3.** **CONCENTRATION OF RISKS** 

***Liquidity risk and Capital Resources***

The Company has incurred net operating losses each period since inception. For the nine months ended September 30, 2022, the Company incurred a net loss of RMB1,109,358 (US$155,951). During the nine months ended September 30, 2022, the Company used RMB502,096 (US$70,584) of cash in operations. As of September 30, 2022, the Company had an accumulated deficit of approximately RMB4,927,072 (US$692,636). The Company expects to gradually mitigate operating losses in the foreseeable future by achieving economies of scale in its pet care hospitals, supply chain and local services businesses. To date, the Company has been able to fund its operations through bank borrowings and private placements of redeemable ordinary shares. As of September 30, 2022, the Company had cash and cash equivalents of RMB855,947 (US$120,327).

Management believes that the existing cash and cash equivalents, together with unused bank credit facilities, are sufficient for the Company to continue operating activities for at least the next 12 months from the date of issuance of its unaudited interim condensed consolidated financial statements.

The Company plans to continuously fund its operations through public and private equity financings, bank borrowings and debt borrowings. The Company's ultimate success depends on achieving economies of scale in its pet care hospitals, supply chain and local services businesses. Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending and investments could have a material adverse effect on the Company's ability to achieve its intended business objectives. These factors would have a material adverse effect on the Company's future financial results, financial position and cash flows.

***Concentration of credit risk***

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments and accounts receivable. As of December 31, 2021, and September 30, 2022, RMB2,119,911 and RMB1,785,393 (US$250,987), respectively, of the Group's cash and cash equivalents, restricted cash and short term investments were primarily deposited in financial institutions located in the PRC, which management believes are of high credit quality.

Accounts receivable are typically unsecured and derived from revenue earned from customers in China, which are exposed to credit risk. The risk is mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring process of outstanding balances. The Company maintains reserves for estimated credit losses and these losses have generally been within its expectations. No customers had a receivable balance exceeding 10% of the total accounts receivable balance as of December 31, 2021, and September 30, 2022.

No customers generated greater than 10% of total revenues for the periods ended September 30, 2021, and 2022.

Amounts due from related parties are typically unsecured. In evaluating the collectability of the amounts due from related parties, the Company considers many factors, including the related parties' repayment history and their credit-worthiness. An allowance for doubtful accounts is made when collection of the full amount is no longer probable.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**3.** **CONCENTRATION OF RISKS (CONTINUED)** 

***Impact of COVID-19***

The COVID-19 pandemic continues to evolve. There are still uncertainties of COVID-19's future impact, and the extent of the impact will depend on a number of factors, including the duration and severity of COVID-19, possibility of Delta and Omicron outbreak, the development and progress of distribution of COVID-19 vaccine and other medical treatment, the potential change in user behavior, especially on internet usage due to the prolonged impact of COVID-19, the actions taken by government authorities, particularly to contain the outbreak such as lockdowns, and, stimulate the economy to improve business condition especially for small and medium enterprises ("SMEs"), almost all of which are beyond the Company's control. As a result, certain of the Company's estimates and assumptions, including the valuation of long-term investments and impairment assessments of goodwill and long-lived assets, require significant judgments and carry a higher degree of variabilities and volatilities that could result in material changes to the Company's current estimates in future periods.

**4.** **BUSINESS COMBINATIONS** 

In order to consolidate and optimize the Group's capacity in certain geographic areas in the PRC for its business in pet care services, Supply chain and Local services, the Group acquired 104 and 5 pet service groups or companies including 416 and 14 pet hospitals, 15 and 3 supply chain companies and nil and nil local services companies during the nine months ended September 30, 2021 and 2022, respectively. Except for the supply chain companies which were acquired using the ordinary shares of the supply chain subsidiary (Runhe Supply Chain Group Co., Ltd. ("Runhe")), the other business combinations were acquired using the Company's shares. The Group accounted for these acquisitions as business combinations. Total consideration for the nine months ended September 30, 2021 and 2022 acquisitions amounted to RMB1,275,536 and RMB117,833 (US$16,565), respectively, including RMB601,800 and RMB86,656 (US$12,182) of cash consideration, RMB452,451 and nil of the Company's shares, RMB76,702 and RMB31,177 (US$4,383) of the supply chain subsidiary's shares and contingent share consideration and RMB144,583 and nil representing the fair value of pre-existing equity interests. RMB2,987 and RMB15,999 (US$2,249) represents the fair value of the non-controlling interests for the nine months ended September 30, 2021 and 2022, respectively. The fair value of the net assets acquired were RMB139,911 and RMB53,859 (US$7,572), including RMB4,700 and RMB922 (US$130) of intangible assets, resulting in goodwill of RMB1,138,612 and RMB79,973 (US$11,242) for the nine months ended September 30, 2021 and 2022, respectively. Goodwill represents the expected synergies from the consolidation. Goodwill associated with these acquisitions are not tax deductible.

*Zhejiang Jiawen Pet Hospital Management Co., Ltd.* 

On April 19, 2021, the Company acquired the remaining 74.51% equity interests in Zhejiang Jiawen Pet Hospital Management Co., Ltd. ("Zhejiang Jiawen") for a purchase consideration of RMB328,931, which included cash of RMB100,794, ordinary shares with fair value of RMB145,825 and the fair value of the 25.49% equity interest previously held of RMB82,312. A gain of RMB36,385 was recognized on the remeasurement of the previously held equity interest.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**4.** **BUSINESS COMBINATIONS (CONTINUED)** 

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:

---

| | |
|:---|:---|
|  | **RMB** |
|  Purchase consideration | 328931 |
|  Less: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | 619 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 167422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 28075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets | 20069 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities | (211164) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contract liabilities | (25147) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current liabilities | (10797) |
|  Goodwill | 359854 |

---

*Zhejiang Jiawen Pet Hospital Management Co., Ltd.* 

The valuations used in the purchase price allocation described above were determined by the Company with the assistance of a third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches.

*Shanghai Youge Medical Technology Co., Ltd* 

On January 25, 2022, the Company acquired a 60% equity interests in Shanghai Youge Medical Technology Co., Ltd ("Youge") for a cash consideration of RMB22,500 (US$3,163). The non-controlling interests of Youge was measured at the acquisition date at fair value RMB11,250 (US$1,581).

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:

---

| | | |
|:---|:---|:---|
|  | **RMB** | **US$** |
|  Purchase consideration | 22500 | 3163 |
|  Fair value of non-controlling interests | 11250 | 1581 |
|  Less: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash | 11271 | 1584 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other current assets | 411 | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment | 560 | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible assets | 3060 | 430 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other non-current assets | 123 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current liabilities | (555) | (78) |
|  Goodwill | 18880 | 2654 |

---

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**4.** **BUSINESS COMBINATIONS (CONTINUED)** 

*Shanghai Youge Medical Technology Co., Ltd (continued)* 

The valuations used in the purchase price allocation and the fair value of the noncontrolling interest measurement described above were determined by the Company with the assistance of a third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches.

*Shanghai Chongai Runhe Supply Chain Co., Ltd* 

On February 28, 2022, the Company acquired 100% equity interests in Shanghai Chongai Runhe Supply Chain Co., Ltd ("Chongai") for a purchase consideration of RMB37,677 (US$5,297), which included cash of RMB15,750 (US$2,214) and 1.13% equity interest in Runhe with fair value of RMB21,927 (US$3,083). To determine the fair value of equity interests of Runhe, the Company used the discounted cash flow (DCF) method of the income approach, which involved significant assumptions including projected cash flows, discount rate and discount for lack of marketability (DLOM) using the Finnerty method.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:

---

| | | |
|:---|:---|:---|
|  | **RMB** | **US$** |
|  Purchase consideration | 37677 | 5297 |
|  Less: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories | 8897 | 1251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 2644 | 372 |
|  Goodwill | 26136 | 3674 |

---

*Shanghai Chongai Runhe Supply Chain Co., Ltd* 

The valuations used in the purchase price allocation described above were determined by the Company with the assistance of a third-party valuation firm. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches.

Supplemental unaudited pro forma information for all acquisitions has been excluded as they are not material to the consolidated financial statements of the Group.

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**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**5.** **SHORT-TERM INVESTMENTS** 

Short-term investments consist of time deposits in commercial banks with maturities within twelve months and bank structured deposits with maturities within three months issued by commercial banks for which the Company has the positive intent and ability to hold those securities to maturity. Time deposits and bank structured deposits are carried at amortized cost which approximate their fair value due to their short-term nature and are classified as Level 2 and Level 3, respectively.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** | **As of December 31, 2021** |
|  | **Amortized<br>cost** | **Gross unrecognized<br>holding gains** | **Gross unrecognized<br>gains** | **Fair<br>value** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
|  Time deposits | 892598 |  |  | 892598 |
|  Bank structured deposits | 1000 |  |  | 1000 |
|  Total short-term investments | 893598 |  |  | 893598 |

---

As of September 30, 2022, the Company had no short-term investments.

**6.** **LONG-TERM INVESTMENTS** 

The Company's percentage of ownership of their long-term investments and carrying values are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Percentage of<br>ownership** | **Percentage of<br>ownership** | **As of<br>December 31** | **As of September 30** | **As of September 30** |
| **Investees** | **2021** | **2022** | **2021** | **2022** | **2022** |
|  |  |  | **RMB** | **RMB** | **US$** |
|  Equity method investments |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beijing Siwei Enterprise Management Consulting Co., Ltd. ("Beijing Siwei") | 25% |  | 994 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Beijing Kolobo Pet Hospital Co., Ltd. ("Beijing Kolobo") | 27% | 27% | 1262 | 1221 | 172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tianjin Ranova Petfood Co., Ltd. ("Ranova") | 20% | 20% | 52134 | 54351 | 7640 |
|  Total equity method investments |  |  | 54390 | 55572 | 7812 |
|  Equity investments without readily determinable fair value |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shenzhen Shenzhi Biological Technology Co., Ltd. ("Shenzhen Shenzhi") | 15% | 15% | 3000 | 3000 | 422 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shanghai Hanvet Bio-Pharm Co., Ltd. ("Shanghai Hanvet") | 20% | 20% | 50000 | 50000 | 7029 |
|  Total equity investments without readily determinable fair value |  |  | 53000 | 53000 | 7451 |
|  |  |  | 107390 | 108572 | 15263 |

---

The equity method goodwill of the Company's equity method investments was RMB31,661 and RMB30,440 (US$4,279) as of December 31, 2021 and September 30, 2022, respectively.

For the nine months ended September 30, 2021, no impairment losses were recognized for long-term investments.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**6.** **LONG-TERM INVESTMENTS (CONTINUED)** 

For the nine months ended September 30, 2022, impairment losses of RMB994 (US$140) were recognized as Beijing Siwei was shut down in August, 2022.

**7.** **GOODWILL** 

The changes in the carrying amount of goodwill by reporting segment were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Pet care services** | **Supply chain** | **Local services** | **Total** |
|  | **RMB** | **RMB** | **RMB** | **RMB** |
|  Balance as of January 1, 2021 | 2410447 | 144222 | 50190 | 2604859 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions related to acquisitions | 1120716 | 173372 |  | 1294088 |
|  Balance as of December 31, 2021 | 3531163 | 317594 | 50190 | 3898947 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additions related to acquisitions | 46187 | 33786 |  | 79973 |
|  Balance as of September 30, 2022 | 3577350 | 351380 | 50190 | 3978920 |
|  Balance as of September 30, 2022, in US$ | 502896 | 49396 | 7056 | 559348 |

---

No impairment losses were recognized for the nine months ended September 30, 2021 and 2022.

**8.** **OPERATING LEASES** 

The Company leases pet hospitals, offices and warehouses under operating leases. The Company's lease agreements include lease payments that are largely fixed, do not contain material residual value guarantees or variable lease payments. The leases have remaining lease terms of up to twenty years. Certain lease agreements include terms with options to extend the lease, however none of these have been recognized in the Company's right-of-use assets or lease liabilities since those options were not reasonably certain to be exercised. The Company's leases do not contain restrictions or covenants that restrict the Group from incurring other financial obligations. The Company's lease agreements may contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities.

The components of lease costs were as follows:

---

| | | |
|:---|:---|:---|
|  | **Nine months ended September 30, 2022** | **Nine months ended September 30, 2022** |
|  | **RMB** | **US$** |
|  Operating lease costs | 486496 | 68391 |
|  Short-term lease costs | 73169 | 10285 |
|  Total lease costs | 559665 | 78676 |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**8.** **OPERATING LEASES (CONTINUED)** 

---

| | | |
|:---|:---|:---|
| **Other information** | **Nine months ended September 30, 2022** | **Nine months ended September 30, 2022** |
|  | **RMB** | **US$** |
|  Cash paid for amounts included in the measurement of operating lease liabilities | 494777 | 69555 |
|  ROU assets obtained in exchange for new operating lease liabilities | 292126 | 41066 |
|  Weighted-average remaining lease term (in years) | 5.86 |  |
|  Weighted-average discount rate | 7.06% |  |

---

For the nine months ended September 30, 2022, total lease costs of RMB485,904 (US$68,307), RMB35,719 (US$5,021), RMB36,155 (US$5,083), and RMB1,887 (US$265) were recorded in cost of revenues, selling and marketing expenses, general and administrative expenses, and research and development expenses, respectively.

For the nine months ended September 30, 2021, total lease costs of RMB391,133, RMB30,958, RMB9,600 and RMB2,658 were recorded in cost of revenues, selling and marketing expenses, general and administrative expenses, and research and development expenses respectively.

Future minimum lease payments for operating leases as of September 30, 2022 are as follows:

---

| | | |
|:---|:---|:---|
|  | **As of September 30,<br>2022** | **As of September 30,<br>2022** |
|  | **RMB** | **US$** |
|  October 1, 2022 to September 30, 2023 | 591893 | 83207 |
|  October 1, 2023 to September 30, 2024 | 486075 | 68331 |
|  October 1, 2024 to September 30, 2025 | 406486 | 57143 |
|  October 1, 2025 to September 30, 2026 | 313817 | 44116 |
|  October 1, 2026 to September 30, 2027 | 227025 | 31915 |
|  October 1, 2027 and after | 424081 | 59616 |
|  Total minimum lease payments | 2449377 | 344328 |
|  Less: Imputed interest | 429398 | 60364 |
|  Total lease liability balance | 2019979 | 283964 |
|  Minimum payments related to leases not yet commenced as of September 30, 2022 | 26626 | 3743 |

---

**9.** **SHORT-TERM BANK BORROWINGS** 

Short-term bank borrowings represent RMB denominated term loans from various banks in the PRC that are due within one year.

The total deposits in restricted cash pledged for short-term bank borrowings was RMB911,725 and RMB1,568,701 (US$220,524) as of December 31, 2021 and September 30, 2022, respectively. As of December 31, 2021 and September 30, 2022, the weighted average interest rate for short-term bank borrowings was 3.78% and 3.96%, respectively, and the aggregate amounts of unused lines of credit for short-term borrowings was RMB4,150,440 and RMB2,235,212 (US$314,221), respectively.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**10.** **ACCRUED EXPENSES AND OTHER LIABILITIES** 

Accrued expenses and other liabilities consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **As of<br>December 31** | **As of September 30** | **As of September 30** |
|  | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** |
|  Accrued payroll and welfare benefits | 966608 | 1139877 | 160241 |
|  Amounts due to the former shareholders of acquired entities | 28620 | 22586 | 3175 |
|  Accrued expenses | 102102 | 97011 | 13638 |
|  Unpaid cash consideration of acquisition of subsidiaries and non-controlling interests | 311679 | 159492 | 22421 |
|  Payables for property and equipment suppliers | 33617 | 18481 | 2598 |
|  Deposits | 18499 | 10958 | 1540 |
|  Contingent consideration | 26858 | 26858 | 3776 |
|  Others | 47544 | 43701 | 6143 |
|  | 1535527 | 1518964 | 213532 |

---

**11.** **TAXATION** 

For the nine months ended September 30, 2021 and 2022, the Company recorded an income tax provision of RMB11,984 and RMB3,393 (US$477), which represents an effective income tax rate of negative 1.42% and negative 0.31%, respectively. The effective income tax rate is lower than the statutory rate of 25% primarily due to the preferential tax rates and entities with losses that are partially benefited.

The Company did not identify any material unrecognized tax benefits for each of the periods presented.

**12.** **OTHER SHAREHOLDERS' EQUITY** 

As of December 31, 2021 and September 30, 2022, the Company had authorized capital of 50,000,000,000 shares of stock, consisting of 47,847,597,810 Class A ordinary shares, par value US$0.000001 per share, out of which 6,325,670,000 are classified as redeemable ordinary shares (see Note 13), and 2,152,402,190 Class B ordinary shares, par value US$0.000001 per share that are redeemable and classified as redeemable ordinary shares (see Note 13).

Ordinary shares that are not redeemable consisted of the following as of December 31, 2021:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Carrying**<br>**value** |
|  | | | **RMB** | **RMB** |
|  Class A ordinary shares |  | 5422013363 |  | 37 |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**12.** **OTHER SHAREHOLDERS' EQUITY (CONTINUED)** 

Ordinary shares that are not redeemable consisted of the following as of September 30, 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Carrying**<br>**value** |
|  | | **RMB** | **US$** |
|  Class A ordinary shares | 5422013363 | 37 | 5 |

---

For shares issued and outstanding as of December 31, 2021 and September 30, 2022, each holder of ordinary shares of the Company may exercise such holder's voting right based on the portion of the shares such shareholder holds. Each ordinary share entitles the holder to one vote. If the number of shares held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., exceeds the aggregate number of shares held, directly or indirectly, by former Ruipeng Group shareholders and management, HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., agree to vote in the manner that is consistent with Ruipeng Group's management's position with respect to the exceeding part of the shares, without prejudice to the interests of other shareholders.

As of December 31, 2021 and September 30, 2022, such ordinary shares of the Company were directly held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P.

Certain ordinary shares have preferential rights and are classified within mezzanine equity on the unaudited condensed consolidated balance sheets as they may become redeemed at the option of the holders upon a deemed liquidation event and/or upon certain redemption trigger events that are outside of the Company's control. The details related to these redeemable ordinary shares as disclosed in Note 13.

As of December 31, 2021 and September 30, 2022, the Group was committed to issue, subject to satisfaction of certain conditions, up to 24,000,000 and 24,000,000 ordinary shares, respectively, as a result of contingent consideration recorded in accrued expenses and other liabilities (see Note 10).

Furthermore as of December 31, 2021 and September 30, 2022, 22,750,203 and 22,750,203 ordinary shares were held by Group level vehicles in relation to future acquisition of subsidiaries. These shares legally issued but not outstanding are accordingly presented as treasury shares as of December 31, 2021 and September 30, 2022.

**13.** **REDEEMABLE ORDINARY SHARES** 

As of December 31, 2021 and September 30, 2022, 6,325,670,000 Class A ordinary shares issued to designated shareholders have liquidation preference and/or redemption rights as agreed in the shareholders agreements and are referred to as redeemable Class A ordinary shares. Class B ordinary shares are redeemable and are referred to as redeemable Class B ordinary shares.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**13.** **REDEEMABLE ORDINARY SHARES (CONTINUED)** 

Redeemable ordinary shares consisted of the following as of December 31, 2021:

---

| | | | |
|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Liquidation**<br>**Value** |
|  | | **RMB** | **RMB** |
|  *Redeemable Class A ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RMB | 4725670000 | 3212096 | 3810873 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1600000000 | 1467227 | 1613950 |
|  | 6325670000 | 4679323 | 5424823 |
|  *Redeemable Class B ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1718846894 | 3564016 | 3920418 |
|  | 8044516894 | 8243339 | 9345241 |

---

Redeemable ordinary shares consisted of the following as of September 30, 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **Shares issued**<br>**and**<br>**outstanding** | **Carrying**<br>**value** | **Liquidation**<br>**Value** |
|  | | **RMB** | **RMB** |
|  *Redeemable Class A ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RMB | 4725670000 | 3212096 | 3810873 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1600000000 | 1633863 | 1797249 |
|  | 6325670000 | 4845959 | 5608122 |
|  *Redeemable Class B ordinary shares denominated in* |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; US$ | 1718846894 | 3968788 | 4365667 |
|  | 8044516894 | 8814747 | 9973789 |
|  | US$ | 1239158 | 1402093 |

---

The redeemable ordinary shares issued and outstanding in the tables above as of December 31, 2021 and September 30, 2022 are part of the authorized ordinary shares as described in Note 12.

As of December 31, 2021 and September 30, 2022, the redeemable Class A and Class B ordinary shares are not mandatorily redeemable financial instruments. However, the Company has classified certain ordinary shares as mezzanine equity on the unaudited condensed consolidated balance sheets as they may become redeemed at the option of the holders upon a deemed liquidation event and/or upon certain redemption trigger events that are outside of the Company's control. The redeemable ordinary shares were initially measured at fair value.

For Class A ordinary shares that are only redeemable upon a deemed liquidation event, the carrying value of the ordinary shares has not been accreted to their liquidation value as a deemed liquidation event is not considered probable of occurrence. Subsequent adjustments of the carrying values to liquidation values will be made only if and when it becomes probable redemption will occur.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**13.** **REDEEMABLE ORDINARY SHARES (CONTINUED)** 

For Class A and Class B ordinary shares that have redemption rights, no accretion was recognized because the carrying amount of the ordinary shares was greater than the redemption value.

The rights, preferences and privileges of the redeemable ordinary shares are as follows:

• *Voting rights* 

Each holder of redeemable ordinary shares of the Company may exercise such holder's voting right based on the portion of the shares such shareholder holds. Each redeemable ordinary share entitles the holder to one vote. If the number of shares held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., exceeds the aggregate number of shares held, directly or indirectly, by former Ruipeng Group shareholders and management, HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P., agree to vote in the manner that is consistent with Ruipeng Group's management's position with respect to the exceeding part of the shares, without prejudice to the interests of other shareholders.

As of December 31, 2021 and September 30, 2022, such redeemable ordinary shares of the Company were directly held by HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and Tianjin GLNY Enterprise Management Consultation, L.P.

• *Distribution of profit* 

If the general meeting of the Company approves the distribution of profit of the Company, such distribution shall be made according to the proportion of shareholders' shareholding of the Company.

• *Liquidation preference* 

In the event of (i) a liquidation, dissolution or winding up of the Company and/or its subsidiaries, (provided that a liquidation, dissolution or winding up of the subsidiaries of the Company shall constitute a liquidation event only when the number of branches and subsidiaries of the Company that have been liquidated, dissolved or wound up during a financial year exceeds 10% of the total number of branches and subsidiaries of the Company at the end of the previous financial year) or (ii) any deemed liquidation event as defined in the shareholders agreement, distributions to the shareholders shall be made as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The holders of redeemable ordinary shares are entitled to receive an amount equal 110% of the investment amount
or issue price plus all dividends declared but unpaid with respect thereto for each redeemable ordinary share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If upon full payment of the preference amount, there are still remaining distributable assets available for
distribution to the shareholders, such distributable assets shall be distributed to the shareholders (including shareholders who have received preference amount) on a pro rata basis based on number of shares held by each such shareholder at the time
of such distribution.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**13.** **REDEEMABLE ORDINARY SHARES (CONTINUED)** 

• *Redemption* rights

Class B ordinary shares are redeemable at the holders' option at any time after the earlier to occur of the following: (i) the fifth anniversary, if no qualified initial public offering (i.e. an IPO on the Hong Kong Stock Exchange, New York Stock Exchange, NASDAQ or any other recognized regional or national securities exchange, which public offering reflects the valuation of the Company immediately prior to such offering being not less than the post-Class B valuation with a simple rate of 15% per annum return calculated from the Class B ordinary shares closing date to the date that is immediately prior to such offering or US$5,415,246 (RMB38,521,352) as of September 30, 2022 (December 31, 2021: US$4,948,640) has occurred, and (ii) the occurrence of any material breach of the transaction documents by the Company or New Ruipeng Pet Group Inc.'s management, at a redemption price per Class B ordinary share equal to (a) the Class B ordinary share issue price with an interest rate of 8% per annum calculated from the first date on which such holder becomes a Class B ordinary shareholder through the date on which the redemption price is paid, plus (b) all declared but unpaid dividend on such share.

If upon full payment of the redemption price to the Class B ordinary shareholders, there are still remaining funds available, 873,597,973 shares of Class A ordinary shares are redeemable at the holders' option at a redemption price per share ranging from RMB0.25867 to RMB0.65327. 720,760,000 of those shares are also entitled to an interest rate of 8% per annum calculated from an agreed date through the date on which the redemption price is paid.

**14.** **RESTRICTED NET ASSETS** 

The Company's ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company's PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company's PRC subsidiaries.

In accordance with the PRC Regulations on Enterprises with Foreign Investment and the articles of association of the Company's PRC subsidiaries, a foreign-invested enterprise established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise's PRC statutory accounts. A foreign-invested enterprise is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise's PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign-invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends and are not transferable to the Company in the form of loans, advances, or cash dividends.

As a result of these PRC laws and regulations subject to the limit discussed above that require annual appropriations of 10% of after-tax income to be set aside, prior to payment of dividends as general reserve fund, the Company's PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. Amounts restricted include paid-in capital, additional paid-in capital and statutory reserve funds of the

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**14.** **RESTRICTED NET ASSETS (CONTINUED)** 

Company's PRC subsidiaries, as determined pursuant to PRC generally accepted accounting principles, totaling an aggregate of RMB4,908,000 and RMB5,638,288 (US$792,618) as of December 31, 2021 and September 30, 2022, respectively.

As of December 31, 2021 and September 30, 2022, the Company's PRC subsidiaries had appropriated RMB3,123 and nil, respectively, in their combined statutory reserves.

**15.** **LOSS PER SHARE** 

Basic net loss per share attributable to ordinary shares is computed by dividing net loss attributable to New Ruipeng Pet Group Inc. by the weighted average number of shares of ordinary share outstanding for the period using the two-class method. Under the two-class method, net loss attributable to New Ruipeng Pet Group Inc. is allocated between ordinary shares issued and to be issued for closed business combinations, and other participating securities based on their participating rights on a proportionate basis less treasury shares relating to the share based payment vehicles and vehicles in relation to future acquisition of subsidiaries. The Company's redeemable ordinary shares and warrant to purchase redeemable ordinary shares are participating securities because they participate in both profits or losses.

Diluted net loss per share attributable to ordinary shares is calculated by giving the effect of potential dilutive shares, if any. For the periods presented, the number of shares used to calculate diluted net loss per share attributable to ordinary shares is the same as the number of shares used to calculate basic net loss per share attributable to ordinary shares because there were no potentially dilutive shares for the nine months ended September 30, 2021 and 2022.

The computation of basic and diluted loss per ordinary share is as follows for the nine months ended September 30, 2021 and 2022.

---

| | | | |
|:---|:---|:---|:---|
|  | **Nine months ended September 30,** | **Nine months ended September 30,** | **Nine months ended September 30,** |
|  | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** |
|  **Numerator:** |  |  |  |
|  Net loss | (856591) | (1109358) | (155951) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net loss attributable to non-controlling interests | 9452 | 14034 | 1973 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange (loss) gain on foreign denominated redeemable ordinary shares | (19450) | 339473 | 47722 |
|  Net loss attributable to New Ruipeng Pet Group Inc. | (866589) | (755851) | (106256) |
|  Net loss attributable to holders of participating redeemable ordinary shares | 539854 | 451524 | 63474 |
|  Adjusted net loss attributable to ordinary shareholders | (326735) | (304327) | (42782) |
|  **Denominator:** |  |  |  |
|  Weighted average number of ordinary shares outstanding—Basic and diluted | 4868768293 | 5422013363 | 5422013363 |
|  Loss per ordinary share—Basic and diluted | (0.07) | (0.06) | (0.01) |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**16.** **RELATED PARTY TRANSACTIONS** 

The Group had the following related party transactions with an equity method investee:

---

| | | | |
|:---|:---|:---|:---|
|  | **Nine months ended September 30,** | **Nine months ended September 30,** | **Nine months ended September 30,** |
|  | **2021** | **2022** | **2022** |
|  | **RMB** | **RMB** | **US$** |
|  Goods sold to: |  |  |  |
|  Zhejiang Jiawen<sup>(1)</sup> | 3319 |  |  |
|  | 3319 |  |  |

---

(1) On April 19, 2021, Zhejiang Jiawen Pet Hospital Management Co., Ltd. ("Zhejiang Jiawen") became
a wholly-owned subsidiary of the Company.

**17.** **SEGMENT REPORTING** 

The Company has determined that it operates in three operating segments, consisting of the pet care services, supply chain, and local services. The Company derives the results of the segments directly from its internal management reporting system.

As substantially all of the Company's long-lived assets are located in the PRC and substantially all of the Company's revenues are derived from the PRC, no geographical information is presented.

No separate segment assets information is provided to the Company's Chief Operating Decision Maker for use in allocating resources to or evaluating the performance of the segments.

The intersegment eliminations mainly consist of products sold by supply chain segment to pet care services segment and local services segment under cost plus a margin method.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**17.** **SEGMENT REPORTING (CONTINUED)** 

The table below provides a summary of the Company's operating segment results:

**a)** **Nine months ended September 30, 2021 in RMB** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2147330 | 880852 | 371479 |  | 3399661 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 627642 | 7134 | (634776) |  |
|  Total | **2147330** | **1508494** | **378613** | **(634776)** | **3399661** |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 2066671 | 764012 | 397544 |  | 3228227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 65327 | 546782 | 18491 | (630600) |  |
|  Less: Cost of revenues | **2131998** | **1310794** | **416035** | **(630600)** | **3228227** |
|  Segment profit (loss) | 15332 | 197700 | (37422) | (4176) | 171434 |
|  Less: Total operating expenses |  |  |  |  | 1076958 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest income, net |  |  |  |  | (7763) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 585 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net loss from equity method investments |  |  |  |  | 2778 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Remeasurement gain on step acquisitions |  |  |  |  | (54337) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value loss of contingent liabilities |  |  |  |  | 681 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  |  |  |  | (2861) |
|  Loss before income taxes |  |  |  |  | (844607) |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**17.** **SEGMENT REPORTING (CONTINUED)** 

**b)** **Nine months ended September 30, 2022 in RMB** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 2284246 | 1573222 | 457649 |  | 4315117 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 584906 | 2658 | (587564) |  |
|  Total | **2284246** | **2158128** | **460307** | **(587564)** | **4315117** |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 2279401 | 1392209 | 424724 |  | 4096334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 78722 | 487937 | 11329 | (577988) |  |
|  Less: Cost of revenues | **2358123** | **1880146** | **436053** | **(577988)** | **4096334** |
|  Segment (loss) profit | (73877) | 277982 | 24254 | (9576) | 218783 |
|  Less: Total operating expenses |  |  |  |  | 1283079 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net |  |  |  |  | 37327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 6735 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net profit from equity method investments |  |  |  |  | (2176) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  |  |  |  | (217) |
|  Loss before income taxes |  |  |  |  | (1105965) |

---

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**17.** **SEGMENT REPORTING (CONTINUED)** 

**c)** **Nine months ended September 30, 2022 in US$** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Pet care<br>services** | **Supply<br>chain** | **Local<br>services** | **Intersegment<br>eliminations** | **Total** |
|  Revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External customers | 321115 | 221160 | 64335 |  | 606610 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment |  | 82225 | 374 | (82599) |  |
|  Total | **321115** | **303385** | **64709** | **(82599)** | **606610** |
|  Cost of revenues |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; External cost | 320433 | 195714 | 59707 |  | 575854 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intersegment | 11067 | 68593 | 1593 | (81253) |  |
|  Less: Cost of revenues | **331500** | **264307** | **61300** | **(81253)** | **575854** |
|  Segment (loss) profit | (10385) | 39078 | 3409 | (1346) | 30756 |
|  Less: Total operating expenses |  |  |  |  | 180372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense, net |  |  |  |  | 5248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign exchange loss |  |  |  |  | 947 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share of net profit from equity method investments |  |  |  |  | (306) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of subsidiaries and long-term investments |  |  |  |  | (31) |
|  Loss before income taxes |  |  |  |  | (155474) |

---

**18.** **COMMITMENTS AND CONTINGENCIES** 

***Contingencies***

From time to time, the Group is subject to legal proceedings and claims in the ordinary course of business, including patent, commercial, professional liability, product liability, employment, infringement liability, contract disputes, class action, and other litigation and claims, as well as governmental and other regulatory investigations and proceedings incidental to the conduct of its business. In addition, third parties may from time to time assert claims against the Group in the form of letters and other communications. As legal proceedings and claims are immaterial and at an early stage, management considers the loss outcome to be remote. In the opinion of the Group's legal counsel, an estimate of the amount or range of reasonably possible losses cannot be made at time. Therefore, the Company does not meet both the probable and estimable criteria for loss contingencies.

**19.** **SHARE-BASED COMPENSATION** 

On May 8, 2020, the Board of Directors of the Company approved a supply chain subsidiary level employee share purchase plan of the ordinary shares of Runhe. The purpose of the plan is to retain and motivate key supply chain subsidiary executives and core employees.

On June 29, 2020 (the "Grant Date"), Runhe entered into an equity classified employee share purchase agreement with its employee grantees. Each agreement listed out the percentage of ownership granted as well as

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SHARE-BASED COMPENSATION (CONTINUED)** 

a proportionate fixed exercise price to be paid within 30 days of the Grant Date. The total ordinary shares issued for the employee shares purchase plan accounted for 5.4% of the equity ownership of Runhe with a total exercise price of RMB1,239. The shares vest upon completion of a three-year vesting period. The shares purchased that have not vested are subject to forfeiture by the purchaser upon termination of the purchaser's employment or services. As of December 31, 2020, all of the rights to purchase ordinary shares issued under the plan were exercised.

The fair value of the share purchase plan award granted to employees was measured using Grant Date enterprise fair value using a discounted cash flow method less exercise price. The Company is recognizing compensation expense using the straight-line method over the three-year vesting period. On August 16, 2021 ("Modification Date"), 3.97% of the equity ownership of Runhe under the share purchase plan were modified to be fully vested on the Modification Date and were replaced with 30,954,019 Class A ordinary shares of the Company and RMB9,950 in cash. The fair value of the shares immediately after the modification was lower than that immediately before the modification. Therefore, no incremental compensation cost was recognized on the Modification Date. On the Modification Date, the Company recognized share-based compensation expense of RMB18,281 associated with these shares.

As of September 30, 2022, total unrecognized shared-based compensation expenses related to the remaining shares issued under the above plan was RMB1,788 (US$251) which will be recognized over the remaining requisite service period.

As of December 31, 2020, 60,000,000 Class A ordinary shares were held by Group level share based payment vehicles in relation to future share awards to employees. These shares legally issued but not outstanding were presented as treasury shares as there is no formal Group level share award plan.

On June 29, 2021, the Company granted 15,000,000 Class A ordinary shares to its employees which became vested immediately and 45,000,000 nonvested Class A ordinary shares to its employees which are not held by employees until certain service and performance conditions are met. The weighted-average grant-date fair value per share was RMB1.059 (US$0.16393). The total fair value of 15,000,000 shares immediately vested was RMB15,885 for the year ended December 31, 2021. The 45,000,000 nonvested Class A ordinary shares will become vested as follows: 25% after the completion of the IPO and upon completion of nine months of service thereafter; 25% after the completion of the IPO and upon completion of one year of service thereafter; and 50% after the completion of the IPO and upon completion of two-years of service thereafter. Due to the IPO performance condition, the Company did not recognize any shared-based compensation expense related to the 45,000,000 nonvested Class A ordinary shares granted for the nine months ended September 30, 2022.

As of September 30, 2022, 75,000,000 Class A ordinary shares were held by Group level share based payment vehicles in relation to future share awards to employees, including the 45,000,000 non-vested shares discussed above and 30,000,000 Class A ordinary issued on December 28, 2021. These shares legally issued but not outstanding were presented as treasury shares as there is no formal Group level share award plan.

As of September 30, 2022, total unrecognized shared-based compensation expense related to the 45,000,000 nonvested Class A ordinary shares was RMB47,655 (US$6,699) which will be recognized over the remaining service requisite period using the accelerated method upon the completion of an IPO.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SHARE-BASED COMPENSATION (CONTINUED)** 

Total share-based compensation expense of RMB41,518 and RMB1,788 (US$250) was recognized for the nine months ended September 30, 2021 and 2022.

To determine the fair value of the ordinary shares of Runhe, the Company used the discounted cash flow method of the income approach. The DCF analysis is performed based on the projected cash flows based on its best estimate as of the valuation date. The significant assumptions used in the DCF included projected cash flows, discount rate and discount for lack of marketability using the Finnerty method.

To determine the fair value of the ordinary shares of the Company, the Company first determined the underlying equity value of the Company and then allocated a portion of the equity value to the ordinary shares of the Company based on their particular rights and preferences using the hybrid return method. The hybrid return method is a combination of the probability-weighted expected return method and the option pricing method. To determine the equity value of the Company, the Company used the DCF method of the income approach as the primary valuation approach, and to cross check the reasonableness of the results derived from the income approach by the market approach. The DCF analysis is performed based on the projected cash flows based on its best estimate as of the valuation date. The significant assumptions used in the DCF included projected cash flows and discount rate. The significant assumptions used to determine the fair value of the ordinary shares included the probability of IPO exit event, risk-free rate, equity volatility based on historical volatility of selected peer companies and DLOM using the Finnerty method.

<u>2021 Plan</u> 

The 188,110,900 options issued to employees on August 1, 2021 under the 2021 Plan but not granted from an accounting perspective will be vested in three or four tranches when a grant date is established. As of December 31, 2021, 1,705,200 options issued were forfeited upon employees' termination of services. The annual individual employee performance evaluation of 2021 was completed on January 28, 2022, which is determined to be the grant date for the first tranche related to 27,400,567 options with service condition and performance conditions based on achievement of IPO and individual employee performance. Additionally, the Company's annual financial performance target for 2021 was completed on March 5, 2022, which is determined to be the grant date for the first tranche related to 25,875,000 options with service condition and performance conditions based on achievement of IPO, individual employee performance and the Company's annual financial performance. During the nine months ended September 30, 2022, 8,621,400 options issued but are not granted from an accounting perspective were forfeited upon employees' termination of services. As of September 30, 2022, 124,508,733 options related to the second, third and fourth tranches had not been granted as a grant date was not established.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SHARE-BASED COMPENSATION (CONTINUED)** 

The following table summarizes information regarding the nonvested options granted from an accounting perspective and vested:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of<br>options** | **Weighted-average**<br>**exercise price** | **Weighted-average**<br>**grant-date**<br>**fair value** | **Weighted-average**<br>**grant-date**<br>**fair value** |
|  | | **US$** | **US$** | **RMB** |
|  Outstanding, December 31, 2021 |  |  |  |  |
|  Granted | 53275567 | 0.05 | 0.12 | 0.79 |
|  Forfeited | 2003899 | 0.06 | 0.12 | 0.76 |
|  Outstanding, September 30, 2022 | 51271668 | 0.05 | 0.12 | 0.79 |
|  Vested and expected to vest at September 30, 2022 | 51271668 | 0.05 | 0.12 | 0.79 |
|  Exercisable at September 30, 2022 |  |  |  |  |

---

The total weighted average grant-date fair value of the options granted were RMB42,122 (US$5,921) during the nine months ended September 30, 2022. No awards were vested during the nine months ended September 30, 2022. Due to the IPO performance condition, the Company did not recognize any share-based compensation expenses related to these options during the nine months ended September 30, 2022. As of September 30, 2022, total unrecognized shared-based compensation expense related to the above options was RMB44,247 (US$6,220).

The fair value of the share options was determined using the binomial option valuation model, with the assistance from an independent third-party appraiser. The binomial model requires the input of highly subjective assumptions, including the equity volatility based on historical volatilities of comparable companies, risk-free rate and early exercise multiple. The early exercise factor was estimated based on the Company's expectation of exercise behavior of the grantees. As the Company did not have sufficient information of past employee exercise history, the exercise multiple was based on management's best estimate.

In January 2022, the Company issued a liability classified option award to an employee under the 2021 Plan in which the employee would receive a variable number of shares with a market value equal to RMB30 million on the respective annual delivery dates. The award's exercise price is 30% of the share price based on the latest round of financing prior to the Company's IPO or after the Company's IPO 30% of the closing price on the last trading date, on the respective annual purchase dates. The award has a service conditions of four years and performance conditions based on the achievement of an IPO, annual individual employee performance and the Company's financial performance.

Due to the subjectivity of the individual employee performance evaluation and certain performance targets (to measure the individual employee performance) which have not been established as of September 30, 2022, and due to the Company's financial performance targets which have not been established as of September 30, 2022, the grant date for accounting purposes will not occur until the individual employee performance evaluation is completed and the Company's financial performance measurement target is established. The Company did not recognize any share-based compensation expenses related to the above option award during the nine months ended September 30, 2022 since the grant date did not occur.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**19.** **SHARE-BASED COMPENSATION (CONTINUED)** 

On April 1, 2022, the Company issued 1,300,000 options to one employee under the 2021 Plan with service condition of three years and performance conditions based on the achievement of an IPO and annual individual employee performance. The option award has the same vesting terms as option awards issued to employees in August, 2021.

Due to the subjectivity of the individual employee performance evaluation and certain performance targets (to measure the individual employee performance) which have not been established as of September 30, 2022, the grant date for accounting purposes will not occur until the individual employee performance evaluation is completed. The Company did not recognize any share-based compensation expenses related to the above option award during the nine months ended September 30, 2022 since the grant date did not occur.

**20.** **SUBSEQUENT EVENTS** 

The Company has evaluated events and transactions for potential recognition and disclosure through January 23, 2023, the date the unaudited interim condensed consolidated financial statements were available to be issued.

Subsequent to September 30, 2022 and through to January 23, 2023, 41,667 options granted, and 1,670,548 options issued but not granted from an accounting perspective under the 2021 Plan were forfeited upon certain employees termination of services.

On January 17, 2023, the Company issued to one investor a convertible note (the "Convertible Note") in an aggregate principal amount of US$50,000. The initial maturity date of the Convertible Note will be January 16, 2024.

The first tranche of the Convertible Note, which is US$25,000, will be automatically converted into the ordinary shares of the Company upon completion of a qualified subsequent private equity financing at a conversion price equals to the per share price applicable in the qualified subsequent equity financing. If no qualified subsequent private equity financing is completed and a qualified public offering in the US or Hong Kong is completed, the first tranche of the Convertible Note will be automatically converted into the ordinary shares of the Company calculated based on the initial public offering price (adjusted for the ADS-to-ordinary share ratio). If no qualified subsequent private equity financing is completed and a non-US or a non-Hong Kong public offering is completed, the investor has the option to convert the first tranche into the ordinary shares of the Company calculated based on the initial public offering price (adjusted for the ADS-to-ordinary share ratio) or the average closing price of the previous five trading days (adjusted for the ADS-to-ordinary share ratio) quoted on the non-US or non-Hong Kong stock exchange.

The investor has the option to convert the second tranche of US$25,000 into the Company's ordinary shares upon completion of any qualified subsequent private equity financing at a conversion price equal to the per share price in the qualified subsequent private equity financing ("Pre-IPO Conversion Option"). If no Pre-IPO Conversion Option was exercised and a public offering was completed, the investor has the option to convert the second tranche into the Company's ordinary shares at a conversion price equals to the average closing price during the last five trading days (adjusted for the ADS-to-ordinary share ratio) quoted on the public stock exchange ("Post-IPO Conversion Option"). The second tranche of the Convertible Note will be automatically converted if no Pre-

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS** 

**AS OF SEPTEMBER 30, 2022 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND** 

**SEPTEMBER 30, 2022** 

**(Amounts in thousands of Renminbi ("RMB") and US dollars ("US$"),** 

**except for number of shares and per share data)** 

**20.** **SUBSEQUENT EVENTS (CONTINUED)** 

IPO Conversion Option was exercised and a qualified public offering in the US or Hong Kong is subsequently completed by December 31, 2025 when certain conditions are met at a conversion price that equals to the average closing price during the last five trading days of the lock-up period (adjusted for the ADS-to-ordinary share ratio) quoted on the public stock exchange during the last five trading days.

The number of converted shares under the above different conversion scenarios for both the first tranche and second tranche are subject to a minimum number, which equals to 65,082,399.

The Convertible Note is non-interest bearing, subject to certain exceptions, including when an event of default occurs or the Company chooses to prepay the principal amount of the second tranche of the Convertible Note or upon repayment by final repayment date. In such event, the Company will be required to pay interest at a simple rate of 7% on the aggregate outstanding principal amount of the convertible notes calculated from the issuance date.

If any portion of the principal amount has not been converted and repaid by the maturity date, the investor has the option to convert such portion of the principal amount into the Company's ordinary shares at a conversion price in accordance with the conversion terms for the first tranche and second tranche discussed above or at a conversion price based on valuation agreed between the investor and the Company ("Maturity Conversion Option").

If the investor does not exercise the Maturity Conversion Option upon the initial maturity date, the initial maturity date shall be extended by another 364 days and such annual extension process will be repeated up to three years until December 31, 2026.

The Convertible Note also includes a material adverse clause that can allow the investor to accelerate its maturity date.

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##### [**Table of Contents**](#toc)
**PART II** 

**INFORMATION NOT REQUIRED IN PROSPECTUS** 

**Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.** 

Cayman Islands law does not limit the extent to which a company's 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.

The post-offering memorandum and articles of association that we expect to adopt and to become effective immediately prior to the completion of this offering provide that we shall indemnify our directors and officers (each, an indemnified person) against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such indemnified person, other than by reason of such person's own dishonesty, wilful 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 or her duties, powers, authorities or discretions, including, without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such indemnified person 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.

Pursuant to the indemnification agreements the form of which is filed as Exhibit 10.2 to this registration statement, 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 such a director or officer.

The underwriting agreement, the form of which will be filed as Exhibit 1.1 to this registration statement, will also provide indemnification for us and our officers and directors for certain liabilities.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to 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.

**Item 7. RECENT SALES OF UNREGISTERED SECURITIES.** 

During the past three years, we have issued the following securities. We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.

---

| | | | |
|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Sale or<br>Issuance** | **Number of<br>Securities** | **Consideration** |
|  **Ordinary shares** |  |  |  |
|  Goldenway Capital Management Limited | December 3, 2019 | 298523727 | US$298.52 |
|  Bing Xiao Enterprise Management Company Limited | December 3, 2019 | 19329999 | US$19.33 |
|  Leap Eternity Enterprise Management Company Limited | December 3, 2019 | 303439999 | US$303.44 |
|  PD Company Limited | December 3, 2019 | 55839999 | US$55.84 |
|  Great Dream Of Veterinarian Management Limited | December 3, 2019 | 121749999 | US$121.75 |

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##### [**Table of Contents**](#toc)

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| | | | |
|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Sale or<br>Issuance** | **Number of<br>Securities** | **Consideration** |
|  HH Skyfield Holdings Inc. | December 3, 2019 | 3193130000 | equity interest in Skyfield Group |
|  | December 12, 2019 | 761984136 | US dollar equivalent of RMB750 million and US$1,708,066.99 |
|  Jing An Holdings Limited | December 3, 2019 | 341870000 | equity interest in Skyfield Group |
|  AnAn Brothers Holdings Limited | December 3, 2019 | 69200000 | equity interest in Skyfield Group |
|  | September 3, 2020 | 88740300 | US$88.75 |
|  Aino Family Holding Limited | December 3, 2019 | 65180000 | equity interest in Skyfield Group |
|  Aino Brothers Holding Limited | December 3, 2019 | 8890000 | equity interest in Skyfield Group |
|  RP Chen Rui Enterprise Management Company Limited | December 3, 2019 | 897730000 | US$897.73 |
|  | September 3, 2020 | 8700000 | US dollar equivalent of RMB7.5 million |
|  RP Rui You Enterprise Management Company Limited | December 3, 2019 | 760230000 | US$760.23 |
|  RP Ye Bei Enterprise Management Company Limited | December 3, 2019 | 556570000 | US$556.57 |
|  Riverhead Capital I, L.P. | December 3, 2019 | 529640000 | RMB64,786,054.77 |
|  Shenzhen Fortune Chuanglian Equity Investment Fund Limited Partnership | December 3, 2019 | 202160000 | RMB24,728,577.99 |
|  Shenzhen Fortune Chuangfeng Equity Investment Limited Partnership | December 3, 2019 | 115950000 | RMB14,183,296.8 |
|  RP Sheng Peng Enterprise Management Company Limited | December 3, 2019 | 67593496 | US$67.59 |
|  RP Peng Cheng Enterprise Management Company Limited | December 3, 2019 | 93942776 | US$93.94 |
|  HAO's Holdings, Inc. | December 3, 2019 | 52630000 | RMB6,438,084.93 |
|  Ningbo Meishan Highbury Investment Partnership (limited partnership) | December 3, 2019 | 15650000 | RMB1,914,745.07 |
|  New Hope Healthcare Nanjing Investment Center (Limited Partnership) | December 3, 2019 | 14490000 | RMB1,772,912.1 |
|  Tianjin GLNY Enterprise Management Consultation, L.P. | December 3, 2019 | 839620000 | RMB109,588,235.37 |
|  HCBN Investment Holdings, Ltd. | December 3, 2019 | 261120000 | US$41,050,134.16 |
|  Cloudpet Holdings Limited | May 13, 2020 | 170544000 | US$170.544 |
|  Puppytown Holdings Limited | May 13, 2020 | 15160000 | US$15.160 |
|  Vet Harvest Enterprise Management Company Limited | September 3, 2020 | 452182700 | US$452.19 |
|  Vet Time Enterprise Management Company Limited | September 3, 2020 | 45000000 | US$45 |
|  **Class A ordinary shares** |  |  |  |
|  Great Dream Of Veterinarian Management Limited | September 25, 2020 | 109580460 | share reclassification and re-designation |
|  Goldenway Capital Management Limited | September 25, 2020 | 278523728 | share reclassification and re-designation |

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| | | | |
|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Sale or<br>Issuance** | **Number of<br>Securities** | **Consideration** |
|  Bing Xiao Enterprise Management Company Limited | September 25, 2020 | 19330000 | share reclassification and re-designation |
|  Leap Eternity Enterprise Management Company Limited | September 25, 2020 | 273109610 | share reclassification and re-designation |
|  PD Company Limited | September 25, 2020 | 55840000 | share reclassification and re-designation |
|  HH Skyfield Holdings Inc. | September 25, 2020 | 4065114136 | share reclassification and re-designation |
|  Jing An Holdings Limited | September 25, 2020 | 341870000 | share reclassification and re-designation |
|  AnAn Brothers Holdings Limited | September 25, 2020 | 157940300 | share reclassification and re-designation |
|  Aino Family Holding Limited | September 25, 2020 | 65180000 | share reclassification and re-designation |
|  Aino Brothers Holding Limited | September 25, 2020 | 8890000 | share reclassification and re-designation |
|  RP Chen Rui Enterprise Management Company Limited | September 25, 2020 | 816697260 | share reclassification and re-designation |
|  RP Rui You Enterprise Management Company Limited | September 25, 2020 | 684241093 | share reclassification and re-designation |
|  RP Ye Bei Enterprise Management Company Limited | September 25, 2020 | 500937960 | share reclassification and re-designation |
|  Riverhead Capital I, L.P | September 25, 2020 | 529640000 | share reclassification and re-designation |
|  Shenzhen Fortune Chuanglian Equity Investment Fund Limited Partnership | September 25, 2020 | 312160000 | share reclassification and re-designation |
|  Shenzhen Fortune Chuangfeng Equity Investment Limited Partnership | September 25, 2020 | 115950000 | share reclassification and re-designation |
|  RP Sheng Peng Enterprise Management Company Limited | September 25, 2020 | 60837177 | share reclassification and re-designation |
|  RP Peng Cheng Enterprise Management Company Limited | September 25, 2020 | 84552712 | share reclassification and re-designation |
|  HAO's Holdings, Inc. | September 25, 2020 | 52630000 | share reclassification and re-designation |
|  Ningbo Meishan Highbury Investment Partnership (limited partnership) | September 25, 2020 | 15650000 | share reclassification and re-designation |
|  New Hope Healthcare Nanjing Investment Center (Limited Partnership) | September 25, 2020 | 14490000 | share reclassification and re-designation |
|  Tianjin GLNY Enterprise Management Consultation, L.P. | September 25, 2020 | 839620000 | share reclassification and re-designation |
|  HCBN Investment Holdings, Ltd. | September 25, 2020 | 261120000 | share reclassification and re-designation |
|  Cloudpet Holdings Limited | September 25, 2020 | 130544000 | share reclassification and re-designation |
|  Puppytown Holdings Limited | September 25, 2020 | 15160000 | share reclassification and re-designation |
|  Huimeikangcheng (Tianjin) Enterprise Management Consulting Partnership (Limited Partnership) | September 25, 2020 | 120000000 | share reclassification and re-designation |

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| | | | |
|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Sale or<br>Issuance** | **Number of<br>Securities** | **Consideration** |
|  Vet Harvest Enterprise Management Company Limited | September 25, 2020 | 452182700 | share reclassification and re-designation |
|  Vet Time Enterprise Management Company Limited | September 25, 2020 | 45000000 | share reclassification and re-designation |
|  RP Pulse Holdings Limited | January 6, 2021 | 541069195 | US$541.07 |
|  GRACIOUS RHYTHM LIMITED | January 21, 2021 | 26895864 | US$27 |
|  Ronghui Ruijia (Tianjin) Asset Management Partnership (Limited Partnership) | May 28, 2021 | 28990000 | US dollar equivalent of RMB28,990,000 |
|  RP Passion Enterprise Management Company Limited | May 29, 2021 | 227203755 | US$227.2 |
|  Jin Rui Investment Co. Limited | June 26, 2021 | 56820000 | US$10,730,000 |
|  HAO's Holdings, Inc. | June 30, 2021 | 11111111 | US dollar equivalent of RMB25,000,000 |
|  Vet Harvest Enterprise Management Company Limited | June 30, 2021 | 29196375 | US$29.2 |
|  RP Passion Enterprise Management Company Limited | June 30, 2021 | 194618321 | US$194.6 |
|  Vet Harvest Enterprise Management Company Limited | August 16, 2021 | 32643087 | US$32.64 |
|  RP Passion Enterprise Management Company Limited | August 16, 2021 | 219910339 | US$219.9 |
|  Vet Harvest Enterprise Management Company Limited | October 11, 2021 | 20184383 | US$20.18 |
|  Vet Time Enterprise Management Company Limited | December 28, 2021 | 30000000 | US$30.00 |
|  **Class B ordinary shares** |  |  |  |
|  Tencent Mobility Limited | September 25, 2020 | 307486028 | US$100,000,000 |
|  Boehringer Ingelheim Animal Health Participations GmbH | September 25, 2020 | 614972056 | US$200,000,000 |
|  Snow Lake Asia Master Fund Limited | September 25, 2020 | 38973854 | US$12,675,000 |
|  Snow Lake China Master Fund, Ltd. | September 25, 2020 | 114769160 | US$37,325,000 |
|  GRACIOUS RHYTHM LIMITED | September 28, 2020 | 307486028 | US$100,000,000 |
|  WORLDWIDE HEALTHCARE TRUST PLC | September 28, 2020 | 50735194 | US$16,500,000 |
|  OrbiMed Partners Master Fund Limited | September 28, 2020 | 24598882 | US$8,000,000 |
|  OrbiMed New Horizons Master Fund, L.P. | September 28, 2020 | 9224581 | US$3,000,000 |
|  OrbiMed Genesis Master Fund, L.P. | September 28, 2020 | 7687151 | US$2,500,000 |
|  Aspex Master Fund | September 28, 2020 | 61497205 | US$20,000,000 |
|  LBC Sunshine Healthcare Fund L.P. | October 14, 2020 | 46122904 | US$15,000,000 |
|  AIG DECO Fund I, LP | October 14, 2020 | 92245808 | US$30,000,000 |
|  ABCI Global Opportunities SPC for the account and on behalf of ABCI CHINA RISING PRIVATE EQUITY 4 SP | October 14, 2020 | 43048043 | US$14,000,000 |
|  **Warrants** |  |  |  |
|  Tianjin GLNY Enterprise Management Consultation, L.P. | December 3, 2019 | Warrant to<br>purchase up to<br>26,895,864<br>ordinary shares | N/A |
|  **Convertible note** |  |  |  |
|  NESTLE TREASURY CENTRE—MIDDLE EAST & AFRICA LTD. | January 17, 2023 | Convertible at<br>prices<br>specified in the<br>Note | US$50,000,000 |

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| | | | |
|:---|:---|:---|:---|
| **Securities/Purchaser** | **Date of Sale or<br>Issuance** | **Number of Securities** | **Consideration** |
|  **Options** |  |  |  |
|  Certain directors, executive officers and employees | August 1, 2021 | Options to<br>purchase<br>188,110,900<br>ordinary shares | Exercise prices ranging from US$0.05 per share to US$0.11 per share |
|  Certain employee | January 1, 2022 | Option to purchase<br>RMB30.0 million<br>worth of ordinary<br>shares based on<br>the per share<br>exercise price as<br>specified in the<br>award agreement | RMB30.0 million |
|  Certain employees | April 1, 2022 | Options to<br>purchase<br>1,300,000<br>ordinary shares | US$0.1421 |

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**Item 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits

See Exhibit Index beginning on page II-6 of this registration statement.

The agreements included as exhibits to this registration statement contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in such agreement by disclosure that was made to the other party in connection with the negotiation of the applicable agreement; (iii) may apply contract standards of "materiality" that are different from "materiality" under the applicable securities laws; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.

We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosure of material information regarding material contractual provisions is required to make the statements in this registration statement not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Financial Statement Schedules

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the Consolidated Financial Statements or the Notes thereto.

**Item 9. UNDERTAKINGS.** 

The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as

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##### [**Table of Contents**](#toc)
expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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##### [**Table of Contents**](#toc)
**NEW RUIPENG PET GROUP INC.** 

**Exhibit Index** 

---

| | |
|:---|:---|
| **Exhibit<br>Number** | **Description of Document** |
| 1.1\* | Form of Underwriting Agreement |
| 3.1 | [Ninth Amended and Restated Memorandum and Articles of Association of the Registrant, as currently in effect](d148072dex31.htm) |
| 3.2\* | Form of Tenth Amended and Restated Memorandum and Articles of Association of the Registrant (effective upon the closing of this offering) |
| 4.1\* | Registrant's Specimen American Depositary Receipt (included in Exhibit 4.3) |
| 4.2\* | Registrant's Specimen Certificate for Ordinary Shares |
| 4.3\* | Form of Deposit Agreement, among the Registrant, the depositary and the holders and beneficial owners of the American Depositary Receipts issued thereunder |
| 4.4 | [Amended and Restated Shareholders Agreement, dated as of September 25, 2020, between the Registrant and other parties thereto](d148072dex44.htm) |
| 5.1 | [Form of opinion of Maples and Calder (Hong Kong) LLP regarding the validity of the ordinary shares being registered and certain Cayman Islands tax matters](d148072dex51.htm) |
| 8.1 | [Form of opinion of Maples and Calder (Hong Kong) LLP regarding certain Cayman Islands tax matters (included in Exhibit 5.1)](d148072dex51.htm) |
| 8.2 | [Opinion of Haiwen & Partners regarding certain PRC tax matters (included in Exhibit 99.2)](d148072dex992.htm) |
| 10.1 | [2021 Share Incentive Plan](d148072dex101.htm) |
| 10.2 | [Form of Indemnification Agreement, between the Registrant and its directors and executive officers](d148072dex102.htm) |
| 10.3 | [Form of Employment Agreement, between the Registrant and its executive officers](d148072dex103.htm) |
| 10.4 | [Class A Ordinary Share Subscription Agreement, dated January 6, 2021, between the Registrant and RP Pulse Holdings Limited](d148072dex104.htm) |
| 10.5 | [Class A Ordinary Share Subscription Agreement, dated May 28, 2021, between the Registrant and Ronghui Ruijia (Tianjin) Asset Management Partnership (Limited Partnership)](d148072dex105.htm) |
| 10.6 | [Class A Ordinary Share Subscription Agreement, dated May 29, 2021, between the Registrant and RP Passion Enterprise Management Company Limited](d148072dex106.htm) |
| 10.7 | [Class A Ordinary Share Subscription Agreement, dated June 30, 2021, between the Registrant and RP Passion Enterprise Management Company Limited](d148072dex107.htm) |
| 10.8 | [Class A Ordinary Share Subscription Agreement, dated June 30, 2021, between the Registrant and Vet Harvest Enterprise Management Company Limited](d148072dex108.htm) |
| 10.9 | [Class A Ordinary Share Subscription Agreement, dated June 30, 2021, between the Registrant and HAO's Holding, Inc.](d148072dex109.htm) |
| 10.10 | [Class A Ordinary Share Subscription Agreement, dated June 26, 2021, between the Registrant and Jin Rui Investment Co. Limited](d148072dex1010.htm) |
| 10.11 | [Class A Ordinary Share Subscription Agreement, dated August 16, 2021, between the Registrant and RP Passion Enterprise Management Company Limited](d148072dex1011.htm) |
| 10.12 | [Class A Ordinary Share Subscription Agreement, dated August 16, 2021, between the Registrant and Vet Harvest Enterprise Management Company Limited](d148072dex1012.htm) |

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| | |
|:---|:---|
| **Exhibit<br>Number** | **Description of Document** |
| 10.13 | [Class A Ordinary Share Subscription Agreement, dated October 11, 2021, between the Registrant and Vet Harvest Enterprise Management Company Limited](d148072dex1013.htm) |
| 10.14 | [Class A Ordinary Share Subscription Agreement, dated December 28, 2021, between the Registrant and Vet Time Enterprise Management Company Limited](d148072dex1014.htm) |
| 10.15 | [English translation of Comprehensive Credit Contract, dated April 14, 2020, between New Ruipeng Pet Healthcare Group Co., Ltd. and China CITIC Bank (Shenzhen Branch)](d148072dex1015.htm) |
| 10.16 | [English translation of Credit Agreement, dated February 24, 2020, between New Ruipeng Pet Healthcare Group Co., Ltd. and China Merchants Bank (Shenzhen Branch)](d148072dex1016.htm) |
| 10.17 | [English translation of Blanket Merger Agreement, dated January 23, 2019, between Ruipeng Pet Healthcare Group Co., Ltd., Skyfield (Shanghai) Investment Co. Ltd. and other parties thereto](d148072dex1017.htm) |
| 10.18 | [English translation of Comprehensive Credit Contract, dated August 6, 2022, between Skyfield (Shanghai) Investment Co., Ltd. and Shanghai Bank (Caohejing Branch)](d148072dex1018.htm) |
| 10.19 | [Convertible Note Purchase Agreement, dated December 23, 2022, between New Ruipeng Pet Group Inc., NESTLE TREASURY CENTRE - MIDDLE EAST & AFRICA LTD., and other parties thereto](d148072dex1019.htm) |
| 21.1 | [Principal Subsidiaries of the Registrant](d148072dex211.htm) |
| 23.1 | [Consent of Ernst & Young Hua Ming LLP, an independent registered public accounting firm](d148072dex231.htm) |
| 23.2 | [Form of consent of Maples and Calder (Hong Kong) LLP (included in Exhibit 5.1)](d148072dex51.htm) |
| 23.3 | [Consent of Haiwen & Partners (included in Exhibit 99.2)](d148072dex992.htm) |
| 24.1 | [Powers of Attorney (included on signature page)](#ii148072_100aaa) |
| 99.1 | [Code of Business Conduct and Ethics of the Registrant](d148072dex991.htm) |
| 99.2 | [Opinion of Haiwen & Partners regarding certain PRC law matters](d148072dex992.htm) |
| 99.3 | [Consent of Frost & Sullivan](d148072dex993.htm) |
| 99.4 | [Representations under Item 8.A.4 of Form 20-F](d148072dex994.htm) |
| 107 | [Calculation of Filing Fee Table](d148072dexfilingfees.htm) |

---

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\* To be filed by amendment.

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##### [**Table of Contents**](#toc)
**SIGNATURES** 

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Shenzhen, Guangdong Province, China, on January 23, 2023.

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| | |
|:---|:---|
| **New Ruipeng Pet Group Inc.** | **New Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director, Co-Chairman and President |

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##### [**Table of Contents**](#toc)
**POWER OF ATTORNEY** 

Each person whose signature appears below constitutes and appoints each of Yonghe Peng and Chenguang Zhou as attorneys-in-fact with full power of substitution for him or her in any and all capacities to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the registrant to comply with the Securities Act of 1933, as amended (the "Securities Act"), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of ordinary shares of the registrant (the "Shares"), including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the Registration Statement on Form F-1 (the "Registration Statement") to be filed with the Securities and Exchange Commission with respect to such Shares, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

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| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Yonghe Peng<br> Yonghe Peng | Director, Co-Chairman and President (Principal Executive Officer) | January 23, 2023 |
| /s/ Liang Li<br> Liang Li | Director and Co-Chairman | January 23, 2023 |
| /s/ Lang Liu<br> Lang Liu | Director | January 23, 2023 |
| /s/ Yanzhong Zhang<br> Yanzhong Zhang | Director | January 23, 2023 |
| /s/ Liesheng Wang<br> Liesheng Wang | Director | January 23, 2023 |
| /s/ Guoqiang Li<br> Guoqiang Li | Director | January 23, 2023 |
| /s/ Tieming Yu<br> Tieming Yu | Director | January 23, 2023 |
| /s/ Shanwei Wei<br> Shanwei Wei | Director | January 23, 2023 |
| /s/ Bing Xiao<br> Bing Xiao | Director | January 23, 2023 |
| /s/ Shenghao Shi<br> Shenghao Shi | Director | January 23, 2023 |
| /s/ Chenguang Zhou<br> Chenguang Zhou | Chief Financial Officer<br> (Principal Financial and Accounting Officer) | January 23, 2023 |

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**SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES** 

Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of New Ruipeng Pet Group Inc. has signed this registration statement or amendment thereto in New York, New York on January 23, 2023.

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| | |
|:---|:---|
| **Authorized U.S. Representative** | **Authorized U.S. Representative** |
| **Cogency Global Inc.** | **Cogency Global Inc.** |
| By: | /s/ Colleen A. De Vries |
| Name: | Colleen A. De Vries |
| Title: | Senior Vice President |

---

## Exhibit 3.1

**Exhibit 3.1** 

**NINTH AMENDED AND RESTATED** 

**MEMORANDUM** 

**AND** 

**ARTICLES OF ASSOCIATION** 

**OF** 

**New Ruipeng Pet Group Inc.** 

**adopted by special resolutions passed on September 30, 2022** 

**INCORPORATED IN THE CAYMAN ISLANDS** 

------

THE COMPANIES ACT (As Revised)

Company Limited by Shares

NINTH AMENDED AND RESTATED

MEMORANDUM OF ASSOCIATION

OF

New Ruipeng Pet Group Inc.

**adopted by special resolutions passed on September 30, 2022** 

---

| | |
|:---|:---|
| 1. | The name of the Company is New Ruipeng Pet Group Inc.. |
| 2. | The Registered Office of the Company shall be at the offices of Citco Fund Services (Cayman Islands) Limited of 89 Nexus Way, Camana Bay; PO Box 31106, George Town, Grand Cayman, KY1-1205, Cayman Islands or at such other place as the Directors may from time to time decide. |
| 3. | The objects for which the Company is established are unrestricted and shall include, but without limitation, the following: |
| (a) (i) | To carry on the business of an investment company and to act as promoters and entrepreneurs and to carry on business as financiers, capitalists, concessionaires, merchants, brokers, traders, dealers, agents, importers and exporters and to undertake and carry on and execute all kinds of investment, financial, commercial, mercantile, trading and other operations. |
| (ii) | To carry on whether as principals, agents or otherwise howsoever the business of realtors, developers, consultants, estate agents or managers, builders, contractors, engineers, manufacturers, dealers in or vendors of all types of property including services. |
| (b) | To exercise and enforce all rights and powers conferred by or incidental to the ownership of any shares, stock, obligations or other securities including without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of the holding by the Company of some special proportion of the issued or nominal amount thereof, to provide managerial and other executive, supervisory and consultant services for or in relation to any company in which the Company is interested upon such terms as may be thought fit. |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To purchase or otherwise acquire, to sell, exchange, surrender, lease, mortgage, charge, convert, turn
to account, dispose of and deal with real and personal property and rights of all kinds and, in particular, mortgages, debentures, produce, concessions, options, contracts, patents, annuities, licences, stocks, shares, bonds, policies, book debts,
business concerns, undertakings, claims, privileges and choses in action of all kinds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) To subscribe for, conditionally or unconditionally, to underwrite, issue on commission or otherwise,
take, hold, deal in and convert stocks, shares and securities of all kinds and to enter into partnership or into any arrangement for sharing profits, reciprocal concessions or cooperation with any person or company and to promote and aid in
promoting, to constitute, form or organise any company, syndicate or partnership of any kind, for the purpose of acquiring and undertaking any property and liabilities of the Company or of advancing, directly or indirectly, the objects of the
Company or for any other purpose which the Company may think expedient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To stand surety for or to guarantee, support or secure the performance of all or any of the obligations
of any person, firm or company whether or not related or affiliated to the Company in any manner and whether by personal covenant or by mortgage, charge or lien upon the whole or any part of the undertaking, property and assets of the Company, both
present and future, including its uncalled capital or by any such method and whether or not the Company shall receive valuable consideration thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) To engage in or carry on any other lawful trade, business or enterprise which may at any time appear to
the Directors of the Company capable of being conveniently carried on in conjunction with any of the aforementioned businesses or activities or which may appear to the Directors or the Company likely to be profitable to the Company.

In the interpretation of this Memorandum of Association in general and of this Clause 3 in particular no object, business or power specified or mentioned shall be limited or restricted by reference to or inference from any other object, business or power, or the name of the Company, or by the juxtaposition of two or more objects, businesses or powers and that, in the event of any ambiguity in this clause or elsewhere in this Memorandum of Association, the same shall be resolved by such interpretation and construction as will widen and enlarge and not restrict the objects, businesses and powers of and exercisable by the Company.

------

4. Except as prohibited or limited by The Companies Act (As Revised), the Company shall have full power and
authority to carry out any object and shall have and be capable of from time to time and at all times exercising any and all of the powers at any time or from time to time exercisable by a natural person or body corporate in doing in any part of the
world whether as principal, agent, contractor or otherwise whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or consequential thereon, including,
but without in any way restricting the generality of the foregoing, the power to make any alterations or amendments to this Memorandum of Association and the Articles of Association of the Company considered necessary or convenient in the manner set
out in the Articles of Association of the Company, and the power to do any of the following acts or things, viz: to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company to do
business in any other jurisdiction; to sell, lease or dispose of any property of the Company; to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills of lading, warrants and other negotiable
or transferable instruments; to lend money or other assets and to act as guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the Company including uncalled capital or without security; to invest
monies of the Company in such manner as the Directors determine; to promote other companies; to sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to Members of the Company; to make charitable or
benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to Directors, officers, employees, past or present and their families; to purchase Directors and officers liability insurance and to carry on any trade or
business and generally to do all acts and things which, in the opinion of the Company or the Directors, may be conveniently or profitably or usefully acquired and dealt with, carried on, executed or done by the Company in connection with the
business aforesaid PROVIDED THAT the Company shall only carry on the businesses for which a licence is required under the laws of the Cayman Islands when so licensed under the terms of such laws.

5. The liability of each Member is limited to the amount from time to time unpaid on such Member's
shares.

6. The share capital of the Company is US$50,000.00 divided into 50,000,000,000 shares, comprising of
47,847,597,810 Class A Ordinary Shares of a nominal or par value of US$0.000001 each, and 2,152,402,190 Class B Ordinary Shares, which are redeemable, of a nominal or par value of US$0.000001 each with power for the Company insofar as is
permitted by law, to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of The Companies Act (As Revised) and the Articles of Association and to issue any part of its capital, whether original,
redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every
issue of shares whether declared to be preference or otherwise shall be subject to the powers hereinbefore contained PROVIDED ALWAYS that, notwithstanding any provision to the contrary contained in this Memorandum of Association, the Company shall
have no power to issue bearer shares, warrants, coupons or certificates.

7. If the Company is registered as exempted, its operations will be carried on subject to the provisions of
Section 174 of The Companies Act (As Revised) and, subject to the provisions of The Companies Act (As Revised) and the Articles of Association, it shall have the power to register by way of continuation as a body corporate limited by shares
under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

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THE COMPANIES ACT (As Revised)

Company Limited by Shares

NINTH AMENDED AND RESTATED ARTICLES OF

ASSOCIATION

OF

New Ruipeng Pet Group Inc.

**adopted by special resolutions passed on September 30, 2022** 

1. In these Articles Table A in the Schedule to the Statute does not apply and, unless there be something
in the subject or context inconsistent therewith,

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| | |
|:---|:---|
| "Articles" | means the Ninth Amended and Restated Articles of Association of the Company as originally framed or as from time to time altered by Special Resolution, and shall include Schedule A hereto. |
| "Auditors" | means the persons for the time being performing the duties of auditors of the Company. |
| "Company" | means the above named Company. |
| "debenture" | means debenture stock, mortgages, bonds and any other such securities of the Company whether constituting a charge on the assets of the Company or not. |
| "Directors" | means the directors for the time being of the Company. |
| "dividend" | includes bonus. |
| "fully paid" | shall bear the meaning as ascribed to it in the Statute. |
| "Member" | shall bear the meaning as ascribed to it in the Statute. |
| "month" | means calendar month. |
| "paid-up" | means paid-up and/or credited as paid-up. |

---

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| | |
|:---|:---|
| "registered office" | means the registered office for the time being of the Company. |
| "Seal" | means the common seal of the Company and includes every duplicate seal. |
| "Secretary" | includes an Assistant Secretary and any person appointed to perform the duties of Secretary of the Company. |
| "share" | means either a Class A Ordinary Share (as defined in Schedule A hereto), or a Class B Ordinary Share (as defined in Schedule A hereto), and a fraction of a share. |
| "Special Resolution" | has the same meaning as in the Statute and includes a resolution approved in writing as described therein. |
| "Statute" | means the Companies Law of the Cayman Islands as amended and every statutory modification or re-enactment thereof for the time being in force. |
| "written" and "in writing" | include all modes of representing or reproducing words in visible form. |
| Words importing the singular number only include the plural number and vice versa. | Words importing the singular number only include the plural number and vice versa. |
| Words importing the masculine gender only include the feminine gender. | Words importing the masculine gender only include the feminine gender. |
| Words importing persons only include corporations. | Words importing persons only include corporations. |

---

2. The business of the Company may be commenced as soon after incorporation as the Directors shall see fit,
notwithstanding that part only of the shares may have been allotted.

3. The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in
or about the formation and establishment of the Company including the expenses of registration.

3A. In the event of any conflict or inconsistency between any of the provisions of these Articles (other than Schedule A hereto) and the provisions in Schedule A hereto, the provisions in Schedule A hereto shall prevail.

**CERTIFICATES FOR SHARES** 

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4. Certificates representing shares of the Company shall be in such form as shall be determined by the
Directors. Such certificates may be under Seal. All certificates for shares shall be consecutively numbered or otherwise identified and shall specify the shares to which they relate. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be entered in the register of Members of the Company. All certificates surrendered to the Company for transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and cancelled. The Directors may authorise certificates to be issued with the Seal and authorised signature(s) affixed by some method or system of mechanical process.

Each certificate representing the shares shall bear legends substantially in the following form (in addition to any legend required under the laws of Cayman Islands):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT DATED AS OF SEPTEMBER 25, 2020 AS MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON REQUEST TO THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.

5. Notwithstanding Article 4 of these Articles, if a share certificate be defaced, lost or destroyed, it
may be renewed on payment of a fee of one dollar (US$l.00) or such less sum and on such terms (if any) as to evidence and indemnity and the payment of the expenses incurred by the Company in investigating evidence, as the Directors may prescribe.

**ISSUE OF SHARES** 

6. Subject to Schedule A hereto, the provisions, if any, in that behalf in the Memorandum of Association
and to any direction that may be given by the Company in general meeting and without prejudice to any special rights previously conferred on the holders of existing shares, the Directors may allot, issue, grant options over or otherwise dispose of
shares of the Company (including fractions of a share) with or without preferred, deferred or other special rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise and to such persons, at such times and on such
other terms as they think proper PROVIDED ALWAYS that, notwithstanding any provision to the contrary contained in these Articles of Association, the Company shall be precluded from issuing bearer shares, warrants, coupons or certificates.

7. The Company shall maintain a register of its Members and every person whose name is entered as a Member
in the register of Members shall be entitled without payment to receive within two months after allotment or lodgement of transfer (or within such other period as the conditions of issue shall provide) one certificate for all his shares or several
certificates each for one or more of his shares upon payment of fifty cents (US$0.50) for every certificate after the first or such less sum as the Directors shall from time to time determine provided that in respect of a share or shares held
jointly by several persons the Company shall not be bound to issue more than one certificate and delivery of a certificate for a share to one of the several joint holders shall be sufficient delivery to all such holders.

**TRANSFER OF SHARES** 

8. The instrument of transfer of any share shall be in writing and shall be executed by or on behalf of the
transferor and the transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the register in respect thereof. Any sale, assigning or other transfer or disposal of shares shall be made in accordance to
the Shareholders Agreement (as defined in Schedule A hereto) and the Articles (including the Schedule A hereto).

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9. The Directors may not decline to register any transfer of shares unless such registration of transfer
would be contrary to any provision in these Articles (including Schedule A hereto) or the Shareholders Agreement (as defined in Schedule A hereto). If the Directors refuse to register a transfer they shall notify the transferee within twenty
(20) business days after receipt of a request for such transfer, providing a detailed explanation of the reason therefor. The Directors shall promptly register any transfer of shares that complies with these Articles and the Shareholders
Agreement (as defined in Schedule A hereto).

10. The registration of transfers may be suspended at such time and for such periods as the Directors may
from time to time determine, provided always that: (i) registration of transfers may not be suspended for any transfer of shares made in compliance with Schedule A hereto and the Shareholders Agreement (as defined in Schedule A hereto); and
(ii) such registration shall not be suspended for more than 45 days in any year.

**REDEEMABLE SHARES** 

11. (a) Subject to Schedule A hereto, the provisions of the Statute and the Memorandum of Association,
shares may be issued on the terms that they are, or at the option of the Company or the holder are, to be redeemed on such terms and in such manner as the Company, before the issue of the shares, may by Special Resolution determine and the rights
attaching to any issued shares may, subject to the provisions of these Articles (including Schedule A hereto), by Special Resolution, be varied so as to provide that such shares are to be or are liable to be so redeemed, subject to and except for
any redemption pursuant to the terms of Section 3.8 of Schedule A hereto (which may not be varied by Special Resolution).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to Schedule A hereto, the provisions of the Statute and the Memorandum of Association, the
Company may purchase its own shares (including fractions of a share), including any redeemable shares, provided that the manner of purchase has first been authorised by the Company in general meeting (unless the redemption is in respect of the
Class B Ordinary Shares in accordance with the provisions of Schedule A hereto), and may make payment therefor in any manner authorised by the Statute, including out of capital and provided that the Company may not redeem or purchase any of its
shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the Company other than shares held as treasury shares (unless the redemption is in respect of the Class B Ordinary Shares in accordance with the
provisions of Schedule A hereto).

12. Subject to the provisions of these Articles, the manner and any of the terms of any such redemption or
purchase of shares may be determined by either the Company by ordinary resolution.

**TREASURY SHARES** 

13. The Company may, subject to the provisions of the Statute, acquire, hold and dispose of its own shares
as treasury shares.

**VARIATION OF RIGHTS OF SHARES** 

14. In addition to Schedule A hereto and notwithstanding anything to the contrary provided in these
Articles, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of more than 90% of the
issued shares of that class, or with the sanction of a Special Resolution passed at a general meeting of the holders of the shares of that class by the holders of more than 90% of the issued shares of that class.

The provisions of these Articles relating to general meetings shall apply to every such general meeting of the holders of one class of shares except that the necessary quorum shall be one or more person holding or representing by proxy at least 50% of the issued shares of that class and that any holder of shares of that class present in person or by proxy may demand a poll. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Members, shall be dissolved and in any other case it shall stand adjourned to the third day at the same time and place and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the holders of the shares of that class present shall be a quorum, provided that no business other than those set forth in the notice for such meeting shall be transacted at the adjourned meeting.

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15. The rights conferred upon the holders of the shares of any class issued with preferred or other rights
shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

**COMMISSION ON SALE OF SHARES** 

16. The Company may in so far as the Statute from time to time permits pay a commission to any person in
consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any shares of the Company. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up shares or partly in one way and partly in the other. The Company may also on any issue of shares pay such brokerage as may be lawful.

**NON-RECOGNITION OF TRUSTS** 

17. No person shall be recognised by the Company as holding any share upon any trust and the Company shall
not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future, or partial interest in any share, or any interest in any fractional part of a share, or (except only as is otherwise
provided by these Articles or the Statute) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

**LIEN ON SHARES** 

18. The Company shall have a first and paramount lien and charge on all shares (not being a fully paid-up share) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his
estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such share
shall operate as a waiver of the Company's lien (if any) thereon. The Company's lien (if any) on a share shall extend to all dividends or other monies payable in respect thereof.

19. The Company may sell, in such manner as the Directors think fit, any shares on which the Company has a
lien, but no sale shall be made unless a sum in respect of which the lien exists is presently payable, nor until the expiration of fourteen days after a notice in writing stating and demanding payment of such part of the amount in respect of which
the lien exists as is presently payable, has been given to the registered holder or holders for the time being of the share, or the person, of which the Company has notice, entitled thereto by reason of his death or bankruptcy.

20. To give effect to any such sale the Directors may authorise some person to transfer the shares sold to
the purchaser thereof. The purchaser shall be registered as the holder of the shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any
irregularity or invalidity in the proceedings in reference to the sale.

21. The proceeds of such sale shall be received by the Company and applied in payment of such part of the
amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the
date of the sale.

**CALL ON SHARES** 

22. (a) The Directors may from time to time make calls upon the Members in respect of any monies unpaid on
their shares (whether on account of the nominal value of the shares or by way of premium or otherwise) and not by the conditions of allotment thereof made payable at fixed terms, provided that no call shall be payable at less than one month from the
date fixed for the payment of the last preceding call, and each Member shall (subject to receiving at least fourteen days notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the
shares. A call may be revoked or postponed as the Directors may determine (provided that the Director appointed by the Member whose shares are subject to such call shall abstain from all discussions and voting of the Directors in relation to such
call). A call may be made payable by instalments.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) A call shall be deemed to have been made at the time when the resolution of the Directors authorising
such call was passed (provided that the Director appointed by the Member whose shares are subject to such call shall not be entitled to vote on such resolution, and a simple majority of the remaining Directors shall have the power and authority to
pass such a resolution).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.

23. If a sum called in respect of a share is not paid before or on a day appointed for payment thereof, the
persons from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate not exceeding ten per cent per annum as the Directors may determine, but the Directors shall be at
liberty to waive payment of such interest either wholly or in part.

24. Any sum which by the terms of issue of a share becomes payable on allotment or at any fixed date,
whether on account of the nominal value of the share or by way of premium or otherwise, shall for the purposes of these Articles be deemed to be a call duly made, notified and payable on the date on which by the terms of issue the same becomes
payable, and in the case of non-payment all the relevant provisions of these Articles as to payment of interest forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly
made and notified.

25. The Directors may, on the issue of shares, differentiate between the holders as to the amount of calls
or interest to be paid and the times of payment.

26. (a) The Directors may, if they think fit, receive from any Member willing to advance the same, all or any part of the monies uncalled and unpaid upon any shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not exceeding (unless the Company in general meeting shall otherwise direct) seven per cent per annum, as may be agreed upon between the Directors and the Member paying such
sum in advance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No such sum paid in advance of calls shall entitle the Member paying such sum to any portion of a
dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.

**FORFEITURE OF SHARES** 

27. (a) If a Member fails to pay any call or instalment of a call or to make any payment required by the terms of issue on the day appointed for payment thereof, the Directors (excluding the Director(s) appointed by the Member whose shares
are subject to the forfeiture hereunder) may, at any time thereafter during such time as any part of the call, instalment or payment remains unpaid, give notice requiring payment of so much of the call, instalment or payment as is unpaid, together
with any interest which may have accrued and all expenses that have been incurred by the Company by reason of such non-payment. Such notice shall name a day (not earlier than the expiration of fourteen days
from the date of giving of the notice) on or before which the payment required by the notice is to be made, and shall state that, in the event of non-payment at or before the time appointed the shares in
respect of which such notice was given will be liable to be forfeited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the requirements of any such notice as aforesaid are not complied with, any share in respect of which
the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Directors (excluding the Director(s) appointed by the Member whose shares are subject to the
forfeiture hereunder) to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before the forfeiture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Directors
(excluding the Director(s) appointed by the Member whose shares are subject to the forfeiture hereunder) think fit and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors (excluding the Director(s)
appointed by the Member whose shares are subject to the forfeiture hereunder) think fit.

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28. A person whose shares have been forfeited shall cease to be a Member in respect of the forfeited shares,
but shall, notwithstanding, remain liable to pay to the Company all monies which, at the date of forfeiture were payable by him to the Company in respect of the shares together with interest thereon, but his liability shall cease if and when the
Company shall have received payment in full of all monies whenever payable in respect of the shares.

29. A certificate in writing under the hand of one Director or the Secretary of the Company that a share in
the Company has been duly forfeited on a date stated in the declaration shall be conclusive evidence of the fact therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration given for the
share on any sale or disposition thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of and he shall thereupon be registered as the holder of the share and shall not be bound to see to the
application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

30. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium as if the same had been payable by virtue of
a call duly made and notified.

**REGISTRATION OF EMPOWERING INSTRUMENTS** 

31. The Company shall be entitled to charge a fee not exceeding one dollar (US$l.00) on the registration of
every probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of distringas, or other instrument.

**TRANSMISSION OF SHARES** 

32. In case of the death of a Member, the survivor or survivors where the deceased was a joint holder, and
the legal personal representatives of the deceased where he was a sole holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing herein contained shall release the estate of any such
deceased holder from any liability in respect of any shares which had been held by him solely or jointly with other persons.

33. (a) Any person becoming entitled to a share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to be registered himself as holder of the share or to make such transfer of the share to such other person nominated by him as the deceased or bankrupt person could have
made and to have such person registered as the transferee thereof, but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that Member before
his death or bankruptcy as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the person so becoming entitled shall elect to be registered himself as holder he shall deliver or
send to the Company a notice in writing signed by him stating that he so elects.

34. A person becoming entitled to a share by reason of the death or bankruptcy or liquidation or dissolution
of the holder (or in any other case than by transfer) shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a
Member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company PROVIDED HOWEVER that the Directors may at any time give notice requiring any such person to elect
either to be registered himself or to transfer the share and if the notice is not complied with within ninety days the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share until the
requirements of the notice have been complied with.

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**AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF LOCATION OF** 

**REGISTERED OFFICE & ALTERATION OF CAPITAL** 

35. (a) Subject to and in so far as permitted by the provisions of the Statute and the provisions in
Schedule A hereto, the Company may from time to time by Special Resolution alter or amend its Memorandum of Association and may, without restricting the generality of the foregoing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) increase the share capital by such sum to be divided into shares of such amount or without nominal or par value
as the resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) by subdivision of its existing shares or any of them divide the whole or any part of its share capital into
shares of smaller amount than is fixed by the Memorandum of Association or into shares without nominal or par value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All new shares created hereunder shall be subject to the same provisions with reference to the payment
of calls, liens, transfer, transmission, forfeiture and otherwise as the shares in the original share capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subject to the provisions of the Statute and Schedule A hereto, the Company may by Special Resolution
change its name or alter its objects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Without prejudice to Article 11 hereof and subject to the provisions of the Statute and these Articles
(including Schedule A hereto), the Company may by Special Resolution reduce its share capital and any capital redemption reserve fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Subject to the provisions of the Statute, the Company may by resolution of the Directors change the
location of its registered office.

**CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE** 

36. For the purpose of determining Members entitled to notice of or to vote at any meeting of Members or any
adjournment thereof, or Members entitled to receive payment of any dividend, or in order to make a determination of Members for any other proper purpose, the Directors of the Company may provide that the register of Members shall be closed for
transfers for a stated period but not to exceed in any case 40 days. If the register of Members shall be so closed for the purpose of determining Members entitled to notice of or to vote at a meeting of Members such register shall be so closed for
at least ten days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the register of Members.

37. In lieu of or apart from closing the register of Members, the Directors may fix in advance a date as the
record date for any such determination of Members entitled to notice of or to vote at a meeting of the Members and for the purpose of determining the Members entitled to receive payment of any dividend the Directors may, at or within 90 days prior
to the date of declaration of such dividend fix a subsequent date as the record date for such determination.

38. If the register of Members is not so closed and no record date is fixed for the determination of Members
entitled to notice of or to vote at a meeting of Members or Members entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Directors declaring such dividend is adopted,
as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this section, such determination shall apply to any adjournment
thereof.

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**GENERAL MEETING** 

39. (a) Subject to Schedule A hereto, the Company shall within one year of its incorporation and in each year of its existence thereafter hold a general meeting as its annual general meeting and shall specify the meeting as such in the
notices calling it. The annual general meeting shall be held at such time and place as the Directors shall appoint and if no other time and place is prescribed by them, it shall be held at the registered office on the second Wednesday in December of
each year at ten o'clock in the morning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At these meetings the report of the Directors (if any) shall be presented.

40. (a) The Directors may whenever they think fit, and they shall on the requisition of Members of the Company holding at the date of the deposit of the requisition not less than one-tenth of such of
the paid-up capital of the Company as at the date of the deposit carries the right of voting at general meetings of the Company, proceed to convene a general meeting of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The requisition must state the objects of the meeting and must be signed by the requisitionists and
deposited at the registered or principal office of the Company and may consist of several documents in like form each signed by one or more requisitionists.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Directors do not within 21 days from the date of the deposit of the requisition duly proceed to
convene a general meeting, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened
shall not be held after the expiration of three months after the expiration of the said 21 days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as
nearly as possible as that in which general meetings are to be convened by Directors.

**NOTICE OF GENERAL MEETINGS** 

41. At least twenty (20) days' prior written notice shall be given of an annual general meeting
and at least fifteen (15) days' prior written notice shall be given of any other general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify
the place, the day and the hour of the meeting and the general nature of the business and shall be given in manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company; provided that a general meeting of the
Company may be convened on a shorter written notice period if it is so agreed by the Members entitled to attend and vote thereat or their proxies holding not less than two-thirds (2/3) of the issued and
outstanding shares of the Company (or their proxies) (including at least a majority of the then outstanding Class B Ordinary Shares).

42. The accidental omission to give notice of a general meeting to, or the non-receipt of notice of a meeting by any person entitled to receive notice shall not invalidate the proceedings of that meeting.

**PROCEEDINGS AT GENERAL MEETINGS** 

43. No business shall be transacted at any general meeting unless a quorum of Members is present at the time
when the meeting proceeds to business; one or more Members present in person or by proxy holding at least fifty percent (50%) of the issued and outstanding shares of the Company shall be a quorum provided always that if the Company has one Member of
record the quorum shall be that one Member present in person or by proxy.

44. A resolution (including a Special Resolution and an ordinary resolution) in writing (in one or more
counterparts) signed by all Members for the time being entitled to receive notice of and to attend and vote at general meetings (or being corporations by their duly authorised representatives) shall be as valid and effective as if the same had been
passed at a general meeting of the Company duly convened and held.

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45. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if
convened upon the requisition of Members, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and place or to such other time or such other place as the Directors may determine and if
at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the Members present shall be a quorum.

46. The chairman of the general meeting shall be elected pursuant to Schedule A hereto.

47. If at any general meeting no Director is willing to act as chairman of the general meeting or if no
Director is present within fifteen minutes after the time appointed for holding the meeting, the Members present shall choose one of their number to be chairman of the general meeting.

48. The chairman of the general meeting may, with the consent of any general meeting duly constituted
hereunder, and shall if so directed by the meeting, adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the
adjournment took place. When a general meeting is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting; save as aforesaid it shall not be necessary to give any notice of an adjournment
or of the business to be transacted at an adjourned general meeting.

49. At any general meeting a resolution put to the vote of the meeting shall be decided by way of poll.

50. [reserved]

51. [reserved]

52. The result of the poll shall be deemed to be the resolution of the general meeting.

53. [reserved]

54. A poll demanded on the election of a Chairman or on a question of adjournment shall be taken forthwith.
A poll demanded on any other question shall be taken at such time as the chairman of the general meeting directs and any business other than that upon which a poll has been demanded or is contingent thereon may be proceeded with pending the taking
of the poll.

**VOTES OF MEMBERS** 

55. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on
a poll every Member of record present in person or by proxy shall have one vote for each share registered in his name in the register of Members.

56. In the case of joint holders of record the vote of the senior who tenders a vote, whether in person or
by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of Members.

57. A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction
in lunacy, may vote, on a poll, by his committee, receiver, curator bonis, or other person in the nature of a committee, receiver or curator bonis appointed by that court, and any such committee, receiver, curator bonis or other persons may vote by
proxy.

58. No Member shall be entitled to vote at any general meeting unless he is registered as a shareholder of
the Company on the record date for such meeting nor unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.

59. No objection shall be raised to the qualification of any voter except at the general meeting or
adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at such general meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the general
meeting whose decision shall be final and conclusive.

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60. On a poll votes may be given either personally or by proxy.

**PROXIES** 

61. The instrument appointing a proxy shall be in writing and shall be executed under the hand of the
appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation under the hand of an officer or attorney duly authorised in that behalf. A proxy need not be a Member of the Company.

62. The instrument appointing a proxy shall be deposited at the registered office of the Company or at such
other place as is specified for that purpose in the notice convening the meeting no later than the time for holding the meeting, or adjourned meeting provided that the Chairman of the Meeting may at his discretion direct that an instrument of proxy
shall be deemed to have been duly deposited upon receipt of telex, cable or telecopy confirmation from the appointor that the instrument of proxy duly signed is in the course of transmission to the Company.

63. The instrument appointing a proxy may be in any usual or common form and may be expressed to be for a
particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.

64. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the
previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given provided that no intimation in writing of such death,
insanity, revocation or transfer as aforesaid shall have been received by the Company at the registered office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.

65. Any corporation which is a Member of record of the Company may in accordance with its Articles or in the
absence of such provision by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members of the Company, and the person so
authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member of record of the Company.

66. Shares of its own capital belonging to the Company or held by it in a fiduciary capacity shall not be
voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time.

**DIRECTORS** 

67. Subject to the provisions in Schedule A hereto, there shall be a Board of Directors consisting of not
less than one or more than ten persons (exclusive of alternate Directors).

68. Subject to these Articles (including Schedule A hereto), the remuneration to be paid to the Directors
shall be such remuneration as the Members shall determine. Such remuneration shall be deemed to accrue from day to day. Subject to these Articles (including Schedule A hereto), the Directors shall also be entitled to be paid their travelling, hotel
and other expenses properly incurred by them in going to, attending and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or otherwise in connection with the business of the Company, or
to receive a fixed allowance in respect thereof as may be determined by the Directors from time to time, or a combination partly of one such method and partly the other.

69. The Members may by resolution award special remuneration to any Director of the Company undertaking any
special work or services for, or undertaking any special mission on behalf of, the Company other than his ordinary routine work as a Director. Any fees paid to a Director who is also counsel or solicitor to the Company, or otherwise serves it in a
professional capacity shall be in addition to his remuneration as a Director.

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70. A Director or alternate Director may hold any other office or place of profit under the Company (other
than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.

71. A Director or alternate Director may act by himself or his firm in a professional capacity for the
Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate Director.

72. A shareholding qualification for Directors may be fixed by the Company in general meeting, but unless
and until so fixed no qualification shall be required.

73. A Director or alternate Director of the Company may be or become a director or other officer of or
otherwise interested in any company promoted by the Company or in which the Company may be interested as shareholder or otherwise and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits
received by him as a director or officer of, or from his interest in, such other company.

74. No person shall be disqualified from the office of Director or alternate Director or prevented by such
office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any
way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or transaction by reason of such
Director holding office or of the fiduciary relation thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of any contract or transaction in which he is so interested as aforesaid PROVIDED
HOWEVER that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by him or the alternate Director appointed by him at or prior to its consideration and any vote thereon.

75. A general notice that a Director or alternate Director is a shareholder of any specified firm or company
and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure under Article 74 and after such general notice it shall not be necessary to give special notice relating to any particular transaction.

**ALTERNATE DIRECTORS** 

76. Subject to the provisions in Schedule A hereto and the exception contained in Article 84, a Director who
expects to be unable to attend Directors' Meetings because of absence, illness or otherwise may appoint any person to be an alternate Director to act in his stead and such appointee whilst he holds office as an alternate Director shall, in the
event of absence therefrom of his appointor, be entitled to attend meetings of the Directors and to vote thereat and to do, in the place and stead of his appointor, any other act or thing which his appointor is permitted or required to do by virtue
of his being a Director as if the alternate Director were the appointor, other than appointment of an alternate to himself, and he shall *ipso facto* vacate office if and when his appointor ceases to be a Director or removes the appointee from
office. Any appointment or removal under this Article shall be effected by notice in writing under the hand of the Director making the same.

**POWERS AND DUTIES OF DIRECTORS** 

77. Subject to the provisions in Schedule A hereto, the business of the Company shall be managed by the
Directors (or a sole Director if only one is appointed) who may pay all expenses incurred in promoting, registering and setting up the Company, and may exercise all such powers of the Company as are not, from time to time by the Statute, or by these
Articles, or such regulations, being not inconsistent with the aforesaid, as may be prescribed by the Company in general meeting required to be exercised by the Company in general meeting PROVIDED HOWEVER that no regulations made by the Company in
general meeting shall invalidate any prior act of the Directors which would have been valid if that regulation had not been made.

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78. The Directors may from time to time and at any time by powers of attorney appoint any company, firm,
person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by
the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorneys
as the Directors may think fit and may also authorise any such attorney to delegate all or any of the powers, authorities and discretions vested in him.

79. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all
receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall from time to time by resolution determine.

80. The Directors shall cause minutes to be made in books provided for the purpose:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) of all appointments of officers made by the Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) of the names of the Directors (including those represented thereat by an alternate or by proxy) present
at each meeting of the Directors and of any committee of the Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) of all resolutions and proceedings at all meetings of the Company and of the Directors and of committees
of Directors.

81. The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any
Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

82. Subject to these Articles (including Schedule A hereto), the Directors may exercise all the powers of
the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or
obligation of the Company or of any third party.

**MANAGEMENT** 

83. (a) Subject to the provisions of Schedule A hereto, the Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next
following paragraphs shall be without prejudice to the general powers conferred by this paragraph.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Subject to these Articles (including Schedule A hereto), the Directors from time to time and at any time
may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any persons to be members of such committees or local boards or any managers or agents and may fix their remuneration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Subject to these Articles (including Schedule A hereto), the Directors from time to time and at any time
may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to
fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so
appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Subject to these Articles (including Schedule A hereto), any such delegates as aforesaid may be
authorised by the Directors to subdelegate all or any of the powers, authorities, and discretions for the time being vested in them.

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**MANAGING DIRECTORS** 

84. Subject to these Articles (including Schedule A hereto), the Directors may, from time to time, appoint
one or more of their body (but not an alternate Director) to the office of Managing Director for such term and at such remuneration (whether by way of salary, or commission, or participation in profits, or partly in one way and partly in another) as
they may think fit but his appointment shall be subject to determination *ipso facto* if he ceases from any cause to be a Director and no alternate Director appointed by him can act in his stead as a Director or Managing Director.

85. The Directors may entrust to and confer upon a Managing Director any of the powers exercisable by them
upon such terms and conditions and with such restrictions as they may think fit and either collaterally with or to the exclusion of their own powers and may from time to time revoke, withdraw, alter or vary all or any of such powers.

**PROCEEDINGS OF DIRECTORS** 

86. Except as otherwise provided by these Articles (including the provisions in Schedule A hereto), the
Directors shall meet together for the despatch of business, convening, adjourning and otherwise regulating their meetings as they think fit. Except as otherwise provided by these Articles (including the provisions in Schedule A hereto), questions
arising at any meeting shall be decided by a majority of votes of the Directors and alternate Directors , the vote of an alternate Director not being counted if his appointor be present at such meeting. In case of an equality of votes, the Chairman
shall have no second or casting vote.

87. Subject to the provisions in Schedule A hereto, a Director or alternate Director may, and the Secretary
on the requisition of a Director or alternate Director shall, at any time summon a meeting of the Directors by at least ten day notice in writing to every Director and alternate Director and Observer (as defined in Schedule A hereto) which notice
shall set forth the general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) and the Observers either at, before or after the meeting is held and PROVIDED FURTHER if notice is given in
person, by cable, telex or telecopy the same shall be deemed to have been given on the day it is delivered to the Directors and the Observers or transmitting organisation as the case may be. The provisions of Article 42 shall apply *mutatis mutandis* with respect to notices of meetings of Directors.

88. The quorum necessary for the transaction of the business of the Directors shall be as stated in Schedule
A hereto, PROVIDED ALWAYS that if there shall at any time be only a sole Director the quorum shall be one. For the purposes of this Article an alternate Director or proxy appointed by a Director shall be counted in a quorum at a meeting at which the
Director appointing him is not present.

89. Subject to these Articles (including Schedule A hereto), the continuing Directors may act
notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of
increasing the number of Directors to that number, or of summoning a general meeting of the Company, but for no other purpose.

90. The Chairman of the Company shall be elected in accordance with Schedule A hereto. If at any meeting the
Chairman is not present within five minutes after the time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting.

91. Subject to these Articles (including Schedule A hereto), the Directors may delegate any of their powers
to committees consisting of such member or members of the Board of Directors (including Alternate Directors in the absence of their appointors) as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to
any regulations that may be imposed on it by the Directors.

92. Subject to these Articles (including Schedule A hereto), a committee may meet and adjourn as it thinks
proper. Questions arising at any meeting of a committee shall be determined by a majority of votes of the members present, and in the case of an equality of votes the Chairman shall have no second or casting vote.

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| | |
|:---|:---|
| 93. | All acts done by any meeting of the Directors or of a committee of Directors (including any person acting as an alternate Director) shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or alternate Director, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and qualified to be a Director or alternate Director as the case may be. |
| 94. | Members of the Board of Directors or of any committee thereof may participate in a meeting of the Board or of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting. A resolution in writing (in one or more counterparts), signed by all the Directors for the time being or all the members of a committee of Directors (an alternate Director being entitled to sign such resolution on behalf of his appointor) shall be as valid and effectual as if it had been passed at a meeting of the Directors or committee as the case may be duly convened and held. |
| 95. (a) | A Director may be represented at any meetings of the Board of Directors by a proxy appointed by him in which event the presence or vote of the proxy shall for all purposes be deemed to be that of the Director. |
| (b) | The provisions of Articles 61-64 shall *mutatis mutandis* apply to the appointment of proxies by Directors. |

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**VACATION OF OFFICE OF DIRECTOR** 

96. The office of a Director shall be vacated:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if he gives notice in writing to the Company that he resigns the office of Director or being removed
pursuant to the provisions in Schedule A hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if he absents himself (without being represented by proxy or an alternate Director appointed by him)
from three consecutive meetings of the Board of Directors without special leave of absence from the Directors, and they pass a resolution that he has by reason of such absence vacated office;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if he dies, becomes bankrupt or makes any arrangement or composition with his creditors generally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) if he is found a lunatic or becomes of unsound mind.

**APPOINTMENT AND REMOVAL OF DIRECTORS** 

97. Subject to the provisions in Schedule A hereto, the Company may by ordinary resolution appoint any
person to be a Director and may in like manner remove any Director and may in like manner appoint another person in his stead.

98. Subject to the provisions in Schedule A hereto, the Directors shall have power at any time and from time
to time to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors but so that the total amount of Directors (exclusive of alternate Directors) shall not at any time exceed the number fixed in
accordance with these Articles.

**PRESUMPTION OF ASSENT** 

99. A Director of the Company who is present at a meeting of the Board of Directors at which action on any
Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the Minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the Secretary of
the meeting before the adjournment thereof or shall forward such dissent by registered mail to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.

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**SEAL** 

100. (a) The Company may, if the Directors so determine, have a Seal which shall, subject to paragraph (c) hereof, only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors in that
behalf and every instrument to which the Seal has been affixed shall be signed by one person who shall be either a Director or the Secretary or Secretary-Treasurer or some person appointed by the Directors for the purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals
each of which shall be a facsimile of the Common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) A Director, Secretary or other officer or representative or attorney may without further authority of
the Directors affix the Seal of the Company over his signature alone to any document of the Company required to be authenticated by him under Seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) A document to be executed as a Deed shall be executed by a Director or other person authorised by the
Directors for that purpose.

**OFFICERS** 

101. The Company may have a President, a Secretary or Secretary-Treasurer appointed by the Directors who may
also from time to time appoint such other officers as they consider necessary, all for such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors from time to time
prescribe.

**DIVIDENDS, DISTRIBUTIONS AND RESERVE** 

102. Subject to the Members' approval and other applicable requirements in Schedule A hereto and the
Statute, the Directors may from time to time declare dividends (including interim dividends) and distributions on shares of the Company outstanding and authorise payment of the same out of the funds of the Company lawfully available therefor. Except
for distribution expressly contemplated under Schedule A hereto (including Section 3.6, Section 3.8 and Section 5 therein), all dividends and distributions on shares of the Company shall be made to all holders of shares on a pro-rata basis based on their respective shareholding in the Company.

103. The Directors may, before declaring any dividends or distributions, set aside such sums as they think
proper as a reserve or reserves which shall at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the like discretion, be employed in the business of the Company.

104. No dividend or distribution shall be payable except out of the profits of the Company, realised or
unrealised, or out of the share premium account or as otherwise permitted by the Statute.

105. Subject to the rights of persons, if any, entitled to shares with special rights as to dividends or
distributions, if dividends or distributions are to be declared on a class of shares they shall be declared and paid according to the amounts paid or credited as paid on the shares of such class outstanding on the record date for such dividend or
distribution as determined in accordance with these Articles but no amount paid or credited as paid on a share in advance of calls shall be treated for the purpose of this Article as paid on the share.

106. The Directors may deduct from any dividend or distribution payable to any Member all sums of money (if
any) presently payable by him to the Company on account of calls or otherwise.

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107. The Directors may declare that any dividend or distribution be paid wholly or partly by the distribution
of specific assets and in particular of paid up shares, debentures, or debenture stock of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they
think expedient and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the footing of the value so
fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem expedient to the Directors.

108. Any dividend, distribution, interest or other monies payable in cash in respect of shares may be paid by
cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the holder who is first named on the register of Members or to such person and to such address as such holder or joint
holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.

109. Subject to Schedule A hereto, no dividend or distribution shall bear interest against the Company.

**CAPITALISATION** 

110. Subject to the provisions of Schedule A hereto, the Company may upon the recommendation of the Directors
by ordinary resolution authorise the Directors to capitalise any sum standing to the credit of any of the Company's reserve accounts (including share premium account and capital redemption reserve fund) or any sum standing to the credit of
profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of dividend and to
apply such sum on their behalf in paying up in full unissued shares for allotment and distribution credited as fully paid up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give
effect to such capitalisation, with full power to the Directors to make such provisions as they think fit for the case of shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the
Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any
agreement made under such authority shall be effective and binding on all concerned.

**BOOKS OF ACCOUNT** 

111. The Directors shall cause proper books of account to be kept with respect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all sums of money received and expended by the Company and the matters in respect of which the receipt or
expenditure takes place;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) all sales and purchases of goods by the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the assets and liabilities of the Company.

Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company's affairs and to explain its transactions.

112. Subject to Schedule A hereto, the Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of
inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting or in accordance with these Articles (including Schedule A hereto).

113. The Directors may from time to time cause to be prepared and to be laid before the Company in general
meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.

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**AUDIT** 

114. The Company may at any annual general meeting appoint an Auditor or Auditors of the Company who shall
hold office until the next annual general meeting and may fix his or their remuneration.

115. The Directors may before the first annual general meeting appoint an Auditor or Auditors of the Company
who shall hold office until the first annual general meeting unless previously removed by an ordinary resolution of the Members in general meeting in which case the Members at that meeting may appoint Auditors. The Directors may fill any casual
vacancy in the office of Auditor but while any such vacancy continues the surviving or continuing Auditor or Auditors, if any, may act. The remuneration of any Auditor appointed by the Directors under this Article may be fixed by the Directors.

116. Every Auditor of the Company shall have a right of access at all times to the books and accounts and
vouchers of the Company and shall be entitled to require from the Directors and Officers of the Company such information and explanation as may be necessary for the performance of the duties of the auditors.

117. Auditors shall at the next annual general meeting following their appointment and at any other time
during their term of office, upon request of the Directors or any general meeting of the Members, make a report on the accounts of the Company in general meeting during their tenure of office.

**NOTICES** 

118. Notices shall be in writing and may be given by the Company to any Member either personally or by
sending it by post, cable, telex or telecopy to him or to his address as shown in the register of Members, such notice, if mailed, to be forwarded airmail if the address be outside the Cayman Islands.

119. (a) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter containing the notice, and to have been effected at
the expiration of 60 hours after the letter containing the same is posted as aforesaid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Where a notice is sent by cable, telex, telecopy or electronic message, service of the notice shall be
deemed to be effected by properly addressing, and sending such notice through a transmitting organisation and to have been effected on the day the same is sent as aforesaid.

120. A notice may be given by the Company to the joint holders of record of a share by giving the notice to
the joint holder first named on the register of Members in respect of the share.

121. A notice may be given by the Company to the person or persons which the Company has been advised are
entitled to a share or shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles, addressed to them by name, or by the title of representatives of the deceased,
or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if
the death or bankruptcy had not occurred.

122. Notice of every general meeting shall be given in any manner hereinbefore authorised to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) every person shown as a Member in the register of Members as of the record date for such meeting except
that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the register of Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) every person upon whom the ownership of a share devolves by reason of his being a legal personal
representative or a trustee in bankruptcy of a Member of record where the Member of record but for his death or bankruptcy would be entitled to receive notice of the meeting; and

No other person shall be entitled to receive notices of general meetings.

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**WINDING UP** 

123. Subject to Schedule A hereto, if the Company shall be wound up the liquidator may, with the sanction of
a Special Resolution of the Company and any other sanction required by the Statute, divide amongst the Members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and
may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may with the like
sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any shares or other
securities whereon there is any liability.

124. Subject to Schedule A hereto, if the Company shall be wound up, and the assets available for
distribution amongst the Members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members
in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively, and if in a winding up the assets available for distribution amongst the Members shall be more
than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the Members in proportion to the capital paid up at the commencement of the winding up on the shares held by
them respectively. This Article is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions.

**INDEMNITY** 

125. The Directors and officers for the time being of the Company and any trustee for the time being acting
in relation to any of the affairs of the Company and their heirs, executors, administrators and personal representatives respectively shall be indemnified out of the assets of the Company from and against all actions, proceedings, costs, charges,
losses, damages and expenses which they or any of them shall or may incur or sustain by reason of any act done or omitted in or about the execution of their duty in their respective offices or trusts, except such (if any) as they shall incur or
sustain by or through their own wilful neglect or default respectively and no such Director, officer or trustee shall be answerable for the acts, receipts, neglects or defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other persons with whom any monies or effects belonging to the Company may be lodged or deposited for safe custody or for any insufficiency of any security upon which any
monies of the Company may be invested or for any other loss or damage due to any such cause as aforesaid or which may happen in or about the execution of his office or trust unless the same shall happen through the wilful neglect or default of such
Director, Officer or trustee.

**FINANCIAL YEAR** 

126. Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December
in each year and, following the year of incorporation, shall begin on 1st January in each year.

**AMENDMENTS OF ARTICLES** 

127. Subject to the Statute and these Articles (including Schedule A hereto), the Company may at any time and
from time to time by Special Resolution alter or amend these Articles in whole or in part.

**TRANSFER BY WAY OF CONTINUATION** 

128. If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute
and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

------

**Schedule A** 

This Schedule A forms part of these Articles. In the event of any inconsistency between the provisions set out in this Schedule A and other provisions of the Memorandum and these Articles, the provisions set out in this Schedule A shall prevail.

Any reference to a "**Section**" in this Schedule A is a reference to a section of this Schedule A, unless otherwise expressly stated.

**1.** **Definition** 

In addition to the words and expressions defined elsewhere in these Articles, the following terms shall have the meanings ascribed to them below in this Schedule A:

"**Affiliate**" means (i) in the case of a Person other than a natural person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person; and (ii) in the case of a natural person, any other Person that directly or indirectly is Controlled by such Person, or a Relative of such Person or any other Person that directly or indirectly Controlled by a Relative of such Person.

"**Applicable Law(s)**", or "**Law(s)**" means, with respect to any Person, any public, effective and applicable treaties, laws, administrative regulations, local regulations, rules, judicial interpretations, judgment, rulings, arbitral awards and other administrative, normative documents which are binding upon such Person or the asset(s) of such Person.

"**Asset**" means any tangible or intangible asset, right and privilege of any nature (including rights relating to the Intellectual Property).

"**Board**" or "**Board of Directors**" means the board of directors of the Company.

"**Boehringer Ingelheim"** means Boehringer Ingelheim Animal Health Participations GmbH, together with its permitted transferees, assignees and successors.

"**Business Day**" means any day that is not a Saturday, a Sunday, a public holiday or a day on which date commercial banks in the PRC, Cayman Islands or Hong Kong Special Administrative Region are closed.

"**CG Fund**" means CG Partners Opportunity Fund SP2, a segregated portfolio of CG Partners Fund SPC, together with its permitted transferees, assignees and successors.

"**Class A Ordinary Shares**" means the Class A ordinary shares of the Company, par value US$0.000001 each, with the rights and privileges as set forth in these Articles and the Shareholders Agreement.

"**Class B Ordinary Shares**" means the Class B Ordinary Shares of the Company, which are redeemable, par value US$0.000001 each, with the rights and privileges as set forth in these Articles and the Shareholders Agreement. For purposes of this Schedule A, any reference to the number or percentage of "outstanding Class B Ordinary Shares" or "Class B Ordinary Shares" shall also include the Warrant Shares assuming full exercise of the CLASS B Warrants.

"**Class B Ordinary SPA**" means the Class B Ordinary Share and Warrant Purchase Agreement entered into by and among the Company, Boehringer Ingelheim, Tencent, Snow Lake China Master Fund, Ltd. and certain other parties named therein on September 8, 2020, as amended and restated from time to time.

"**Class B Ordinary Closing Date**" means "Closing Date" as defined in section 2.1 of the Class B Ordinary SPA.

Schedule A-1

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"**Class B Ordinary Members**" means the holders of Class B Ordinary Shares, and a Class B Ordinary Member means any of them.

"**Class B Ordinary Share Issue Price**" means US$0.32521803, as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and similar events with respect to such a Class B Ordinary Share.

"**CLASS B Warrant**" shall bear the meaning set forth in section 4.2(b)(ii) of the Class B Ordinary SPA.

"**Competitor**" means any entity that directly or indirectly competes with the Main Business of any Group Company, or any third party identified by the Board as having direct or indirect competition with the Main Business.

"**Control**" of a given Person means (i) holding 50% or more of the issued shares, other equity interest or registered capital of that Person or (ii) the power or authority, to determine the management and policies of such Person, whether through the ownership of more than fifty percent (50%) voting right of that Person, through the voting proxy of more than fifty percent (50%) voting right of that Person, through the power to control the composition of a majority of the board of directors of such Person or through contractual arrangement or other means; the term "Person" in this definition does not refer to a natural person.

"**Deemed Liquidation Event**" means: (a) any transaction, whether by sale, lease, transfer, assignment or other means, pursuant to or as a result of which all or substantially all of the Assets of the Group Companies are disposed; (b) any transaction, whether by sale, association, consolidation, restructuring, merger or amalgamation, pursuant to or as a result of which the existing shareholders of the Company immediately before the consummation of such transaction do not retain more than fifty percent (50%) of the voting rights immediately after such transaction; or (c) the exclusive licensing of all or substantially all of the Intellectual Property of the Group Companies to a third party.

"**Equity Securities**" means, with respect to a Person, any equity interest, shares, preference shares, shareholder interest, partnership interest, registered capital interest, joint venture interest and any other ownership interest, and any option, warrant, or other right or securities which can be directly or indirectly converted into or are exercisable or exchangeable for any of the foregoing. Any "equity interest" or "equity securities" of a Person shall include the Equity Securities unless otherwise it becomes illogical to interpret within the context. For the purpose of this definition, a Person does not include a natural person.

"**Gracious Rhythm**" means GRACIOUS RHYTHM LIMITED (尚韵有限公司), together with its permitted transferees, assignees and successors.

"**Group Companies**" or "**Group**" shall bear the meaning of "**Group Companies**" as set forth in the Class B Ordinary SPA, and a "**Group Company**" shall mean any of the Group Companies.

" **Hillhouse**" means HH Skyfield Holdings Inc. and 天津高瓴诺远企业管理咨询合伙企业（有限合伙）, collectively; and "**Hillhouse Chairman**" shall bear the meaning as set forth in <u>Section</u> <u>2.2(ii)</u> hereof.

"**Identified Competitor**" means any Person which operates under any brand set forth in Schedule V of the Shareholders Agreement, which list shall not exceed ten (10) brands and may be updated once in every twelve (12) consecutive months (provided that : (i) such update shall be made in good faith and shall only include a brand whose primary business is in material competition with the Group's Main Business, and (ii) the list shall not include any Class B Ordinary Member or its Affiliates for so long as such Class B Ordinary Member or Affiliate does not hold more than twenty percent (20%) in any brand or Person whose primary business is in material competition with the Group's Main Business), as notified by the Board to the Members in writing.

Schedule A-2

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"**Intellectual Property**" means patents, trademarks, service logos, registration designs, domain names, utility models, copyrights, inventions, confidential information, trade secrets, proprietary production processes and equipment, brand names, database rights, trade names, other similar rights and any of the above interests (whether registered or not) in any country, and shall include the application of granting any of the above-mentioned items and the right to apply for them in any part of the world.

"**IPO**" means an initial public offering of the ordinary shares of the Company.

"**Liquidation Event**" means any of the following events: (i) a liquidation, dissolution or winding up of the Company and/or its Subsidiaries; <u>provided</u> that a liquidation, dissolution or winding up of the Subsidiaries of the Company shall constitute a Liquidation Event only when the number of branches and Subsidiaries of the Company that have been liquidated, dissolved or wound up during a financial year exceeds 10% of the total number of branches and Subsidiaries of the Company at the end of the previous financial year or (ii) any Deemed Liquidation Event.

"**Main Business**" means the business conducted by the Group Companies, being animal hospital, animal grooming, sale of animal food and products, and other pet-related businesses, including but not limited to the internet, software development, education and training, supply chain, media, etc.

"**Major Subsidiaries**" has the meaning ascribed thereto in the Shareholders Agreement.

"**Original Closing Date**" means December 3, 2019.

"**Person**" means any individual, company, corporation, partnership, trust, government, department or agency of government, or other entity.

"**PRC**" means the People's Republic of China, but solely for the purposes of these Articles, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan.

"**Qualified IPO**" shall bear the meanings as set forth in the Shareholders Agreement.

"**Related Party Transaction**" means a dealing or transaction between any of the Group Companies, on one side, and any shareholder, director, Key Employees (as defined in the Class B Ordinary SPA) or Ruipeng Management Members of any Group Company or any Affiliate(s) of the foregoing (excluding a Group Company), on the other side.

"**Relative**" means a husband, wife and husband's or wife's father, mother, grandparent, son, daughter, grandchild, brother, sister, uncle, auntie, nephew, niece, or grand grandparent.

"**Restructuring Framework Agreement**" means the agreement entered into by and among certain holders of Class A Ordinary Shares and/or their Affiliates and other parties thereto on January 23, 2019, a copy of which is attached to the Shareholders Agreement as Exhibit A.

"**RMB**" means the lawful currency of PRC.

"**Ruipeng**" means New Ruipeng Pet Healthcare Group Co., Ltd.(新瑞鹏宠物医疗集团有限公司).

"**Ruipeng Chairman**" shall bear the meaning as set forth in <u>Section</u> <u>2.2(ii)</u> hereof.

"**Ruipeng Management Members**" means collectively Peng Yonghe (彭永鹤), Liu Lang (刘朗), Zhang Yanzhong (张延忠), Zhang Wei (张微),Wang Liesheng (王烈胜), Dong Yi (董轶), Mao Junfu (毛军福), Wei Rensheng (魏仁生) and Li Wanbang (李万邦).

"**Ruipeng Investor Members**" means, collectively, Goldenway Capital Management Limited, PD Company Limited, HAO's Holdings, Inc., Bing Xiao Enterprise Management Company Limited, 北京阳光融汇医疗健康产业成长投资管理中心(有限合伙), 深圳市达晨创联股权投资基金合伙企业(有限合伙), 深圳市达晨创丰股权投资企业(有限合伙), ACE ELEMENT VENTURES LIMITED, 新希望医疗健康南京投资中心(有限合伙), 融汇瑞嘉（天津）资产管理合伙企业（有 限合伙）, Jin Rui Investment Co. Limited, 惠每康承（天津）企业管理咨询合伙企业（有限合伙）and any permitted assign of the foregoing accepted by Hillhouse and Ruipeng Management Members as a Ruipeng Investor Member, and a "**Ruipeng Investor Member**" shall mean any of them.

Schedule A-3

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"**Ruipeng Members**" means, collectively, RP Chen Rui Enterprise Management Company Limited, RP Rui You Enterprise Management Company Limited, RP Ye Bei Enterprise Management Company Limited, Vet Leap Eternity Limited, Vet Great Dream Limited, RP Sheng Peng Enterprise Management Company Limited, RP Peng Cheng Enterprise Management Company Limited, Vet Harvest Enterprise Management Company Limited, Vet Time Enterprise Management Company Limited, RP Pulse Holdings Limited, RP Passion Enterprise Management Company Limited, Ruipeng Management Members and any permitted assign of the foregoing accepted by Hillhouse and Ruipeng Management Members as a Ruipeng Member, and a "**Ruipeng Member**" shall mean any of them.

"**Shareholders Agreement**" means the Amended and Restated Shareholders Agreement entered into by and among the Company, Boehringer Ingelheim, Tencent, Snow Lake China Master Fund, Ltd. and certain other Members, the Ruipeng Management Members and certain other parties named therein, dated September 25, 2020, as amended and restated from time to time<u>.</u>

"**Skyfield Minority Members**" means, collectively, Jing An Holdings Limited, AnAn Brothers Holdings Limited, Vet Aino Family Limited, Aino Brothers Holding Limited, Vet Cloudpet Intermediate Limited, Puppytown Holdings Limited and the direct and/or indirect shareholders of the aforementioned entities and any permitted assign of the foregoing accepted by Hillhouse and Ruipeng Management Members as a Skyfield Minority Member, and a "**Skyfield Minority Member**" shall mean any of them.

"**Subsidiary**" or "**Subsidiaries**" means, with respect to any specified Person, any Person (excluding natural persons) which the specified Person, directly or indirectly, owns or Controls.

"**Tencent**" means Tencent Mobility Limited.

"**Tencent Competitors**" means the Persons whose names are listed in <u>Schedule IV</u> of the Shareholders Agreement.

"**Transaction Documents**" shall bear the meaning as set forth in section 4.4 of the Class B Ordinary SPA.

"**Warrants**" shall bear the meaning as set forth in section 4.2(b)(ii) of the Class B Ordinary SPA and the Shareholders Agreement.

**2.** **Corporate Governance.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1** **General Meetings** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All Members (for the purpose of this Schedule A, any reference to the "Members" shall also include
the holders of the Warrants and any reference to the "voting" or "votes" of the Members shall also include the votes of the holders of the Warrants as if the Warrants have been fully exercised) shall via a general meeting, vote
for or against the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) approval of the management strategy and investment plan of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) appointment and removal of directors of the Board (except for removal of directors by the Board in accordance with Section 2.3) and approval of such directors' remuneration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) approval of Board reports;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) approval of the profit distribution plan and loss compensation plan of the Company;

Schedule A-4

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) alternation of the authorized share capital of the Company, issuance or redemption of any Equity Securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the issuance of any debt securities of the Group in a single transaction (for the avoidance of doubt, a series of related transactions shall be regarded as a single transaction, the same applies below) or a series of transactions within any twelve (12) consecutive months, the issuance amount of which exceeds RMB500,000,000 (whether in one or multiple issuances);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) merger, division, dissolution, liquidation or change of any form of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) any amendments of these Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any IPO plans of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any external loans or other contingent indebtedness of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the amount of which exceeds RMB500,000,000 individually or in the aggregate except for any internal financings among the Group Companies or bank credit facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) any external guarantees, indebtedness and/or contingent liabilities provided by the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the amount of which exceeds RMB50,000,000 individually or in the aggregate except for those guarantees provided by a Group Company to another Group Company and guarantees provided to a Group Company for debts that have been pre-approved according to <u>Section</u> <u>2.1(i)(j)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) any Transfer of material Assets or Equity Securities by the Group that is either: (i) in a single transaction, the consideration of which exceeds RMB 50,000,000, or (ii) in transactions within any twelve (12) consecutive months, the consideration of which exceeds RMB200,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) any acquisition, purchase or subscription of material Assets or Equity Securities by the Group that is either: (i) in a single transaction, the consideration of which exceeds RMB300,000,000, or (ii) in transactions within any twelve (12) consecutive months, the consideration of which exceeds RMB500,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) any Related Party Transactions of the Group, the consideration of which exceeds RMB10,000,000 in a single transaction or a series of transactions within any twelve (12) consecutive months except for cash donations received by the Group or guarantees provided by the counter-parties of the Related Party Transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) any Group's expenditure, the aggregate amount of which exceeds RMB150,000,000 in a single transaction or a series of transactions within any twelve (12) consecutive months, unless otherwise approved in the Group's duly approved and adopted annual budget plan. For the avoidance of doubt, any acquisition of, subscription for or purchase of the material Assets or Equity Securities by the Group Company shall be subject to <u>Section</u> <u>2.1(i)(m)</u>, <u>Sections 2.2(iii)(q)</u> and <u>2.4(iv)(e)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) approval of the Company's share incentive plan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) approval of any other matters that requires Members' approval under the Applicable Laws, the Shareholders Agreement and these Articles.

Schedule A-5

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each Member (including his proxy) of the Company may exercise such Member's voting right based on the number of the Shares such Member holds. One Share shall carry one (1) vote. If the number of Shares held by Hillhouse exceeds the aggregate number of Shares held, directly or indirectly, by Ruipeng Members, then Hillhouse hereby irrevocably and unconditionally agrees to vote in the manner that is consistent with the direction of Ruipeng Members with respect to the exceeding part of the Shares, without prejudice to the interests of other Members. This voting restriction shall terminate upon the consummation of the Company's Qualified IPO. The Ruipeng Members and the Ruipeng Management Members hereby, irrevocably and unconditionally, agree and covenant with the other Members that Peng Yonghe (彭永鹤) is hereby expressly authorized by the Ruipeng Members and the Ruipeng Management Members to take any and all actions as he thinks fit in his absolute discretion on behalf of the Ruipeng Members and the Ruipeng Management Members with respect to any and all matters that are required to be considered or decided by the Ruipeng Members and/or the Ruipeng Management Members hereunder, including without limitation matters that are subject to consent, voting, agreement, determination and/or like actions by the Ruipeng Members and/or the Ruipeng Management Members. Any decision made, or action taken, by Peng Yonghe (彭永鹤) pursuant to the foregoing sentence shall be binding on the Ruipeng Members and the Ruipeng Management Members and such decision or action may be relied upon by the other Members for the purpose of these Articles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) When any Related Party Transaction is being discussed at the general meeting, Members that are involved in that Related Party Transaction are not entitled to vote and the number of Shares held by such Members shall not be counted when calculating the total number of voting Shares. For avoidance of doubt, such Member shall be counted towards the quorum of the general meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The general meeting may pass an ordinary resolution or a special resolution. An ordinary resolution of the Company ("**Ordinary Resolution**") means a resolution of a duly constituted general meeting of the Company that is both (i) passed by Members representing a simple majority of the total votes of Members entitled to vote at the general meeting, either in person or by proxy, and (ii) with consent from both Hillhouse (or its Affiliates) and Ruipeng Management Members. A special resolution of the Company ("**Special Resolution**") means a resolution of a duly constituted general meeting of the Company that is both (i) passed by Members representing at least 2/3 of the total votes of Members entitled to vote at the general meeting, either in person or by proxy, and (ii) with consent from both Hillhouse (or its Affiliates) and Ruipeng Management Members. For the avoidance of doubt, subject to the Statue, matters set out in paragraphs <u>(e)</u>, <u>(g)</u> and <u>(h)</u> of <u>Section</u> <u>2.1(i)</u> of this Schedule A shall be approved by a Special Resolution and all other matters set out in <u>Section</u> <u>2.1(i)</u> shall be approved by an Ordinary Resolution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Unless otherwise provided herein, the general meeting shall be chaired by each Co-Chairman in turn. Peng Yonghe as the Ruipeng Chairman may chair the very first general meeting of the Company and Hillhouse Chairman may chair the next one. In case one Co-Chairman is unable to chair the general meeting when he shall be in charge, the other Co-Chairman may chair the meeting. In case where neither of the Co-Chairmen is able to performs his duty, the general meeting shall be chaired by a director who is recommended by a simple majority of the Board. If a general meeting is called by the Members, the chairman of such general meeting shall be determined by those Members who called the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2 Board of Directors.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall have a Board consisting of ten (10) directors. Such directors shall be elected or replaced by the general meeting of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Hillhouse shall have the right to appoint four (4) directors (for the avoidance of doubt, in case of any disagreement among those four (4) directors, the opinion of the Co-Chairman appointed by Hillhouse shall be the final decision).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Ruipeng Management Members shall have the right to appoint four (4) directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) 深圳市达晨创联股权投资基金合伙企业(有限合伙) ("**Dachen Chuanglian**") and 北京阳光融汇医疗健康产业成长投资管理中心（有限合伙） ("**Beijing Yangguang**"), respectively, shall each have the right to appoint one (1) director, provided that Dachen Chuanglian and Beijing Yangguang shall cease to have such appointment right if their respective number of Shares in the Company on any date following the Original Closing Date are less than seventy percent (70%) of their respective number of Shares held in the Company on the Original Closing Date, and Dachen Chuanglian and Beijing Yangguang shall procure that all the directors appointed by them resign from the Board and the size of the Board shall be decreased accordingly.

Schedule A-6

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Each Class B Ordinary Member who has invested not less than US$100,000,000 on the Class B Ordinary Closing Date shall each have the right to appoint one (1) observer (each, an "**Observer**"); provided that such Class B Ordinary Member's right to appoint an Observer shall terminate when it no longer holds at least sixty-seven percent (67%) of the Class B Ordinary Shares it purchased on the Class B Ordinary Closing Date. The Company shall invite and allow each Observer to attend (in a nonvoting capacity), participate and speak at all meetings of its board of directors (and its sub-committees) and shall give each Observer copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that with respect to any business relationship between the Company and Boehringer Ingelheim, the Observer appointed by Boehringer Ingelheim shall not participate in such parts of Board meetings in respect of which the agenda provides for a discussion of, or decision on, the business relationship with Boehringer Ingelheim (including without limitation, extension, termination or prolongation) and such Observer appointed by Boehringer Ingelheim shall not receive any information shared with Board members related to such agenda item.

The Board, acting in good faith and upon advice of legal counsel, reserves the right to withhold any information and to exclude any member of the Board or Observer from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel with respect to matters between the Company and the relevant Member appointing such member of the Board or Observer.

Each of the Members covenants that it shall or make its Affiliates to, take all actions permitted by Applicable Laws, including but not limited to elect or remove those directors so designated or removed by such Members as stated above. The term of office for each director shall be three (3) years and every director may be re-appointed, unless such director is removed by the Member who appoints him/her or resigns from his/her office.

Each Member who has the right to appoint a director or Observer of the Company shall procure that the director or Observer appointed by such Member comply with the obligations set forth under <u>Section</u> <u>7.3</u> of the Shareholders Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company adopts a co-chairman system, pursuant to which Ruipeng Management Members shall designate one (1) director appointed by them as chairman (initially to be Peng Yonghe, "**Ruipeng Chairman**") and Hillhouse may designate one (1) director appointed by them as chairman ("**Hillhouse Chairman**", who shall be a partner or other senior manager at the same level in Hillhouse, together with the Ruipeng Chairman, the "**Co-Chairmen**", or each a "**Co- Chairman**"). But for the purpose of filing with Government Authority, the chairman of the Company submitted to the Government Authority shall be the Ruipeng Chairman, i.e., initially, Peng Yonghe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Board is responsible to the Members and has without prejudice to <u>Section</u> <u>2.1(i)</u> the power of taking the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) calling a general meeting and report to the general meeting about its work;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) implementing resolutions of a general meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) adopting detailed business and investment plans of the Group in accordance with business and investment strategies approved by the general meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) drafting the profit distribution plan and the loss compensation plan of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) adopting merger, division, dissolution, liquidation or change of any forms of New Ruipeng Pet Healthcare Group Co., Ltd.(新瑞鹏宠物医疗集团有限公司), Yunchong (Beijing) Animal Hospital Technology Co., Limited (云宠(北京)动物医疗科技有限公司), Shanghai Anan Pet Co., Limited (上海安安宠物有限公司), Shanghai Ce Er Xing Management and Consulting Co., Limited (上海策而行企业管理咨询有限公司) or Qingdao Ainuo Animal Hospital Management Co., Limited (青岛爱诺动物医院管理有限公司) (collectively, the "**Branding Platform Companies**");

Schedule A-7

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) drafting the plans of merger, division, dissolution, liquidation or change of any forms of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) drafting the plans of the decrease or increase of the authorized share capital of the Company, issuance or redemption of the Equity Securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) approving the increase or decrease of the authorized share capital/issued share capital of such Branding Platform Company whose net assets value reaches RMB10,000,000 or more, or approving the issuance or redemption of any Equity Securities of such Branding Platform Companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any Group Company's issuance of any debt securities: in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which does not exceed RMB500,000,000 (whether in one or multiple issuances);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) approving the annual budget plan and annual accounting plan of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) approving any Group Company's change of the Main Business, entry into a new business or exit from the current business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) approving the remuneration, reward and/or penalization of the CEO, vice CEO, CFO and other Senior Management Personnel (each as defined below) of the Company; removal of directors in accordance with Section 2.3;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) approving the remuneration policy of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) approving provision of any external loan or other contingent indebtedness of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which reaches RMB20,000,000 or more but below RMB500,000,000 individually or in the aggregate except for any internal financings among the Group Companies or bank credit facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) approving any external guarantees, indebtedness or other contingent liabilities of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the amount of which does not exceed RMB50,000,000 individually or in the aggregate, except for any internal guarantees among the Group Companies or guarantees provided for any Group Companies for any pre-approved loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) approving the Group's Transfer of material Assets or Equity Securities in a single transaction, the consideration of which reaches RMB20,000,000 or more but does not exceed RMB50,000,000 or in a series of transactions within any twelve (12) consecutive months, the consideration of which reaches RMB30,000,000 or more but does not exceed RMB200,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) approving the acquisition of, subscription for or purchase of the material Assets or Equity Securities by the Group in a single transaction the consideration of which reaches RMB50,000,000 or more but does not exceed RMB300,000,000 or in a series of transactions within any twelve (12) consecutive months, the consideration of which reaches RMB50,000,000 or more but does not exceed RMB500,000,000；

Schedule A-8

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) approving the Related Party Transaction of the Group (other than that the Group receives cash or that the Group accepts a security created in favor of the Group by the counterparty in a Related Party Transaction) in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which does not exceed RMB10,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) any expenditure (other than those approved in the Group's duly approved and adopted annual budget plan) in a single transaction or a series of transactions within any twelve (12) consecutive months, the aggregate consideration of which reaches RMB 20,000,000 or more but does not exceed RMB150,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) approving the share incentive plan of the Subsidiaries of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) approving the provision of any gifts or charitable donations to a third party by any Group Company in single tranche or tranches within any twelve (12) consecutive months, the amount of which reaches RMB 2,000,000 or more;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) reviewing the work report from CEO of the Company and inspect his work;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) settlement of any litigation, arbitration or other disputes involving any Group Companies, the amount of which reaches RMB 2,000,000 or more;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) recommending the Company's the place of IPO, the stock exchange, the listing valuation, the amount of funds to be raised, the sponsor/ underwriter, etc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) drafting of the investment and financing management policies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) any other matters that require the Board's approval under the Applicable Laws and these Articles, or matters that are not stipulated under the power of scope of general meeting and the CEO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3 Board Meetings.** A quorum for a Board meeting shall be more than half of the total number of directors. Each director shall have one vote. A resolution at a Board meeting shall be decided by a simple majority of the directors on the Board, <u>provided</u> that matters set out in <u>Sections 2.2(iii)(h)—2.2(iii)(s)</u> shall require affirmative votes of at least three (3) directors appointed by Ruipeng Management Members and at least three (3) directors appointed by Hillhouse. A director shall resign immediately or be removed by a Board meeting if he is absent from three (3) consecutive meetings of the Board without cause (for the avoidance of doubt, attending in person or by proxy, via on-site, telephone, telepresence or other means shall be counted as attending). If any vacancy as a result of the aforementioned resignation or removal of the director, the Member who is entitled to nominate and appoint that director shall have the right to re-appoint a new director to the Board. The Company shall hold no less than two (2) Board meetings during each fiscal year and such meeting shall be called by either Co-Chairman. With respect to one Board meeting (no matter a regular meeting or an extraordinary meeting), at least ten (10) days' prior written notice (or a shorter period agreed by all directors of the Company) must be given to all directors. An extraordinary Board meeting shall be held if (i) one or more Members who together hold more than 10% of the total and outstanding Shares with voting rights of the Company or (ii) more than one third (1/3) of the directors on the Board request so. Any director shall attend the Board meeting in person, by conference telephone or other communication equipment which allows those participating to hear and speak to each other clearly. Any director may appoint another director as the proxy to represent him at any meeting of the directors if he is unable to attend the meeting. If a director appoints a proxy, the instrument appointing a proxy shall be in writing, setting out the name of the proxy, the authorized matters and scope and the term of the authorization, then for all purposes the presence or vote of the proxy shall be deemed to be that of the appointing director. Such instrument shall be signed or chopped by the appointing director. The proxy shall exercise right of a director of the Company within the authorized scope. If a director neither is present at a Board meeting nor appoints a proxy, such director is deemed to have abstained at that Board meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4 CEO and Senior Management Team** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall have one chief executive officer ("**CEO**"), one chief finance officer ("**CFO**") and one secretary of the Board ("**Board Secretary**"). The Co-Chairmen may jointly determine the number of the vice CEO depending on the need of the business operation of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The CEO, vice CEO, CFO, Board Secretary and other personnel approved by the Board are the senior management personnel of the Company ("**Senior Management Personnel**").

Schedule A-9

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The CEO shall be appointed and removed by Ruipeng Management Members, and the first CEO shall be Peng Yonghe; Hillhouse may appoint and remove CFO and Board Secretary, and Hillhouse agree to maintain the current board secretary of Ruipeng as the Board Secretary of the Company. CEO may recommend vice CEO(s), appointment of whom will be decided by the Co-Chairmen jointly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) CEO shall be responsible to the Board and shall have the power to take the following actions (CEO may delegate part of the following matters to the Senior Management Personnel in terms of the actual operation of the Company):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in charge of the production and management work of the Group, implementing the resolution of the Board and reporting to the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) implementing the detailed annual business and investment plan of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) other than any internal financings among the Group Companies or bank credit facilities, approving provision of any external loan or other indebtedness of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which is less than RMB20,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) approving the Group's Transfer of material Assets or Equity Securities in a single transaction consideration of which is less than RMB20,000,000 or in transactions within any twelve (12) consecutive months the consideration of which is less than RMB30,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) approving the Group's acquisition of, subscription for or purchase of the material Assets or Equity Securities in a single transaction or in transactions within any twelve (12) consecutive months the consideration of which is less than RMB50,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any expenditure (other than those approved in the duly approved and adopted annual budget plan of the Group) in a single transaction or a series of transactions within any twelve (12) consecutive months in the aggregate, the consideration of which does not exceed RMB20,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) approving the provision of any gifts or charitable donations to a third party in single tranche or tranches within any twelve (12) consecutive months, the amount of which is less than RMB2,000,000 by any Group Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) drafting the internal management institutions plan of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) creating the fundamental operation policies of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) creating detailed internal rules and regulations of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) determining appointment or removal of the management personnel other than those to be appointed and removed by the Board and the Co-Chairmen; appointing and removing the management personnel of each Branding Platform Companies of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) drafting the remuneration policy of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) proposing to convene an extraordinary meeting of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) settling any litigation, arbitration or other disputes, the amount of which does not exceed RMB2,000,000 by any Group Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) advising the Board on whether the Senior Management Personnel (including the vice CEO, CFO, the Board Secretary, etc.) is competent for his/her job; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) taking any other actions authorized by these Articles or the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) CFO is responsible to the CEO and the Board, and takes charge of the financial matter of the Group. CFO may take the following actions:

Schedule A-10

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) guiding and managing the budget, planning and forecasting the progress; and working with other management team members to develop action plans to meet financial and operational objectives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) employing, removing and supervising financial and accounting personnel, <u>provided</u> that the appointment and removal of any financial and accounting personnel who directly reports to the CFO under the financial system shall be subject to the consent of the CEO;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) taking full responsibility of the financial and auditing work of the Group, including reviewing and approving accounting books and financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) guiding and managing tax returns, and conducting tax planning to ensure compliance with Applicable Laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) preparing monthly, quarterly and annual reports to the CEO and the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) guiding and managing the Group's funds to ensure that cash and cash equivalent Assets are reasonably managed and controlled; monitoring the Group's use of funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) participating in Board meetings when necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) coordinating the relationship between the Group and banks and Government Authorities on fiscal and tax matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) developing, implementing and maintaining accounting practices and standards applied in the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) according to the Group's financial system approving funds allocation, use of funds, expenditure, and loan in a single transaction made by a Group Company, the amount of which reaches RMB1,000,000 or approving funds allocation, use of funds, expenditure, and loan made by a Group Company in any twelve (12) consecutive months, the total amount of which exceeds RMB3,000,000; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) taking any other actions authorized by the CEO or the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Hillhouse shall be responsible for the capital operation of the Group (which will need to be implemented in accordance with the corporate governance mechanism of the Company), technology enabling and external cooperation. Hillhouse undertakes that it will fully mobilize and utilize its resources in Internet-related industries so as to create a bridge between advanced resources (including but not limited to Tencent, Jingdong and other resources) and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.5 Special Approval of Certain Matters** 

Notwithstanding anything provided to the contrary in the Shareholders Agreement or in these Articles, the Restructuring Framework Agreement, the CLASS B Warrants or the RMB Investment Agreements (as defined in the Class B Ordinary SPA) and in addition to such other consent or approval required herein or therein, the Company, the Major Subsidiaries and the Ruipeng Management Members shall not, and shall cause the other Group Companies not to, effect or otherwise consummate any of the following actions without the prior written approval for such actions by holders of more than 50% of the outstanding Class B Ordinary Shares (including the Warrant Shares assuming the full exercise of the CLASS B Warrants):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) through amending these Articles, the CLASS B Warrants, the RMB Investment Agreements (as defined in the Class B Ordinary SPA), the Restructuring Framework Agreement or other means, amend or change the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Class B Ordinary Shares, or carry out any action that may have disproportionate impact on the holders of the Class B Ordinary Shares compared to the holders of the other classes of the Shares;

Schedule A-11

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) increase or decrease or reclassification of the share capital or registered capital of any Group Company, issuance of any authorized Shares or Equity Securities of any Group Company (other than those issued to any Group Company, or those issued pursuant to the Management Incentive Plan (as defined in the Shareholders Agreement), or resulting from a duly approved acquisition by such Group Company of another business entity by means of share issuance which shall not exceed 2,000,000,000 Class A Ordinary Shares in aggregate within any twelve (12) consecutive months, or the issuance of any Equity Securities pursuant to Section 1.4 of the Class B Ordinary SPA), or the issuance of any Equity Securities convertible into the share capital or registered capital of any Group Company with rights, privileges or powers superior or equivalent to the Class B Ordinary Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) redeem or repurchase any Shares of the Company, or options or other securities or obligations convertible into or exercisable or exchangeable for the Shares of the Company except for those expressly provided herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) approve, amend or terminate the Company's management or employee incentive plan including without limitation the Management Incentive Plan (as defined in the Shareholders Agreement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) any Related Party Transactions of the Group, with the value or consideration involved in a single transaction or in transactions within any twelve (12) consecutive months exceeding RMB10,000,000 other than the Related Party Transactions within and between the Group Companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) initiate any Liquidation Event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) (a) any investment by the Group in another Person that is either: (x) in a single transaction, the consideration of which exceeds RMB300,000,000, or (y) in transactions within a twelve (12) consecutive months, the consideration of which exceeds RMB500,000,000, (b) any Transfer of the Equity Securities held by the Group in another Person, or any withdrawal from any partnership, consortium, joint venture or similar entity or relation that is either: (x) in a single transaction, the consideration of which exceeds RMB50,000,000, or (y) in transactions within a twelve (12) consecutive months, the consideration of which exceeds RMB200,000,000; or (c) any participation in any partnership, consortium, joint venture or similar entity or relation that is either (x) in a single transaction, the consideration of which exceeds RMB300,000,000, or (y) in transactions within a twelve (12) consecutive months, the consideration of which exceeds RMB500,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) change the Main Business, enter into any new business that deviates from the Main Business, or exit from the Main Business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) any action that transfers, assigns, dilutes, disposes of, or creates any encumbrance over, any Group Company's interests or other Equity Securities in any Major Subsidiary.

**3. Members' Rights** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1 General Restriction on Transfer.** Notwithstanding anything provided to the contrary in the Restructuring Framework Agreement and unless otherwise agreed in the Shareholders Agreement or this Schedule A, the Members agree that from the Class B Ordinary Closing Date and until the completion of a Qualified IPO by the Company, any Transfer (as defined below) of the Shares shall be made in accordance with this <u>Section</u> <u>3</u>. The Third Party Purchaser (as defined below) who complies with this <u>Section</u> <u>3</u> shall sign a Deed of Adherence (as defined in the Shareholders Agreement), agree to assume and comply with all the obligations of the Transferor (as defined below) under the Shareholders Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Except for Permitted Transfers (as defined below), without the prior written consent of Hillhouse and Ruipeng Management Members, Skyfield Minority Members and/or Affiliates of the aforementioned parties, who directly or indirectly own the Shares, shall not directly or indirectly sell, give as a gift, transfer, pledge, encumber or otherwise dispose of (including disposing its economic rights, titles or interests) in any way (whether voluntarily or not, including but not limited to disposal as a result of change of marital status, bankruptcy or insolvency) (each, a "**Transfer**") all or any part of their Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by Skyfield Minority Members and/or Affiliates of the aforementioned parties do not need prior written consent

Schedule A-12

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from other Members: (a) if the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 10% of the total Shares owned by such transferring Skyfield Minority Member or such transferring Affiliate as of the Original Closing Date; (b) if a successful Qualified IPO does not happen within six (6) years commencing from the Original Closing Date, and the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 20% of the total Shares owned by such transferring Skyfield Minority Member or such transferring Affiliate as of the Original Closing Date (the amount of Permitted Transfer pursuant to this <u>Section</u> <u>3.1(i)(a)</u> shall be taken into account, if any), <u>provided</u> that in either case, each of the Skyfield Minority Members and/or Affiliates of the aforementioned parties shall not Transfer its Shares to any Competitor ("**Permitted Transfers**"). For the avoidance of doubt, the other relevant Members shall have the Right of First Refusal (as defined below) but not the Co-sale Right (as defined below) with respect to the Permitted Transfers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Without prior written consent from Hillhouse and Ruipeng Management Members, any Ruipeng Investor Member shall not directly or indirectly Transfer its Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by any Ruipeng Investor Member do not need prior written consent from Hillhouse, Ruipeng Management Members and other Members: (a) any Transfer of Shares by a Ruipeng Investor Member to a fund managed by the same fund manager or an Affiliate of such Ruipeng Investor Member; (b) within a three-year period commencing from the Original Closing Date, any Transfer of Shares by a Ruipeng Investor Member either in a single transaction or a series of transactions, <u>provided</u> that the aggregate number of the transferred Shares do not exceed 30% of the total Shares such Ruipeng Investor Member owns as of the Original Closing Date; or (c) any Transfer after the third anniversary of the Original Closing Date. Notwithstanding anything to the contrary, any Ruipeng Investor Member shall not Transfer its Shares to any Competitor. For the avoidance of doubt, (i) the other relevant non-transferring Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(ii)(a)</u>, and (ii) the other relevant non-transferring Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(ii)(b) and (c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Without prior written consent from Hillhouse and Ruipeng Management Members, Hillhouse shall not directly or indirectly Transfer its Shares or Warrants or any interest therein. Notwithstanding the foregoing, the following Transfers by Hillhouse do not need prior written consent from other Members: (a) any Transfer of Shares to a fund managed by their fund manager or their Affiliates; or (b) the aggregate shareholding percentage of Hillhouse or its Affiliates (including天津高瓴诺远企业管理咨询合伙企业(有限合伙)) held in the Company, after any Transfer of Shares and/or Warrants through either one transaction or a series of transactions, is no less than the product obtained by adding: (i) the aggregate shareholding percentage of Ruipeng Members (excluding Vet Harvest Enterprise Management Company Limited, Vet Time Enterprise Management Company Limited, RP Pulse Holdings Limited and RP Passion Enterprise Management Company Limited) in the Company, directly or indirectly, at the time immediately after such Transfer, and (ii) 5%; <u>provided</u> that in either case, Hillhouse or its Affiliates (including天津高瓴诺远企业管理咨询合伙企业(有限合伙)) shall not Transfer its Shares and/or Warrants to any Competitor. For the avoidance of doubt, (i) the other Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(iii)(a)</u> and the Transfer by天津高瓴诺远企业管理咨询合伙企业(有限合伙) permitted in <u>Section</u> <u>3.1(iii)(b)</u>; and (ii) the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer by Hillhouse or its Affliates other than天津高瓴诺远企业管理咨询合伙企业(有限合伙) as permitted in <u>Section</u> <u>3.1(iii)(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Without the prior written consent of the holders of more than 50% of the outstanding Class B Ordinary Shares and Hillhouse, any Ruipeng Member (other than Ruipeng) and/or their Affiliates shall not directly or indirectly Transfer their Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by any Ruipeng Member (other than Ruipeng) and/or their Affiliates do not need prior written consent from other Members: (a) if the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 10% of the total Shares owned by such transferring Ruipeng Member or such transferring Affiliate as of the Original Closing Date; and (b) if a successful Qualified IPO does not happen within six (6) years commencing from the Original Closing Date, and the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 20% of the total Shares owned by such transferring Ruipeng Member or such transferring Affiliate as of the Original Closing Date, <u>provided</u> that in either case, Ruipeng Member (other than Ruipeng) and their Affiliates shall not Transfer its Shares to any Competitor. For the avoidance of doubt, the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer permitted in this <u>Section</u> <u>3.1(iv)(a) and (b)</u>.

Schedule A-13

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Without the prior written consent of Hillhouse and Ruipeng Management Members, any Class B Ordinary Member and/or its Affiliates shall not directly or indirectly Transfer its Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by any Class B Ordinary Member and/or its Affiliates do not need prior written consent from any other Members or Persons: (a) any Transfer of Shares by a Class B Ordinary Member to a fund managed by the same fund manager or an Affiliate of such Class B Ordinary Member; (b) within a three-year period commencing from the Original Closing Date, any Transfer of Shares by a Class B Ordinary Member either in a single transaction or a series of transactions, <u>provided</u> that the aggregate amount of the transferred Shares by such transferring Class B Ordinary Member do not exceed 40% of the total Shares such Class B Ordinary Member owns as of the first date on which it becomes a Class B Ordinary Member; or (c) any Transfer after the third anniversary of the Original Closing Date; <u>provided</u> that in either case, the Transferor shall not transfer its Shares to any Identified Competitor, unless with the prior written consent of Hillhouse and Ruipeng Management Members. If there is any update to the list of Identified Competitor, written notice of such update shall be promptly (but in any event within ten (10) Business Days after such update) provided by the Company to all the Class B Ordinary Members in writing. For the avoidance of doubt, (I) no update of the list of Identified Competitor shall have any retrospective effect to any Class B Ordinary Member , and (II) no update of the list of Identified Competitor shall be effective to a Class B Ordinary Member unless and until the notice informing such update is received by such Class B Ordinary Member. For the avoidance of doubt, (i) the other Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(v)(a)</u>; and (ii) the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(v)(b) and Section</u> <u>3.1(v)(c)</u>, provided that the other Members shall have no Right of First Refusal or the Co-sale Right to any Transfer by any Class B Ordinary Member and/or its Affiliates after the fifth anniversary of the Original Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Company and each Member shall take or cause to be taken all actions, do or cause to be done, all things and execute all instruments necessary, proper or advisable under Applicable Laws to consummate and make effective, in the most expeditious manner practicable, the Transfers that are in compliance with this <u>Section</u> <u>3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Without the prior written consent of Hillhouse and Ruipeng Management Members, each of CG Fund, Gracious Rhythm and/or their Affiliates shall not directly or indirectly Transfer its Class A Ordinary Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by CG Fund, Gracious Rhythm and/or its Affiliates do not need prior written consent from any other Members or Persons: (a) any Transfer of Class A Ordinary Shares by CG Fund or Gracious Rhythm to a fund managed by the same fund manager or an Affiliate of CG Fund or Gracious Rhythm; (b) within a three-year period commencing from the first date on which it becomes a Class A Ordinary Member, any Transfer of Class A Ordinary Shares by CG Fund or Gracious Rhythm either in a single transaction or a series of transactions, provided that the aggregate amount of the transferred Class A Ordinary Shares by CG Fund or Gracious Rhythm do not exceed 40% of the total Class A Ordinary Shares CG Fund or Gracious Rhythm owns as of the first date on which it becomes a Class A Ordinary Member; or (c) any Transfer after the third anniversary of the first date on which it becomes a Class A Ordinary Member; provided that in either case, CG Fund or Gracious Rhythm shall not transfer its Class A Ordinary Shares to any Identified Competitor, unless with the prior written consent of Hillhouse and Ruipeng Management Members. If there is any update to the list of Identified Competitor, written notice of such update shall be promptly (but in any event within ten (10) Business Days after such update) provided by the Company to CG Fund or Gracious Rhythm in writing. For the avoidance of doubt, (I) no update of the list of Identified Competitor shall have any retrospective effect to CG Fund or Gracious Rhythm, and (II) no update of the list of Identified Competitor shall be effective to CG Fund or Gracious Rhythm unless and until the notice informing such update is received by CG Fund or Gracious Rhythm. For the avoidance of doubt, (i) the other Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(vii)(a)</u>; and (ii) the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer set out in <u>Section</u> <u>3.1(vii)(b)</u> and <u>Section</u> <u>3.1(vii)(c)</u>, provided that the other Members shall have no Right of First Refusal or the Co-sale Right to any Transfer by CG Fund, Gracious Rhythm and/or their Affiliates after the fifth anniversary of the first date on which CG Fund or Gracious Rhythm becomes a Class A Ordinary Member.

Schedule A-14

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2 Right of First Refusal.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the above <u>Section</u> <u>3.1</u>, if any Member (a "**Transferor**") proposes to Transfer any Shares ("**Offered Shares**") to one or more Persons (a "**Third Party Purchaser**") either directly or indirectly (the "**Proposed Transfer**"), the Members (other than the Transferor) shall have the Right of First Refusal according to this <u>Section</u> <u>3.2</u>. For the avoidance of doubt, any Transfer of the Shares (assuming full exercise of the Warrants) by any Skyfield Minority Member or Ruipeng Member to any Ruipeng Member shall not be subject to the transfer restrictions set forth in this Section 3.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Prior to the Proposed Transfer, the Transferor shall give each other Member (the "**Offeree**") a written notice of the Transferor's intention to make the Proposed Transfer (the "**Transfer Notice**"). The Transfer Notice shall set forth at least (a) the name or identity of the Transferor, (b) the name or identity and address of the Third Party Purchaser, (c) the amount of the Offered Shares, (d) the consideration and the means of the Proposed Transfer, and (e) the other terms and conditions of the Proposed Transfer. If the consideration of the Offered Shares includes non-cash payments, the Transfer Notice shall also set forth the method determining the fair market value of the non-cash consideration and the rationale for such method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Each Offeree shall have an option (the "**Right of First Refusal**"), exercisable upon written notice to the Transferor, within a period of twenty (20) Business Days following receipt of the Transfer Notice (the "**Option Period**") to elect to purchase all or any portion of its respective pro rata share of the Offered Shares at the same price and subject to the same terms and conditions set out in the Transfer Notice. An Offeree's "pro rata share" of the Offered Shares means the Offered Shares multiplied by a fraction, the numerator of which shall be the number of Shares held by such Offeree on the date of the Transfer Notice, and the denominator of which shall be the total number of Shares held by all the Offerees on the date of the Transfer Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If any Offeree fails to fully exercise its Right of First Refusal, then all the other Offerees who have fully exercised their Right of First Refusal ("**Fully Exercising Offeree**") are entitled to purchase such unpurchased Offered Shares (the "**Over-Allotment Shares**") within ten (10) Business Days after the expiration of the Option Period (the "**Over-Allotment Period**"). If, as a result thereof, such Fully Exercising Offerees desire to purchase in aggregate more than the aggregate number of the Over-Allotment Shares, then each of the Fully Exercising Offerees is entitled to purchase an amount which equals to: the Over-Allotment Shares multiplied by a fraction, the numerator of which shall be the number of Shares held by such Fully Exercising Offeree and the denominator of which shall be the aggregate number of Shares then held by all Fully Exercising Offerees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Subject to <u>Section</u> <u>4.4</u> of the Shareholders Agreement and <u>Section</u> <u>3.4</u> of this Schedule A, the Transferor may transfer the Offered Shares unpurchased pursuant to this <u>Section</u> <u>3.2</u> to the Third Party Purchaser on the price, terms and conditions specified in the Transfer Notice; <u>provided</u> that, (a) the Proposed Transfer shall be completed within sixty (60) Business Days following the delivery of the Transfer Notice (any Proposed Transfer not concluded within such 60 Business Day period shall again be subject to the Right of First Refusal described in this <u>Section</u> <u>3.2</u>); and (b) the Third Party Purchaser undertakes that it will assume all rights and obligations of the Transferor in respect of the Offered Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) If any Offeree elects to exercise its Right of First Refusal, the Company and each of the other Members shall, pursuant to the request from such Offeree, sign all documents and take all actions as necessary to the completion of the Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3 Transfers Involving Tencent Competitors.** 

Schedule A-15

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Unless otherwise expressly provided in this Agreement, notwithstanding anything provided herein to the contrary, so long as Tencent owns not less than sixty-seven percent (67%) of the total Shares it purchased on the Class B Ordinary Closing Date, without the prior written consent of Tencent, the Group Companies and the Members other than Tencent shall not, directly or indirectly, approve, consent to, carry out or in any way participate in any transaction involving the sale of the Group Companies or Equity Securities in any Group Company(including without limitation any Liquidation Event) to any Tencent Competitor, or permit any Tencent Competitor to purchase or hold any Equity Securities of the Company (each, a "**Tencent Prohibited Transaction**"). If any Member other than Tencent proposes to Transfer any Equity Securities of the Group Companies or any interest therein to any Person which is a Tencent Competitor, then such Member shall give Tencent a written notice of its intention to make such Transfer (the "**Tencent Competitor Transfer Notice**"), which shall include (i) a description of the Equity Securities to be transferred (the "**Tencent Competitor Offered Shares**"), (ii) the identity and address of the prospective transferee and (iii) the consideration and the material terms and conditions upon which the proposed Transfer is to be made. Tencent shall have the right (the "**Tencent ROFR**"), exercisable upon written notice to the selling Member and the Company within twenty (20) Business Days following the date of the Tencent Competitor Transfer Notice (the "**Tencent Option Period**"), to elect to purchase all or a portion of the Tencent Competitor Offered Shares at the same price and subject to the same material terms and conditions as described in the Tencent Competitor Transfer Notice, provided that if Tencent elects to purchase all or a portion of the Tencent Competitor Offered Shares, such purchase shall be completed, including execution and completion of the share purchase agreement, within forty (40) Business Days following the Tencent Option Period. The applicable selling Member shall have the right to freely sell all the Tencent Competitor Offered Shares which have not been so purchased by Tencent to the prospective transferee at substantially the same price and terms as indicated on the Tencent Competitor Transfer Notice, provided that any such transfer shall remain subject to Section 3.1 hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4 Co-Sale Right** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the above <u>Section</u> <u>3.1</u> of this Schedule A, within five (5) Business Days after expiration of the Option Period or the Over-Allotment Period (as the case may be), the Transferor (if it is any of Ruipeng Members, Skyfield Minority Members or Hillhouse (except for the Transfer set out in <u>Section</u> <u>3.1(iii)(a) and (b))</u>) shall give written notice (the "**First Refusal Expiration Notice**") to each Offeree specifying either (x) that all of the Offered Shares were purchased by the Offerees exercising their Rights of First Refusal, or (y) that the Offerees have not purchased all of the Offered Shares and that such unpurchased Offered Shares shall be subject to the Co-Sale Right (as defined below) of the Co-Sale Shareholders (as defined below), in which case the First Refusal Expiration Notice shall specify the Co-Sale Shareholders' Co-Sale Pro Rata Portion (as defined below) of the remaining Offered Shares for the purpose of their Co-Sale Rights described in this Section 3.4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Subject to <u>Section</u> <u>4.1</u> of the Shareholders Agreement and Section 3.1 of this Schedule A and to the extent the Offerees have not exercised their Right of First Refusal with respect to all the Offered Shares, the Transferor (if it is any of Ruipeng Members, Skyfield Minority Members or Hillhouse (except for the Transfer set out in <u>Section</u> <u>3.1(iii)(a) and (b))</u>, then each Offeree who is a Member other than Ruipeng Members, Skyfield Minority Members, Hillhouse, CG Fund or Gracious Rhythm and has not exercised its Right of First Refusal in full or in part (each, a "**Co-Sale Shareholder**") shall have the right (the "**Co-Sale Right**"), exercisable upon written notice to the Transferor (the "**Co-Sale Notice**"), within twenty (20) Business Days after receipt of the First Refusal Expiration Notice (the "**Co-Sale Right Period**"), to participate in such sale of the Offered Shares at the same price and on the same terms and conditions as specified in the Transfer Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Co-Sale Notice shall set forth the number of Shares that such Co-Sale Shareholder wishes to include in such sale or transfer, which amount shall not exceed the Co-Sale Pro Rata Portion of such Co-Sale Shareholder. To the extent one or more of Co-Sale Shareholders exercise such right of participation pursuant to this Section 3.4, the number of Offered Shares that the Transferor may sell in the transaction shall be correspondingly reduced. To the extent that any Co-Sale Shareholder does not participate in the sale to the full extent of its Co-Sale Pro Rata Portion, the Transferor and the participating Co-Sale Shareholders shall, within five (5) Business Days after the expiration of the Co-Sale Right Period, make such adjustments to the Co-Sale Pro Rata Portion of each participating Co-Sale Shareholder so that any remaining Offered Shares may be allocated to other participating Co-Sale Shareholders on a pro rata basis.

Schedule A-16

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each Co-Sale Shareholder exercising its Co-Sale Right may sell all or any part of that number of Shares held by it that is equal to the product obtained by multiplying (x) the aggregate number of the Offered Shares subject to the Co-Sale Right hereunder by (y) a fraction, the numerator of which is the number of Shares owned by such Co-Sale Shareholder on the date of the Transfer Notice and the denominator of which is the total combined number of all Shares owned by the Transferor and all the Co-Sale Shareholders exercising their Co-Sale Right hereunder on the date of the Transfer Notice (the "**Co-Sale Pro Rata Portion**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If the Third Party Purchaser refuses to purchase the Shares from the Co-Sale Shareholders, then the Transferor shall not proceed with the Proposed Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) If any Co-Sale Shareholder elects to exercise its Co-Sale Right, the Company and each of the other Members shall, pursuant to the request from such Co-Sale Shareholder, sign all documents and take all actions as necessary to the completion of the Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5 Preemptive Rights** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event that the Company proposes to undertake an issuance of Equity Securities ("**New Shares**") to any Person ("**Proposed Subscriber**") after the Class B Ordinary Closing Date ("**Proposed Issuance**"), it shall give each Member written notice of such intention pursuant to this <u>Section</u> <u>3.5</u>. Each Member (each, a "**Preemptive Right Holder**") shall be entitled to exercise its right ("**Preemptive Right**") to subscribe via cash on the same conditions and price per share for its pro rata share of the New Shares. For purposes of this Section 3.5, each Member's "**pro rata share**" means the ratio of (a) the Shares held by such Preemptive Right Holder immediately before the issuance of the New Shares to (b) the total number of Shares then issued and outstanding immediately prior to the issuance of the New Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Prior to the Proposed Issuance, the Company shall deliver a written notice (an "**Issuance Notice**") to each Preemptive Right Holder in respect of the Proposed Issuance, describing (a) the amount, type and terms of the New Shares, (b) the consideration the Company will obtain from the issuance of New Shares, and (c) the name or identity and address of the Proposed Subscriber. If the consideration of the News Shares includes non-cash payments, the Issuance Notice shall also set forth the method determining the fair market value of such non-cash consideration and the rationale for such method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Each of the Preemptive Right Holders shall have twenty (20) Business Days ("**Preemptive Right Period**") after the receipt of the Issuance Notice to agree to exercise in full or any part of its Preemptive Right. The Preemptive Right Holder shall notify the Company in writing the number and type of the Shares that it wishes to subscribe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If any Preemptive Right Holder fails to fully exercise its Preemptive Right within the Preemptive Right Period, the Company shall promptly give notice (the "**Second Participation Notice**") to other Preemptive Right Holders who have fully exercised their right to purchase their respective pro rata share of the New Shares ("**Exercising Member of Preemptive Right**"). Each Exercising Member of Preemptive Right shall be entitled to, within ten (10) Business Days after receipt of the Second Participation Notice, notify the Company of its desire to purchase more than its pro rata share of the New Shares, stating the number of the additional New Shares it proposes to buy ("**Additional Shares**"). If the amount of the Shares that the Exercising Members of Preemptive Right wish to subscribe exceeds the amount of the remaining New Shares available for purchase, then each Exercising Member of Preemptive Right shall be entitled to purchase an additional amount which equals to the lesser of (x) the Additional Shares and (y) the product obtained by multiplying (a) the number of the remaining New Shares available for purchase by (b) a fraction, the numerator of which is the number of Shares held by such Exercising Member of Preemptive Right on the date of the Issuance Notice and the denominator of which is the total number of Shares held by all the Exercising Members of Preemptive Right on the date of the Issuance Notice.

Schedule A-17

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If any New Shares were not subscribed by the Preemptive Right Holders, the Company may issue such remaining New Shares to the Proposed Subscribers identified in the Issuance Notice with the price, terms and conditions stated therein, within forty (40) Business Days after the expiration of the Preemptive Right Period, <u>provided</u> that the Proposed Subscribers shall execute a Deed of Adherence (as defined in the Shareholders Agreement) and shall be subject to all terms and conditions which apply to all parties to the Shareholders Agreement. If the Company and the Proposed Subscribers fail to complete the issuance and subscription of such New Shares within such forty (40) Business Days, the Company shall not issue New Shares without first offering such New Shares again to the Members pursuant to this <u>Section</u> <u>3.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) For the purpose of this <u>Section</u> <u>3.5</u> and <u>Section</u> <u>3.6</u>, the issuance of New Shares does not include (i) issuance of Equity Securities in accordance with the duly approved share incentive plan (including the ESOP Shares (as defined in the Shareholders Agreement)); (ii) issuance of Equity Securities for a Qualified IPO, (iii) issuance of Equity Securities in connection with any share split, share dividend or other similar events in which all the Preemptive Right Holders are entitled to participate on a pro rata basis, (iv) issuance of Equity Securities upon the exercise of the Warrants, and (v) issuance of Equity Securities upon the exercise of anti-dilution right as provided in <u>Section</u> <u>4.6</u> of the Shareholders Agreement or <u>Section</u> <u>3.6</u> of this Schedule A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) If any Preemptive Right Holder elects to exercise its Preemptive Right, the Company and each Member shall, pursuant to the request of such Preemptive Righter Holder, sign all the documents and take all actions which are necessary to complete the issuance and subscription of the New Shares, <u>provided</u> that the proposed issuance has been duly approved in accordance with the provisions of the Shareholders Agreement and these Articles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6 Anti-Dilution Right.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event that the Company proposes to issue New Shares to any Person (other than the issuance set out in above <u>Section3.5(vi)</u>) after the Class B Ordinary Closing Date and prior to the date of completion of a Qualified IPO, the issue price per Share of such New Shares ("**New Price Per Share**") shall not be lower than the then Effective Hillhouse Issue Price (as defined below) or the then Effective Class B Ordinary Share Issue Price (as defined below) (each as adjusted in accordance with Section 3.6 (ii) below, and as further adjusted due to share split, share dividend or other similar events). For the purpose hereof, "**Effective Hillhouse Issue Price**" means the effective purchase price per Share for the Class A Ordinary Shares held by the Anti-Dilution Members (as defined below), which is initially RMB 1 Yuan; and "**Effective Class B Ordinary Share Issue Price**" means the effective purchase price per Share for the Class B Ordinary Shares, which is initially the Class B Ordinary Share Issue Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If the New Price Per Share in an issuance of New Shares is less than the then Effective Hillhouse Issue Price and/or the then Effective Class B Ordinary Share Issue Price (as the case may be and as adjusted) (such issuance, a "**Dilutive Issuance**"), then, the Company shall issue to the Capital Increase Investors (as defined under Section 5.1, the "**Anti-Dilution Members**") and/or the Class B Ordinary Members (as the case may be), free of any charge, such additional number of Class A Ordinary Shares to the Anti-Dilution Members and/or Class B Ordinary Shares to the Class B Ordinary Members (as the case may be), such that the Effective Hillhouse Issue Price and/or the Effective Class B Ordinary Share Issue Price (as the case may be) shall be adjusted to the purchase price per Share calculated pursuant to the following formula:

CP2 = CP1 \* (A+B) / (A+C)

CP2 = the adjusted Effective Hillhouse Issue Price or the adjusted Effective Class B Ordinary Share Issue Price (as the case may be) in effect immediately after the Dilutive Issuance,

CP1 = the Effective Hillhouse Issue Price or the Effective Class B Ordinary Share Issue Price (as the case may be) then in effect immediately prior to the Dilutive Issuance,

A = the total number of Shares deemed to be outstanding immediately prior to the Dilutive Issuance, on a fully-diluted basis,

Schedule A-18

------

B = the aggregate consideration received by the Company in the Dilutive Issuance divided by CP1, and

C = the number of Shares issued in the Dilutive Issuance.

The Company and each Member shall take or cause to be taken all actions, do or cause to be done, and assist and cooperate with the Anti-Dilution Members and/or the Class B Ordinary Members (as the case may be) in doing, all things and execute all instruments necessary, proper or advisable under Applicable Laws to consummate and make effective, in the most expeditious manner practicable, the issuance contemplated by this <u>Section</u> <u>3.6</u>.

For the avoidance of doubt, to the extent any Warrant has not been exercised prior to any Dilutive Issuance, the number of Warrant Shares underlying such Warrant shall also be adjusted accordingly pursuant to this <u>Section</u> <u>3.6</u> (if applicable), such that the holder of Warrant shall receive, upon the exercise of such Warrant, the number of Shares it would have been entitled to receive had such holder of Warrant exercised such Warrant in full immediately prior to such Dilutive Issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.7 Drag-Along Right** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If after the Class B Ordinary Closing Date, Ruipeng Members approve in writing a proposed transaction (including but not limited to merger, reorganization, share transfer, share issuance in respect of the Company or other transactions) as a result of which all or substantially all the Assets of the Company are disposed with a third party (other than Hillhouse nor Ruipeng Members nor any of their respective Affiliates) ("**Disposal Transaction**"), in which the implied valuation of the Company would enable each Class B Ordinary Share to realize a return at a simple rate of fifteen percent (15%) or higher per annum of the Class B Ordinary Share Issue Price calculated from the Class B Ordinary Closing Date, then Ruipeng Members shall have the right to notify each of the other Members in writing such approval, whereupon each of those Members shall sign all transaction documents and take all necessary actions so as to complete the Disposal Transaction; <u>provided</u> that (x) no Member other than Ruipeng Members and Skyfield Minority Members will be required to make any representations and warranties other than those regarding such Member's title to the Shares, (y) no Member other than Ruipeng Members and Skyfield Minority Members will be required to sell its Shares unless the liability, if any, of such Member in such Disposal Transaction is several, not joint, and such Member shall only be liable for any breach of its representations and warranties regarding such Member's title to the Shares, and in any event will not exceed the consideration payable to such Member, if any, in such transaction (except in the case of potential liability for fraud or willful misconduct committed by such Member); (c) such Disposal Transaction shall require the prior written consent of Hillhouse; and (d) such Disposal Transaction shall also require the prior written consent of Tencent, if such Disposal Transaction constitutes a Tencent Prohibited Transaction and Tencent owns not less than sixty seven (67%) of all Shares it owns as at the Class B Ordinary Closing Date as at immediately prior to the completion of such Disposal Transaction. Such actions include but are not limited to (a) voting in favour of the Disposal Transaction at the general meeting; (b) procuring that the director so appointed by the respective Member vote in favour of the Disposal Transaction; and (c) selling or transferring all the Shares held by them, if applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If any Member (other than Ruipeng Members) does not approve the Disposal Transaction or does not agree to sell its Shares, such Member shall purchase in a single transaction all the Shares to be transferred by Ruipeng Members, at the price per Share and on the same terms and conditions that Ruipeng Members proposed to offer to the third party under the Disposal Transaction. For the avoidance of doubt, if such Member is unable to purchase the Shares of Ruipeng Members, then such Member shall act in accordance with this <u>Section</u> <u>3.7</u> to vote for the Disposal Transaction and/or sell the Shares that it owns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.8 Redemption Right** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At any time after the earlier to occur of the following: (i) the fifth (5<sup>th</sup>) anniversary of the date of the Class B Ordinary Closing Date, if no Qualified IPO has occurred, and (ii) the occurrence of any material breach of the Transaction Documents by the Company or Ruipeng Management Members, then, at the option of any holder of the Class B Ordinary Shares, by written notice of at least 30 days prior to the Redemption Date (as defined below) to the Company (the "**Redemption Notice**") stating the date on which the Class B Ordinary Shares are to be redeemed (the "**Redemption Date**"), the Company shall redeem all or any part of the outstanding Class B Ordinary Shares (including the Class B Ordinary Shares issuable upon the exercise of the CLASS B Warrants, <u>provided</u> that the applicable redemption price of a Class B Ordinary Share issuable upon the exercise of the CLASS B Warrants to be redeemed shall deduct the applicable exercise price of such share issuable under the relevant CLASS B Warrant) then requested to be redeemed by such holder(s) on the Redemption Date, out of funds legally available therefor, at a redemption price per Class B Ordinary Share (the "**Redemption Price**") equal to (a) the Class B Ordinary Share Issue Price with a simple rate of eight percent (8%) per annum return calculated from the first date on which such holder becomes a Class B Ordinary Member through the date on which the redemption price is paid, plus (b) all declared but unpaid dividend on such Share.

Schedule A-19

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Within three (3) Business Days after receipt of the Redemption Notice, the Company shall promptly give written notice of the redemption request to each non-requesting holder of Class B Ordinary Shares, Beijing Yangguang, PD Company Limited, Bing Xiao Enterprise Management Company Limited ("**Bing Xiao**"), Dachen Chuanglian and 深圳市达晨创丰股权投资企业(有限合伙) ("**Dachen Chuangfeng**", with Bing Xiao, Dachen Chuanglian collectively, "**Dachen**") stating the existence of such request, the Redemption Price, the Redemption Date and the mechanics of redemption. Upon receipt of such notice from the Company, any holder of Class B Ordinary Shares, Beijing Yangguang, Dachen may participate in the redemption on the Redemption Date. If on the Redemption Date, the fund and assets of the Company legally available for redemption is insufficient for the Company to redeem all Class B Ordinary Shares requested to be redeemed in full, then (i) the number of Class B Ordinary Shares to be redeemed on the Redemption Date (and to receive Redemption Price thereon) shall be allocated to the Class B Ordinary Members requesting the redemption, ratably based on their respective number of Class B Ordinary Shares requested to be redeemed on such Redemption Date, and (ii) the remaining Class B Ordinary Shares requested to be redeemed (but the Redemption Price thereon is not paid on the Redemption Date) shall continue to be deemed issued and outstanding, and the Company shall redeem such remaining Class B Ordinary Shares subject to redemption as soon as the Company has legally available funds to do so. Only after the Company has redeemed all of the outstanding Class B Ordinary Shares (whether or not requested to be redeemed on the relevant Redemption Date) and unconditionally and irrevocably paid the Redemption Price with respect to all outstanding Class B Ordinary Shares to their holder(s) in full, (i) up to 376,564,855 Class A Ordinary Shares held by Beijing Yangguang shall then be redeemed at a redemption price per Share equal to RMB 0.65327 with a simple rate of eight percent (8%) per annum return calculated from December 7, 2017 through the date on which the redemption price is paid; (ii) up to 153,075,145 Class A Ordinary Shares held by Beijing Yangguang shall then be redeemed at a redemption price per Share equal to RMB 0.65327 with a simple rate of eight percent (8%) per annum return calculated from December 1, 2017 through the date on which the redemption price is paid; (iii) up to 152,837,973 Class A Ordinary Shares held by Dachen Chuanglian shall then be redeemed at a redemption price per Share equal to RMB 0.60826 with no interest; (iv) the Class A Ordinary Shares held by Dachen Chuangfeng shall then be redeemed at a redemption price per Share equal to RMB 0.25873 with a simple rate of eight percent (8%) per annum return calculated from December 24, 2015 through the date on which the redemption price is paid; (v) the Class A Ordinary Shares held by Bing Xiao shall then be redeemed at a redemption price per Share equal to RMB 0.25867 with a simple rate of eight percent (8%) per annum return calculated from December 24, 2015 through the date on which the redemption price is paid; and (vi) the Class A Ordinary Shares held by PD Company Limited shall then be redeemed at a redemption price per Share equal to RMB 0.26862 with a simple rate of eight percent (8%) per annum return calculated from December 25, 2015 through the date on which the redemption price is paid. Notwithstanding anything to the contrary contained in the Shareholders Agreement or in these Articles, the Restructuring Framework Agreement or other Transaction Documents, no other Shares or Equity Securities of the Company (including without limitation the Class A Ordinary Shares held by Beijing Yangguang, PD Company Limited and Dachen) shall be redeemed unless and until the Company shall have redeemed all of the outstanding Class B Ordinary Shares requested to be redeemed in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Once the Company has received the Redemption Notice, the Company and the Major Subsidiaries shall not, and shall procure that none of the Group Companies shall, take any action which might have the effect of delaying, undermining or restricting the redemption, and the Company, the Major Subsidiaries, the holders of Class A Ordinary Shares and the Ruipeng Management Members shall in good faith use all best efforts to increase as expeditiously as possible the amount of legally available funds including, without limitation, causing any other Group Companies to distribute any and all available funds to the Company for purposes of paying the applicable Redemption Price for all Class B Ordinary Shares subject to redemption on the Redemption Date. If the Company fails (for whatever reason) to redeem any Class B Ordinary Share on the Redemption Date, as from such date until the date on which the same is redeemed, the Company shall not declare or pay any dividend nor otherwise make any distribution of or otherwise decrease its profits available for distribution nor redeem or repurchase any other Equity Securities of the Company (other than the Class B Ordinary Shares requested to be redeemed). Without prejudice to any claim or other remedies that a holder of Class B Ordinary Shares subject to redemption may have under the Shareholders Agreement, these Articles, Applicable Law or otherwise, and notwithstanding anything to the contrary in the Shareholders Agreement, these Articles, the Restructuring Framework Agreement or other Transaction Documents, such holder of such Class B Ordinary Shares is entitled (provided a prior written consent from holders holding at least 90% of the then outstanding Class B Ordinary Shares has been obtained) to make any proposal for the purpose of receiving the applicable Redemption Price including without limitation, (i) liquidation or dissolution of any Group Company, (ii) any sale or merger of any Group Company; (iii) Transfer, sale, lease or otherwise disposal of any Assets of any Group Company and (iv) licensing any brand or any business of any Group Company to any third party. Immediately upon the request of such holder of such Class B Ordinary Shares (provided a prior written consent from holders holding at least 90% of the then outstanding Class B Ordinary Shares has been obtained), each Member, the Ruipeng Management Members and the Group Companies shall fully cooperate with, and follow the instructions of, such holder of such Class B Ordinary Shares in connection therewith.

Schedule A-20

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Company and each Member shall take or cause to be taken all actions, do or cause to be done, and assist and cooperate with the holders of Class B Ordinary Shares subject to redemption in doing, all things and execute all instruments necessary, proper or advisable under Applicable Laws to consummate and make effective, in the most expeditious manner practicable, the redemption contemplated by this <u>Section</u> <u>3.8</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) No Member other than the Class B Ordinary Members, Beijing Yangguang, Dachen, Bing Xiao and PD Company Limited shall be entitled to the redemption right from the date of the Shareholders Agreement and any redemption right previously granted to any Member other than the Class B Ordinary Members, Beijing Yangguang, Dachen, Bing Xiao and PD Company Limited shall cease to exist from the date of the Shareholders Agreement.

**4.** **Information and Inspection Rights.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.1 Delivery of Financial Statements.** The Company shall deliver the following documents, with respect to each Group Companies, to Hillhouse, Ruipeng Management Members, Members holding five percent (5%) or more of the Shares (including the Warrant Shares assuming the full exercise of the Warrants) outstanding as well as Members who have the right to appoint the Company Directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) within one hundred and twenty (120) calendar days after the end of each fiscal year, a consolidated annual report (including income statement, statement of cash flows, and a balance sheet) prepared in accordance with the applicable accounting principles ("**Applicable Accounting Principles**"), and audited and certified by an independent accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) within sixty (60) calendar days after the end of half fiscal year, a consolidated and unaudited half year financial report (including income statement, statement of cash flows and a balance sheet) prepared in accordance with the Applicable Accounting Principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) within forty-five (45) calendar days of the end of each fiscal month, an unaudited management report prepared in accordance with the Applicable Accounting Principles; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the other reasonable business and financial information that Hillhouse and/or Ruipeng Management Members may request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2 Information Right of Class B Ordinary Members**. The Company shall deliver the following documents to each Class B Ordinary Member so long as such Class B Ordinary Member respectively owns not less than six seven percent (67%) of all Shares it owns as at the Class B Ordinary Closing Date:

Schedule A-21

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) within one hundred and twenty (120) calendar days after the end of each fiscal year, documents referred to in <u>Sections 4.1(i)</u> hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) within sixty (60) calendar days after the end of half fiscal year, documents referred to in <u>Sections 4.1(ii)</u> hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) within forty-five (45) calendar days after the end of each quarter, unaudited quarterly consolidated financial statements of the Group Companies for each quarter of a financial year (including income statement, statement of cash flows and a balance sheet) prepared in accordance with the Applicable Accounting Principles; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) (to Tecent and Boehringer Ingelheim only and not to other Class B Ordinary Members) an annual consolidated budget and a business plan for the following fiscal year duly approved by the Board at least thirty (30) days prior to the end of each fiscal year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) (to Tecent and Boehringer Ingelheim only and not to other Class B Ordinary Members) any documents provided to other Members (other than that provided to Hillhouse, Ruipeng Management Members, Members holding five percent (5%) or more of the Shares (including the Warrant Shares assuming the full exercise of the Warrants) outstanding as well as Members who have the right to appoint the Company Directors pursuant to <u>Section</u> <u>4.1(iii)</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.3 Provision of Information.** The Company shall ensure Ruipeng Management Members, Hillhouse, Boehringer Ingelheim (only if Boehringer Ingelheim owns no less than sixty seven percent (67%) of all the Shares it owns as at the Class B Ordinary Closing Date) and Tencent (only if Tencent owns no less than sixty seven percent (67%) of all the Shares it owns as at the Class B Ordinary Closing Date) and their respective authorized representatives may, upon reasonable prior notice, have reasonable access to the offices of each Group Company and obtain property, books and records, and any other financial, operating or business data or information that Ruipeng Management Members, Hillhouse, Boehringer Ingelheim or Tencent may reasonably request for from time to time, <u>provided that</u> any Group Company, acting in good faith, reserves the right to withhold any property, books and records, and any other financial, operating or business data or information if access to such property, books and records, and any other financial, operating or business data or information could adversely affect any of the Group Companies.

**5.** **Liquidation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1 Liquidation Event.** 

In the event of a Liquidation Event, distributions to Members shall be made in a manner set out in <u>Section</u> <u>6.2</u> of the Shareholders Agreement and in accordance with the Applicable Laws and <u>Section</u> <u>5.2</u> of this Schedule A.

For the purpose of this <u>Section</u> <u>5</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**Capital Increase Investors**" means HH Skyfield Holdings Inc. and CG Fund, and (1) for HH Skyfield Holdings Inc., only with respect to 1,575,720,941 Class A Ordinary Shares (out of 4,301,955,077 Class A Ordinary Shares) held by HH Skyfield Holdings Inc. as of the date of these Articles; and (2) for CG Fund, only with respect to 24,279,059 Class A Ordinary Shares (out of 307,486,028 Class A Ordinary Shares) held by CG Fund as of the date of these Articles (such number of Class A Ordinary Shares shall hereinafter referred to as "**Capital Increase Investor Qualified Shares**"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "**Other Investors**" means Dachen Chuanglian, Dachen Chuangfeng, Beijing Yangguang, 惠每康承（天津）企业管理咨询合伙企业（有限合伙）("**Huimei**"),天津高瓴诺远企业管理咨询合伙企业(有限合伙), HH Skyfield Holdings Inc. and Gracious Rhythm, and (1) for each of the foregoing Other Investors (other than HH Skyfield Holdings Inc., Huimei and Gracious Rhythm), with respect to all Class A Ordinary Shares held by such Other Investor as of the date of these Articles; (2) for Huimei, only with respect to 100,000,000 Class A Ordinary Shares (out of 120,000,000 Class A Ordinary Shares) held by Huimei as of the date of these Articles; and (3) for HH Skyfield Holdings Inc., only with respect to 2,726,234,136 Class A Ordinary Shares (out of 4,301,955,077 Class A Ordinary Shares) held by HH Skyfield Holdings Inc. as of the date of these Articles; and (4) for Gracious Rhythm, only with respect to 307,486,028 Class A Ordinary Shares held by Gracious Rhythm as of the date of these Articles (such number of Class A Ordinary Shares shall hereinafter referred to as "**Other Investor Qualified Shares**").

Schedule A-22

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The Company warrants and represents, and each Capital Increase Investor and Other Investor severally but not jointly warrants and represents with respect to itself, to each other Member that Schedule VII and Schedule VIII of the Shareholders Agreement correctly and completely reflect the investment amount paid by each Capital Increase Investor and Other Investor to the Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2 Distribution** 

In the event of a Liquidation Event, any and all proceeds and consideration resulting therefrom (or, in case of a Liquidation Event other than a Deemed Liquidation Event, all distributable funds and assets of the Group Companies) ("**Distributable Assets**") shall be distributed to the Members in the following manner and order, subject to the claims that may be superior under the Applicable Laws:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) firstly, each holder of the Class B Ordinary Shares is entitled to receive an amount equal to one hundred and ten percent (110%) of the Class B Ordinary Share Issue Price plus all dividends declared but unpaid with respect thereto for each Class B Ordinary Share (including any Class B Ordinary Shares issuable under the CLASS B Warrants, assuming the full exercise of the CLASS B Warrants) then held by such holder ("**Class B Ordinary Member Liquidation Preference Amount**"); in the event that the Company has insufficient assets to permit payment of the Class B Ordinary Member Liquidation Preference Amount in full to all holders of the Class B Ordinary Shares, then the Distributable Assets shall be distributed ratably to the holders of the Class B Ordinary Shares in proportion to the Class B Ordinary Member Liquidation Preference Amount each such holder of Class B Ordinary Shares would otherwise be entitled to receive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) secondly, if there are any Distributable Assets remaining after the distribution of the Class B Ordinary Member Liquidation Preference Amount in full to the Class B Ordinary Members, each of the Capital Increase Investors shall be entitled to receive an amount equal to one hundred and ten percent (110%) of the amount of the "**Capital Increase Amount Per Share**" set forth opposite the name of such Capital Increase Investor in Schedule VII of the Shareholders Agreement per each Capital Increase Investor Qualified Share then outstanding and held by such Capital Increase Investor as of the date of distribution plus all dividends declared but unpaid with respect thereto (the "**Capital Increase Liquidation Preference Amount**"); in the event that after full payment of the Class B Ordinary Member Liquidation Preference Amount the Company has insufficient assets to permit payment of the Capital Increase Liquidation Preference Amount in full to all Capital Increase Investors, then the remaining Distributable Assets shall be distributed ratably to all Capital Increase Investors in proportion to the Capital Increase Liquidation Preference Amount each such Capital Increase Investor would otherwise be entitled to receive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) thirdly, if there are any Distributable Assets remaining after the distribution of the Capital Increase Liquidation Preference Amount to the Capital Increase Investors in full, each of the Other Investor shall be entitled to receive an amount equal to one hundred and ten percent (110%) of the amount of the "**Target Assets Investment Amount Per Share**" set forth opposite the name of such Other Investor in Schedule VIII of the Shareholders Agreement per each Other Investor Qualified Share then outstanding and held by such Other Investor as of the date of distribution plus all dividends declared but unpaid with respect thereto (the "**Other Investor Liquidation Preference Amount**"). If the remaining Distributable Assets after full payment of the Class B Ordinary Member Liquidation Preference Amount and the Capital Increase Liquidation Preference Amount is insufficient to pay such Other Investor Liquidation Preference Amount in full, then the remaining Distributable Assets shall be distributed ratably to all Other Investors in proportion to the Other Investor Liquidation Preference Amount each such Other Investor would otherwise be entitled to receive;

Schedule A-23

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) fourthly, if upon full payment of the Class B Ordinary Member Liquidation Preference Amount, the Capital Increase Liquidation Preference Amount and the Other Investor Liquidation Preference Amount, there are still remaining Distributable Assets available for distribution to the Members, the Company shall ensure that such Distributable Assets shall be distributed to the Members (for the avoidance of doubt, including Members who have received Class B Ordinary Member Liquidation Preference Amount, the Capital Increase Liquidation Preference Amount and/or the Other Investor Liquidation Preference Amount) on a pro rata basis based on the number of Shares held by each such Member at the time of such distribution.

The Company and all Members shall take or cause to be taken all actions and effective measures and do or cause to be done all things and execute all instruments necessary, proper or advisable in accordance with Applicable Laws to ensure that the Distributable Assets are distributed, in the most expeditious manner practicable, in accordance with the above-mentioned arrangement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3 Compulsory Payment** 

In the event of a Deemed Liquidation Event, the consideration received from the purchaser(s) shall be paid to the Company (regardless of the means by which a purchaser or licensee obtains the relevant Equity Securities, Assets or Intellectual Property of the Group Companies or the surviving entities), and then the Company shall distribute such consideration in accordance with Section 5.2 of this Schedule A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.4 Distribution of Assets or Securities** 

The Company shall use its best efforts to make any distribution hereunder to the Members in cash. If the distribution in cash is not practical or feasible, distributions of securities or assets other than cash may be made subject to prior consent of the Member receiving such non-cash distribution. Distributions consisting of both cash and non-cash securities or assets shall be made to each Member receiving such distributions in the same proportions of cash and non-cash securities or assets (unless the relevant Member agrees to receive such distributions in a different proportion). In the case of non-cash distribution in connection with any Liquidation Event pursuant to Sections 5.2 and/or 5.3 of this Schedule A, the value of the assets to be distributed to the Members shall be determined in good faith by the Board. Any securities not subject to investment letter or similar restrictions on free marketability shall be valued as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If traded on a securities exchange, the value shall be deemed to be the average of the security's closing prices on such exchange over the thirty (30) day period ending one (1) day prior to the distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the thirty (30) day period ending three (3) days prior to the distribution; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If there is no active public market, the value shall be the fair market value thereof as determined in good faith by the Board.

The holders of at least a majority of the outstanding Class B Ordinary Shares, or the holders of at least a majority of the Capital Increase Investor Qualified Shares, or the holders of at least a majority of the Other Investor Qualified Shares shall have the right to challenge any determination by the Board of the fair market value determined pursuant to this Section 5.4, in which case the determination of fair market value shall be made by an independent appraiser selected jointly by the Board and the challenging Members, the cost of such appraisal to be borne by the Company.

Schedule A-24

## Exhibit 4.4

**Exhibit 4.4** 

**AMENDED AND RESTATED SHAREHOLDERS AGREEMENT** 

THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this "**Agreement**") is entered into as of September 25, 2020, by and among:

(1) Ruipeng Pet Group Inc., a company duly incorporated and validly existing under the Laws of Cayman Islands (the
" **Company** "),

(2) the Persons listed in <u>Schedule I(A)</u> attached hereto (each a "**Class A Ordinary Member** ",
and collectively, the "**Class A Ordinary Members** "),

(3) the Persons listed in <u>Schedule I(B)</u> attached hereto (each, a "**Class B Ordinary Member** ",
and collectively, the "**Class B Ordinary Members** ", and together with the Class A Ordinary Members, the "**Members**" and each, a "**Member** "),

(4) the entities listed in <u>Schedule I(C)</u> attached hereto (each, a "**Major Subsidiary** ", and
collective, the "**Major Subsidiaries** "),

(5) the natural persons listed in <u>Schedule I(D)</u> attached hereto (each, a "**Ruipeng Management Member** ", and collectively "**Ruipeng Management Members** "); and

(6) each other Person who, after the date hereof, has executed and delivered a Deed of Adherence (as defined below)
and become a party to this Agreement in accordance with the terms herein and therein (collectively, the "**New Joining Parties**" and each, a "**New Joining Party** ").

Each of the above is referred to herein individually as a "**Party**" and collectively as the "**Parties**."

**RECITALS** 

A. Each of the Class B Ordinary Member has agreed to purchase from the Company, and the Company has agreed to
issue to each Class B Ordinary Member, certain Class B Ordinary Shares (as defined below) and/or certain CLASS B Warrant (as defined below) on the terms and conditions set forth in the Class B Ordinary Share and Warrant Purchase Agreement dated
September 8, 2020 by and among the Company, the Class B Ordinary Members and certain other parties named therein (the "**Class B Ordinary SPA** ").

B. The Class B Ordinary SPA provides that the execution and delivery of this Agreement shall be a condition
precedent to the consummation of the transaction contemplated thereunder.

C. The Class B Ordinary Members desire to enter into this Agreement and to accept the rights, covenants and
obligations hereunder.

D. The Company, the Class A Ordinary Members and the other parties named thereto are parties to that certain
shareholders' agreement of the Company dated December 3, 2019 (the "**Prior Shareholders' Agreement** ").

E. The Parties desire to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein on the terms and conditions set forth herein. This Agreement shall supersede the Prior Shareholders' Agreement in its entirety, and the Prior Shareholders' Agreement shall terminate and have no further force
or effect as of the Class B Ordinary Closing Date.

------

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1. Definitions.** In addition to the words and expressions defined elsewhere in this Agreement, the following words and expressions have the meanings as follows

"**Affiliate**" means (i) in the case of a Person other than a natural person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person; and (ii) in the case of a natural person, any other Person that directly or indirectly is Controlled by such Person, or a Relative of such Person or any other Person that directly or indirectly Controlled by a Relative of such Person.

"**Applicable Law(s)**", or "**Law(s)**" means, with respect to any Person, any public, effective and applicable treaties, laws, administrative regulations, local regulations, rules, judicial interpretations, judgment, rulings, arbitral awards and other administrative, normative documents which are binding upon such Person or the asset(s) of such Person.

"**Articles**" means the Memorandum of Association of the Company and the Articles of Association of the Company, as each may be amended and/or restated from time to time.

"**Asset**" means any tangible or intangible asset, right and privilege of any nature (including rights relating to the Intellectual Property).

"**Board**" or "**Board of Directors**" means the board of directors of the Company.

"**Boehringer Ingelheim"** means Boehringer Ingelheim Animal Health Participations GmbH, together with its permitted transferees, assignees and successors.

"**Business Day**" means any day that is not a Saturday, a Sunday, a public holiday or a day on which date commercial banks in the PRC, Cayman Islands or Hong Kong Special Administrative Region are closed.

"**Class A Ordinary Shares**" means the Class A ordinary shares of the Company, par value US$0.000001 each, with the rights and privileges as set forth in the Articles and this Agreement.

"**Class B Ordinary Shares**" means the Class B ordinary shares of the Company, par value US$0.000001 each, with the rights and privileges as set forth in the Articles and this Agreement. For purposes of this Agreement, any reference to the number or percentage of "outstanding Class B Ordinary Shares" or "Class B Ordinary Shares" shall also include the Warrant Shares assuming full exercise of the CLASS B Warrants.

"**Class B Ordinary Closing Date**" means "Closing Date" as defined in section 2.1 of the Class B Ordinary SPA.

------

"**Class B Ordinary Share Issue Price**" means US$0.32521803, as appropriately adjusted for share splits, share dividends, combinations, recapitalizations and similar events with respect to such a Class B Ordinary Share.

"**CLASS B Warrant**" shall bear the meaning set forth in section 4.2(b)(ii) of the Class B Ordinary SPA.

"**Confidential Information**" means (i) information about the organization, business, technology, finances, customers, suppliers, transactions or affairs of the Group or a Party, or about their respective directors, officers or employees (whether that information is provided in writing, orally or otherwise before, on or after the date of this Agreement); (ii) terms of this Agreement and the identity of the Parties and their respective Affiliates; and (iii) information or materials prepared by a Party or its Representative (as defined below), which contains or otherwise reflects Confidential Information or which is generated by the Confidential Information.

"**Control**" of a given Person means (i) holding 50% or more of the issued shares, other equity interest or registered capital of that Person or (ii) the power or authority, to determine the management and policies of such Person, whether through the ownership of more than fifty percent (50%) voting right of that Person, through the voting proxy of more than fifty percent (50%) voting right of that Person, through the power to control the composition of a majority of the board of directors of such Person or through contractual arrangement or other means; the term "Person" in this definition does not refer to a natural person.

"**Deemed Liquidation Event**" means: (a) any transaction, whether by sale, lease, transfer, assignment or other means, pursuant to or as a result of which all or substantially all of the Assets of the Group Companies are disposed; (b) any transaction, whether by sale, association, consolidation, restructuring, merger or amalgamation, pursuant to or as a result of which the existing shareholders of the Company immediately before the consummation of such transaction do not retain more than fifty percent (50%) of the voting rights immediately after such transaction; or (c) the exclusive licensing of all or substantially all of the Intellectual Property of the Group Companies to a third party.

"**Equity Securities**" means, with respect to a Person, any equity interest, shares, preference shares, shareholder interest, partnership interest, registered capital interest, joint venture interest and any other ownership interest, and any option, warrant, or other right or securities which can be directly or indirectly converted into or are exercisable or exchangeable for any of the foregoing. Any "equity interest" or "equity securities" of a Person shall include the Equity Securities unless otherwise it becomes illogical to interpret within the context. For the purpose of this definition, a Person does not include a natural person.

**"Governmental Authority"** means any competent government or its affiliated institution, department, court or arbitral tribunal and the supervising authority of the stock exchange.

"**Group Companies**" or "**Group**" shall bear the meaning of "**Group Companies**" as set forth in the Class B Ordinary SPA, and a "**Group Company**" shall mean any of the Group Companies.

"**Hillhouse**" means HH Skyfield Holdings Inc., HCBN Investment Holdings, Ltd. and 天津高瓴诺远企业管理咨询合伙企业（有限合伙）, collectively; and "**Hillhouse Chairman**" shall bear the meaning as set forth in <u>Section 3.2(ii)</u> hereof.

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"**Identified Competitor**" means any Person which operates under any brand set forth in <u>Schedule V</u> hereof, which list shall not exceed ten (10) brands and may be updated once in every twelve (12) consecutive months (provided that: (i) such update shall be made in good faith and shall only include a brand whose primary business is in material competition with the Group's Main Business, and (ii) the list shall not include any Class B Ordinary Member or its Affiliates for so long as such Class B Ordinary Member or Affiliate does not hold more than twenty percent (20%) in any brand or Person whose primary business is in material competition with the Group's Main Business), as notified by the Board to the Parties in writing.

"**Intellectual Property**" means patents, trademarks, service logos, registration designs, domain names, utility models, copyrights, inventions, confidential information, trade secrets, proprietary production processes and equipment, brand names, database rights, trade names, other similar rights and any of the above interests (whether registered or not) in any country, and shall include the application of granting any of the above-mentioned items and the right to apply for them in any part of the world.

"**IPO**" means an initial public offering of the ordinary shares of the Company.

"**Liquidation Event**" means any of the following events: (i) a liquidation, dissolution or winding up of the Company and/or its Subsidiaries; <u>provided</u> that a liquidation, dissolution or winding up of the Subsidiaries of the Company shall constitute a Liquidation Event only when the number of branches and Subsidiaries of the Company that have been liquidated, dissolved or wound up during a financial year exceeds 10% of the total number of branches and Subsidiaries of the Company at the end of the previous financial year or (ii) any Deemed Liquidation Event.

"**Main Business**" means the business conducted by the Group Companies, being animal hospital, animal grooming, sale of animal food and products, and other pet-related businesses, including but not limited to the internet, software development, education and training, supply chain, media, etc.

"**Original Closing Date**" means December 3, 2019.

"**Person**" means any individual, company, corporation, partnership, trust, government, department or agency of government, or other entity.

"**PRC**" means the People's Republic of China, but solely for the purposes of this Agreement, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan.

"**Qualified IPO**" means an IPO on the Hong Kong Stock Exchange, New York Stock Exchange, NASDAQ or any other recognized regional or national securities exchange, which public offering reflects the valuation of the Company immediately prior to such offering being not less than the Post-Class B Valuation with a simple rate of fifteen percent (15%) per annum return calculating from the Class B Ordinary Closing Date to the date that is immediately prior to such offering, unless adjusted with the prior written consent of (i) Ruipeng Management Members, (ii) Hillhouse, (iii) the holders of more than 50% of the outstanding Class B Ordinary Shares (including the Warrant Shares assuming the full exercise of the CLASS B Warrants), and (iv) each Class B Ordinary Member who has invested not less than US$100,000,000 on the Class B Ordinary Closing Date, provided that such Class B Ordinary Member's prior written consent will not be required when it no longer holds at least sixty-seven percent (67%) of the Class B Ordinary Shares it purchased on the Class B Ordinary Closing Date. For the purpose hereof, "**Post-Class B Valuation**" means the valuation of the Company immediately prior to the Class B Ordinary Closing Date, i.e. US$3.6 billion plus the Purchase Prices and RMB Investment Considerations (as defined in the Class B Ordinary SPA) actually paid by the Investors (as defined in the Class B Ordinary SPA) and the Additional Investors (as defined in the Class B Ordinary SPA) for the subscription of Class B Ordinary Shares and CLASS B Warrants as contemplated under the Class B Ordinary SPA.

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"**Related Party Transaction**" means a dealing or transaction between any of the Group Companies, on one side, and any shareholder, director, Key Employees (as defined in the Class B Ordinary SPA) or Ruipeng Management Members of any Group Company or any Affiliate(s) of the foregoing (excluding a Group Company), on the other side.

"**Relative**" means a husband, wife and husband's or wife's father, mother, grandparent, son, daughter, grandchild, brother, sister, uncle, auntie, nephew, niece, or grand grandparent.

"**Restructuring Framework Agreement**" means the agreement entered into by and among certain Class A Ordinary Members and/or their Affiliates and other parties thereto on January 23, 2019, a copy of which is attached hereto as Exhibit A.

"**RMB**" means the lawful currency of PRC.

"**Ruipeng**" means New Ruipeng Pet Healthcare Group Co., Ltd.(新瑞鹏宠物医疗集团有限公司).

"**Ruipeng Chairman**" shall bear the meaning as set forth in <u>Section 3.2(ii)</u> hereof.

"**Ruipeng Investor Members**" means, collectively, Goldenway Capital Management Limited, PD Company Limited, HAO's Holdings, Inc., Bing Xiao Enterprise Management Company Limited, 北京阳光融汇医疗健康产业成长投资管理中心(有限合伙), 深圳市达晨创联股权投资基金合伙企业(有限合伙), 深圳市达晨创丰股权投资企业(有限合伙), 宁波梅山保税港区海布里投资合伙企业(有限合伙), 新希望医疗健康南京投资中心(有限合伙), 北京健能投资管理中心（有限合伙）or its designated Affiliate that shall hold Shares in the Company, 中国国际金融股份有限公司 or its designated Affiliate that shall hold Shares in the Company, 惠每康承（天津）企业管理咨询合伙企业（有限合伙）and any permitted assign of the foregoing accepted by Hillhouse and Ruipeng Management Members as a Ruipeng Investor Member, and a "**Ruipeng Investor Member**" shall mean any of them.

"**Ruipeng Members**" means, collectively, RP Chen Rui Enterprise Management Company Limited, RP Rui You Enterprise Management Company Limited, RP Ye Bei Enterprise Management Company Limited, Leap Eternity Enterprise Management Company Limited, Great Dream Of Veterinarian Management Limited, RP Sheng Peng Enterprise Management Company Limited, RP Peng Cheng Enterprise Management Company Limited, Vet Harvest Enterprise Management Company Limited, Vet Time Enterprise Management Company Limited, Ruipeng Management Members and any permitted assign of the foregoing accepted by Hillhouse and Ruipeng Management Members as a Ruipeng Member, and a "**Ruipeng Member**" shall mean any of them.

"**Share**" means a share in the share capital of the Company including a Class B Ordinary Share or a Class A Ordinary Share; and the expression: (i) includes stock (except where a distinction between shares and stock is expressed or implied); and (ii) where the context permits, also includes a fraction of a share. For purpose of this Agreement, any reference to the number or percentage of "outstanding Shares" or "Shares" shall also include the Warrant Shares assuming full exercise of the Warrants.

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"**Skyfield Minority Members**" means, collectively, Jing An Holdings Limited, AnAn Brothers Holdings Limited, Aino Family Holding Limited, Aino Brothers Holding Limited, Cloudpet Holdings Limited, Puppytown Holdings Limited and the direct and/or indirect shareholders of the aforementioned entities and any permitted assign of the foregoing accepted by Hillhouse and Ruipeng Management Members as a Skyfield Minority Member, and a "**Skyfield Minority Member**" shall mean any of them.

"**Subsidiary**" or "**Subsidiaries**" means, with respect to any specified Person, any Person (excluding natural persons) which the specified Person, directly or indirectly, owns or Controls.

"**Tax**" means various forms of tax levied, withheld or assessed by the central or local governments of PRC or other jurisdictions as well as the costs of similar taxes, as well as interest, fines, additional charges or fines related to the above-mentioned items.

"**Tencent**" means Tencent Mobility Limited.

"**Tencent Competitors**" means the Persons whose names are listed in <u>Schedule IV</u> hereto.

"**Transaction Documents**" shall bear the meaning as set forth in section 4.4 of the Class B Ordinary SPA.

"**Warrants**" shall bear the meaning as set forth in section 4.2(b)(ii) of the Class B Ordinary SPA. For the avoidance of doubt, (i) the right and privileges pertaining to any Shares set forth herein shall be also applicable to those Shares issuable under the applicable Warrant as if such Warrant has been exercised, and (ii) the right and privileges of any holder of any Shares and/or any Member set forth herein shall be also applicable to any holder of the applicable Warrant as if such Warrant has been exercised. The Parties agree that, for the purpose of this Agreement, (i) each Party holding a Warrant shall be deemed as duly exercised such Warrant in full such that it shall be deemed as a holder of the corresponding Shares of the Company under this Agreement, and (ii) the term "**Warrant Shares**" shall mean the Shares that the holders of the Warrant shall be entitled to purchase under the Warrants.

Except where the context requires otherwise, capitalized terms used herein without definition shall have the meanings set forth in the Class B Ordinary SPA.

**2.** **Registration Rights** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1** <u>Applicability of Rights</u>. The Holders (as defined below) shall be entitled to the following rights with respect to any potential public offering of the Company's Shares in the United States and shall be entitled to reasonably analogous or equivalent rights with respect to any other offering of the Company's securities in any other jurisdiction pursuant to which the Company undertakes to publicly offer or list such securities for trading on a recognized securities exchange.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2** <u>Definitions</u>. For purposes of this <u>Section 2</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Registration</u>. The terms "**register**," "**registered**," and "**registration**" refer to a registration effected by preparing and filing a registration statement which is in a form which complies with, and is declared effective by the SEC (as defined below) in accordance with, the Securities Act (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Registrable Securities</u>. The term "**Registrable Securities**" means: (1) any Class B Ordinary Shares, and any Shares issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, any Class B Ordinary Shares, and (2) any Class A Ordinary Shares, and any Shares issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, any Class A Ordinary Shares. Notwithstanding the foregoing, "**Registrable Securities**" shall exclude (i) any Class A Ordinary Shares held by any Ruipeng Member or Skyfield Minority Member, or (ii) any Registrable Securities sold by a person in a transaction in which rights under this <u>Section 2</u> are not assigned in accordance with this Agreement and any Registrable Securities which are sold in a registered public offering under the Securities Act or analogous statute of another jurisdiction, or sold pursuant to Rule 144 promulgated under the Securities Act or analogous rule of another jurisdiction. For the avoidance of doubt, it shall not in any event mean that the Class A Ordinary Shares held by any Ruipeng Member or Skyfield Minority Member are not registrable upon the IPO of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Registrable Securities Then Outstanding</u>. The number of shares of "**Registrable Securities then outstanding**" shall mean the number of Shares that are Registrable Securities and are then issued and outstanding or issuable upon conversion or exercise of any warrant, right or other security then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Holder</u>. For purposes of this <u>Section 2</u>, the term "**Holder**" shall mean any person owning or having the rights to acquire Registrable Securities or any permitted assignee of record of such Registrable Securities to whom rights under this <u>Section 2</u> have been duly assigned in accordance with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Form F-3</u>. The term "**Form F-3**" shall mean such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>SEC</u>. The term "SEC" or "Commission" shall mean the U.S. Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>Registration Expenses</u>. The term "**Registration Expenses**" shall mean all expenses incurred by the Company in complying with Sections 2.3, 2.4 and 2.5 hereof, including, without limitation, all registration and filing fees, printing expenses, fees, and disbursements of counsel for the Company, reasonable fees and disbursements of counsel for the Holders, "blue sky" fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Selling Expenses</u>. The term "**Selling Expenses**" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities pursuant to <u>Sections 2.3</u>, <u>2.4</u> and <u>2.5</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Exchange Act</u>. The term "**Exchange Act**" shall mean the Securities Exchange Act of 1934, as amended, and any successor statute.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Securities Act</u>. The term "**Securities Act**" shall mean the United States Securities Act of 1933, as amended and interpreted from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) For purposes of this Agreement, reference to registration of securities under the Securities Act and the Exchange Act shall be deemed to mean the equivalent registration in a jurisdiction other than the United States as designated by such Holders, it being understood and agreed that in each such case all references in this Agreement to the Securities Act, the Exchange Act and rules, forms of registration statements and registration of securities thereunder, U.S. law and the SEC, shall be deemed to refer, to the equivalent statutes, rules, forms of registration statements, registration of securities and laws of and equivalent government authority in the applicable non-U.S. jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3** <u>Demand Registration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Request by Holders</u>. If the Company shall, at any time after the earlier of (i) the sixth anniversary of the Original Closing Date or (ii) the date that is six (6) months after the closing of an IPO, receive a written request from the Holders of at least thirty percent (30%) of the Registrable Securities then outstanding that the Company file a registration statement under the Securities Act covering the registration of a minimum of 20% of the Registrable Securities pursuant to this <u>Section 2.3</u>, then the Company shall, within ten (10) Business Days of the receipt of such written request, give written notice of such request (the "**Request Notice**") to all the Holders, and use its best efforts to effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered and included in such registration by written notice given by such Holders to the Company within twenty (20) days after receipt of the Request Notice, subject only to the limitations of this <u>Section 2.3</u>; <u>provided</u> that the Company shall not be obligated to effect any such registration if the Company has, within the six (6) month period preceding the date of such request, already effected a registration under the Securities Act pursuant to this <u>Section 2.3</u> or <u>Section 2.5</u> or in which the Holders had an opportunity to participate pursuant to the provisions of <u>Section 2.4</u>, other than a registration from which the Registrable Securities of the Holders have been excluded (with respect to all or any portion of the Registrable Securities the Holders requested be included in such registration) pursuant to the provisions of <u>Section 2.4(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Underwriting</u>. If the Holders initiating the registration request under this <u>Section 2.3</u> (the "Initiating Holders") intend to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to this <u>Section 2.3</u> and the Company shall include such information in the Request Notice. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Holders of a majority of the Registrable Securities being registered and reasonably acceptable to the Company. Notwithstanding any other provision of this <u>Section 2.3</u>, if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten then the Company shall so advise all Holders of Registrable Securities which would otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be reduced as required by the underwriter(s) and allocated (x) first, to the holders of Class B Ordinary Shares requesting registration on a pro rata basis according to the number of Registrable Securities then outstanding held by each such holder of Class B Ordinary Shares, and (y) then, to the other Holders of Registrable Securities on a pro rata basis according to the number of Registrable Securities then outstanding held by each such Holder requesting registration; <u>provided</u>, <u>however</u>, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities are first entirely excluded from the underwriting and registration including, without limitation, all shares that are not Registrable Securities and are held by any other person, including, without limitation, any person who is an employee, officer or director of the Company or any subsidiary of the Company; <u>provided further</u>, that at least twenty-five percent (25%) of shares of Registrable Securities requested by the Holders to be included in such underwriting and registration shall be so included. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Maximum Number of Demand Registrations</u>. The Company shall not be obligated to effect more than two (2) such registrations pursuant to this <u>Section 2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Deferral</u>. Notwithstanding the foregoing, if the Company shall furnish to the Holders requesting registration pursuant to this <u>Section 2.3</u>, a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its shareholders for such registration statement to be filed at such time, then the Company shall have the right to defer such filing for a period of not more than ninety (90) days after receipt of the request of the Initiating Holders; <u>provided</u>, <u>however</u>, that the Company may not utilize this right more than once in any twelve (12) month period; <u>provided further</u>, that the Company shall not register any other of its shares during such twelve (12) month period. A demand right shall not be deemed to have been exercised until such deferred registration shall have been effected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4** <u>Piggyback Registrations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days prior to filing any registration statement under the Securities Act (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but <u>excluding</u> registration statements relating to any registration under <u>Section 2.3</u> or <u>Section 2.5</u> of this Agreement or to any employee benefit plan or a corporate reorganization) and shall afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by it shall within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Underwriting</u>. If a registration statement under which the Company gives notice under this <u>Section 2.4</u> is for an underwritten offering, then the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder's Registrable Securities to be included in a registration pursuant to this <u>Section 2.4</u> shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, <u>first</u>, to the Company, <u>second</u>, to the holders of Class B Ordinary Shares requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the total number of shares of Registrable Securities then held by each such holder of Class B Ordinary Shares, <u>third</u>, to the other Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the total number of shares of Registrable Securities then held by each such Holder, and <u>fourth</u>, to holders of other securities of the Company; <u>provided</u>, <u>however</u>, that the right of the underwriter(s) to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that (i) the number of Registrable Securities included in any such registration is not reduced below twenty-five percent (25%) of the aggregate number of shares of Registrable Securities for which inclusion has been requested; and (ii) all shares that are not Registrable Securities and are held by any other person, including, without limitation, any person who is an employee, officer or director of the Company (or any subsidiary of the Company) shall first be excluded from such registration and underwriting before any Registrable Securities are so excluded, unless otherwise approved by the Holders of a majority of the Registrable Securities. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter(s), delivered at least ten (10) Business Days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Not Demand Registration</u>. Registration pursuant to this <u>Section 2.4</u> shall not be deemed to be a demand registration as described in <u>Section 2.3</u> above. There shall be no limit on the number of times the Holders may request registration of Registrable Securities under this <u>Section 2.4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.5** <u>Form F-3 Registration</u>. In case the Company shall receive from any Holder or Holders of at least thirty percent (30%) of all Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form F-3 (or an equivalent registration in a jurisdiction outside of the United States) and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then the Company will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Notice</u>. Promptly give written notice of the proposed registration and the Holder's or Holders' request therefor, and any related qualification or compliance, to all other Holders of Registrable Securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Registration</u>. As soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within twenty (20) days after the Company provides the notice contemplated by <u>Section 2.5(i)</u>; <u>provided</u>, <u>however</u>, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this <u>Section 2.5</u>:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if Form F-3 is not available for such offering by the Holders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than US$1,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) if the Company shall furnish to the Holders a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such Form F-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form F-3 registration statement no more than once during any twelve (12) month period for a period of not more than sixty (60) days after receipt of the request of the Holder or Holders under this <u>Section 2.5</u>; <u>provided</u> that the Company shall not register any of its other shares during such sixty (60) day period. A registration right under this <u>Section 2.5</u> shall not be deemed to have been exercised until such deferred registration shall have been effected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) if the Company has, within the six (6) month period preceding the date of such request, already effected one registration under the Securities Act other than a registration from which the Registrable Securities of the Holders have been excluded (with respect to all or any portion of the Registrable Securities the Holders requested be included in such registration) pursuant to the provisions of <u>Sections 2.3(ii)</u> and <u>2.4(iv)</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Not Demand Registration</u>. Form F-3 registrations shall not be deemed to be demand registrations as described in <u>Section 2.3</u> above. Except as otherwise provided herein, there shall be no limit on the number of times the Holders may request registration of Registrable Securities under this <u>Section 2.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Underwriting</u>. If the Holders of Registrable Securities requesting registration under this <u>Section 2.5</u> intend to distribute the Registrable Securities covered by their request by means of an underwriting, the provisions of <u>Section 2.3(ii)</u> shall apply to such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.6** <u>Expenses</u>. All Registration Expenses incurred in connection with any registration pursuant to <u>Sections 2.3</u>, <u>2.4</u> or <u>2.5</u> (but excluding Selling Expenses) shall be borne by the Company. Each Holder participating in a registration pursuant to <u>Sections 2.3</u>, <u>2.4</u> or <u>2.5</u> shall bear such Holder's proportionate share (based on the total number of shares sold in such registration other than for the account of the Company) of all Selling Expenses or other amounts payable to underwriter(s) or brokers, in connection with such offering by the Holders. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to <u>Section 2.3</u> if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered, unless the Holders of a majority of the Registrable Securities then outstanding agree that such registration constitutes the use by the Holders of one (1) demand registration pursuant to <u>Section 2.3</u> (in which case such registration shall also constitute the use by all Holders of Registrable Securities of one (1) such demand registration); <u>provided further</u>, <u>however</u>, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company not known to the Holders at the time of their request for such registration and have withdrawn their request for registration with reasonable promptness after learning of such material adverse change, then the Holders shall not be required to pay any of such expenses and such registration shall not constitute the use of a demand registration pursuant to <u>Section 2.3</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.7** <u>Obligations of the Company</u>. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Registration Statement</u>. Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to ninety (90) days or, in the case of Registrable Securities registered under Form F-3 in accordance with Rule 415 under the Securities Act or a successor rule, until the distribution contemplated in the registration statement has been completed; <u>provided</u>, <u>however</u>, that (i) such ninety (90) day period shall be extended for a period of time equal to the period any Holder refrains from selling any securities included in such registration at the request of the underwriter(s), and (ii) in the case of any registration of Registrable Securities on Form F-3 which are intended to be offered on a continuous or delayed basis, such ninety (90) day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Amendments and Supplements</u>. Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Prospectuses</u>. Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders, <u>provided</u> that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Underwriting</u>. In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement in usual and customary form, with the managing underwriter(s) of such offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of (i) the issuance of any stop order by the SEC in respect of such registration statement, or (ii) the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>Opinion and Comfort Letter</u>. Furnish, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriter(s) for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and (ii) letters dated as of (x) the effective date of the registration statement covering such Registrable Securities and (y) the closing date of the offering from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.8** <u>Furnish Information</u>. It shall be a condition precedent to the obligations of the Company to take any action pursuant to <u>Sections 2.3</u>, <u>2.4</u> or <u>2.5</u> that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to timely effect the Registration of their Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.9** <u>Indemnification</u>. In the event any Registrable Securities are included in a registration statement under <u>Sections 2.3</u>, <u>2.4</u> or <u>2.5</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>By the Company</u>. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, its partners, officers, directors, legal counsel, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other United States federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "**Violation**"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any United States federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any United States federal or state securities law in connection with the offering covered by such registration statement;

and the Company will reimburse each such Holder, its partner, officer, director, legal counsel, underwriter or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; <u>provided</u>, <u>however</u>, that the indemnity agreement contained in this <u>subsection 2.9(i)</u> shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder or any partner, officer, director, counsel, underwriter or controlling person of such Holder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>By Selling Holders</u>. To the extent permitted by law, each selling Holder will, if Registrable Securities held by Holder are included in the securities as to which such registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder's partners, directors, officers, legal counsel or any person who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, legal counsel, controlling person, underwriter or other such Holder, partner or director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other United States federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; <u>provided</u>, <u>however</u>, that the indemnity agreement contained in this <u>Section 2.9(ii)</u> shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and <u>provided further</u>, that in no event shall any indemnity under this <u>Section 2.9(ii)</u> exceed the net proceeds received by such Holder in the registered offering out of which the applicable Violation arises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Notice</u>. Promptly after receipt by an indemnified party under this <u>Section 2.9</u> of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnified party under this <u>Section 2.9</u>, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; <u>provided</u>, <u>however</u>, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of liability to the indemnified party under this <u>Section 2.9</u> to the extent the indemnifying party is prejudiced as a result thereof, but the omission to so deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this <u>Section 2.9</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Contribution</u>. In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any indemnified party makes a claim for indemnification pursuant to this <u>Section 2.9</u> but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this <u>Section 2.9</u> provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party in circumstances for which indemnification is provided under this <u>Section 2.9</u>; then, and in each such case, the indemnified party and the indemnifying party will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that a Holder (together with its related persons) is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by and sold under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company and other selling Holders are responsible for the remaining portion. The relative fault of the indemnifying Party and of the indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying Party or by the indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; <u>provided</u>, <u>however</u>, that, in any such case: (A) no Holder will be required to contribute any amount in excess of the net proceeds to such Holder from the sale of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Survival</u>. The obligations of the Company and Holders under this <u>Section 2.9</u> shall survive the completion of any offering of Registrable Securities in a registration statement, regardless of the expiration of any statutes of limitation or extensions of such statutes. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.10** <u>Termination of the Company's Obligations</u>. Notwithstanding any provision to the contrary in Section 8, the Company's obligations under <u>Sections 2.3</u>, <u>2.4</u> and <u>2.5</u> with respect to any Registrable Securities proposed to be sold by a Holder in a registration pursuant to <u>Section 2.3</u>, <u>2.4</u> or <u>2.5</u> shall terminate on the fifth (5th) anniversary of the completion of a Qualified IPO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.11** <u>No Registration Rights to Third Parties</u>. Without the prior written consent of the Holders of a majority in interest of the Registrable Securities then outstanding, the Company covenants and agrees that it shall not grant, or cause or permit to be created, for the benefit of any person or entity any registration rights of any kind (whether similar to the demand, "piggyback", Form F-3 registration rights described in this <u>Section 2</u>, or otherwise) relating to any securities of the Company which are senior to, or on a parity with, those granted to the Holders of Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.12** <u>Rule 144 Reporting</u>. With a view to make available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration or pursuant to a registration on Form F-3, after such time as a public market exists for the Shares, the Company agrees to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) File with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) So long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the Company's initial public offering), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or its qualification as a registrant whose securities may be resold pursuant to Form F-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to Form F-3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.13** <u>Market Stand-Off</u>. Each shareholder of the Company agrees that, so long as it holds any voting securities of the Company, upon request by the Company or the underwriters managing the initial public offering of the Company's securities, it will not sell or otherwise transfer or dispose of any securities of the Company (other than those permitted to be included in the registration and other transfers to affiliates permitted by law) without the prior written consent of the Company or such underwriters, as the case may be, for a period of time specified by the representative of the underwriters not to exceed one hundred and eighty (180) days from the effective date of the registration statement covering such initial public offering or the pricing date of such offering as may be requested by the underwriters. The foregoing provision of this <u>Section 2.13</u> shall not apply to the sale of any securities of the Company to an underwriter pursuant to any underwriting agreement, and shall only be applicable to the Holders if all officers, directors and holders of one percent (1%) or more of the Company's outstanding share capital enter into similar agreements, and if the Company or any underwriter releases any officer, director or holder of one percent (1%) or more of the Company's outstanding share capital from his or her sale restrictions so undertaken, then each Holder shall be notified prior to such release and shall itself be simultaneously released to the same proportional extent. The Company shall require all future acquirers of the Company's securities holding at least one percent (1%) of the then outstanding share capital of the Company to execute prior to an IPO a market stand-off agreement containing substantially similar provisions as those contained in this <u>Section 2.13</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.14 Qualified IPO**. Ruipeng Management Members and the Company shall use best efforts to realize and consummate a Qualified IPO before the fifth anniversary of the Class B Ordinary Closing Date.

**3.** **Corporate Governance**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1** **General Meetings** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All Members (for the purpose of this Agreement, any reference to the "Members" shall also include the holders of the Warrants and any reference to the "voting" or "votes" of the Members shall also include the votes of the holders of the Warrants as if the Warrants have been fully exercised) shall via a general meeting, vote for or against the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) approval of the management strategy and investment plan of the Company;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) appointment and removal of directors of the Board (except for removal of directors by the Board in accordance with Section 3.3) and approval of such directors' remuneration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) approval of Board reports;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) approval of the profit distribution plan and loss compensation plan of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) alternation of the authorized share capital of the Company, issuance or redemption of any Equity Securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the issuance of any debt securities of the Group in a single transaction (for the avoidance of doubt, a series of related transactions shall be regarded as a single transaction, the same applies below) or a series of transactions within any twelve (12) consecutive months, the issuance amount of which exceeds RMB500,000,000 (whether in one or multiple issuances);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) merger, division, dissolution, liquidation or change of any form of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) any amendments of the Articles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any IPO plans of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) any external loans or other contingent indebtedness of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the amount of which exceeds RMB500,000,000 individually or in the aggregate except for any internal financings among the Group Companies or bank credit facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) any external guarantees, indebtedness and/or contingent liabilities provided by the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the amount of which exceeds RMB50,000,000 individually or in the aggregate except for those guarantees provided by a Group Company to another Group Company and guarantees provided to a Group Company for debts that have been pre-approved according to <u>Section 3.1(i)(j)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) any Transfer of material Assets or Equity Securities by the Group that is either: (i) in a single transaction, the consideration of which exceeds RMB 50,000,000, or (ii) in transactions within any twelve (12) consecutive months, the consideration of which exceeds RMB200,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) any acquisition, purchase or subscription of material Assets or Equity Securities by the Group that is either: (i) in a single transaction, the consideration of which exceeds RMB300,000,000, or (ii) in transactions within any twelve (12) consecutive months, the consideration of which exceeds RMB500,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) any Related Party Transactions of the Group, the consideration of which exceeds RMB10,000,000 in a single transaction or a series of transactions within any twelve (12) consecutive months except for cash donations received by the Group or guarantees provided by the counter-parties of the Related Party Transactions;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) any Group's expenditure, the aggregate amount of which exceeds RMB150,000,000 in a single transaction or a series of transactions within any twelve (12) consecutive months, unless otherwise approved in the Group's duly approved and adopted annual budget plan. For the avoidance of doubt, any acquisition of, subscription for or purchase of the material Assets or Equity Securities by the Group Company shall be subject to <u>Section 3.1(i)(m)</u>, <u>Sections 3.2(iv)(q)</u> and <u>3.4(iv)(e)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) approval of the Company's share incentive plan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) approval of any other matters that requires Members' approval under the Applicable Laws, this Agreement and the Articles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Each Member (including his proxy) of the Company may exercise such Member's voting right based on the number of the Shares such Member holds. One Share shall carry one (1) vote. If the number of Shares held by Hillhouse exceeds the aggregate number of Shares held, directly or indirectly, by Ruipeng Members, then Hillhouse hereby irrevocably and unconditionally agrees to vote in the manner that is consistent with the direction of Ruipeng Members with respect to the exceeding part of the Shares, without prejudice to the interests of other Members. This voting restriction shall terminate upon the consummation of the Company's Qualified IPO. The Ruipeng Members and the Ruipeng Management Members hereby, irrevocably and unconditionally, agree and covenant with the other Parties that Peng Yonghe (彭永鹤) is hereby expressly authorized by the Ruipeng Members and the Ruipeng Management Members to take any and all actions as he thinks fit in his absolute discretion on behalf of the Ruipeng Members and the Ruipeng Management Members with respect to any and all matters that are required to be considered or decided by the Ruipeng Members and/or the Ruipeng Management Members hereunder, including without limitation matters that are subject to consent, voting, agreement, determination and/or like actions by the Ruipeng Members and/or the Ruipeng Management Members. Any decision made, or action taken, by Peng Yonghe (彭永鹤) pursuant to the foregoing sentence shall be binding on the Ruipeng Members and the Ruipeng Management Members and such decision or action may be relied upon by the other Parties for the purpose of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) When any Related Party Transaction is being discussed at the general meeting, Members that are involved in that Related Party Transaction are not entitled to vote and the number of Shares held by such Members shall not be counted when calculating the total number of voting Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The general meeting may pass an ordinary resolution or a special resolution. An ordinary resolution of the Company ("**Ordinary Resolution**") means a resolution of a duly constituted general meeting of the Company that is both (i) passed by Members representing a simple majority of the total votes of Members entitled to vote at the general meeting, either in person or by proxy, and (ii) with consent from both Hillhouse (or its Affiliates) and Ruipeng Management Members. A special resolution of the Company ("**Special Resolution**") means a resolution of a duly constituted general meeting of the Company that is both (i) passed by Members representing at least 2/3 of the total votes of Members entitled to vote at the general meeting, either in person or by proxy, and (ii) with consent from both Hillhouse (or its Affiliates) and Ruipeng Management Members. Matters set out in paragraphs <u>(e)</u>, <u>(g)</u> and <u>(h)</u> of <u>Section 3.1(i)</u> of this Agreement shall be approved by a Special Resolution and all other matters set out in <u>Section 3.1(i)</u> shall be approved by an Ordinary Resolution.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Unless otherwise provided herein, the general meeting shall be chaired by each Co-Chairman in turn. Peng Yonghe as the Ruipeng Chairman may chair the very first general meeting of the Company and Hillhouse Chairman may chair the next one. In case one Co-Chairman is unable to chair the general meeting when he shall be in charge, the other Co-Chairman may chair the meeting. In case where neither of the Co-Chairmen is able to performs his duty, the general meeting shall be chaired by a director who is recommended by a simple majority of the Board. If a general meeting is called by the Members, the chairman of such general meeting shall be determined by those Members who called the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2** **Board of Directors.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) From the date of this Agreement, the Company shall have a Board consisting of ten (10) directors. Such directors shall be elected or replaced by the general meeting of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Hillhouse shall have the right to appoint four (4) directors (for the avoidance of doubt, in case of any disagreement among those four (4) directors, the opinion of the Co-Chairman appointed by Hillhouse shall be the final decision).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Ruipeng Management Members shall have the right to appoint four (4) directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) 深圳市达晨创联股权投资基金合伙企业(有限合伙) ("**Dachen Chuanglian**") and 北京阳光融汇医疗健康产业成长投资管理中心（有限合伙） ("**Beijing Yangguang**"), respectively, shall each have the right to appoint one (1) director, provided that Dachen Chuanglian and Beijing Yangguang shall cease to have such appointment right if their respective number of Shares in the Company on any date following the Original Closing Date are less than seventy percent (70%) of their respective number of Shares held in the Company on the Original Closing Date, and Dachen Chuanglian and Beijing Yangguang shall procure that all the directors appointed by them resign from the Board and the size of the Board shall be decreased accordingly.

Each Class B Ordinary Member who has invested not less than US$100,000,000 on the Class B Ordinary Closing Date shall each have the right to appoint one (1) observer (each, an "**Observer**"); provided that such Class B Ordinary Member's right to appoint an Observer shall terminate when it no longer holds at least sixty-seven percent (67%) of the Class B Ordinary Shares it purchased on the Class B Ordinary Closing Date. The Company shall invite and allow each Observer to attend (in a nonvoting capacity), participate and speak at all meetings of its board of directors (and its sub-committees) and shall give each Observer copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that with respect to any business relationship between the Company and Boehringer Ingelheim, the Observer appointed by Boehringer Ingelheim shall not participate in such parts of Board meetings in respect of which the agenda provides for a discussion of, or decision on, the business relationship with Boehringer Ingelheim (including without limitation, extension, termination or prolongation) and such Observer appointed by Boehringer Ingelheim shall not receive any information shared with Board members related to such agenda item.

The Board, acting in good faith and upon advice of legal counsel, reserves the right to withhold any information and to exclude any member of the Board or Observer from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel with respect to matters between the Company and the relevant Member appointing such member of the Board or Observer.

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Each of the Parties covenants that it shall or make its Affiliates to, take all actions permitted by Applicable Laws, including but not limited to elect or remove those directors so designated or removed by such Members as stated above. The term of office for each director shall be three (3) years and every director may be re-appointed, unless such director is removed by the Member who appoints him/her or resigns from his/her office.

Each Member who has the right to appoint a director or Observer of the Company shall procure that the director or Observer appointed by such Member comply with the obligations set forth under <u>Section 7.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company adopts a co-chairman system, pursuant to which Ruipeng Management Members shall designate one (1) director appointed by them as chairman (initially to be Peng Yonghe, "**Ruipeng Chairman**") and Hillhouse may designate one (1) director appointed by them as chairman ("**Hillhouse Chairman**", who shall be a partner or other senior manager at the same level in Hillhouse, together with the Ruipeng Chairman, the "**Co-Chairmen**", or each a "**Co- Chairman**"). But for the purpose of filing with Government Authority, the chairman of the Company submitted to the Government Authority shall be the Ruipeng Chairman, i.e., initially, Peng Yonghe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If the number of directors of the Company is lower than the minimum statutory requirement as a result of the resignation or removal of director(s), such resigning director (but not the removed director) shall still perform his/her duties in accordance with the Applicable Laws and the Articles until the new director takes office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Board is responsible to the Members and has without prejudice to <u>Section 3.1(i)</u> the power of taking the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) calling a general meeting and report to the general meeting about its work;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) implementing resolutions of a general meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) adopting detailed business and investment plans of the Group in accordance with business and investment strategies approved by the general meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) drafting the profit distribution plan and the loss compensation plan of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) adopting merger, division, dissolution, liquidation or change of any forms of New Ruipeng Pet Healthcare Group Co., Ltd.(新瑞鹏宠物医疗集团有限公司), Yunchong (Beijing) Animal Hospital Technology Co., Limited (云宠(北京)动物医疗科技有限公司), Shanghai Anan Pet Co., Limited (上海安安宠物有限公司), Shanghai Ce Er Xing Management and Consulting Co., Limited (上海策而行企业管理咨询有限公司) or Qingdao Ainuo Animal Hospital Management Co., Limited (青岛爱诺动物医院管理有限公司) (collectively, the "**Branding Platform Companies**");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) drafting the plans of merger, division, dissolution, liquidation or change of any forms of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) drafting the plans of the decrease or increase of the authorized share capital of the Company, issuance or redemption of the Equity Securities of the Company;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) approving the increase or decrease of the authorized share capital/issued share capital of such Branding Platform Company whose net assets value reaches RMB10,000,000 or more, or approving the issuance or redemption of any Equity Securities of such Branding Platform Companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any Group Company's issuance of any debt securities: in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which does not exceed RMB500,000,000 (whether in one or multiple issuances);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) approving the annual budget plan and annual accounting plan of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) approving any Group Company's change of the Main Business, entry into a new business or exit from the current business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) approving the remuneration, reward and/or penalization of the CEO, vice CEO, CFO and other Senior Management Personnel (each as defined below) of the Company; removal of directors in accordance with Section 3.3;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) approving the remuneration policy of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) approving provision of any external loan or other contingent indebtedness of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which reaches RMB20,000,000 or more but below RMB500,000,000 individually or in the aggregate except for any internal financings among the Group Companies or bank credit facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) approving any external guarantees, indebtedness or other contingent liabilities of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the amount of which does not exceed RMB50,000,000 individually or in the aggregate, except for any internal guarantees among the Group Companies or guarantees provided for any Group Companies for any pre-approved loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) approving the Group's Transfer of material Assets or Equity Securities in a single transaction, the consideration of which reaches RMB20,000,000 or more but does not exceed RMB50,000,000 or in a series of transactions within any twelve (12) consecutive months, the consideration of which reaches RMB30,000,000 or more but does not exceed RMB200,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) approving the acquisition of, subscription for or purchase of the material Assets or Equity Securities by the Group in a single transaction the consideration of which reaches RMB50,000,000 or more but does not exceed RMB300,000,000 or in a series of transactions within any twelve (12) consecutive months, the consideration of which reaches RMB50,000,000 or more but does not exceed RMB500,000,000；

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) approving the Related Party Transaction of the Group (other than that the Group receives cash or that the Group accepts a security created in favor of the Group by the counterparty in a Related Party Transaction) in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which does not exceed RMB10,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) any expenditure (other than those approved in the Group's duly approved and adopted annual budget plan) in a single transaction or a series of transactions within any twelve (12) consecutive months, the aggregate consideration of which reaches RMB 20,000,000 or more but does not exceed RMB150,000,000;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) approving the share incentive plan of the Subsidiaries of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) approving the provision of any gifts or charitable donations to a third party by any Group Company in single tranche or tranches within any twelve (12) consecutive months, the amount of which reaches RMB 2,000,000 or more;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) reviewing the work report from CEO of the Company and inspect his work;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) settlement of any litigation, arbitration or other disputes involving any Group Companies, the amount of which reaches RMB 2,000,000 or more;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) recommending the Company's the place of IPO, the stock exchange, the listing valuation, the amount of funds to be raised, the sponsor/ underwriter, etc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) drafting of the investment and financing management policies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) any other matters that require the Board's approval under the Applicable Laws and the Articles, or matters that are not stipulated under the power of scope of general meeting and the CEO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3 Board Meetings.** A quorum for a Board meeting shall be more than half of the total number of directors. Each director shall have one vote. A resolution at a Board meeting shall be decided by a simple majority of the directors on the Board, <u>provided</u> that matters set out in <u>Sections 3.2(iv)(h)—3.2(iv)(s)</u> shall require affirmative votes of at least three (3) directors appointed by Ruipeng Management Members and at least three (3) directors appointed by Hillhouse. A director shall resign immediately or be removed by a Board meeting if he is absent from three (3) consecutive meetings of the Board without cause (for the avoidance of doubt, attending in person or by proxy, via on-site, telephone, telepresence or other means shall be counted as attending). If any vacancy as a result of the aforementioned resignation or removal of the director, the Member who is entitled to nominate and appoint that director shall have the right to re-appoint a new director to the Board. The Company shall hold no less than two (2) Board meetings during each fiscal year and such meeting shall be called by either Co-Chairman. With respect to one Board meeting (no matter a regular meeting or an extraordinary meeting), at least ten (10) days' prior written notice (or a shorter period agreed by all directors of the Company) must be given to all directors. An extraordinary Board meeting shall be held if (i) one or more Members who together hold more than 10% of the total and outstanding Shares with voting rights of the Company or (ii) more than one third (1/3) of the directors on the Board request so. Any director shall attend the Board meeting in person, by conference telephone or other communication equipment which allows those participating to hear and speak to each other clearly. Any director may appoint another director as the proxy to represent him at any meeting of the directors if he is unable to attend the meeting. If a director appoints a proxy, the instrument appointing a proxy shall be in writing, setting out the name of the proxy, the authorized matters and scope and the term of the authorization, then for all purposes the presence or vote of the proxy shall be deemed to be that of the appointing director. Such instrument shall be signed or chopped by the appointing director. The proxy shall exercise right of a director of the Company within the authorized scope. If a director neither is present at a Board meeting nor appoints a proxy, such director is deemed to have abstained at that Board meeting.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4 CEO and Senior Management Team**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company shall have one chief executive officer ("**CEO**"), one chief finance officer ("**CFO**") and one secretary of the Board ("**Board Secretary**"). The Co-Chairmen may jointly determine the number of the vice CEO depending on the need of the business operation of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The CEO, vice CEO, CFO, Board Secretary and other personnel approved by the Board are the senior management personnel of the Company ("**Senior Management Personnel**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The CEO shall be appointed and removed by Ruipeng Management Members, and the first CEO shall be Peng Yonghe; Hillhouse may appoint and remove CFO and Board Secretary, and Hillhouse agree to maintain the current board secretary of Ruipeng as the Board Secretary of the Company. CEO may recommend vice CEO(s), appointment of whom will be decided by the Co-Chairmen jointly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) CEO shall be responsible to the Board and shall have the power to take the following actions (CEO may delegate part of the following matters to the Senior Management Personnel in terms of the actual operation of the Company):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) in charge of the production and management work of the Group, implementing the resolution of the Board and reporting to the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) implementing the detailed annual business and investment plan of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) other than any internal financings among the Group Companies or bank credit facilities, approving provision of any external loan or other indebtedness of the Group in a single transaction or a series of transactions within any twelve (12) consecutive months, the consideration of which is less than RMB20,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) approving the Group's Transfer of material Assets or Equity Securities in a single transaction consideration of which is less than RMB20,000,000 or in transactions within any twelve (12) consecutive months the consideration of which is less than RMB30,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) approving the Group's acquisition of, subscription for or purchase of the material Assets or Equity Securities in a single transaction or in transactions within any twelve (12) consecutive months the consideration of which is less than RMB50,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) any expenditure (other than those approved in the duly approved and adopted annual budget plan of the Group) in a single transaction or a series of transactions within any twelve (12) consecutive months in the aggregate, the consideration of which does not exceed RMB20,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) approving the provision of any gifts or charitable donations to a third party in single tranche or tranches within any twelve (12) consecutive months, the amount of which is less than RMB2,000,000 by any Group Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) drafting the internal management institutions plan of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) creating the fundamental operation policies of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) creating detailed internal rules and regulations of the Group;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) determining appointment or removal of the management personnel other than those to be appointed and removed by the Board and the Co-Chairmen; appointing and removing the management personnel of each Branding Platform Companies of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) drafting the remuneration policy of the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) proposing to convene an extraordinary meeting of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) settling any litigation, arbitration or other disputes, the amount of which does not exceed RMB2,000,000 by any Group Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) advising the Board on whether the Senior Management Personnel (including the vice CEO, CFO, the Board Secretary, etc.) is competent for his/her job; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) taking any other actions authorized by the Articles or the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) CFO is responsible to the CEO and the Board, and takes charge of the financial matter of the Group. CFO may take the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) guiding and managing the budget, planning and forecasting the progress; and working with other management team members to develop action plans to meet financial and operational objectives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) employing, removing and supervising financial and accounting personnel, <u>provided</u> that the appointment and removal of any financial and accounting personnel who directly reports to the CFO under the financial system shall be subject to the consent of the CEO;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) taking full responsibility of the financial and auditing work of the Group, including reviewing and approving accounting books and financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) guiding and managing tax returns, and conducting tax planning to ensure compliance with Applicable Laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) preparing monthly, quarterly and annual reports to the CEO and the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) guiding and managing the Group's funds to ensure that cash and cash equivalent Assets are reasonably managed and controlled; monitoring the Group's use of funds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) participating in Board meetings when necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) coordinating the relationship between the Group and banks and Government Authorities on fiscal and tax matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) developing, implementing and maintaining accounting practices and standards applied in the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) according to the Group's financial system approving funds allocation, use of funds, expenditure, and loan in a single transaction made by a Group Company, the amount of which reaches RMB1,000,000 or approving funds allocation, use of funds, expenditure, and loan made by a Group Company in any twelve (12) consecutive months, the total amount of which exceeds RMB3,000,000; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) taking any other actions authorized by the CEO or the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Hillhouse shall be responsible for the capital operation of the Group (which will need to be implemented in accordance with the corporate governance mechanism of the Company), technology enabling and external cooperation. Hillhouse undertakes that it will fully mobilize and utilize its resources in Internet-related industries so as to create a bridge between advanced resources (including but not limited to Tencent, Jingdong and other resources) and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5 Special Approval of Certain Matters** 

Notwithstanding anything provided to the contrary herein or in the Articles, the Restructuring Framework Agreement, the CLASS B Warrants or the RMB Investment Agreements (as defined in the Class B Ordinary SPA) and in addition to such other consent or approval required herein or therein, the Company, the Major Subsidiaries and the Ruipeng Management Members shall not, and shall cause the other Group Companies not to, effect or otherwise consummate any of the following actions without the prior written approval for such actions by holders of more than 50% of the outstanding Class B Ordinary Shares (including the Warrant Shares assuming the full exercise of the CLASS B Warrants):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) through amending the Articles, the CLASS B Warrants, the RMB Investment Agreements (as defined in the Class B Ordinary SPA), the Restructuring Framework Agreement or other means, amend or change the rights, preferences, privileges or powers of, or the restrictions provided for the benefit of, the Class B Ordinary Shares, or carry out any action that may have disproportionate impact on the holders of the Class B Ordinary Shares compared to the holders of the other classes of the Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) increase or decrease or reclassification of the share capital or registered capital of any Group Company, issuance of any authorized Shares or Equity Securities of any Group Company (other than those issued to any Group Company, or those issued pursuant to the Management Incentive Plan, or resulting from a duly approved acquisition by such Group Company of another business entity by means of share issuance which shall not exceed 2,000,000,000 Class A Ordinary Shares in aggregate within any twelve (12) consecutive months, or the issuance of any Equity Securities pursuant to Section 1.4 of the Class B Ordinary SPA), or the issuance of any Equity Securities convertible into the share capital or registered capital of any Group Company with rights, privileges or powers superior or equivalent to the Class B Ordinary Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) redeem or repurchase any Shares of the Company, or options or other securities or obligations convertible into or exercisable or exchangeable for the Shares of the Company except for those expressly provided herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) approve, amend or terminate the Company's management or employee incentive plan including without limitation the Management Incentive Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) any Related Party Transactions of the Group, with the value or consideration involved in a single transaction or in transactions within any twelve (12) consecutive months exceeding RMB10,000,000 other than the Related Party Transactions within and between the Group Companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) initiate any Liquidation Event;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) (a) any investment by the Group in another Person that is either: (x) in a single transaction, the consideration of which exceeds RMB300,000,000, or (y) in transactions within a twelve (12) consecutive months, the consideration of which exceeds RMB500,000,000, (b) any Transfer of the Equity Securities held by the Group in another Person, or any withdrawal from any partnership, consortium, joint venture or similar entity or relation that is either: (x) in a single transaction, the consideration of which exceeds RMB50,000,000, or (y) in transactions within a twelve (12) consecutive months, the consideration of which exceeds RMB200,000,000; or (c) any participation in any partnership, consortium, joint venture or similar entity or relation that is either (x) in a single transaction, the consideration of which exceeds RMB300,000,000, or (y) in transactions within a twelve (12) consecutive months, the consideration of which exceeds RMB500,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) change the Main Business, enter into any new business that deviates from the Main Business, or exit from the Main Business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) any action that transfers, assigns, dilutes, disposes of, or creates any encumbrance over, any Group Company's interests or other Equity Securities in any Major Subsidiary.

**4.** **Members' Rights** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.1 General Restriction on Transfer.** Notwithstanding anything provided to the contrary in the Restructuring Framework Agreement and unless otherwise agreed in this Agreement, the Parties agree that from the Class B Ordinary Closing Date and until the completion of a Qualified IPO by the Company, any Transfer (as defined below) of the Shares shall be made in accordance with this <u>Section 4</u>. The Third Party Purchaser (as defined below) who complies with this <u>Section 4</u> shall sign a Deed of Adherence (as defined below), agree to assume and comply with all the obligations of the Transferor (as defined below) under this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Except for Permitted Transfers (as defined below), without the prior written consent of Hillhouse and Ruipeng Management Members, Skyfield Minority Members and/or Affiliates of the aforementioned parties, who directly or indirectly own the Shares, shall not directly or indirectly sell, give as a gift, transfer, pledge, encumber or otherwise dispose of (including disposing its economic rights, titles or interests) in any way (whether voluntarily or not, including but not limited to disposal as a result of change of marital status, bankruptcy or insolvency) (each, a "**Transfer**") all or any part of their Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by Skyfield Minority Members and/or Affiliates of the aforementioned parties do not need prior written consent from other Members: (a) if the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 10% of the total Shares owned by such transferring Skyfield Minority Member or such transferring Affiliate as of the Original Closing Date; (b) if a successful Qualified IPO does not happen within six (6) years commencing from the Original Closing Date, and the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 20% of the total Shares owned by such transferring Skyfield Minority Member or such transferring Affiliate as of the Original Closing Date (the amount of Permitted Transfer pursuant to this <u>Section 4.1(i)(a)</u> shall be taken into account, if any), <u>provided</u> that in either case, each of the Skyfield Minority Members and/or Affiliates of the aforementioned parties shall not Transfer its Shares to any Competitor (as defined below) ("**Permitted Transfers**"). For the avoidance of doubt, the other relevant Members shall have the Right of First Refusal (as defined below) but not the Co-sale Right (as defined below) with respect to the Permitted Transfers.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Without prior written consent from Hillhouse and Ruipeng Management Members, any Ruipeng Investor Member shall not directly or indirectly Transfer its Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by any Ruipeng Investor Member do not need prior written consent from Hillhouse, Ruipeng Management Members and other Members: (a) any Transfer of Shares by a Ruipeng Investor Member to a fund managed by the same fund manager or an Affiliate of such Ruipeng Investor Member; (b) within a three-year period commencing from the Original Closing Date, any Transfer of Shares by a Ruipeng Investor Member either in a single transaction or a series of transactions, <u>provided</u> that the aggregate number of the transferred Shares do not exceed 30% of the total Shares such Ruipeng Investor Member owns as of the Original Closing Date; or (c) any Transfer after the third anniversary of the Original Closing Date. Notwithstanding anything to the contrary, any Ruipeng Investor Member shall not Transfer its Shares to any Competitor. For the avoidance of doubt, (i) the other relevant non-transferring Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section 4.1(ii)(a)</u>, and (ii) the other relevant non-transferring Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer set out in <u>Section 4.1(ii)(b)</u> and <u>(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Without prior written consent from Hillhouse and Ruipeng Management Members, Hillhouse shall not directly or indirectly Transfer its Shares or Warrants or any interest therein. Notwithstanding the foregoing, the following Transfers by Hillhouse do not need prior written consent from other Members: (a) any Transfer of Shares to a fund managed by their fund manager or their Affiliates; or (b) the aggregate shareholding percentage of Hillhouse or its Affiliates (including天津高瓴诺远企业管理咨询合伙企业(有限合伙)) held in the Company, after any Transfer of Shares and/or Warrants through either one transaction or a series of transactions, is no less than the product obtained by adding: (i) the aggregate shareholding percentage of Ruipeng Members (excluding Vet Harvest Enterprise Management Company Limited and Vet Time Enterprise Management Company Limited) in the Company, directly or indirectly, at the time immediately after such Transfer, and (ii) 5%; <u>provided</u> that in either case, Hillhouse or its Affiliates (including天津高瓴诺远企业管理咨询合伙企业(有限合伙)) shall not Transfer its Shares and/or Warrants to any Competitor. For the avoidance of doubt,(i) the other Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section 4.1(iii)(a)</u> and the Transfer by天津高瓴诺远企业管理咨询合伙企业(有限合伙) permitted in <u>Section 4.1(iii)(b)</u>; and (ii) the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer by Hillhouse or its Affliates other than天津高瓴诺远企业管理咨询合伙企业(有限合伙) as permitted in <u>Section 4.1(iii)(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Without the prior written consent of the holders of more than 50% of the outstanding Class B Ordinary Shares and Hillhouse, any Ruipeng Member (other than Ruipeng) and/or their Affiliates shall not directly or indirectly Transfer their Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by any Ruipeng Member (other than Ruipeng) and/or their Affiliates do not need prior written consent from other Members: (a) if the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 10% of the total Shares owned by such transferring Ruipeng Member or such transferring Affiliate as of the Original Closing Date; and (b) if a successful Qualified IPO does not happen within six (6) years commencing from the Original Closing Date, and the aggregate Shares to be transferred, either via a single transaction or a series of transactions, do not exceed 20% of the total Shares owned by such transferring Ruipeng Member or such transferring Affiliate as of the Original Closing Date, <u>provided</u> that in either case, Ruipeng Member (other than Ruipeng) and their Affiliates shall not Transfer its Shares to any Competitor. For the avoidance of doubt, the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer permitted in this <u>Section 4.1(iv)(a)</u> and <u>(b)</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Without the prior written consent of Hillhouse and Ruipeng Management Members, any Class B Ordinary Member and/or its Affiliates shall not directly or indirectly Transfer its Shares or any interest therein. Notwithstanding the foregoing, the following Transfers by any Class B Ordinary Member and/or its Affiliates do not need prior written consent from any other Members or Persons: (a) any Transfer of Shares by a Class B Ordinary Member to a fund managed by the same fund manager or an Affiliate of such Class B Ordinary Member; (b) within a three-year period commencing from the Original Closing Date, any Transfer of Shares by a Class B Ordinary Member either in a single transaction or a series of transactions, <u>provided</u> that the aggregate amount of the transferred Shares by such transferring Class B Ordinary Member do not exceed 40% of the total Shares such Class B Ordinary Member owns as of the first date on which it becomes a Class B Ordinary Member; or (c) any Transfer after the third anniversary of the Original Closing Date; <u>provided</u> that in either case, the Transferor shall not transfer its Shares to any Identified Competitor, unless with the prior written consent of Hillhouse and Ruipeng Management Members. If there is any update to the list of Identified Competitor, written notice of such update shall be promptly (but in any event within ten (10) Business Days after such update) provided by the Company to all the Class B Ordinary Members in writing. For the avoidance of doubt, (I) no update of the list of Identified Competitor shall have any retrospective effect to any Class B Ordinary Member, and (II) no update of the list of Identified Competitor shall be effective to a Class B Ordinary Member unless and until the notice informing such update is received by such Class B Ordinary Member. For the avoidance of doubt, (i) the other Members shall not have the Right of First Refusal or the Co-sale Right with respect to the Transfer set out in <u>Section 4.1(v)(a)</u>; and (ii) the other relevant Members shall have the Right of First Refusal but not the Co-sale Right with respect to the Transfer set out in <u>Section 4.1(v)(b)</u> and <u>Section 4.1(v)(c)</u>, provided that the other Members shall have no Right of First Refusal or the Co-sale Right to any Transfer by any Class B Ordinary Member and/or its Affiliates after the fifth anniversary of the Original Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Company and each Member shall take or cause to be taken all actions, do or cause to be done, all things and execute all instruments necessary, proper or advisable under Applicable Laws to consummate and make effective, in the most expeditious manner practicable, the Transfers that are in compliance with this <u>Section 4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2** **Right of First Refusal.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the above <u>Section 4.1</u>, if any Member (a "**Transferor**") proposes to Transfer any Shares ("**Offered Shares**") to one or more Persons (a "**Third Party Purchaser**") either directly or indirectly (the "**Proposed Transfer**"), the Members (other than the Transferor) shall have the Right of First Refusal according to this <u>Section 4.2</u>. For the avoidance of doubt, any Transfer of the Shares (assuming full exercise of the Warrants) by any Skyfield Minority Member or Ruipeng Member to any Ruipeng Member shall not be subject to the transfer restrictions set forth in this Section 4.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Prior to the Proposed Transfer, the Transferor shall give each other Member (the "**Offeree**") a written notice of the Transferor's intention to make the Proposed Transfer (the "**Transfer Notice**"). The Transfer Notice shall set forth at least (a) the name or identity of the Transferor, (b) the name or identity and address of the Third Party Purchaser, (c) the amount of the Offered Shares, (d) the consideration and the means of the Proposed Transfer, and (e) the other terms and conditions of the Proposed Transfer. If the consideration of the Offered Shares includes non-cash payments, the Transfer Notice shall also set forth the method determining the fair market value of the non-cash consideration and the rationale for such method.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Each Offeree shall have an option (the "**Right of First Refusal**"), exercisable upon written notice to the Transferor, within a period of twenty (20) Business Days following receipt of the Transfer Notice (the "**Option Period**") to elect to purchase all or any portion of its respective pro rata share of the Offered Shares at the same price and subject to the same terms and conditions set out in the Transfer Notice. An Offeree's "pro rata share" of the Offered Shares means the Offered Shares multiplied by a fraction, the numerator of which shall be the number of Shares held by such Offeree on the date of the Transfer Notice, and the denominator of which shall be the total number of Shares held by all the Offerees on the date of the Transfer Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If any Offeree fails to fully exercise its Right of First Refusal, then all the other Offerees who have fully exercised their Right of First Refusal ("**Fully Exercising Offeree**") are entitled to purchase such unpurchased Offered Shares (the "**Over-Allotment Shares**") within ten (10) Business Days after the expiration of the Option Period (the "**Over-Allotment Period**"). If, as a result thereof, such Fully Exercising Offerees desire to purchase in aggregate more than the aggregate number of the Over-Allotment Shares, then each of the Fully Exercising Offerees is entitled to purchase an amount which equals to: the Over-Allotment Shares multiplied by a fraction, the numerator of which shall be the number of Shares held by such Fully Exercising Offeree and the denominator of which shall be the aggregate number of Shares then held by all Fully Exercising Offerees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Subject to <u>Section 4.4</u> of this Agreement, the Transferor may transfer the Offered Shares unpurchased pursuant to this <u>Section 4.2</u> to the Third Party Purchaser on the price, terms and conditions specified in the Transfer Notice; <u>provided</u> that, (a) the Proposed Transfer shall be completed within sixty (60) Business Days following the delivery of the Transfer Notice (any Proposed Transfer not concluded within such 60 Business Day period shall again be subject to the Right of First Refusal described in this <u>Section 4.2</u>); and (b) the Third Party Purchaser undertakes that it will assume all rights and obligations of the Transferor in respect of the Offered Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) If any Offeree elects to exercise its Right of First Refusal, the Company and each of the other Members shall, pursuant to the request from such Offeree, sign all documents and take all actions as necessary to the completion of the Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.3** **Transfers Involving Tencent Competitors.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Unless otherwise expressly provided in this Agreement, notwithstanding anything provided herein to the contrary, so long as Tencent owns not less than sixty-seven percent (67%) of the total Shares it purchased on the Class B Ordinary Closing Date, without the prior written consent of Tencent, the Group Companies and the Members other than Tencent shall not, directly or indirectly, approve, consent to, carry out or in any way participate in any transaction involving the sale of the Group Companies or Equity Securities in any Group Company (including without limitation any Liquidation Event) to any Tencent Competitor, or permit any Tencent Competitor to purchase or hold any Equity Securities of the Company (each, a "**Tencent Prohibited Transaction**"). If any Member other than Tencent proposes to Transfer any Equity Securities of the Group Companies or any interest therein to any Person which is a Tencent Competitor, then such Member shall give Tencent a written notice of its intention to make such Transfer (the "**Tencent Competitor Transfer Notice**"), which shall include (i) a description of the Equity Securities to be transferred (the "**Tencent Competitor Offered Shares**"), (ii) the identity and address of the prospective transferee and (iii) the consideration and the material terms and conditions upon which the proposed Transfer is to be made. Tencent shall have the right (the "**Tencent ROFR**"), exercisable upon written notice to the selling Member and the Company within twenty (20) Business Days following the date of the Tencent Competitor Transfer Notice (the "**Tencent Option Period**"), to elect to purchase all or a portion of the Tencent Competitor Offered Shares at the same price and subject to the same material terms and conditions as described in the Tencent Competitor Transfer Notice, provided that if Tencent elects to purchase all or a portion of the Tencent Competitor Offered Shares, such purchase shall be completed, including execution and completion of the share purchase agreement, within forty (40) Business Days following the Tencent Option Period. The applicable selling Member shall have the right to freely sell all the Tencent Competitor Offered Shares which have not been so purchased by Tencent to the prospective transferee at substantially the same price and terms as indicated on the Tencent Competitor Transfer Notice, provided that any such transfer shall remain subject to Section 4.1 hereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.4** **Co-Sale Right** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the above <u>Section 4.1</u> of this Agreement, within five (5) Business Days after expiration of the Option Period or the Over-Allotment Period (as the case may be), the Transferor (if it is any of Ruipeng Members, Skyfield Minority Members or Hillhouse (except for the Transfer set out in <u>Section 4.1(iii)(a) and (b)</u>) shall give written notice (the "**First Refusal Expiration Notice**") to each Offeree specifying either (x) that all of the Offered Shares were purchased by the Offerees exercising their Rights of First Refusal, or (y) that the Offerees have not purchased all of the Offered Shares and that such unpurchased Offered Shares shall be subject to the Co-Sale Right (as defined below) of the Co-Sale Shareholders (as defined below), in which case the First Refusal Expiration Notice shall specify the Co-Sale Shareholders' Co-Sale Pro Rata Portion (as defined below) of the remaining Offered Shares for the purpose of their Co-Sale Rights described in this Section 4.4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Subject to <u>Section 4.1</u> of this Agreement and to the extent the Offerees have not exercised their Right of First Refusal with respect to all the Offered Shares, the Transferor (if it is any of Ruipeng Members, Skyfield Minority Members or Hillhouse (except for the Transfer set out in <u>Section 4.1(iii)(a) and (b))</u>, then each Offeree who is a Member other than Ruipeng Members, Skyfield Minority Members or Hillhouse and has not exercised its Right of First Refusal in full or in part (each, a "**Co-Sale Shareholder**") shall have the right (the "**Co-Sale Right**"), exercisable upon written notice to the Transferor (the "**Co-Sale Notice**"), within twenty (20) Business Days after receipt of the First Refusal Expiration Notice (the "**Co-Sale Right Period**"), to participate in such sale of the Offered Shares at the same price and on the same terms and conditions as specified in the Transfer Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Co-Sale Notice shall set forth the number of Shares that such Co-Sale Shareholder wishes to include in such sale or transfer, which amount shall not exceed the Co-Sale Pro Rata Portion of such Co-Sale Shareholder. To the extent one or more of Co-Sale Shareholders exercise such right of participation pursuant to this Section 4.4, the number of Offered Shares that the Transferor may sell in the transaction shall be correspondingly reduced. To the extent that any Co-Sale Shareholder does not participate in the sale to the full extent of its Co-Sale Pro Rata Portion, the Transferor and the participating Co-Sale Shareholders shall, within five (5) Business Days after the expiration of the Co-Sale Right Period, make such adjustments to the Co-Sale Pro Rata Portion of each participating Co-Sale Shareholder so that any remaining Offered Shares may be allocated to other participating Co-Sale Shareholders on a pro rata basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each Co-Sale Shareholder exercising its Co-Sale Right may sell all or any part of that number of Shares held by it that is equal to the product obtained by multiplying (x) the aggregate number of the Offered Shares subject to the Co-Sale Right hereunder by (y) a fraction, the numerator of which is the number of Shares owned by such Co-Sale Shareholder on the date of the Transfer Notice and the denominator of which is the total combined number of all Shares owned by the Transferor and all the Co-Sale Shareholders exercising their Co-Sale Right hereunder on the date of the Transfer Notice (the "**Co-Sale Pro Rata Portion**").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If the Third Party Purchaser refuses to purchase the Shares from the Co-Sale Shareholders, then the Transferor shall not proceed with the Proposed Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) If any Co-Sale Shareholder elects to exercise its Co-Sale Right, the Company and each of the other Members shall, pursuant to the request from such Co-Sale Shareholder, sign all documents and take all actions as necessary to the completion of the Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.5** **Preemptive Rights** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event that the Company proposes to undertake an issuance of Equity Securities ("**New Shares**") to any Person ("**Proposed Subscriber**") after the Class B Ordinary Closing Date ("**Proposed Issuance**"), it shall give each Member written notice of such intention pursuant to this <u>Section 4.5</u>. Each Member (each, a "**Preemptive Right Holder**") shall be entitled to exercise its right ("**Preemptive Right**") to subscribe via cash on the same conditions and price per share for its pro rata share of the New Shares. For purposes of this Section 4.5, each Member's "**pro rata share**" means the ratio of (a) the Shares held by such Preemptive Right Holder immediately before the issuance of the New Shares to (b) the total number of Shares then issued and outstanding immediately prior to the issuance of the New Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Prior to the Proposed Issuance, the Company shall deliver a written notice (an "**Issuance Notice**") to each Preemptive Right Holder in respect of the Proposed Issuance, describing (a) the amount, type and terms of the New Shares, (b) the consideration the Company will obtain from the issuance of New Shares, and (c) the name or identity and address of the Proposed Subscriber. If the consideration of the News Shares includes non-cash payments, the Issuance Notice shall also set forth the method determining the fair market value of such non-cash consideration and the rationale for such method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Each of the Preemptive Right Holders shall have twenty (20) Business Days ("**Preemptive Right Period**") after the receipt of the Issuance Notice to agree to exercise in full or any part of its Preemptive Right. The Preemptive Right Holder shall notify the Company in writing the number and type of the Shares that it wishes to subscribe.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If any Preemptive Right Holder fails to fully exercise its Preemptive Right within the Preemptive Right Period, the Company shall promptly give notice (the "**Second Participation Notice**") to other Preemptive Right Holders who have fully exercised their right to purchase their respective pro rata share of the New Shares ("**Exercising Member of Preemptive Right**"). Each Exercising Member of Preemptive Right shall be entitled to, within ten (10) Business Days after receipt of the Second Participation Notice, notify the Company of its desire to purchase more than its pro rata share of the New Shares, stating the number of the additional New Shares it proposes to buy ("**Additional Shares**"). If the amount of the Shares that the Exercising Members of Preemptive Right wish to subscribe exceeds the amount of the remaining New Shares available for purchase, then each Exercising Member of Preemptive Right shall be entitled to purchase an additional amount which equals to the lesser of (x) the Additional Shares and (y) the product obtained by multiplying (a) the number of the remaining New Shares available for purchase by (b) a fraction, the numerator of which is the number of Shares held by such Exercising Member of Preemptive Right on the date of the Issuance Notice and the denominator of which is the total number of Shares held by all the Exercising Members of Preemptive Right on the date of the Issuance Notice.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If any New Shares were not subscribed by the Preemptive Right Holders, the Company may issue such remaining New Shares to the Proposed Subscribers identified in the Issuance Notice with the price, terms and conditions stated therein, within forty (40) Business Days after the expiration of the Preemptive Right Period, <u>provided</u> that the Proposed Subscribers shall execute a Deed of Adherence (as defined below) and shall be subject to all terms and conditions which apply to all Parties. If the Company and the Proposed Subscribers fail to complete the issuance and subscription of such New Shares within such forty (40) Business Days, the Company shall not issue New Shares without first offering such New Shares again to the Members pursuant to this <u>Section 4.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) For the purpose of this <u>Section 4.5</u> and <u>Section 4.6</u>, the issuance of New Shares does not include (i) issuance of 28,990,000 Class A Ordinary Shares to 北京健能投资管理中心（有限合伙）or its designee after the Class B Ordinary Closing Date upon its transfer of its entire shareholding in Ruipeng to any Group Company according to the Restructuring Framework Agreement, and issuance of 56,820,000 Class A Ordinary Shares to 中国国际金融股份有限公司 or its designee after the Class B Ordinary Closing Date upon its transfer of its entire shareholding in Ruipeng to any Group Company according to the Restructuring Framework Agreement; (ii) issuance of Equity Securities in accordance with the duly approved share incentive plan (including the ESOP Shares); (iii) issuance of Equity Securities for a Qualified IPO, (iv) issuance of Equity Securities in connection with any share split, share dividend or other similar events in which all the Preemptive Right Holders are entitled to participate on a pro rata basis, (v) issuance of Equity Securities upon the exercise of the Warrants, and (vi) issuance of Equity Securities upon the exercise of anti-dilution right as provided in <u>Section 4.6</u> of this Agreement or the Articles of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) If any Preemptive Right Holder elects to exercise its Preemptive Right, the Company and each Member shall, pursuant to the request of such Preemptive Righter Holder, sign all the documents and take all actions which are necessary to complete the issuance and subscription of the New Shares, <u>provided</u> that the proposed issuance has been duly approved in accordance with the provisions hereof and the Articles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.6** **Anti-Dilution Right.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event that the Company proposes to issue New Shares to any Person (other than the issuance set out in above <u>Section 4.5(vi)</u>) after the Class B Ordinary Closing Date and prior to the date of completion of a Qualified IPO, the issue price per Share of such New Shares ("**New Price Per Share**") shall not be lower than the then Effective Hillhouse Issue Price (as defined below) or the then Effective Class B Ordinary Share Issue Price (as defined below) (each as adjusted in accordance with Section 4.6 (ii) below, and as further adjusted due to share split, share dividend or other similar events). For the purpose hereof, "**Effective Hillhouse Issue Price**" means the effective purchase price per Share for the Class A Ordinary Shares held by the Anti-Dilution Members (as defined below), which is initially RMB 1 Yuan; and "**Effective Class B Ordinary Share Issue Price**" means the effective purchase price per Share for the Class B Ordinary Shares, which is initially the Class B Ordinary Share Issue Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If the New Price Per Share in an issuance of New Shares is less than the then Effective Hillhouse Issue Price and/or the then Effective Class B Ordinary Share Issue Price (as the case may be and as adjusted) (such issuance, a "**Dilutive Issuance**"), then, the Company shall issue to the Capital Increase Investors (as defined under Section 6.1, the "**Anti-Dilution Members**") and/or the Class B Ordinary Members (as the case may be), free of any charge, such additional number of Class A Ordinary Shares to the Anti-Dilution Members and/or Class B Ordinary Shares to the Class B Ordinary Members (as the case may be), such that the Effective Hillhouse Issue Price and/or the Effective Class B Ordinary Share Issue Price (as the case may be) shall be adjusted to the purchase price per Share calculated pursuant to the following formula:

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CP2 = CP1 \* (A+B) / (A+C)

CP2 = the adjusted Effective Hillhouse Issue Price or the adjusted Effective Class B Ordinary Share Issue Price (as the case may be) in effect immediately after the Dilutive Issuance,

CP1 = the Effective Hillhouse Issue Price or the Effective Class B Ordinary Share Issue Price (as the case may be) then in effect immediately prior to the Dilutive Issuance,

A = the total number of Shares deemed to be outstanding immediately prior to the Dilutive Issuance, on a fully-diluted basis,

B = the aggregate consideration received by the Company in the Dilutive Issuance divided by CP1, and

C = the number of Shares issued in the Dilutive Issuance.

The Company and each Member shall take or cause to be taken all actions, do or cause to be done, and assist and cooperate with the Anti-Dilution Members and/or the Class B Ordinary Members (as the case may be) in doing, all things and execute all instruments necessary, proper or advisable under Applicable Laws to consummate and make effective, in the most expeditious manner practicable, the issuance contemplated by this <u>Section 4.6</u>.

For the avoidance of doubt, to the extent any Warrant has not been exercised prior to any Dilutive Issuance, the number of Warrant Shares underlying such Warrant shall also be adjusted accordingly pursuant to this <u>Section 4.6</u> (if applicable), such that the holder of Warrant shall receive, upon the exercise of such Warrant, the number of Shares it would have been entitled to receive had such holder of Warrant exercised such Warrant in full immediately prior to such Dilutive Issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.7** **Drag-Along Right** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If after the Class B Ordinary Closing Date, Ruipeng Members approve in writing a proposed transaction (including but not limited to merger, reorganization, share transfer, share issuance in respect of the Company or other transactions) as a result of which all or substantially all the Assets of the Company are disposed with a third party (other than Hillhouse nor Ruipeng Members nor any of their respective Affiliates) ("**Disposal Transaction**"), in which the implied valuation of the Company would enable each Class B Ordinary Share to realize a return at a simple rate of fifteen percent (15%) or higher per annum of the Class B Ordinary Share Issue Price calculated from the Class B Ordinary Closing Date, then Ruipeng Members shall have the right to notify each of the other Members in writing such approval, whereupon each of those Members shall sign all transaction documents and take all necessary actions so as to complete the Disposal Transaction; <u>provided</u> that (x) no Member other than Ruipeng Members and Skyfield Minority Members will be required to make any representations and warranties other than those regarding such Member's title to the Shares, (y) no Member other than Ruipeng Members and Skyfield Minority Members will be required to sell its Shares unless the liability, if any, of such Member in such Disposal Transaction is several, not joint, and such Member shall only be liable for any breach of its representations and warranties regarding such Member's title to the Shares, and in any event will not exceed the consideration payable to such Member, if any, in such transaction (except in the case of potential liability for fraud or willful misconduct committed by such Member); (c) such Disposal Transaction shall require the prior written consent of Hillhouse; and (d) such Disposal Transaction shall also require the prior written consent of Tencent, if such Disposal Transaction constitutes a Tencent Prohibited Transaction and Tencent owns not less than sixty seven (67%) of all Shares it owns as at the Class B Ordinary Closing Date as at immediately prior to the completion of such Disposal Transaction. Such actions include but are not limited to (a) voting in favour of the Disposal Transaction at the general meeting; (b) procuring that the director so appointed by the respective Member vote in favour of the Disposal Transaction; and (c) selling or transferring all the Shares held by them, if applicable.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If any Member (other than Ruipeng Members) does not approve the Disposal Transaction or does not agree to sell its Shares, such Member shall purchase in a single transaction all the Shares to be transferred by Ruipeng Members, at the price per Share and on the same terms and conditions that Ruipeng Members proposed to offer to the third party under the Disposal Transaction. For the avoidance of doubt, if such Member is unable to purchase the Shares of Ruipeng Members, then such Member shall act in accordance with this <u>Section 4.7</u> to vote for the Disposal Transaction and/or sell the Shares that it owns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.8** **Redemption Right** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At any time after the earlier to occur of the following: (i) the fifth (5<sup>th</sup>) anniversary of the date of the Class B Ordinary Closing Date, if no Qualified IPO has occurred, and (ii) the occurrence of any material breach of the Transaction Documents by the Company or Ruipeng Management Members, then, at the option of any holder of the Class B Ordinary Shares, by written notice of at least 30 days prior to the Redemption Date (as defined below) to the Company (the "**Redemption Notice**") stating the date on which the Class B Ordinary Shares are to be redeemed (the "**Redemption Date**"), the Company shall redeem all or any part of the outstanding Class B Ordinary Shares (including the Class B Ordinary Shares issuable upon the exercise of the CLASS B Warrants, <u>provided</u> that the applicable redemption price of a Class B Ordinary Share issuable upon the exercise of the CLASS B Warrants to be redeemed shall deduct the applicable exercise price of such share issuable under the relevant CLASS B Warrant) then requested to be redeemed by such holder(s) on the Redemption Date, out of funds legally available therefor, at a redemption price per Class B Ordinary Share (the "**Redemption Price**") equal to (a) the Class B Ordinary Share Issue Price with a simple rate of eight percent (8%) per annum return calculated from the first date on which such holder becomes a Class B Ordinary Member through the date on which the redemption price is paid, plus (b) all declared but unpaid dividend on such Share.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Within three (3) Business Days after receipt of the Redemption Notice, the Company shall promptly give written notice of the redemption request to each non-requesting holder of Class B Ordinary Shares, Beijing Yangguang, PD Company Limited, Bing Xiao Enterprise Management Company Limited ("**Bing Xiao**"), Dachen Chuanglian and 深圳市达晨创丰股权投资企业(有限合伙) ("**Dachen Chuangfeng**", with Bing Xiao, Dachen Chuanglian collectively, "**Dachen**") stating the existence of such request, the Redemption Price, the Redemption Date and the mechanics of redemption. Upon receipt of such notice from the Company, any holder of Class B Ordinary Shares, Beijing Yangguang, Dachen may participate in the redemption on the Redemption Date. If on the Redemption Date, the fund and assets of the Company legally available for redemption is insufficient for the Company to redeem all Class B Ordinary Shares requested to be redeemed in full, then (i) the number of Class B Ordinary Shares to be redeemed on the Redemption Date (and to receive Redemption Price thereon) shall be allocated to the Class B Ordinary Members requesting the redemption, ratably based on their respective number of Class B Ordinary Shares requested to be redeemed on such Redemption Date, and (ii) the remaining Class B Ordinary Shares requested to be redeemed (but the Redemption Price thereon is not paid on the Redemption Date) shall continue to be deemed issued and outstanding, and the Company shall redeem such remaining Class B Ordinary Shares subject to redemption as soon as the Company has legally available funds to do so. Only after the Company has redeemed all of the outstanding Class B Ordinary Shares (whether or not requested to be redeemed on the relevant Redemption Date) and unconditionally and irrevocably paid the Redemption Price with respect to all outstanding Class B Ordinary Shares to their holder(s) in full, (i) up to 376,564,855 Class A Ordinary Shares held by Beijing Yangguang shall then be redeemed at a redemption price per Share equal to RMB 0.65327 with a simple rate of eight percent (8%) per annum return calculated from December 7, 2017 through the date on which the redemption price is paid; (ii) up to 153,075,145 Class A Ordinary Shares held by Beijing Yangguang shall then be redeemed at a redemption price per Share equal to RMB 0.65327 with a simple rate of eight percent (8%) per annum return calculated from December 1, 2017 through the date on which the redemption price is paid; (iii) up to 152,837,973 Class A Ordinary Shares held by Dachen Chuanglian shall then be redeemed at a redemption price per Share equal to RMB 0.60826 with no interest; (iv) the Class A Ordinary Shares held by Dachen Chuangfeng shall then be redeemed at a redemption price per Share equal to RMB 0.25873 with a simple rate of eight percent (8%) per annum return calculated from December 24, 2015 through the date on which the redemption price is paid; (v) the Class A Ordinary Shares held by Bing Xiao shall then be redeemed at a redemption price per Share equal to RMB 0.25867 with a simple rate of eight percent (8%) per annum return calculated from December 24, 2015 through the date on which the redemption price is paid; and (vi) the Class A Ordinary Shares held by PD Company Limited shall then be redeemed at a redemption price per Share equal to RMB 0.26862 with a simple rate of eight percent (8%) per annum return calculated from December 25, 2015 through the date on which the redemption price is paid. Notwithstanding anything to the contrary contained herein or in the Articles, the Restructuring Framework Agreement or other Transaction Documents, no other Shares or Equity Securities of the Company (including without limitation the Class A Ordinary Shares held by Beijing Yangguang, PD Company Limited and Dachen) shall be redeemed unless and until the Company shall have redeemed all of the outstanding Class B Ordinary Shares requested to be redeemed in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Once the Company has received the Redemption Notice, the Company and the Major Subsidiaries shall not, and shall procure that none of the Group Companies shall, take any action which might have the effect of delaying, undermining or restricting the redemption, and the Company, the Major Subsidiaries, the Class A Ordinary Members and the Ruipeng Management Members shall in good faith use all best efforts to increase as expeditiously as possible the amount of legally available funds including, without limitation, causing any other Group Companies to distribute any and all available funds to the Company for purposes of paying the applicable Redemption Price for all Class B Ordinary Shares subject to redemption on the Redemption Date. If the Company fails (for whatever reason) to redeem any Class B Ordinary Share on the Redemption Date, as from such date until the date on which the same is redeemed, the Company shall not declare or pay any dividend nor otherwise make any distribution of or otherwise decrease its profits available for distribution nor redeem or repurchase any other Equity Securities of the Company (other than the Class B Ordinary Shares requested to be redeemed). Without prejudice to any claim or other remedies that a holder of Class B Ordinary Shares subject to redemption may have under this Agreement, the Articles, Applicable Law or otherwise, and notwithstanding anything to the contrary in this Agreement, the Articles, the Restructuring Framework Agreement or other Transaction Documents, such holder of such Class B Ordinary Shares is entitled (provided a prior written consent from holders holding at least 90% of the then outstanding Class B Ordinary Shares has been obtained) to make any proposal for the purpose of receiving the applicable Redemption Price including without limitation, (i) liquidation or dissolution of any Group Company, (ii) any sale or merger of any Group Company; (iii) Transfer, sale, lease or otherwise disposal of any Assets of any Group Company and (iv) licensing any brand or any business of any Group Company to any third party. Immediately upon the request of such holder of such Class B Ordinary Shares (provided a prior written consent from holders holding at least 90% of the then outstanding Class B Ordinary Shares has been obtained), each Member, the Ruipeng Management Members and the Group Companies shall fully cooperate with, and follow the instructions of, such holder of such Class B Ordinary Shares in connection therewith.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Company and each Member shall take or cause to be taken all actions, do or cause to be done, and assist and cooperate with the holders of Class B Ordinary Shares subject to redemption in doing, all things and execute all instruments necessary, proper or advisable under Applicable Laws to consummate and make effective, in the most expeditious manner practicable, the redemption contemplated by this <u>Section 4.8</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The Parties acknowledge and agree that no Member other than the Class B Ordinary Members, Beijing Yangguang, Dachen, Bing Xiao and PD Company Limited shall be entitled to the redemption right from the date of this Agreement and any redemption right previously granted to any Member other than the Class B Ordinary Members, Beijing Yangguang, Dachen, Bing Xiao and PD Company Limited shall cease to exist from the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.9 New Joining Party** 

Subject to compliance with provisions of this Agreement, once a New Joining Party executes a deed of adherence in the form attached hereto as <u>Schedule III</u> of this Agreement (the "**Deed of Adherence**"), from the date of execution of the Deed of Adherence, such New Joining Party shall be deemed to be a party to this Agreement and be bound by the terms of the Agreement, whereupon <u>Schedule II</u> to this Agreement shall be deemed to have been updated with the information of such Person as set forth in the Deed of Adherence may become a Party to the Agreement. The New Joining Party may enjoy its rights and be liable for its obligations under this Agreement as a Class A Ordinary Member or Class B Ordinary Member of the Company and/or the relevant transferor (if applicable), as the case may be. The Parties agree that the Board of Director of Company shall be entitled to update the capitalization table of the Company to reflect the shareholding and investment amount by such New Joining Party in the Company.

**5. Information and Inspection Rights**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1 Delivery of Financial Statements.** The Company shall deliver the following documents, with respect to each Group Companies, to Hillhouse, Ruipeng Management Members, Members holding five percent (5%) or more of the Shares (including the Warrant Shares assuming the full exercise of the Warrants) outstanding as well as Members who have the right to appoint the Company Directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) within one hundred and twenty (120) calendar days after the end of each fiscal year, a consolidated annual report (including income statement, statement of cash flows, and a balance sheet) prepared in accordance with the applicable accounting principles ("**Applicable Accounting Principles**"), and audited and certified by an independent accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) within sixty (60) calendar days after the end of half fiscal year, a consolidated and unaudited half year financial report (including income statement, statement of cash flows and a balance sheet) prepared in accordance with the Applicable Accounting Principles;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) within forty-five (45) calendar days of the end of each fiscal month, an unaudited management report prepared in accordance with the Applicable Accounting Principles; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the other reasonable business and financial information that Hillhouse and/or Ruipeng Management Members may request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2 Information Right of Class B Ordinary Members**. The Company shall deliver the following documents to each Class B Ordinary Member so long as such Class B Ordinary Member respectively owns not less than six seven percent (67%) of all Shares it owns as at the Class B Ordinary Closing Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) within one hundred and twenty (120) calendar days after the end of each fiscal year, documents referred to in <u>Sections 5.1(i)</u> hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) within sixty (60) calendar days after the end of half fiscal year, documents referred to in <u>Sections 5.1(ii)</u> hereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) within forty-five (45) calendar days after the end of each quarter, unaudited quarterly consolidated financial statements of the Group Companies for each quarter of a financial year (including income statement, statement of cash flows and a balance sheet) prepared in accordance with the Applicable Accounting Principles; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) (to Tecent and Boehringer Ingelheim only and not to other Class B Ordinary Members) an annual consolidated budget and a business plan for the following fiscal year duly approved by the Board at least thirty (30) days prior to the end of each fiscal year; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) (to Tecent and Boehringer Ingelheim only and not to other Class B Ordinary Members) any documents provided to other Members (other than that provided to Hillhouse, Ruipeng Management Members, Members holding five percent (5%) or more of the Shares (including the Warrant Shares assuming the full exercise of the Warrants) outstanding as well as Members who have the right to appoint the Company Directors pursuant to Section 5.1(iii)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3 Provision of Information.** The Company shall ensure Ruipeng Management Members, Hillhouse, Boehringer Ingelheim (only if Boehringer Ingelheim owns no less than sixty seven percent (67%) of all the Shares it owns as at the Class B Ordinary Closing Date) and Tencent (only if Tencent owns no less than sixty seven percent (67%) of all the Shares it owns as at the Class B Ordinary Closing Date) and their respective authorized representatives may, upon reasonable prior notice, have reasonable access to the offices of each Group Company and obtain property, books and records, and any other financial, operating or business data or information that Ruipeng Management Members, Hillhouse, Boehringer Ingelheim or Tencent may reasonably request for from time to time, <u>provided that</u> any Group Company, acting in good faith, reserves the right to withhold any property, books and records, and any other financial, operating or business data or information if access to such property, books and records, and any other financial, operating or business data or information could adversely affect any of the Group Companies.

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**6. Liquidation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1 Liquidation Event.** 

In the event of a Liquidation Event, distributions to Members shall be made in a manner set out in <u>Section 6.2</u> of this Agreement and in accordance with the Applicable Laws and the Articles of the Company.

For the purpose of this <u>Section 6</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**Capital Increase Investors**" means HCBN Investment Holdings, Ltd., and HH Skyfield Holdings Inc., and (1) for HCBN Investment Holdings, Ltd., with respect to all Class A Ordinary Shares held by HCBN Investment Holdings, Ltd. as of the date of Class B Ordinary Closing Date; and (2) for HH Skyfield Holdings Inc., only with respect to 1,338,880,000 Class A Ordinary Shares (out of 4,065,114,136 Class A Ordinary Shares) held by HH Skyfield Holdings Inc. as of the date of Class B Ordinary Closing Date (such number of Class A Ordinary Shares shall hereinafter referred to as "**Capital Increase Investor Qualified Shares**"). For the avoidance of doubt, the number of Capital Increase Investor Qualified Shares as of the date of Class B Ordinary Closing Date of each Capital Increase Investor is set forth opposite the name of such Capital Increase Investor in <u>Schedule VII</u>; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "**Other Investors**" means Dachen Chuanglian, Dachen Chuangfeng, Beijing Yangguang, 惠每康承（天津）企业管理咨询合伙企业（有限合伙）("**Huimei**"), 天津高瓴诺远企业管理咨询合伙企业(有限合伙) and HH Skyfield Holdings Inc., and (1) for each of the foregoing Other Investors (other than HH Skyfield Holdings Inc. and Huimei), with respect to all Class A Ordinary Shares held by such Other Investor as of the date of Class B Ordinary Closing Date; (2) for Huimei, only with respect to 100,000,000 Class A Ordinary Shares (out of 120,000,000 Class A Ordinary Shares) held by Huimei as of the date of Class B Ordinary Closing Date; and (3) for HH Skyfield Holdings Inc., only with respect to 2,726,234,136 Class A Ordinary Shares (out of 4,065,114,136 Class A Ordinary Shares) held by HH Skyfield Holdings Inc. as of the date of Class B Ordinary Closing Date (such number of Class A Ordinary Shares shall hereinafter referred to as "**Other Investor Qualified Shares**"). For the avoidance of doubt, the number of Other Investor Qualified Shares as of the date of Class B Ordinary Closing Date of each Other Investor is set forth opposite the name of such Other Investor in <u>Schedule VIII</u>.

The Company warrants and represents, and each Capital Increase Investor and Other Investor severally but not jointly warrants and represents with respect to itself, to each other Party that <u>Schedule VII</u> and <u>Schedule VIII</u> correctly and completely reflect the investment amount paid by each Capital Increase Investor and Other Investor to the Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2 Distribution** 

In the event of a Liquidation Event, any and all proceeds and consideration resulting therefrom (or, in case of a Liquidation Event other than a Deemed Liquidation Event, all distributable funds and assets of the Group Companies) ("**Distributable Assets**") shall be distributed to the Members in the following manner and order, subject to the claims that may be superior under the Applicable Laws:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) firstly, each holder of the Class B Ordinary Shares is entitled to receive an amount equal to one hundred and ten percent (110%) of the Class B Ordinary Share Issue Price plus all dividends declared but unpaid with respect thereto for each Class B Ordinary Share (including any Class B Ordinary Shares issuable under the CLASS B Warrants, assuming the full exercise of the CLASS B Warrants) then held by such holder ("**Class B Ordinary Member Liquidation Preference Amount**"); in the event that the Company has insufficient assets to permit payment of the Class B Ordinary Member Liquidation Preference Amount in full to all holders of the Class B Ordinary Shares, then the Distributable Assets shall be distributed ratably to the holders of the Class B Ordinary Shares in proportion to the Class B Ordinary Member Liquidation Preference Amount each such holder of Class B Ordinary Shares would otherwise be entitled to receive;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) secondly, if there are any Distributable Assets remaining after the distribution of the Class B Ordinary Member Liquidation Preference Amount in full to the Class B Ordinary Members, each of the Capital Increase Investors shall be entitled to receive an amount equal to one hundred and ten percent (110%) of the amount of the "**Capital Increase Amount Per Share**" set forth opposite the name of such Capital Increase Investor in <u>Schedule VII</u> per each Capital Increase Investor Qualified Share then outstanding and held by such Capital Increase Investor as of the date of distribution plus all dividends declared but unpaid with respect thereto (the "**Capital Increase Liquidation Preference Amount**"); in the event that after full payment of the Class B Ordinary Member Liquidation Preference Amount the Company has insufficient assets to permit payment of the Capital Increase Liquidation Preference Amount in full to all Capital Increase Investors, then the remaining Distributable Assets shall be distributed ratably to all Capital Increase Investors in proportion to the Capital Increase Liquidation Preference Amount each such Capital Increase Investor would otherwise be entitled to receive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) thirdly, if there are any Distributable Assets remaining after the distribution of the Capital Increase Liquidation Preference Amount to the Capital Increase Investors in full, each of the Other Investor shall be entitled to receive an amount equal to one hundred and ten percent (110%) of the amount of the "**Target Assets Investment Amount Per Share**" set forth opposite the name of such Other Investor in <u>Schedule VIII</u> per each Other Investor Qualified Share then outstanding and held by such Other Investor as of the date of distribution plus all dividends declared but unpaid with respect thereto (the "**Other Investor Liquidation Preference Amount**"). If the remaining Distributable Assets after full payment of the Class B Ordinary Member Liquidation Preference Amount and the Capital Increase Liquidation Preference Amount is insufficient to pay such Other Investor Liquidation Preference Amount in full, then the remaining Distributable Assets shall be distributed ratably to all Other Investors in proportion to the Other Investor Liquidation Preference Amount each such Other Investor would otherwise be entitled to receive;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) fourthly, if upon full payment of the Class B Ordinary Member Liquidation Preference Amount, the Capital Increase Liquidation Preference Amount and the Other Investor Liquidation Preference Amount, there are still remaining Distributable Assets available for distribution to the Members, the Company shall ensure that such Distributable Assets shall be distributed to the Members (for the avoidance of doubt, including Members who have received Class B Ordinary Member Liquidation Preference Amount, the Capital Increase Liquidation Preference Amount and/or the Other Investor Liquidation Preference Amount) on a pro rata basis based on the number of Shares held by each such Member at the time of such distribution.

The Company and all Members shall take or cause to be taken all actions and effective measures and do or cause to be done all things and execute all instruments necessary, proper or advisable in accordance with Applicable Laws to ensure that the Distributable Assets are distributed, in the most expeditious manner practicable, in accordance with the above-mentioned arrangement.

**6.3** **Compulsory Payment** 

In the event of a Deemed Liquidation Event, the consideration received from the purchaser(s) shall be paid to the Company (regardless of the means by which a purchaser or licensee obtains the relevant Equity Securities, Assets or Intellectual Property of the Group Companies or the surviving entities), and then the Company shall distribute such consideration in accordance with <u>Section 6.2</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.4 Distribution of Assets or Securities** 

The Company shall use its best efforts to make any distribution hereunder to the Members in cash. If the distribution in cash is not practical or feasible, distributions of securities or assets other than cash may be made subject to prior consent of the Member receiving such non-cash distribution. Distributions consisting of both cash and non-cash securities or assets shall be made to each Member receiving such distributions in the same proportions of cash and non-cash securities or assets (unless the relevant Member agrees to receive such distributions in a different proportion). In the case of non-cash distribution in connection with any Liquidation Event pursuant to Sections 6.2 and/or 6.3, the value of the assets to be distributed to the Members shall be determined in good faith by the Board. Any securities not subject to investment letter or similar restrictions on free marketability shall be valued as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If traded on a securities exchange, the value shall be deemed to be the average of the security's closing prices on such exchange over the thirty (30) day period ending one (1) day prior to the distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the thirty (30) day period ending three (3) days prior to the distribution; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If there is no active public market, the value shall be the fair market value thereof as determined in good faith by the Board.

The holders of at least a majority of the outstanding Class B Ordinary Shares, or the holders of at least a majority of the Capital Increase Investor Qualified Shares, or the holders of at least a majority of the Other Investor Qualified Shares shall have the right to challenge any determination by the Board of the fair market value determined pursuant to this Section 6.4, in which case the determination of fair market value shall be made by an independent appraiser selected jointly by the Board and the challenging Parties, the cost of such appraisal to be borne by the Company.

**7. Additional Agreements; Other Covenants**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1 Articles etc.** In the event of any conflict or inconsistency between any of the terms of this Agreement and any of the terms of the Articles, the terms of this Agreement shall prevail in all respects as regards the Parties hereto except for the Company. The Parties hereto other than the Company shall give full effect to and act in accordance with the provisions of this Agreement over the provisions of the Articles, and the Parties hereto shall exercise all voting and other rights and powers (including to procure any required alteration to the Articles to resolve such conflict or inconsistency) to make the provisions of this Agreement effective, and not to take any actions that impair any provisions in this Agreement. Notwithstanding any provision to the contrary in the Restructuring Framework Agreement, the Parties acknowledge and agree that in the event of any conflict or inconsistency between any of the terms of this Agreement and any of the terms of the Restructuring Framework Agreement, and if such terms stipulated in the Restructuring Framework Agreement have a negative impact on rights of Class B Ordinary Members, the terms of this Agreement shall prevail in such respects as regards the Parties hereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.2 Non-compete.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Except for those otherwise agreed by Tencent, Boehringer Ingelheim, Ruipeng Management Members and Hillhouse or those set forth in <u>Schedule VI</u> which were mutually accepted by Ruipeng Management Members and Hillhouse, Ruipeng Management Members severally but not jointly undertakes to other Parties to work and serve the Company on a full-time basis, until (a) the sixth anniversary of the Original Closing Date, if during such period the Company fails to complete its Qualified IPO; or (b) the second (2<sup>nd</sup>) anniversary of the Qualified IPO completion date, if the Company completes its Qualified IPO within six (6) years from the Original Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except for those set forth in <u>Schedule VI</u> which were mutually accepted by Ruipeng Management Members and Hillhouse, each of Ruipeng Management Members and Skyfield Minority Members severally but not jointly undertakes to Hillhouse,Boehringer Ingelheim and Tencent that other than the Group Company, it shall not (unless for the benefit of the Group and upon prior consent of the Company, Boehringer Ingelheim and Tencent) invest, operate, participate or by other means engage in any business that competes with the Main Business from January 23, 2019 until the second (2<sup>nd</sup>) anniversary (the third (3<sup>rd</sup>) anniversary in case he is dismissed by the Company due to his misconduct) of the later of (a) the effective date of his resignation from the Company, or (b) the date on which through himself and/or his Affiliate his aggregate shareholding of the Company, whether directly and/or indirectly, is less than 0.5% on a fully diluted basis, or (c) the date on which through himself and/or his Affiliate his aggregate Shares in the Company, whether directly and/or indirectly, is less than 15% of his (including his and his Affiliates') Shares in the Company as of the Original Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Hillhouse undertakes to Ruipeng Management Members and the Class B Ordinary Members that (a) if its shareholding of Company (either through itself and/or its Affiliates), whether directly and/or indirectly, is more than 30% of its (including its and its Affiliates') shareholding of Company, whether directly and/or indirectly, as of the Original Closing Date, or (b) from January 23, 2019 until (x) the sixth (6<sup>th</sup>) anniversary of the Original Closing Date if completion of a Qualified IPO does not occur by that date or (y) the second (2<sup>nd</sup>) anniversary of the Qualified IPO completion date, if Company has completed a Qualified IPO within six (6) years from the Original Closing Date, except for the investment and operation platform disclosed in writing to Ruipeng, Boehringer Ingelheim and Tencent on the date of this Agreement, Hillhouse or its affiliated companies shall not set up any new holding companies or investment platform in pet hospital industry without the Company's, Boehringer Ingelheim's and Tencent's prior consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Each of Skyfield Minority Members severally but not jointly undertakes to the Parties that, from January 23, 2019, it shall, and shall procure its Affiliate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) treat the Group as the sole platform to operate the Main Business, and any business or acquisition related to the Main Business shall be conducted through the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) not directly or indirectly establish, invest in or participate as a director, senior management, employee, partner, shareholder, consultant or other titles in an entity that directly or indirectly competes with the Main Business of any Group Company, or in any third party identified by the Board as having direct or indirect competition with the Main Business (each a "**Competitor**"); not hold any shares in any Competitor, or manage, operate, join or control any Competitor, or cooperate with any Competitor, or hold the office in any Competitor, or provide loans to any Competitor, or provide financial or other assistance to any Competitor. For the avoidance of doubt, holding no more than 1% equity interests in a publicly traded Competitor shall not be subject to the restrictions under this <u>Section 7.2 (iv)(b)</u>, <u>provided</u> that no other association or connection exists between such Competitor and the Skyfield Minority Member and/or its Affiliates; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) not entice any employees of a Group Company to resign.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Each Ruipeng Investor Member (excluding any Ruipeng Investor Member who holds, directly or indirectly, through itself or its Affiliates, less than 0.6% of the Shares in the Company) severally but not jointly undertakes to the Parties that unless with the prior written consent from both Ruipeng Management Members and Hillhouse, he shall, and shall procure its Affiliate that,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) treat the Group as the sole platform to operate the animal hospital business, and any business or acquisition related to the animal hospital business shall be conducted through the Group;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) not establish, invest in or participate, as a director, senior management, employee, partner, shareholder, consultant or other titles, in an entity that competes with the animal hospital business of any Group Company, or in any third party identified by the Board as having direct or indirect competition with the animal hospital business of any Group Company; or hold any shares in that third party; or does not manage, operate, join or control that third party; or cooperate with that third party; or hold the office in that third party; or provide loans to that third party; or provide financial or other assistance to an entity that competes with the animal hospital business of any Group Company. For the avoidance of doubt, holding no more than 1% equity interests in a publicly traded third party shall not be subject to the restrictions under this <u>Section 7.2 (v)(b)</u>, <u>provided</u> that no other association or connection exists between such third party and the Ruipeng Investor Member and/or its Affiliates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) not entice any employee of a Group Company to resign.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.3** **Confidentiality.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each Party undertakes not to disclose Confidential Information to any third party without the prior written consent of other Parties, and each party shall also procure their respective directors, equity holders, existing or future partners, shareholders, consultants and bankers, senior officers, employees, agents, advisers, professional consultants and its Affiliates, as well as its respective directors, equity holders, existing or future partners, shareholders, consultants and bankers, senior officers, employees, agents, advisers, and professional consultants (collectively referred to as "**Representatives**") also comply with the aforementioned obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The above section does not apply to the following scenarios:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Confidential Information has been generally made public or known to the public, unless such Confidential Information is disclosed or caused by a Party or its Affiliate in violation of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a Party discloses confidential information to its Representative <u>provided</u> that the Representative (i) has a similar obligation of confidentiality or (ii) is otherwise bound by a binding professional confidentiality obligation; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the disclosure by a Party as a result of the requirements of the listing authority, securities trading rules, Applicable Law or litigation or legal proceedings related to or arising out of the Transaction Documents, but such Party shall discuss the timing, content and method of disclosing such disclosure with the other Parties prior to the disclosure is made and to the extent possible, keep confidential the part of the content as reasonably required by other Parties.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Without prejudice to Section 7.3(ii), none of the Parties shall disclose to a third party (including news agency, media, etc.) any details of the transactions contemplated hereunder or the cooperation of the Parties without the unanimous written consent of Tencent, Boehringer Ingelheim, the Ruipeng Management Members and Hillhouse.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.4** **ESOP Plan** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company has reserved 500,000,000 Class A Ordinary Shares (the "**ESOP Shares**") for the management incentive plan of the Company ("**Management Incentive Plan**") to be approved at the general meeting of the Company. All Parties agree to vote or ensure their respective Affiliates to vote in favour of the adoption and implementation of the Management Incentive Plan at the relevant general meeting(s); provided, that the Management Incentive Plan shall be subject to the following: (a) the Management Incentive Plan shall be formulated by the Company based on good faith, market practice and the actual status of the Company; and (b) the ESOP Shares shall be granted in installment to the relevant management personnel as stipulated in Management Incentive Plan within three (3) years after January 23, 2019. After the expiration of the three (3) years from the approval of the Management Incentive Plan by the general meeting, subject to the business development status of the Company as determined by the Board, the Parties agree to approve or ensure their respective Affiliates approve the increase of the management option shares by a total number of 300,000,000 Class A Ordinary Shares (the "**Additional ESOP Shares**"). The Parties confirm that Peng Yonghe and Zhang Yanzhong will not receive or be awarded any ESOP Shares or Additional ESOP Shares before the completion of the Qualified IPO of the Company unless otherwise approved by both Hillhouse and the holders of more than 50% of the outstanding Class B Ordinary Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.5 Policy.** The Board shall elect the Company's applicable financial and accounting policies according to the suggestion of the CFO and the relevant Applicable Laws of the location of its future IPO, in conjunction with the specific status of the Company, and based on the regulatory requirements of the listing place. The financial and accounting policies of the Company shall be implemented after approval by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.6 Distribution of Profit.** Subject to Section 4 and Section 6, if the general meeting of the Company approves the distribution of profit of the Company, such distribution shall be made according to the proportion of Members' then shareholding of the Company; the Company shall have the right to withhold Taxes on the distribution of profit in accordance with the provisions of Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.7** **Use of Name, Trademark or Logo.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Without the prior written consent of Hillhouse, and whether or not Hillhouse is then a Member of the Company, none of the Parties excluding Hillhouse shall use, publish, reproduce or refer to the names of Hillhouse, its Affiliates and/or controlling persons, or the name "Hillhouse", "高瓴", "Gaoling", "Gao Ling", "Lei Zhang", "张磊" or any similar name, trademark or logo in any discussion, documents or materials or otherwise, including without limitation for marketing, advertising or promotional or other purposes.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Without the prior written consent of Tencent, and whether or not Tencent or any of its Affiliates are then a shareholder of the Company, none of the Group Companies, their shareholders (excluding Tencent and its Affiliates), nor their respective directors and employees, shall (a) use in advertising, publicity, announcements, or otherwise, the name of Tencent or any Affiliate of Tencent, either alone or in combination of, including 腾讯(Tencent), QQ, 微信, WeChat, 微信朋友圈, 微信电视, 应用宝, 财付通, 微众(WeBank), 广点通, 腾讯手机管家, QQ手机管家, QQ电脑管家, 安全管家, QQ浏览器, QQ音乐(QQmusic), QQ空间(Qzone), 微云, 腾讯微云, 同步助手, 腾讯文学(Tencent Literature), RTX, 腾讯企业邮EXMAIL.QQ.COM, imqq.com, QQ秀/QQSHOW, WWW.QQ.COM, tencent image, 小Q, QQ彩贝/彩贝联盟, 小Q书桌, QQ会员, 爱马哥, QQShowSHOW.QQ.COM, Q影, 腾讯印象, 腾讯云, 酷抠族COOL, 路宝/腾讯路宝, 腾讯游戏/腾讯互动娱乐Tencent Interactive Entertainment, 洛克王国Roco Kingdom, 斗战神ASURA, QQ炫舞, QQ西游QQXY.QQ.COM, QQ飞车, 英雄杀YXS.QQ.COM, AI战士AI.QQ.COM, 功夫西游, 逆战NZ.QQ.COM, QQ游戏QQGAME.QQ.COM, Q游记, 功夫企鹅, Q游记17Q.QQ.COM, 腾讯原创动漫AC.QQ.COM, 趣西游, 众神争霸, 天天酷跑, 天天爱消除, 天天连萌, 全民三国, 天天飞车, 腾讯网, FUN秀, 小拇指, 腾讯微漫画, 碰星球PUNG, 翻秀, 腾讯儿童DIY微漫画, 潮童范儿, 广点通, 微彩票518.qq.com, QQ彩票888.QQ.COM, 腾讯微公益基金, 新年新衣, 筑梦新乡村, 米大师, 铜关Tongguan, 益行家, 王者荣耀, 腾讯地图, 天天快报, TIM, FOXMAIL, 自选股, 疾风之刃, JOOX, VOOV, 理财通, Ipick, any associated logos of the above brands, or any company name, trade name, trademark, service mark, domain name, device, design, symbol or any abbreviation, contraction or simulation thereof owned or used by Tencent or any of its Affiliates, or (b) represent, directly or indirectly, that any product or services provided by any Group Company or any of their respective Affiliates has been approved or endorsed by Tencent or any of its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Without the prior written consent of Boehringer Ingelheim, and whether or not Boehringer Ingelheim is then a shareholder of the Company, none of the Group Companies (nor their respective directors and employees) nor any Parties (excluding Boehringer Ingelheim or its Affiliates) shall (a) use, publish, reproduce or refer to the names, brands, company names, trade names, trademarks, similar names, service marks, logos, domain names, devices, designs, symbols or any abbreviation, contraction or simulation thereof owned or used by Boehringer Ingelheim, its Affiliates and/or controlling persons in any discussion, documents or materials or otherwise, including without limitation for marketing, advertising or promotional or other purposes or (b) represent, directly or indirectly, that any product or services provided by any Group Company or any of their respective Affiliates has been approved or endorsed by Boehringer Ingelheim or any of its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Without the prior written consent of a Class B Ordinary Member other than Tencent and Boehringer Ingelheim, and whether or not such Class B Ordinary Member is then a Member of the Company, none of the Group Companies (nor their respective directors and employees) nor any Parties (excluding such Class B Ordinary Member or its Affiliates) shall, use, publish, reproduce or refer to the names, trademarks or logos of such Class B Ordinary Member, its Affiliates and/or controlling persons in any discussion, documents or materials or otherwise, including without limitation for marketing, advertising or promotional or other purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.8 SAFE Registration**. Each of the Ruipeng Management Members shall, and the Group Companies and the Ruipeng Management Members shall use their commercially reasonable efforts to procure any other Person deemed as "Domestic Resident" under the Circular 37 to, fully comply with all legal requirements with respect to his/her direct or indirect holding of Equity Securities in the Company (if any), and their indirect holding of the Equity Securities in other Group Companies on a continuing basis, including but not limited to registering such shareholding with the State Administration for Foreign Exchange of the PRC (the "**SAFE**"), in a timely manner, as required under the Notice on Relevant Issues concerning Foreign Exchange Administration of Overseas Investment and Financing and Inbound Investment through Offshore Special Purpose Companies by Domestic Residents (《国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》(汇发[2014]37号)) issued by SAFE on July 4, 2014, as amended (the "**Circular 37**") if it is applicable, and any other applicable requirements imposed by the Governmental Authorities, and obtaining all necessary consents, approvals, permits and registrations in connection therewith.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.9 Tax filing Cooperation**. Upon the request of any Class B Ordinary Member, each of the Company, the Ruipeng Management Members and the Major Subsidiaries shall, and shall cause the Group Companies to, within a reasonable time period, provide cooperation, information and documents as required by such Class B Ordinary Member for it to fulfil its Tax obligations, <u>provided that</u> such requesting Class B Ordinary Member shall provide Applicable Laws based on which such cooperation, information and documents are required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.** **Amendment and Termination** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any provision in this Agreement (including the Exhibits and Schedules hereto)may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only by the written consent of (i) the Company, (ii) holders of at least ninety percent (90%) of the outstanding Class B Ordinary Shares, and (iii) holders of more than seventy-five percent (75%) of the outstanding Class A Ordinary Shares; <u>provided</u>, <u>however</u>, that (a) any Member may waive any of its rights hereunder without obtaining the consent of any other Party, and (b) any amendment that disproportionately changes the rights, preferences, privileges or liabilities of or create disproportionate burdens or obligations on, a Class B Ordinary Member or a Class A Ordinary Member shall be subject to the prior written consent of such Class B Ordinary Member or Class A Ordinary Member. Any amendment or waiver effected in accordance with this Section 8(i) shall be binding upon the Parties and their respective assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Unless otherwise expressly provided in this Agreement, this Agreement shall terminate upon earliest of: (a) mutual unanimous consent of all the Parties hereto; (b) the consummation of a Qualified IPO; and (c) with respect to a Member only, when such Member no longer directly or indirectly holds any Equity Securities in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The rights and covenants contained in <u>Sections 7.3</u>, <u>7.7, 8</u>, <u>9.3</u>, 9.4 and <u>9.9</u> shall continue to be effective and binding upon termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Without limiting and in addition to Section 8(iii), the rights and covenants contained in <u>Sections</u> 2 shall continue to be effective and binding upon a termination of this Agreement due to the consummation of an IPO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.** **Miscellaneous**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.1 Further Assurances.** Upon the terms and subject to the conditions herein, each of the Parties agrees to use its best efforts to take or cause to be taken all actions, to do or cause to be done, and to assist and cooperate with the other Parties in doing, all things and execute all instruments necessary, proper or advisable under Applicable Laws or otherwise to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement and, to the extent reasonably requested by another Party, to enforce rights and obligations pursuant hereto.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.2 Assignments and Transfers.** Except as otherwise provided herein, no Party shall transfer any of its rights or obligation under this Agreement, <u>provided</u> that the Class B Ordinary Members, Hillhouse and Ruipeng Investor Members may transfer its rights and obligations to their respective Affiliates by notifying the other Parties in writing ten (10) Business Days in advance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.3 Governing Law.** This Agreement shall be governed by and construed under the Laws of Hong Kong.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.4 Dispute Resolution.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any dispute, controversy, difference or claim arising out of or relating to this Agreement, including the existence, validity, invalidity, interpretation, performance, breach or termination thereof or any dispute regarding contractual or non-contractual obligations arising out of or relating to it (a "<u>Dispute</u>"), shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre in Hong Kong (the "**HKIAC**") in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the "**HKIAC Rules**") in force when the Notice of Arbitration is submitted. The seat of arbitration shall be Hong Kong.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) There shall be three (3) arbitrators, the claimant to the Dispute, or in the case of multiple claimants, all such claimants acting collectively (the "Claimant") shall select one (1) arbitrator and the respondent to the Dispute, or in the case of more than one respondent, the respondents acting collectively (the "Respondent") shall select one (1) arbitrator. All selections shall be made within thirty (30) days after the selecting Party gives or receives the demand for arbitration. Such arbitrators shall be freely selected, and neither the Claimant nor the Respondent shall be limited in their selection to any prescribed list. The first two (2) arbitrators shall select the third arbitrator; provided that if the first two (2) arbitrators cannot agree on a third arbitrator within five (5) Business Days, the Chairman of HKIAC shall select the third arbitrator who will act as chairman of the arbitration board. If any arbitrator to be appointed by a Party has not been appointed and consented to participate within thirty (30) days after the selection of the first arbitrator, the relevant appointment shall be made by the Chairman of HKIAC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The arbitral proceedings shall be conducted in English. To the extent that the HKIAC Rules are in conflict with the provisions of this Section, including the provisions concerning the appointment of the arbitrators, the provisions of this Section shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The award of the arbitral tribunal shall be final and binding upon the Parties thereto, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The arbitral tribunal shall decide any Dispute submitted by the Parties to the arbitration strictly in accordance with the substantive Laws of Hong Kong (without regard to principles of conflict of Laws thereunder) and shall not apply any other substantive Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) During the course of the arbitral tribunal's adjudication of the Dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Section 9.13 of the Class B Ordinary SPA shall be amended and replaced by this <u>Section 9.4 (i)</u> to <u>(vii)</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.5 Notices.** Any notice required or permitted pursuant to this Agreement shall be given in writing and shall be given either personally or by sending it to the addresses (or the other address or email address the recipient Party may designate by ten (10) days' advance written notice to the other Parties) of the relevant Party set out in <u>Schedule II</u> of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.6 Severability.** In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. If, however, any provision of this Agreement shall be invalid, illegal, or unenforceable under any such Applicable Laws in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such Law, or, if for any reason it is not deemed so modified, it shall be invalid, illegal, or unenforceable only to the extent of such invalidity, illegality, or limitation on enforceability without affecting the remaining provisions of this Agreement, or the validity, legality, or enforceability of such provision in any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.7 No Waiver.** Any Party may waive any of its rights, powers or remedies under this Agreement <u>provided</u> that such Party has signed and executed relevant written documentation. Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof will not be deemed a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of, or failure to insist upon strict compliance with, any right, power or remedy hereunder at any one or more times be deemed a waiver or relinquishment of such right, power or remedy at any other time or times.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.8 Several but not Joint Obligations**. Unless otherwise agreed in this Agreement, the obligations of each Party under this Agreement shall be several and not joint.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.9 Headings and Subtitles; Interpretation.** The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. Unless a provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) words in the singular include the plural, and words in the plural include the singular; (iii) the terms "herein", "hereof", and other similar words refer to this Agreement as a whole and not to any particular section, subsection, paragraph, clause, or other subdivision; (iv) the term "including" will be deemed to be followed by ", but not limited to,"; (v) the masculine, feminine, and neuter genders will each be deemed to include the others; (vi) the terms "shall", "will", and "agrees" are mandatory, and the term "may" is permissive; and (vii) the term "day" means "calendar day".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.10 Counterparts.** This Agreement may be executed in more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile and e-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.11 Entire Agreement.** This Agreement (including the Exhibits and Schedules hereto) constitutes the full and entire understanding and agreement among the Parties with regard to the subjects hereof and thereof, and supersedes all other agreements between or among any of the Parties with respect to the subject matter hereof. Notwithstanding anything to the contrary provided herein or in any other Transaction Documents, the Parties agree that this Agreement (for the avoidance of doubt, excluding the Restructuring Framework Agreement) shall constitute and be deemed to be amendment and supplement to the Restructuring Framework Agreement, and in the event that there shall be any inconsistency or discrepancy between the provisions in this Agreement (for the avoidance of doubt, excluding the Restructuring Framework Agreement) and those in the Restructuring Framework Agreement, the former shall prevail. This Agreement shall supersede the Prior Shareholders' Agreement in its entirety, and the Prior Shareholders' Agreement shall terminate and have no further force or effect as of the Class B Ordinary Closing Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.12 Most Favored Terms**. The Parties agree that unless otherwise expressly provided in the Transaction Documents, (i) the rights, privileges or protections granted to the Class B Ordinary Members under the Transaction Documents shall not be subordinated and shall be at least equal to the rights, privileges or protections granted to the Class A Ordinary Members, and (ii) in the event any Group Company grants, issues, or provides to any Class A Ordinary Member any right, privilege or protection that is more favorable than those granted to the Class B Ordinary Members, such Group Company shall concurrently grant, issue, or provide the same rights, privileges or protections to the Class B Ordinary Members at least *pari passu* with such Class A Ordinary Member.

[*The remainder of this page has been intentionally left blank.*] 

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IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

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| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: Yonghe Peng | Name: Yonghe Peng |
| Title: Director | Title: Director |

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IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **RP Chen Rui Enterprise Management** | **RP Chen Rui Enterprise Management** |
|  | **Company Limited** | **Company Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Director | Title: Director |

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IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Goldenway Capital Management Limited** | **Goldenway Capital Management Limited** |
|  | By: | /s/ Zhifeng Liu |
|  | Name: Zhifeng Liu | Name: Zhifeng Liu |
|  | Title: Director | Title: Director |

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IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **RP Peng Cheng Enterprise Management Company Limited** | **RP Peng Cheng Enterprise Management Company Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Director | Title: Director |

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IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **PD Company Limited** | **PD Company Limited** |
|  | By: | /s/ Xiaoqi Hu |
|  | Name: Xiaoqi Hu | Name: Xiaoqi Hu |
|  | Title: Director | Title: Director |

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IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **HAO's Holdings, Inc.** | **HAO's Holdings, Inc.** |
|  | By: | /s/ Zhongli Hao |
|  | Name: Zhongli Hao | Name: Zhongli Hao |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** |  |  |
|  | **Bing Xiao Enterprise Management Company Limited** | **Bing Xiao Enterprise Management Company Limited** |
|  | By: | /s/ Bing Xiao |
|  | Name: Bing Xiao | Name: Bing Xiao |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **宁波梅山保税港区海布里投资合伙企业（有限合伙）** | **宁波梅山保税港区海布里投资合伙企业（有限合伙）** |
|  | By: | /s/ Tao Wang |
|  | Name: Tao Wang | Name: Tao Wang |
|  | Title: the assigned representative of the managing partner | Title: the assigned representative of the managing partner |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **新希望医疗健康南京投资中心（有限合伙）** | **新希望医疗健康南京投资中心（有限合伙）** |
|  | By: | /s/ Jianxin Yang |
|  | Name: Jianxin Yang | Name: Jianxin Yang |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **HH Skyfield Holdings Inc.** | **HH Skyfield Holdings Inc.** |
|  | By: | /s/ Jennifer Neo Ju Yun |
|  | Name: Jennifer Neo Ju Yun | Name: Jennifer Neo Ju Yun |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **天津高瓴诺远企业管理咨询合伙企业（有限合伙）** | **天津高瓴诺远企业管理咨询合伙企业（有限合伙）** |
|  | By: | /s/ Cuifang Ma |
|  | Name: Cuifang Ma | Name: Cuifang Ma |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Jing An Holdings Limited** | **Jing An Holdings Limited** |
|  | By: | /s/ Jiansheng Kan |
|  | Name: Jiansheng Kan | Name: Jiansheng Kan |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** |  |  |
|  | **RP Rui You Enterprise Management Company Limited** | **RP Rui You Enterprise Management Company Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **AnAn Brothers Holdings Limited** | **AnAn Brothers Holdings Limited** |
|  | By: | /s/ Xiaohua Zheng |
|  | Name: Xiaohua Zheng | Name: Xiaohua Zheng |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Aino Family Holding Limited** | **Aino Family Holding Limited** |
|  | By: | /s/ Qing Zhao |
|  | Name: Qing Zhao | Name: Qing Zhao |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Aino Brothers Holding Limited** | **Aino Brothers Holding Limited** |
|  | By: | /s/ Wen Zhang |
|  | Name: Wen Zhang | Name: Wen Zhang |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **HCBN Investment Holdings, Ltd.** | **HCBN Investment Holdings, Ltd.** |
|  | By: | /s/ Colm John O'Connell |
|  | Name: Colm John O'Connell | Name: Colm John O'Connell |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Cloudpet Holdings Limited** | **Cloudpet Holdings Limited** |
|  | By: | /s/ Yi Dong |
|  | Name: Yi Dong | Name: Yi Dong |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Puppytown Holdings Limited** | **Puppytown Holdings Limited** |
|  | By: | /s/ Yi Dong |
|  | Name: Yi Dong | Name: Yi Dong |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **惠美康承（天津）企业管理咨询合伙企业（有限合伙）** | **惠美康承（天津）企业管理咨询合伙企业（有限合伙）** |
|  | By: | /s/ Rushu Luo |
|  | Name: Rushu Luo | Name: Rushu Luo |
|  | Title: Authorized Representative | Title: Authorized Representative |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Vet Harvest Enterprise Management Company Limited** | **Vet Harvest Enterprise Management Company Limited** |
|  | By: | /s/ Xiaohong Liu |
|  | Name: Xiaohong Liu | Name: Xiaohong Liu |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** | **Vet Time Enterprise Management Company Limited** | **Vet Time Enterprise Management Company Limited** |
|  | By: | /s/ Li Li |
|  | Name: Li Li | Name: Li Li |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

**CLASS A ORDINARY MEMBER:** 

---

| | |
|:---|:---|
| **RP Ye Bei Enterprise Management Company Limited** | **RP Ye Bei Enterprise Management Company Limited** |
| By: | /s/ Yonghe Peng |
| Name: Yonghe Peng | Name: Yonghe Peng |
| Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

**CLASS A ORDINARY MEMBER:** 

---

| | |
|:---|:---|
| **Leap Eternity Enterprise Management Company Limited** | **Leap Eternity Enterprise Management Company Limited** |
| By: | /s/ Yonghe Peng |
| Name: Yonghe Peng | Name: Yonghe Peng |
| Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

**CLASS A ORDINARY MEMBER:** 

---

| | |
|:---|:---|
| **Great Dream Of Veterinarian Management Limited** | **Great Dream Of Veterinarian Management Limited** |
| By: | /s/ Yanzhong Zhang |
| Name: Yanzhong Zhang | Name: Yanzhong Zhang |
| Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

**CLASS A ORDINARY MEMBER:** 

---

| | |
|:---|:---|
| **北京阳光融汇医疗健康产业成长投资管理中心（有限合伙）** | **北京阳光融汇医疗健康产业成长投资管理中心（有限合伙）** |
| By: | /s/ Lina Lu |
| Name: Lina Lu | Name: Lina Lu |
| Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

**CLASS A ORDINARY MEMBER:** 

---

| | |
|:---|:---|
| **深圳市达晨创联股权投资基金合伙企业（有限合伙）** | **深圳市达晨创联股权投资基金合伙企业（有限合伙）** |
| By: | /s/ Zhou Liu |
| Name: Zhou Liu | Name: Zhou Liu |
| Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** |  |  |
|  | **深圳市达晨创丰股权投资企业（有限合伙）** | **深圳市达晨创丰股权投资企业（有限合伙）** |
|  | By: | /s/ Zhou Liu |
|  | Name: Zhou Liu | Name: Zhou Liu |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** |  |  |
|  | **RP Sheng Peng Enterprise Management Company Limited** | **RP Sheng Peng Enterprise Management Company Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS A ORDINARY MEMBER:** |  |  |
|  | **北京阳光融汇医疗健康产业成长投资管理中心（有限合伙）** | **北京阳光融汇医疗健康产业成长投资管理中心（有限合伙）** |
|  | By: | /s/ Lina Lu |
|  | Name: Lina Lu | Name: Lina Lu |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Skyfield (Shanghai) Investment Co., Ltd.** | **Skyfield (Shanghai) Investment Co., Ltd.** |
|  | **(瓴域(上海)投资有限公司)** | **(瓴域(上海)投资有限公司)** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **MAJOR SUBSIDIARY:** | **Skyfield Holdings Limited** | **Skyfield Holdings Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Skyfield Holdings (Cayman) Inc.** | **Skyfield Holdings (Cayman) Inc.** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** |  |  |
|  | **New Ruipeng Pet Healthcare Group Co., Ltd.** | **New Ruipeng Pet Healthcare Group Co., Ltd.** |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (新瑞鹏宠物医疗集团有限公司) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (新瑞鹏宠物医疗集团有限公司) |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **HHRP Holdings Limited** | **HHRP Holdings Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **HHRP Holdings (Cayman) Inc.** | **HHRP Holdings (Cayman) Inc.** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Concordia Holdings Limited** | **Concordia Holdings Limited** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Concordia Pet Care Limited** | **Concordia Pet Care Limited** |
|  | By: | /s/ Yufei He |
|  | Name: | Yufei He |
|  | Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **<u>MAJOR SUBSIDIARY:</u>** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Yunchong (Beijing) Animal Hospital Technology Co., Limited (云宠(北京)动物医疗科技有限公司)** |

---

---

| | |
|:---|:---|
| By: | /s/ Rong Wang |
| Name: | Rong Wang |
| Title: | Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Shanghai Anan Pet Co., Limited (**上海安安宠物有限公司**)** | **Shanghai Anan Pet Co., Limited (**上海安安宠物有限公司**)** |
|  | By: | /s/ Rong Wang |
|  | Name: Rong Wang | Name: Rong Wang |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Shanghai Ce Er Xing Management and Consulting Co., Limited (**上海策而行企业管理咨询有限公司**)** | **Shanghai Ce Er Xing Management and Consulting Co., Limited (**上海策而行企业管理咨询有限公司**)** |
|  | By: | /s/ Rong Wang |
|  | Name: Rong Wang | Name: Rong Wang |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **<u>MAJOR SUBSIDIARY:</u>** | **Qingdao Ainuo Animal Hospital Management Co., Limited (**青岛爱诺动物医院管理有限公司**)** | **Qingdao Ainuo Animal Hospital Management Co., Limited (**青岛爱诺动物医院管理有限公司**)** |
|  | By: | /s/ Yonghe Peng |
|  | Name: Yonghe Peng | Name: Yonghe Peng |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Yonghe Peng |
| /s/ Yonghe Peng |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Lang Liu |
| /s/ Lang Liu |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Yanzhong Zhang |
| /s/ Yanzhong Zhang |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Wei Zhang |
| /s/ Wei Zhang |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Liesheng Wang |
| /s/ Liesheng Wang |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Rensheng Wei |
| /s/ Rensheng Wei |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Yi Dong |
| /s/ Yi Dong |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Junfu Mao |
| /s/ Junfu Mao |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| |
|:---|
| Wanbang Li |
| /s/ Wanbang Li |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **EACH MEMBER:** |  | **Tencent Mobility Limited** |
|  | By: | /s/ Huateng Ma |
|  | Name: Huateng Ma | Name: Huateng Ma |
|  | Title: Authorized Signatory | Title: Authorized Signatory |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS B ORDINARY MEMBER:** |  |  |
|  | **Boehringer Ingelheim Animal Health Participation GmbH** | **Boehringer Ingelheim Animal Health Participation GmbH** |
|  | By: | /s/ Dr. Martin Schwarz /s/ Max Schrecklinger |
|  | Name: Dr. Martin Schwarz Max Schrecklinger | Name: Dr. Martin Schwarz Max Schrecklinger |
|  | Title: Managing Director Managing Director | Title: Managing Director Managing Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

---

| | | |
|:---|:---|:---|
| **CLASS B ORDINARY MEMBER:** |  |  |
|  | **Snow Lake China Master Fund, Ltd.** | **Snow Lake China Master Fund, Ltd.** |
|  | By: | /s/ Sean Ma |
|  | Name: Sean Ma | Name: Sean Ma |
|  | Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have executed this Shareholders Agreement as of the date first above written.

**CLASS B ORDINARY MEMBER:** 

---

| | |
|:---|:---|
| **Snow Lake Asia Master Fund Limited** | **Snow Lake Asia Master Fund Limited** |
| By: | /s/ Sean Ma |
| Name: Sean Ma | Name: Sean Ma |
| Title: Director | Title: Director |

---

## Exhibit 5.1

**Exhibit 5.1** 

DRAFT

subject to review and amendment

**Our ref** VSL/785456-000001/25054839v3

New Ruipeng Pet Group Inc.

11F, Building B, Kingkey Timemark

No.9289 Binhe Boulevard, Futian District

Shenzhen, Guangdong Province 518042

People's Republic of China

[ ] 2023

Dear Sirs

**New Ruipeng Pet Group Inc.** 

We have acted as Cayman Islands legal advisers to New Ruipeng Pet Group Inc. (the "**Company**") in connection with the Company's registration statement on Form F-1, including all amendments or supplements thereto (the "**Registration Statement**"), filed with the Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended to date relating to the offering by the Company of certain American depositary shares (the "**ADSs**") representing the Company's ordinary shares of par value US$0.000001 each (the "**Shares**").

We are furnishing this opinion as Exhibits 5.1, 8.1 and 23.2 to the Registration Statement.

---

| | |
|:---|:---|
| **1** | **Documents Reviewed**  |

---

For the purposes of this opinion, we have reviewed only originals, copies or final drafts of the following documents:

1.1 The certificate of incorporation of the Company dated 14 June 2019 and the certificate of incorporation of
change of name of the Company dated 19 August 2021 issued by the Registrar of Companies in the Cayman Islands.

1.2 The ninth amended and restated memorandum and articles of association of the Company as adopted by a special
resolution passed on 30 September 2022 (the "**Pre -IPO Memorandum and Articles** ").

1.3 The tenth amended and restated memorandum and articles of association of the Company as conditionally adopted
by a special resolution passed on [ ] 2023 and effective immediately prior to the completion of the Company's initial public
offering of the ADSs representing the Shares (the "**IPO Memorandum and Articles** ").

1.4 The written resolutions of the board of directors of the Company dated 23 January 2023 (the "**Board Resolutions** ").

1.5 The written resolutions of the shareholders of the Company dated
[ ] 2023 (the "**Shareholders Resolutions** ").

------

1.6 A certificate from a director of the Company, a copy of which is attached hereto (the "**Director's Certificate** ").

1.7 A certificate of good standing dated 20 December 2022, issued by the Registrar of Companies in the Cayman
Islands (the "**Certificate of Good Standing** ").

1.8 The Registration Statement.

---

| | |
|:---|:---|
| **2** | **Assumptions**  |

---

The following opinions are given only as to, and based on, circumstances and matters of fact existing and known to us on the date of this opinion letter. These opinions only relate to the laws of the Cayman Islands which are in force on the date of this opinion letter. In giving these opinions we have relied (without further verification) upon the completeness and accuracy, as of the date of this opinion letter, of the Director's Certificate and the Certificate of Good Standing. We have also relied upon the following assumptions, which we have not independently verified:

2.1 Copies of documents, conformed copies or drafts of documents provided to us are true and complete copies of, or
in the final forms of, the originals.

2.2 All signatures, initials and seals are genuine.

2.3 There is nothing contained in the minute book or corporate records of the Company (which we have not inspected)
which would or might affect the opinions set out below.

2.4 There is nothing under any law (other than the law of the Cayman Islands), which would or might affect the
opinions set out below.

---

| | |
|:---|:---|
| **3** | **Opinion**  |

---

Based upon the foregoing and subject to the qualifications set out below and having regard to such legal considerations as we deem relevant, we are of the opinion that:

3.1 The Company has been duly incorporated as an exempted company with limited liability and is validly existing
and in good standing with the Registrar of Companies under the laws of the Cayman Islands.

3.2 The authorised share capital of the Company, with effect immediately prior to the completion of the
Company's initial public offering of the ADSs representing the Shares, will be US$250,000 divided into 250,000,000,000 Ordinary Shares of a par value of US$0.000001 each.

3.3 The issue and allotment of the Shares have been duly authorised and when allotted, issued and paid for as
contemplated in the Registration Statement, the Shares will be legally issued and allotted, fully paid and non-assessable. As a matter of Cayman Islands law, a share is only issued when it has been entered in
the register of members (shareholders).

3.4 The statements under the caption "Taxation" in the prospectus forming part of the Registration
Statement, to the extent that they constitute statements of Cayman Islands law, are accurate in all material respects and that such statements constitute our opinion.

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| | |
|:---|:---|
| **4** | **Qualifications**  |

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In this opinion the phrase "non-assessable" means, with respect to Shares in the Company, that a shareholder shall not, solely by virtue of its status as a shareholder and in absence of a contractual arrangement, or an obligation pursuant to the memorandum and articles of association, to the contrary, be liable for additional assessments or calls on the Shares by the Company or its creditors (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).

Except as specifically stated herein, we make no comment with respect to any representations and warranties which may be made by or with respect to the Company in any of the documents or instruments cited in this opinion or otherwise with respect to the commercial terms of the transactions, which are the subject of this opinion.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our name under the headings "Enforceability of Civil Liabilities", "Taxation" and "Legal Matters" and elsewhere in the prospectus included in the Registration Statement. 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 U.S. Securities Act of 1933, as amended, or the Rules and Regulations of the Commission thereunder.

Yours faithfully

Maples and Calder (Hong Kong) LLP

## Exhibit 10.1

**Exhibit 10.1** 

**RUIPENG PET GROUP INC.** 

**2021 SHARE INCENTIVE PLAN** 

**ARTICLE 1** 

**PURPOSE** 

The purpose of the Plan is to promote the success and enhance the value of Ruipeng Pet Group Inc., an exempted company formed under the laws of the Cayman Islands (the "<u>Company</u>"), by linking the personal interests of the Directors, Employees, and Consultants to those of the Company's shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company's shareholders.

**ARTICLE 2** 

**DEFINITIONS AND CONSTRUCTION** 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 "<u>Applicable Laws</u>" means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system, of any jurisdiction applicable to Awards granted to residents therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 "<u>Award</u>" means an Option approved by the Committee granted to a Participant pursuant to the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 "<u>Award Agreement</u>" means any written agreement, contract, or other instrument or document evidencing an Award, including through electronic medium.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 "<u>Board</u>" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 "<u>Cause</u>" with respect to a Participant means (unless otherwise expressly provided in the applicable Award Agreement, or another applicable contract with the Participant that defines such term for purposes of determining the effect that a "for cause" termination has on the Participant's Awards) a termination of employment or service based upon a finding by the Service Recipient, acting in good faith and based on its reasonable belief at the time, that the Participant:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) has been negligent in the discharge of his or her duties to the Service Recipient, has refused to perform stated or assigned duties or is incompetent in or (other than by reason of a disability or analogous condition) incapable of performing those duties;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) has been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) has breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation or policy of the Service Recipient; or has been convicted of, or plead guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations or similar offenses);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) has materially breached any of the provisions of any agreement with the Service Recipient;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) has engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business or assets of, the Service Recipient; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) has improperly induced a vendor or customer to break or terminate any contract with the Service Recipient or induced a principal for whom the Service Recipient acts as agent to terminate such agency relationship.

A termination for Cause shall be deemed to occur (subject to reinstatement upon a contrary final determination by the Committee) on the date on which the Service Recipient first delivers written notice to the Participant of a finding of termination for Cause.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 "<u>Code</u>" means the Internal Revenue Code of 1986 of the United States, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 "<u>Committee</u>" means a committee of the Board described in Article 8.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 "<u>Consultant</u>" means any consultant or adviser if: (a) the consultant or adviser renders bona fide services to a Service Recipient; (b) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and (c) the consultant or adviser is a natural person who has contracted directly with the Service Recipient to render such services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 "<u>Corporate Transaction</u>", unless otherwise defined in an Award Agreement, means any of the following transactions, *provided*, *however*, that the Committee shall determine under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding and conclusive:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) an amalgamation, arrangement or consolidation or scheme of arrangement (i) in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated or (ii) following which the holders of the voting securities of the Company do not continue to hold more than 50% of the combined voting power of the voting securities of the surviving entity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the sale, transfer or other disposition of all or substantially all of the assets of the Company;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the complete liquidation or dissolution of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender offer followed by a reverse takeover) in which the Company is the surviving entity but (A) the Company's equity securities outstanding immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such takeover or the initial transaction culminating in such takeover, but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 "<u>Director</u>" means a member of the Board or a member of the board of directors of any Subsidiary of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 "<u>Disability</u>" unless otherwise defined in an Award Agreement, means that the Participant qualifies to receive long-term disability payments under the Service Recipient's long-term disability insurance program, as it may be amended from time to time, to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Service Recipient to which the Participant provides service does not have a long-term disability plan in place, "Disability" means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 "<u>Effective Date</u>" shall have the meaning set forth in Section 9.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 "<u>Employee</u>" means any person, including an officer or a Director, who is in the employment of a Service Recipient, subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance. The payment of a director's fee by a Service Recipient shall not be sufficient to constitute "employment" by the Service Recipient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14 "<u>Exchange Act</u>" means the Securities Exchange Act of 1934 of the United States, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15 "<u>Fair Market Value</u>" means, as of any date, the value of Shares determined as follows:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, the New York Stock Exchange or the NASDAQ Stock Market, its Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Committee) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported on the website maintained by such exchange or market system or such other source as the Committee deems reliable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such Shares as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the absence of an established market for the Shares of the type described in (a) and (b), above, the Fair Market Value thereof shall be determined by the Committee in good faith and in its discretion by reference to (i) the placing price of the latest private placement of the Shares and the development of the Company's business operations and the general economic and market conditions since such latest private placement, (ii) other third party transactions involving the Shares and the development of the Company's business operation and the general economic and market conditions since such transaction, (iii) an independent valuation of the Shares, or (iv) such other methodologies or information as the Committee determines to be indicative of Fair Market Value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16 "<u>Group Entity</u>" means any of the Company and Subsidiaries of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17 "<u>Incentive Share Option</u>" means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18 "<u>Independent Director</u>" means (i) if the Shares or other securities representing the Shares are not listed on a stock exchange, a Director of the Company who is a Non-Employee Director; and (ii) if the Shares or other securities representing the Shares are listed on one or more stock exchange, a Director of the Company who meets the independence standards under the applicable corporate governance rules of the stock exchange(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19 "<u>Non-Employee Director</u>" means a member of the Board who qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.20 "<u>Non-Qualified Share Option</u>" means an Option that is not intended to be an Incentive Share Option.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.21 "<u>Option</u>" means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of Shares at a specified price during specified time periods. An Option may be either an Incentive Share Option or a Non-Qualified Share Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.22 "<u>Participant</u>" means a person who, as a Director, Consultant or Employee, has been granted an Award pursuant to the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.23 "<u>Parent</u>" means a parent corporation under Section 424(e) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.24 "<u>Plan</u>" means the 2021 Share Incentive Plan of Ruipeng Pet Group Inc., as amended and/or restated from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.25 "<u>Related Entity</u>" means any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, or controls through contractual arrangements and consolidates the financial results according to applicable accounting standards, but which is not a Subsidiary and which the Board designates as a Related Entity for purposes of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.26 "<u>Securities Act</u>" means the Securities Act of 1933 of the United States, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.27 "<u>Service Recipient</u>" means the Company or Subsidiary of the Company to which a Participant provides services as an Employee, a Consultant or a Director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28 "<u>Share</u>" means the ordinary shares of the Company, par value US$0.000001 per share, and such other securities of the Company that may be substituted for Shares pursuant to Article 7.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.29 "<u>Subsidiary</u>" means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.30 "<u>Trading Date</u>" means the closing of the first sale to the general public of the Shares pursuant to a registration statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.

**ARTICLE 3** 

**SHARES SUBJECT TO THE PLAN** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <u>Number of Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the provisions of Article 7 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Share Options) is 500 million Shares.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) To the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan. To the extent permitted by Applicable Laws, Shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form or combination by a Group Entity shall not be counted against Shares available for grant pursuant to the Plan. Shares delivered by the Participant or withheld by the Company upon the exercise of any Award under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a). If any Award is forfeited by the Participant or repurchased by the Company, the Shares underlying such Award may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a). Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Share Option to fail to qualify as an incentive share option under Section 422 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <u>Shares Distributed</u>. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares (subject to Applicable Laws) or Shares purchased on the open market. Additionally, at the discretion of the Committee, any Shares distributed pursuant to an Award may be represented by American depository shares. If the number of Shares represented by an American depository share is other than on a one-to-one basis, the limitations of Section 3.1 shall be adjusted to reflect the distribution of American depository shares in lieu of Shares.

**ARTICLE 4** 

**ELIGIBILITY AND PARTICIPATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <u>Eligibility</u>. Persons eligible to participate in this Plan include Employees, Consultants, and Directors, as determined by the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <u>Participation</u>. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be granted an Award pursuant to this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <u>Jurisdictions</u>. In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in the jurisdiction in which the Participant resides, is employed, operates or is incorporated. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; *provided, however*, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 3.1 of the Plan. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.

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**ARTICLE 5** 

**OPTIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 <u>General</u>. The Committee is authorized to grant Options to Participants on the following terms and conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Exercise Price</u>. The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Award Agreement which may be a fixed price or a variable price related to the Fair Market Value of the Shares. The exercise price per Share subject to an Option may be amended or adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding and conclusive. For the avoidance of doubt, to the extent not prohibited by Applicable Laws or any exchange rule, a downward adjustment of the exercise prices of Options mentioned in the preceding sentence shall be effective without the approval of the Company's shareholders or the approval of the affected Participants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Time and Conditions of Exercise</u>. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, including exercise prior to vesting; *provided* that the term of any Option granted under the Plan shall not exceed the fifth (5<sup>th</sup>) anniversary of the date on which the vesting of the Option commences, except as provided in Section 10.1. The Committee shall also determine any conditions, if any, that must be satisfied before all or part of an Option may be exercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Payment</u>. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible under the Applicable Laws, cash or check in Chinese Renminbi, (iii) cash or check denominated in any other local currency as approved by the Committee, (iv) Shares held for such period of time as may be required by the Committee in order to avoid adverse financial accounting consequences and having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v) after the Trading Date, the delivery of a notice that the Participant has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; *provided* that payment of such proceeds is then made to the Company upon settlement of such sale, (vi) other property acceptable to the Committee with a Fair Market Value equal to the exercise price, or (vii) any combination of the foregoing. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an "executive officer" of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate Section 13(k) of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Effects of Termination of Employment or Service on Options</u>. Termination of employment or service shall have the following effects on Options granted to the Participants:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Dismissal for Cause</u>. Unless otherwise provided in the Award Agreement, if a Participant's employment by or service to the Service Recipient is terminated by the Service Recipient for Cause, the Participant's Options will terminate upon such termination, whether or not the Option is then vested and/or exercisable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Death or Disability</u>. Unless otherwise provided in the Award Agreement, if a Participant's employment by or service to the Service Recipient terminates as a result of the Participant's death or Disability:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Participant (or his or her legal representative or beneficiary, in the case of the Participant's
Disability or death, respectively), will have until the date that is six (6) months after the Participant's termination of Employment to exercise the Participant's Options (or portion thereof) to the extent that such Options were
vested and exercisable on the date of the Participant's termination of Employment on account of death or Disability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Options, to the extent not vested and exercisable on the date of the Participant's termination of
Employment or service, shall terminate upon the Participant's termination of Employment or service on account of death or Disability; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Options, to the extent exercisable within six (6) months following the Participant's termination
of Employment or service and not exercised during such period, shall terminate at the close of business on the last day of the six-month period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Other Terminations of Employment or Service</u>. Unless otherwise provided in the Award Agreement, if a Participant's employment by or service to the Service Recipient terminates for any reason other than a termination by the Service Recipient for Cause or because of the Participant's death or Disability:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the Participant will have within six (6) months after termination of such Participant's Employment or
service to exercise his or her Options (or portion thereof) to the extent that such Options were vested and exercisable on the date of the Participant's termination of Employment or service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Options, to the extent not vested and exercisable on the date of the Participant's termination of
Employment or service, shall terminate upon the Participant's termination of Employment or service; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Options, to the extent exercisable within six (6) months after termination of such Participant's
Employment or service and not exercised during such period, shall terminate at the close of business on the last day of such six-month period.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 <u>Incentive Share Options</u>. Incentive Share Options may be granted to Employees of the Company or a Subsidiary of the Company. Incentive Share Options may not be granted to employees of a Related Entity or to Independent Directors or Consultants. The terms of any Incentive Share Options granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the following additional provisions of this Section 5.2:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Individual Dollar Limitation</u>. The aggregate Fair Market Value (determined as of the time the Option is granted) of all Shares with respect to which Incentive Share Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive Share Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Share Options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Exercise Price</u>. The exercise price of an Incentive Share Option shall be the Fair Market Value at the date of grant. However, the exercise price of any Incentive Share Option granted to any individual who, at the date of grant, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company may not be less than 110% of Fair Market Value on the date of grant and such Option may not be exercisable for more than five years from the date of grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Transfer Restriction</u>. The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive Share Option within (i) two years from the date of grant of such Incentive Share Option or (ii) one year after the transfer of such Shares to the Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Expiration of Incentive Share Options</u>. No Award of an Incentive Share Option may be made pursuant to this Plan after the fifth anniversary of the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 <u>Right to Exercise</u>. During a Participant's lifetime, an Incentive Share Option may be exercised only by the Participant.

**ARTICLE 6** 

**PROVISIONS APPLICABLE TO AWARDS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <u>Award Agreement</u>. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant's employment or service terminates, and the Company's authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <u>No Transferability; Limited Exception to Transfer Restrictions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.1 Limits on Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 6.2, by applicable law and by the Award Agreement, as the same may be amended:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all Awards are non-transferable and will not be subject in any manner
to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Awards will be exercised only by the Participant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) amounts payable or shares issuable pursuant to an Award will be delivered only to (or for the account of), and,
in the case of Shares, registered in the name of, the Participant.

In addition, the shares shall be subject to the restrictions set forth in the applicable Award Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2.2 <u>Further Exceptions to Limits on Transfer</u>. The exercise and transfer restrictions in Section 6.2.1 will not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) transfers to the Company or a Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) transfers by gift to "immediate family" as that term is defined in SEC Rule 16a-1(e) promulgated under the Exchange Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died,
transfers to or exercises by the Participant's beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) if the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by
the Participant's duly authorized legal representative; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) subject to the prior approval of the Committee or an executive officer or director of the Company authorized by
the Committee, transfer to one or more natural persons who are the Participant's family members or entities owned and controlled by the Participant and/or the Participant's family members, including but not limited to trusts or other
entities whose beneficiaries or beneficial owners are the Participant and/or the Participant's family members, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the
Committee or may establish. Any permitted transfer shall be subject to the condition that the Committee receives evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes and on a basis consistent with the
Company's lawful issue of securities.

Notwithstanding anything else in this Section 6.2.2 to the contrary, but subject to compliance with all Applicable Laws, Incentive Share Options will be subject to any and all transfer restrictions under the Code applicable to such Awards or necessary to maintain the intended tax consequences of such Awards. Notwithstanding clause (b) above but subject to compliance with all Applicable Laws, any contemplated transfer by gift to "immediate family" as referenced in clause (b) above is subject to the condition precedent that the transfer be approved by the Committee in order for it to be effective.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 <u>Beneficiaries</u>. Notwithstanding Section 6.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant's spouse as his or her beneficiary with respect to more than 50% of the Participant's interest in the Award shall not be effective without the prior written consent of the Participant's spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant's will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 <u>Performance Objectives and Other Terms</u>. The Committee, in its discretion, shall set performance objectives or other vesting criteria which, depending on the extent to which they are met, will determine the number or value of the Awards that will be granted or paid out to the Participants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 <u>Share Certificates</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing the Shares pursuant to the exercise of any Award, unless and until the Committee has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded. All Share certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with all Applicable Laws, and the rules of any national securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Committee may place legends on any Share certificate to reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the Committee may require that a Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Committee.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding anything herein to the contrary, unless otherwise determined by the Committee or required by Applicable Laws, the Company shall not deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded on the books of the Company or, as applicable, its transfer agent or share plan administrator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 <u>Paperless Administration</u>. Subject to Applicable Laws, the Committee may make Awards and provide applicable disclosure and procedures for exercise of Awards by an internet website or interactive voice response system for the paperless administration of Awards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 <u>Foreign Currency</u>. A Participant may be required to provide evidence that any currency used to pay the exercise price of any Award was acquired and taken out of the jurisdiction in which the Participant resides in accordance with Applicable Laws, including foreign exchange control laws and regulations. In the event the exercise price for an Award is paid in Chinese Renminbi or other foreign currency, as permitted by the Committee, the amount payable will be determined by conversion from U.S. dollars at the official rate promulgated by the People's Bank of China for Chinese Renminbi, or for jurisdictions other than the People's Republic of China, the exchange rate as selected by the Committee on the date of exercise.

**ARTICLE 7** 

**CHANGES IN CAPITAL STRUCTURE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <u>Adjustments</u>. In the event of any dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the shares of Shares or the share price of a Share, the Committee shall make such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1); (b) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant or exercise price per share for any outstanding Awards under the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <u>Corporate Transactions</u>. Except as may otherwise be provided in any Award Agreement or any other written agreement entered into by and between the Company and a Participant, if the Committee anticipates the occurrence, or upon the occurrence, of a Corporate Transaction, the Committee may, in its sole discretion, provide for (i) any and all Awards outstanding hereunder to terminate at a specific time in the future and shall give each Participant the right to exercise the vested portion of such Awards during a period of time as the Committee shall determine, or (ii) the purchase of any Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such Award, then such Award may be terminated by the Company without payment), or (iii) the replacement of such Award with other rights or property selected by the Committee in its sole discretion or the assumption of or substitution of such Award by the successor or surviving corporation, or a Parent or Subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and prices, or (iv) payment of such Award in cash based on the value of Shares on the date of the Corporate Transaction plus reasonable interest on the Award through the date as determined by the Committee when such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with Section 409A of the Code.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 <u>Outstanding Awards – Other Changes</u>. In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 7, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 <u>No Other Rights</u>. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, and no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to an Award or the grant or exercise price of any Award.

**ARTICLE 8** 

**ADMINISTRATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <u>Committee</u>. The Plan shall be administered by the Board or a committee of one or more members of the Board (the "<u>Committee</u>") to whom the Board shall delegate the authority to grant or amend Awards to Participants other than any of the Committee members, Independent Directors and executive officers of the Company. Reference to the Committee shall refer to the Board in absence of the Committee. Notwithstanding the foregoing, the full Board, acting by majority of its members in office, shall conduct the general administration of the Plan if required by Applicable Laws, and with respect to Awards granted to the Committee members, Independent Directors and executive officers of the Company and for purposes of such Awards the term "Committee" as used in the Plan shall be deemed to refer to the Board. The Committee may further delegate, to the extent permitted by applicable law, to one or more officers of the Company, its powers under this Plan (a) to designate officers, employees and consultants of the Company and its Subsidiaries who will receive grants of Awards under this Plan, and (b) to determine the number of shares subject to, and the other terms and conditions of, such Awards, in each case within the limits established by the Board or the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 <u>Action by the Committee</u>. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved unanimously in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of a Group Entity, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 <u>Authority of the Committee</u>. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) designate Participants to receive Awards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) determine the type or types of Awards to be granted to each Participant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) determine the number of Awards to be granted and the number of Shares to which an Award will relate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) prescribe the form of each Award Agreement, which need not be identical for each Participant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) decide all other matters that must be determined in connection with an Award;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) amend the terms and conditions of Award Agreements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan, including design and adopt from time to time new types of Awards that are in compliance with Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 <u>Decisions Binding</u>. The Committee's interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

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**ARTICLE 9** 

**EFFECTIVE AND EXPIRATION DATE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 <u>Effective Date</u>. The Plan shall become effective as of the date on which the Board adopts the Plan (the "<u>Effective Date</u>"). The Plan shall be ratified by the shareholders of the Company by written resolutions or at a meeting duly held in accordance with the applicable provisions of the Company's Memorandum of Association and Articles of Association within 12 months of the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 <u>Expiration Date</u>. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the fifth anniversary of the Effective Date. Any Awards that are outstanding on the fifth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.

**ARTICLE 10** 

**AMENDMENT, MODIFICATION, AND TERMINATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 <u>Amendment, Modification,</u> <u>a</u><u>nd Termination</u>. At any time and from time to time, the Board may terminate, amend or modify the Plan; *provided, however*, that (a) to the extent necessary and desirable to comply with Applicable Laws or stock exchange rules, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required, unless the Company decides to follow home country practice, and (b) unless the Company decides to follow home country practice, shareholder approval is required for any amendment to the Plan that (i) increases the number of Shares available under the Plan (other than any adjustment as provided by Article 7), or (ii) permits the Committee to extend the term of the Plan or the exercise period for an Option beyond five (5) years from the date on which the vesting of the Option commences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 <u>Awards Previously Granted</u>. Except with respect to amendments made pursuant to Section 10.1, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.

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**ARTICLE 11** 

**GENERAL PROVISIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 <u>No Rights to Awards</u>. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 <u>No Shareholders Rights</u>. No Award gives the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 <u>Taxes</u>. No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Committee for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all applicable taxes (including the Participant's payroll tax obligations) required or permitted by Applicable Laws to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy any income and payroll tax liabilities applicable to the Participant with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for the applicable income and payroll tax purposes that are applicable to such supplemental taxable income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 <u>No Right to Employment or Services</u>. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Service Recipient to terminate any Participant's employment or services at any time, nor confer upon any Participant any right to continue in the employment or services of any Service Recipient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5 <u>Unfunded Status of Awards</u>. The Plan is intended to be an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the relevant Group Entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.6 <u>Indemnification</u>. To the extent allowable pursuant to Applicable Laws, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; *provided* he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company's Memorandum of Association and Articles of Association, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7 <u>Relationship to Other Benefits</u>. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of any Group Entity except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.8 <u>Expenses</u>. The expenses of administering the Plan shall be borne by the Group Entities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9 <u>Titles and Headings</u>. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10 <u>Fractional Shares</u>. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down as appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.11 <u>Limitations Applicable to Section</u> <u>16 Persons</u>. Notwithstanding anything herein to the contrary, the Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by the Applicable Laws, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.12 <u>Government and Other Regulations</u>. The obligation of the Company to make payment of awards in Shares or otherwise shall be subject to all Applicable Laws, and to such approvals by government agencies as may be required. The Company shall be under no obligation to register any of the Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction. If the Shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act or other Applicable Laws, the Company may restrict the transfer of such Shares in such manner as it deems advisable to ensure the availability of any such exemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.13 <u>Governing Law</u>. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the Cayman Islands.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.14 <u>Section 409A</u>. To the extent that the Committee determines that any Award granted under the Plan is or may become subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and the Award Agreements shall be interpreted in accordance with Section 409A of the Code and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulation or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Committee may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.15 <u>Appendices</u>. Subject to Section 10.1, the Committee may approve such supplements, amendments or appendices to the Plan as it may consider necessary or appropriate for purposes of compliance with Applicable Laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the share limitation contained in Section 3.1 of the Plan without the approval of the Board.

## Exhibit 10.2

**Exhibit 10.2** 

**INDEMNIFICATION AGREEMENT** 

This INDEMNIFICATION AGREEMENT (this "<u>Agreement</u>") is made as of<u> </u>, 2023 by and between New Ruipeng Pet Group Inc., an exempted company incorporated and existing under the laws of the Cayman Islands (the "<u>Company</u>"), and<u> </u> (ID Card No.<u> </u>) (the "<u>Indemnitee</u>").

WHEREAS, the Indemnitee has agreed to serve as a director or officer of the Company and in such capacity will render valuable services to the Company; and

WHEREAS, in order to induce and encourage highly experienced and capable persons such as the Indemnitee to render valuable services to the Company, the board of directors of the Company (the "<u>Board</u>") has determined that this Agreement is not only reasonable and prudent, but necessary to promote and ensure the best interests of the Company and its shareholders;

NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter set forth, and other good and valuable consideration, including, without limitation, the service of the Indemnitee, the receipt of which hereby is acknowledged, and in order to induce the Indemnitee to render valuable services the Company, the Company and the Indemnitee hereby agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Definitions.</u> As used in this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "<u>Change in Control</u>" shall mean a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A whether or not the Company is then subject to such reporting requirement (or in response to any similar item on any similar or successor schedule or form) promulgated under the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the "<u>Act</u>"); provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred (irrespective of the applicability of the initial clause of this definition) if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act, but excluding any trustee or other fiduciary holding securities pursuant to an employee benefit or welfare plan or employee share plan of the Company or any subsidiary or affiliate of the Company, or any entity organized, appointed, established or holding securities of the Company with voting power for or pursuant to the terms of any such plan) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities without the prior approval of at least two-thirds of the Continuing Directors (as defined below) in office immediately prior to such person's attaining such interest; (ii) the Company is a party to a merger, consolidation, scheme of arrangement, sale of assets or other reorganization, or a proxy contest, as a consequence of which Continuing Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of the Company (or any successor entity) thereafter; or (iii) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of the Company (including for this purpose any new director whose election or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) (such directors being referred to herein as "<u>Continuing Directors</u>") cease for any reason to constitute at least a majority of the Board of the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "<u>Disinterested Director</u>" with respect to any request by the Indemnitee for indemnification or advancement of expenses hereunder shall mean a director of the Company who neither is nor was a party to the Proceeding (as defined below) in respect of which indemnification or advancement is being sought by the Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The term "<u>Expenses</u>" shall mean, without limitation, expenses of Proceedings, including attorneys' fees, disbursements and retainers, accounting and witness fees, expenses related to preparation for service as a witness and to service as a witness, travel and deposition costs, expenses of investigations, judicial or administrative proceedings and appeals, amounts paid in settlement of a Proceeding by or on behalf of the Indemnitee, costs of attachment or similar bonds, any expenses of attempting to establish or establishing a right to indemnification or advancement of expenses, under this Agreement, the Company's Memorandum of Association and Articles of Association as currently in effect (the "<u>Articles</u>"), applicable law or otherwise, and reasonable compensation for time spent by the Indemnitee in connection with the investigation, defense or appeal of a Proceeding or action for indemnification for which the Indemnitee is not otherwise compensated by the Company or any third party. The term "Expenses" shall not include the amount of judgments, fines, interest or penalties, or excise taxes assessed with respect to any employee benefit or welfare plan, which are actually levied against or sustained by the Indemnitee to the extent sustained after final adjudication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The term "<u>Independent Legal Counsel</u>" shall mean any firm of attorneys reasonably selected by the Board of the Company, so long as such firm has not represented the Company, the Company's subsidiaries or affiliates, the Indemnitee, any entity controlled by the Indemnitee, or any party adverse to the Company, within the preceding five (5) years. Notwithstanding the foregoing, the term "Independent Legal Counsel" shall not include any person who, under applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee's right to indemnification or advancement of expenses under this Agreement, the Company's Articles, applicable law or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The term "<u>Proceeding</u>" shall mean any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, or other proceeding (including, without limitation, an appeal therefrom), formal or informal, whether brought in the name of the Company or otherwise, whether of a civil, criminal, administrative or investigative nature, and whether by, in or involving a court or an administrative, other governmental or private entity or body (including, without limitation, an investigation by the Company or its Board), by reason of (i) the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, whether or not the Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement is to be provided under this Agreement, (ii) any actual or alleged act or omission or neglect or breach of duty, including, without limitation, any actual or alleged error or misstatement or misleading statement, which the Indemnitee commits or suffers while acting in any such capacity, or (iii) the Indemnitee attempting to establish or establishing a right to indemnification or advancement of expenses pursuant to this Agreement, the Company's Articles, applicable law or otherwise.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The phrase "<u>serving at the request of the Company as an agent of another enterprise</u>" or any similar terminology shall mean, unless the context otherwise requires, serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, employee benefit or welfare plan or other enterprise, foreign or domestic. The phrase "serving at the request of the Company" shall include, without limitation, any service as a director/an executive officer of the Company which imposes duties on, or involves services by, such director/executive officer with respect to the Company or any of the Company's subsidiaries, affiliates, employee benefit or welfare plans, such plan's participants or beneficiaries or any other enterprise, foreign or domestic. In the event that the Indemnitee shall be a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, employee benefit or welfare plan or other enterprise, foreign or domestic, 30% or more of the ordinary shares, combined voting power or total equity interest of which is owned by the Company or any subsidiary or affiliate thereof, then it shall be presumed conclusively that the Indemnitee is so acting at the request of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Services by the Indemnitee</u>. The Indemnitee agrees to serve as a director or officer of the Company in accordance with applicable law and the Company's Articles of Association, or under any agreement with the Company, for so long as the Indemnitee is duly elected or appointed or until such time as the Indemnitee tenders a resignation in writing or is removed from the Indemnitee's position; provided, however, that the Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or other obligation imposed by operation of law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Proceedings by or in the Right of the Company</u>. To the fullest extent permitted by applicable law, the Company shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, against all Expenses, judgments, fines, interest or penalties, and excise taxes assessed with respect to any employee benefit or welfare plan, which are actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of such a Proceeding, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe that Indemnitee's conduct was unlawful <u>except</u> that no indemnification under this section shall be made in respect of any claim, issue or matter as to which such person shall have been adjudicated by final judgment by a court of competent jurisdiction to be liable to the Company for willful misconduct in the performance of his/her duty to the Company, unless and only to the extent that the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such amounts which such other court shall deem proper.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Proceeding Other Than a Proceeding by or in the Right of the Company</u>. To the fullest extent permitted by applicable law, the Company shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Company), by reason of the fact that the Indemnitee is or was a director or officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, against all Expenses, judgments, fines, interest or penalties, and excise taxes assessed with respect to any employee benefit or welfare plan, which are actually and reasonably incurred by the Indemnitee in connection with such a Proceeding; provided, however, that any settlement of a Proceeding must be approved in advance in writing by the Company (which approval shall not be unreasonably withheld).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Indemnification for Costs, Charges and Expenses of Witness or Successful Party</u>. Notwithstanding any other provision of this Agreement (except as set forth in subparagraph 10(a) hereof), and without a requirement for determination as required by Paragraph 8 hereof, to the extent that the Indemnitee (a) has prepared to serve or has served as a witness in any Proceeding in any way relating to (i) the Company or any of the Company's subsidiaries, affiliates, employee benefit or welfare plans or such plan's participants or beneficiaries or (ii) anything done or not done by the Indemnitee as a director or officer of the Company or in connection with serving at the request of the Company as an agent of another enterprise, or (b) has been successful in defense of any Proceeding or in defense of any claim, issue or matter therein, on the merits or otherwise, including the dismissal of a Proceeding without prejudice or the settlement of a Proceeding without an admission of liability, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection therewith to the fullest extent permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Primacy of Indemnification</u>. The Company hereby acknowledges that, to the extent the Indemnitee is serving as a director or officer of the Company at the direction of another person or entity, the Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance provided by such other person or entity and/or its affiliates (collectively, the "**Other Indemnitors**"). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to the Indemnitee are primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Director are secondary); (ii) that it shall be required to advance the full amount of Expenses incurred by the Indemnitee and shall be liable for the full amount of all Expenses to the extent legally permitted and as required by the terms of this Agreement (or any agreement between the Company and the Indemnitee), without regard to any rights the Indemnitee may have against the Other Indemnitors; and (iii) that it irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof to the extent permitted by the applicable law. The Company further agrees that no advancement or payment by the Other Indemnitors on behalf of the Indemnitee, to the extent reasonable and necessary, with respect to any claim for which the Indemnitee has sought indemnification from the Company shall affect the foregoing and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Indemnitee against the Company; provided, that the Indemnitee may not receive duplicate payments for the same proceedings or claims. The Company and the Indemnitee agree that the Other Indemnitors are express third party beneficiaries of the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Partial Indemnification</u>. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of the Expenses, judgments, fines, interest or penalties, or excise taxes assessed with respect to any employee benefit or welfare plan, which are actually and reasonably incurred by the Indemnitee in the investigation, defense, appeal or settlement of any Proceeding, but not, however, for the total amount of the Indemnitee's Expenses, judgments, fines, interest or penalties, or excise taxes assessed with respect to any employee benefit or welfare plan, then the Company shall nevertheless indemnify the Indemnitee for the portion of such Expenses, judgments, fines, interest or penalties or excise taxes to which the Indemnitee is entitled.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Advancement of Expenses</u>. The Expenses incurred by the Indemnitee in any Proceeding shall be paid promptly by the Company in advance of the final disposition of the Proceeding at the written request of the Indemnitee to the fullest extent permitted by applicable law; provided, however, that the Indemnitee shall set forth in such request reasonable evidence that such Expenses have been incurred by the Indemnitee in connection with such Proceeding, a statement that such Expenses do not relate to any matter described in subparagraph 10(a) of this Agreement, and an undertaking in writing to repay any advances if it is ultimately determined as provided in subparagraph 9(b) of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Indemnification Procedure; Determination of Right to Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Promptly after receipt by the Indemnitee of notice of the commencement of any Proceeding, the Indemnitee shall, if a claim for indemnification or advancement of Expenses in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof in writing. The omission to so notify the Company will not relieve the Company from any liability which the Company may have to the Indemnitee under this Agreement unless the Company shall have lost significant substantive or procedural rights with respect to the defense of any Proceeding as a result of such omission to so notify.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Indemnitee shall be conclusively presumed to have met the relevant standards of conduct, if any, as defined by applicable law, for indemnification pursuant to this Agreement and shall be absolutely entitled to such indemnification. The Company shall have the burden of proof in overcoming such presumption, and such presumption shall be used as a basis for a determination of entitlement to indemnification unless the Company overcomes such presumption by clear and convincing evidence. If there is a Change of Control of the Company, upon written request by Indemnitee for indemnification, any determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made by Independent Counsel selected by Indemnitee with the consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed) in a written opinion, a copy of which shall be delivered to the Company and Indemnitee, and the Company agrees to pay the fees and expenses of the Independent Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If a claim for indemnification or advancement of Expenses under this Agreement is not paid by the Company within thirty (30) days after receipt by the Company of written notice thereof, the rights provided by this Agreement shall be enforceable by the Indemnitee in any court of competent jurisdiction. Such judicial proceeding shall be made de novo. The burden of proving that indemnification or advances are not appropriate shall be on the Company. The termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of *nolo contendere* or its equivalent, shall not, of itself (i) create a presumption that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in the best interests of the Company and/or its shareholders, and, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful or (ii) otherwise adversely affect the rights of the Indemnitee to indemnification or advancement of Expenses under this Agreement, except as may be provided herein.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) If a court of competent jurisdiction shall determine that the Indemnitee is entitled to any indemnification or advancement of Expenses hereunder, the Company shall pay all Expenses actually and reasonably incurred by the Indemnitee in connection with such adjudication (including, but not limited to, any appellate proceedings).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) With respect to any Proceeding for which indemnification or advancement of Expenses is requested, the Company will be entitled to participate therein at its own expense and, except as otherwise provided below, to the extent that it may wish, the Company may assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense of a Proceeding, the Company will not be liable to the Indemnitee under this Agreement for any Expenses subsequently incurred by the Indemnitee in connection with the defense thereof, other than as provided below. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitee's written consent. The Indemnitee shall have the right to employ his/her own counsel in any Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense of the Proceeding shall be at the expense of the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of a Proceeding or that counsel selected by the Company may not be adequately representing the Indemnitee, or (iii) the Company shall not in fact have employed, or cease or terminate the employment of, counsel to assume the defense of a proceeding, in each of which cases the fees and expenses of the Indemnitee's counsel shall be advanced by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which the Indemnitee has reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>Limitations on Indemnification</u>. No payments pursuant to this Agreement shall be made by the Company, *provided that* the payments to be made by the Company pursuant to this Agreement shall arise from the Indemnitee's service in his or her capacity as a director or executive officer of the Company, as the case may be:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To indemnify or advance funds to the Indemnitee for Expenses with respect to (i) Proceedings initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under applicable law or (ii) Expenses incurred by the Indemnitee in connection with voluntarily preparing to serve or serving, prior to a Change in Control, as a witness in cooperation with any party or entity who or which has threatened or commenced any action or proceeding against the Company, or any director, officer, employee, trustee, agent, representative, subsidiary, parent corporation or affiliate of the Company, but such indemnification or advancement of Expenses in each such case may be provided by the Company if the Indemnitee was obligated to serve as such a witness, or if the Board finds it to be appropriate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for which payment has actually been received by or on behalf of Indemnitee under any insurance policy, contract, agreement or other indemnity or advancement provision, except with respect to any excess beyond the amount actually received under any such insurance policy, contract, agreement, other indemnity or advancement provision or otherwise; <u>provided</u>, <u>however</u>, that payment made to Indemnitee pursuant to an insurance policy purchased and maintained by Indemnitee at his or her own expense of any amounts otherwise indemnifiable or obligated to be made pursuant to this Agreement shall not reduce the Company's obligations to Indemnitee pursuant to this Agreement

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties sustained in any Proceeding for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Act or similar provisions of any foreign or United States federal, state or local statute or regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) To indemnify the Indemnitee for any Expenses, judgments, fines, interest or penalties, or excise taxes on account of the Indemnitee's conduct if such conduct shall be finally adjudged to constitute actual fraud or willful deceit actually committed by the Indemnitee; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) If a court of competent jurisdiction finally determines that any indemnification hereunder is unlawful. In this respect, the Company and the Indemnitee have been advised that the U.S. Securities and Exchange Commission takes the position that indemnification for liabilities arising under securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) To indemnify the Indemnitee in connection with Indemnitee's personal tax matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Continuation of Indemnification</u>. All agreements and obligations of the Company contained herein shall continue during the period that the Indemnitee is a director or officer of the Company (or is or was serving at the request of the Company as an agent of another enterprise, foreign or domestic) and shall continue thereafter so long as the Indemnitee shall be subject to any possible Proceeding by reason of the fact that the Indemnitee was a director or officer of the Company or serving in any other capacity referred to in this Paragraph 10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <u>Indemnification Hereunder Not Exclusive</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The indemnification provided by this Agreement shall not be deemed to be exclusive of any other rights to which the Indemnitee may be entitled under the Company's Articles, any agreement, vote of shareholders or vote of Disinterested Directors, provisions of applicable law, or otherwise, both as to action or omission in the Indemnitee's official capacity and as to action or omission in another capacity on behalf of the Company while holding such office. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses than would be afforded currently under the Charter or this Agreement, then this Agreement (without any further action by the parties hereto) shall automatically be deemed to be amended to require that the Company indemnify Indemnitee to the fullest extent permitted by law. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Companies Law and the Charter permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond ("***Indemnification Arrangements***") on behalf of Indemnitee against any liability asserted against Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a director, officer, employee or agent of the Company, or arising out of Indemnitee's status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement or under the Companies Act, as it may then be in effect. The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managing members, fiduciaries, employees, or agents of the Company or of any other entity which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, trustee, partner, managing member, fiduciary, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <u>Successors and Assigns</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement shall be binding upon the Indemnitee, and shall inure to the benefit of, the Indemnitee and the Indemnitee's heirs, executors, administrators and assigns, whether or not the Indemnitee has ceased to be a director or officer, and the Company and its successors and assigns. Upon the sale of all or substantially all of the business, assets or share capital of the Company to, or upon the merger of the Company into or with, any corporation, partnership, joint venture, trust or other person, this Agreement shall inure to the benefit of and be binding upon both the Indemnitee and such purchaser or successor person. Subject to the foregoing, this Agreement may not be assigned by either party without the prior written consent of the other party hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Indemnitee is deceased and is entitled to indemnification under any provision of this Agreement, the Company shall indemnify the Indemnitee's estate and the Indemnitee's spouse, heirs, executors, administrators and assigns against, and the Company shall, and does hereby agree to assume, any and all Expenses actually and reasonably incurred by or for the Indemnitee or the Indemnitee's estate, in connection with the investigation, defense, appeal or settlement of any Proceeding. Further, when requested in writing by the spouse of the Indemnitee, and/or the Indemnitee's heirs, executors, administrators and assigns, the Company shall provide appropriate evidence of the Company's agreement set out herein to indemnify the Indemnitee against and to itself assume such Expenses.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <u>Subrogation</u>. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <u>Severability</u>. Each and every paragraph, sentence, term and provision of this Agreement is separate and distinct so that if any paragraph, sentence, term or provision thereof shall be held to be invalid, unlawful or unenforceable for any reason, such invalidity, unlawfulness or unenforceability shall not affect the validity, unlawfulness or enforceability of any other paragraph, sentence, term or provision hereof. To the extent required, any paragraph, sentence, term or provision of this Agreement may be modified by a court of competent jurisdiction to preserve its validity and to provide the Indemnitee with the broadest possible indemnification permitted under applicable law. The Company's inability, pursuant to a court order or decision, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <u>Savings Clause</u>. If this Agreement or any paragraph, sentence, term or provision hereof is invalidated on any ground by any court of competent jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any Expenses, judgments, fines, interest or penalties, or excise taxes assessed with respect to any employee benefit or welfare plan, which are incurred with respect to any Proceeding to the fullest extent permitted by any (a) applicable paragraph, sentence, term or provision of this Agreement that has not been invalidated or (b) applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <u>Interpretation; Governing Law</u>. This Agreement shall be construed as a whole and in accordance with its fair meaning and any ambiguities shall not be construed for or against either party. Headings are for convenience only and shall not be used in construing meaning. This Agreement shall be governed and interpreted in all respects in accordance with the laws of the Cayman Islands without regard to the conflict of laws principles thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <u>Amendments</u>. No amendment, waiver, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by the party against whom enforcement is sought. The indemnification rights afforded to the Indemnitee hereby are contract rights and may not be diminished, eliminated or otherwise affected by amendments to the Company's Articles, or by other agreements, including directors' and officers' liability insurance policies, of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. <u>Counterparts</u>. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. <u>Notices</u>. Any notice required to be given under this Agreement shall be directed to the Company at New Ruipeng Pet Group Inc., 56F, Building A, Kingkey Timemark, No. 9289 Binhe Boulevard, Futian District, Shenzhen, Guangdong Province 518042, People's Republic of China, People's Republic of China, Attention: Ms. Li Li, and to the Indemnitee at<u> </u> or to such other address as either party shall designate to the other in writing.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties have executed this Indemnification Agreement as of the date first written above.

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| |
|:---|
| **New Ruipeng Pet Group Inc.** |
| By: |
| Name: |
| Title: |
| <br> **INDEMNITEE** |
| By: |
| Name: |

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[Signature Page to Indemnification Agreement]

## Exhibit 10.3

**Exhibit 10.3** 

**EMPLOYMENT AGREEMENT** 

This EMPLOYMENT AGREEMENT (the "<u>Agreement"</u>) is entered into as of<u> </u>, 2023 by and between New Ruipeng Pet Group Inc., an exempted company incorporated and existing under the laws of the Cayman Islands (the "<u>Company</u>") and<u> </u> (ID Card/Passport No.<u> </u>) (the "<u>Executive</u>").

**RECITALS** 

WHEREAS, the Company desires to employ the Executive and to assure itself of the services of the Executive during the term of Employment (as defined below) and under the terms and conditions of the Agreement;

WHEREAS, the Executive desires to be employed by the Company during the term of Employment and under the terms and conditions of the Agreement;

**AGREEMENT** 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the Company and the Executive agree as follows:

1. **EMPLOYMENT** 

The Company hereby agrees to employ the Executive and the Executive hereby accepts such employment, on the terms and conditions hereinafter set forth (the "<u>Employment</u>").

2. **TERM** 

Subject to the terms and conditions of the Agreement, the initial term of the Employment shall be<u> </u> years, commencing on<u> </u>, 2023 (the "<u>Effective Date</u>") and ending on<u> </u>,<u> </u> (the "<u>Initial Term</u>"), unless terminated earlier pursuant to the terms of the Agreement. Upon expiration of the Initial Term of the Employment, the Employment shall be automatically extended for successive periods of<u> </u> months each (each, an "<u>Extension Period</u>") unless either party shall have given advance written notice to the other party, in the manner set forth in Section 19 below, prior to the end of the Initial Term or the Extension Period in question, as applicable, that the term of this Agreement that is in effect at the time such written notice is given is not to be extended or further extended, as the case may be (the period during which this Agreement is effective being referred to hereafter as the "<u>Term</u>").

3. **POSITION AND DUTIES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) During the Term, the Executive shall serve as <u> </u> of the Company or in such other position or positions with a level of duties and responsibilities consistent with the
foregoing with the Company and/or its subsidiaries and affiliates as the Board of Directors of the Company (the " <u>Board</u> ") may specify from time to time and shall have the duties, responsibilities and obligations customarily assigned
to individuals serving in the position or positions in which the Executive serves hereunder and as assigned by the Board, or with the Board's authorization, by the Company's Chief Executive Officer.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Executive agrees to devote all of his/her working time and efforts to the performance of his/her duties for
the Company and to faithfully and diligently serve the Company in accordance with the Agreement and the guidelines, policies and procedures of the Company approved from time to time by the Board.

4. **NO BREACH OF CONTRACT** 

The Executive hereby represents to the Company that: (i) the execution and delivery of the Agreement by the Executive and the performance by the Executive of the Executive's duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which the Executive is a party or by which the Executive is otherwise bound, except that the Executive does not make any representation with respect to agreements required to be entered into by and between the Executive and any member of the Group pursuant to the applicable law of the jurisdiction in which the Executive is based, if any; (ii) that the Executive is not in possession of any information (including, without limitation, confidential information and trade secrets) the knowledge of which would prevent the Executive from freely entering into the Agreement and carrying out his/her duties hereunder; and (iii) that the Executive is not bound by any confidentiality, trade secret or similar agreement with any person or entity other than any member of the Group.

5. **LOCATION** 

The Executive will be based in<u> </u>,<u> </u> or any other location as requested by the Company during the Term.

6. **COMPENSATION AND BENEFITS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Cash Compensation</u>. As compensation for the performance by the Executive of his/her obligations
hereunder, during the Term, the Company shall pay the Executive cash compensation (inclusive of the statutory benefit contributions that the Company is required to set aside for the Executive under applicable law) pursuant to <u>Schedule A</u> hereto, subject to annual review and adjustment by the Board or any committee designated by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Equity Incentives</u>. During the Term, the Executive shall be eligible to participate, at a level
comparable to similarly situated executives of the Company, in such long-term compensation arrangements as may be authorized from time to time by the Board, including any share incentive plan the Company may adopt from time to time in its sole
discretion.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Benefits</u>. During the Term, the Executive shall be entitled to participate in all of the employee benefit
plans and arrangements made available by the Company to its similarly situated executives, including, but not limited to, any retirement plan, medical insurance plan and travel/holiday policy, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.

7. **TERMINATION OF THE AGREEMENT** 

The Employment may be terminated as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Death</u>. The Employment shall terminate upon the Executive's death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Disability</u>. The Employment shall terminate if the Executive has a disability, including any physical or
mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of his/her position at the Company, even with reasonable accommodation that does not impose an undue burden on the
Company, for more than 180 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period shall apply.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Cause</u>. The Company may terminate the Executive's employment hereunder for Cause. The occurrence of any of the following, as reasonably determined by the Company, shall be a reason for Cause, provided that, if the Company determines that the circumstances constituting Cause are curable, then such circumstances shall not constitute Cause unless and until the Executive has been informed by the Company of the existence of Cause and given an opportunity of 30 business days to cure, and such Cause remains uncured at the end of such thirty-day period:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) continued failure by the Executive to satisfactorily perform his/her duties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) willful misconduct or gross negligence by the Executive in the performance of his/her duties hereunder,
including insubordination;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) the Executive's conviction or entry of a guilty or nolo contendere plea of any felony or any misdemeanor
involving moral turpitude;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) the Executive's commission of any act involving dishonesty that results in material financial,
reputational or other harm, monetary or otherwise, to any member of the Group, including but not limited to an act constituting misappropriation or embezzlement of the property of any member of the Group as determined in good faith by the Board; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) any material breach by the Executive of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Good Reason</u>. The Executive may terminate his/her employment hereunder for "Good Reason" upon
the occurrence, without the written consent of the Company, of an event constituting a material breach of this Agreement by the Company that has not been fully cured within ten business days after written notice thereof has been given by the
Executive to the Company setting forth in sufficient detail the conduct or activities the Executive believes constitute grounds for Good Reason, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the failure by the Company to pay to the Executive any portion of the Executive's current compensation or
to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within 20 business days of the date such compensation is due; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any material breach by the Company of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Without Cause by the Company; Without Good Reason by the Executive</u>. The Company may terminate the
Executive's employment hereunder at any time without Cause upon 60-day prior written notice to the Executive, or by giving prior written notice to the Executive in another manner that is then mutually
agreed by the parties. The Executive may terminate the Executive's employment voluntarily for any reason or no reason at any time by giving 60-day prior written notice to the Company, or by giving prior
written notice to the Company in another manner that is then mutually agreed by the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Notice of Termination</u>. Any termination of the Executive's employment under the Agreement shall be
communicated by written notice of termination ("Notice of Termination") from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of the Agreement relied upon in effecting the
termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Date of Termination</u>. The "Date of Termination" shall mean (i) the date set forth in the
Notice of Termination, or (ii) if the Executive's employment is terminated by the Executive's death, the date of his/her death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Compensation upon Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) <u>Death</u>. If the Executive's employment is terminated by reason of the Executive's death, the
Company shall have no further obligations to the Executive under this Agreement and the Executive's benefits shall be determined under the Company's retirement, insurance and other benefit and compensation plans or programs then in effect
in accordance with the terms of such plans and programs.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) <u>By Company without Cause or by the Executive for Good Reason.</u> If the Executive's employment is
terminated by the Company other than for Cause or by the Executive for Good Reason, the Company shall (i) continue to pay and otherwise provide to the Executive, during any notice period, all compensation, base salary and previously earned but
unpaid incentive compensation, if any, and shall continue to allow the Executive to participate in any benefit plans in accordance with the terms of such plans during such notice period; and (ii) pay to the Executive, in lieu of benefits under
any severance plan or policy of the Company, any such amount as may be agreed between the Company and the Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) <u>By Company for Cause or by the Executive other than for Good Reason</u>. If the Executive's employment
shall be terminated by the Company for Cause or by the Executive other than for Good Reason, the Company shall pay the Executive his/her base salary at the rate in effect at the time Notice of Termination is given through the Date of Termination,
and the Company shall have no additional obligations to the Executive under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Return of Company Property</u>. The Executive agrees that following the termination of the Executive's
employment for any reason, or at any time prior to the Executive's termination upon the request of the Company, he/she shall return all property of the Group that is then in or thereafter comes into his/her possession, including, but not
limited to, any Confidential Information (as defined below) or Intellectual Property (as defined below), or any other documents, contracts, agreements, plans, photographs, projections, books, notes, records, electronically stored data and all
copies, excerpts or summaries of the foregoing, as well as any automobile or other materials or equipment supplied by the Group to the Executive, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Requirement for a Release</u>. Notwithstanding the foregoing, the Company's obligations to pay or
provide any benefits shall (1) cease as of the date the Executive breaches any of the provisions of Sections 8, 9 and 11 hereof, and (2) be conditioned on the Executive signing the Company's customary release of claims in favor of the
Group and the expiration of any revocation period provided for in such release.

8. **CONFIDENTIALITY AND NONDISCLOSURE** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Confidentiality and Non-Disclosure.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Executive acknowledges and agrees that: (A) the Executive holds a position of trust and confidence
with the Company and that his/her employment by the Company will require that the Executive have access to and knowledge of valuable and sensitive information, material, and devices relating to the Company and/or its business, activities, products,
services, customers and business partners, including, but not limited to, the following, regardless of the form in which the same is accessed, maintained or stored: the identity of the Company's actual and prospective customers and, as
applicable, their representatives; prior, current or future research or development activities of the Company; the products and services provided or offered by the Company to customers or potential customers and the manner in which such services are
performed or to be performed; the product and/or service needs of actual or prospective customers; pricing and cost information; information concerning the development, engineering, design, specifications, acquisition or disposition of products
and/or services of the Company; user base personal data, programs, software and source codes, licensing information, personnel information, advertising client information, vendor information, marketing plans and techniques, forecasts, and other
trade secrets ("Confidential Information"); and (B) the direct and indirect disclosure of any such Confidential Information would place the Company at a competitive disadvantage and would do damage, monetary or otherwise, to the
Company's business.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) During the Term and at all times thereafter, the Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner, employee, consultant, principal or agent of any business, or in any other capacity, publish or make known, disclose, furnish, reproduce, make available, or utilize any of the Confidential
Information without the prior express written approval of the Company, other than in the proper performance of the duties contemplated herein, unless and until such Confidential Information is or shall become general public knowledge through no
fault of the Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) In the event that the Executive is required by law to disclose any Confidential Information, the Executive
agrees to give the Company prompt advance written notice thereof and to provide the Company with reasonable assistance in obtaining an order to protect the Confidential Information from public disclosure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The failure to mark any Confidential Information as confidential shall not affect its status as Confidential
Information under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Third Party Information in the Executive's Possession</u>. The Executive agrees that he/she shall not, during the Term, (i) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by Executive, if any, or (ii) bring into the premises of Company any document or confidential or proprietary information belonging to such former employer, person or entity unless consented to in writing by such former employer, person or entity. The Executive will indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys' fees and costs of litigation, arising out of or in connection with any violation of the foregoing.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Third Party Information in the Company's Possession</u>. The Executive recognizes that the
Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for
certain limited purposes. The Executive agrees that the Executive owes the Company and such third parties, during the Term and thereafter, a duty to hold all such confidential or proprietary information in strict confidence and not to disclose such
information to any person or firm, or otherwise use such information, in a manner inconsistent with the limited purposes permitted by the Company's agreement with such third party.

This Section 8 shall survive the termination of the Agreement for any reason. In the event the Executive breaches this Section 8, the Company shall have right to seek remedies permissible under applicable law.

9. **INTELLECTUAL PROPERTY** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Prior Inventions</u>. The Executive has attached hereto, as Schedule B, a list describing all inventions,
ideas, improvements, designs and discoveries, whether or not patentable and whether or not reduced to practice, original works of authorship and trade secrets made or conceived by or belonging to the Executive (whether made solely by the Executive
or jointly with others) that (i) were developed by Executive prior to the Executive's employment by the Company (collectively, "Prior Inventions"), (ii) relate to the Company' actual or proposed business, products or
research and development, and (iii) are not assigned to the Company hereunder; or, if no such list is attached, the Executive represents that there are no such Prior Inventions. Except to the extent set forth in Schedule B, the Executive hereby
acknowledges that, if in the course of his/her service for the Company, the Executive incorporates into a Company product, process or machine a Prior Invention owned by the Executive or in which he/she has an interest, the Company is hereby granted
and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide right and license (which may be freely transferred by the Company to any other person or entity) to make, have made, modify, use, sell, sublicense and otherwise
distribute such Prior Invention as part of or in connection with such product, process or machine.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Assignment of Intellectual Property</u>. The Executive hereby assigns to the Company or its designees,
without further consideration and free and clear of any lien or encumbrance, the Executive's entire right, title and interest (within the United States and all foreign jurisdictions) to any and all inventions, discoveries, improvements,
developments, works of authorship, concepts, ideas, plans, specifications, software, formulas, databases, designees, processes and contributions to Confidential Information created, conceived, developed or reduced to practice by the Executive (alone
or with others) during the Term which (i) are related to the Company's current or anticipated business, activities, products, or services, (ii) result from any work performed by Executive for the Company, or (iii) are created,
conceived, developed or reduced to practice with the use of Company property, including any and all Intellectual Property Rights (as defined below) therein ("Work Product"). Any Work Product which falls within the definition of "work
made for hire", as such term is defined in the U.S. Copyright Act, shall be considered a "work made for hire", the copyright in which vests initially and exclusively in the Company. The Executive waives any rights to be attributed as
the author of any Work Product and any "droit morale" (moral rights) in Work Product. The Executive agrees to immediately disclose to the Company all Work Product. For purposes of this Agreement, "Intellectual Property" shall
mean any patent, copyright, trademark or service mark, trade secret, or any other proprietary rights protection legally available.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Patent and Copyright Registration</u>. The Executive agrees to execute and deliver any instruments or
documents and to do all other things reasonably requested by the Company in order to more fully vest the Company with all ownership rights in the Work Product. If any Work Product is deemed by the Company to be patentable or otherwise registrable,
the Executive shall assist the Company (at the Company's expense) in obtaining letters of patent or other applicable registration therein and shall execute all documents and do all things, including testifying (at the Company's expense) as
necessary or appropriate to apply for, prosecute, obtain, or enforce any Intellectual Property right relating to any Work Product. Should the Company be unable to secure the Executive's signature on any document deemed necessary to accomplish
the foregoing, whether due to the Executive's disability or other reason, the Executive hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents as the Executive's agent and attorney-in-fact to act for and on the Executive's behalf and stead to take any of the actions required of Executive under the previous sentence, with the same effect as
if executed and delivered by the Executive, such appointment being coupled with an interest.

This Section 9 shall survive the termination of the Agreement for any reason. In the event the Executive breaches this Section 9, the Company shall have right to seek remedies permissible under applicable law.

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10. **CONFLICTING EMPLOYMENT** 

The Executive hereby agrees that, during the Term, he/she will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Company is now involved or becomes involved during the Term, nor will the Executive engage in any other activities that conflict with his/her obligations to the Company without the prior written consent of the Company.

11. **NON-COMPETITION AND NON-SOLICITATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Non-Competition.</u> In consideration of the compensation provided
to the Executive by the Company hereunder, the adequacy of which is hereby acknowledged by the parties hereto, the Executive agree that during the Term and for a period of one year following the termination of the Employment for whatever reason, the
Executive shall not engage in Competition (as defined below) with the Group. For purposes of this Agreement, "Competition" by the Executive shall mean the Executive's engaging in, or otherwise directly or indirectly being employed by
or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, or permitting the Executive's name to be used in connection with the activities of, any other business
or organization which competes, directly or indirectly, with the Group in the Business; provided, however, it shall not be a violation of this Section 11(a) for the Executive to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a publicly traded corporation in Competition with the Group, provided that the Executive does not otherwise participate in the business of such corporation.

For purposes of this Agreement, "Business" means the operation of pet care platform, including providing pet care services, supply chain services and local services, and any other business which the Group engages in, or is preparing to become engaged in, during the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Non-Solicitation; Non-Interference</u>. During the Term and for a period of one year following the termination of the Executive's employment for any reason, the Executive agrees that he/she will not, directly or
indirectly, for the Executive's benefit or for the benefit of any other person or entity, do any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) solicit from any customer or business partner doing business with the Group during the Term business of the
same or of a similar nature to the Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) solicit from any known potential customer of the Group business of the same or of a similar nature to that
which has been the subject of a known written or oral bid, offer or proposal by the Group, or of substantial preparation with a view to making such a bid, proposal or offer;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) solicit the employment or services of, or hire or engage, any person who is known to be employed or engaged by
the Group; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) otherwise interfere with the business or accounts of the Group, including, but not limited to, with respect to
any relationship or agreement between the Group and any vendor or supplier.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Injunctive Relief; Indemnity of Company</u>. The Executive agrees that any breach or threatened breach of
subsections (a) and (b) of this Section 11 would result in irreparable injury and damage to the Company for which an award of money to the Company would not be an adequate remedy. The Executive therefore also agrees that in the event of
said breach or any reasonable threat of breach, the Company shall be entitled to seek an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all persons
and/or entities acting for and/or with the Executive. The terms of this paragraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including, but not limited to, remedies available
under this Agreement and the recovery of damages. The Executive and the Company further agree that the provisions of this Section 11 are reasonable. The Executive agrees to indemnify and hold harmless the Company from and against all reasonable
expenses (including reasonable fees and disbursements of counsel) which may be incurred by the Company in connection with, or arising out of, any violation of this Agreement by the Executive. This Section 11 shall survive the termination of the
Agreement for any reason.

**12.** **WITHHOLDING TAXES** 

Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to the Agreement such national, state, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.

**13.** **ASSIGNMENT** 

The Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer the Agreement or any rights or obligations hereunder; provided, however, that the Company may assign or transfer the Agreement or any rights or obligations hereunder to any member of the Group without such consent. If the Executive should die while any amounts would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts unless otherwise provided herein shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. The Company will require any and all successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Company had terminated the Executive's employment other than for Cause, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Section 13, "Company" shall mean the Company as herein before defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 13 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

------

**14.** **SEVERABILITY** 

If any provision of the Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of the Agreement are declared to be severable.

**15.** **ENTIRE AGREEMENT** 

The Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The Executive acknowledges that he/she has not entered into the Agreement in reliance upon any representation, warranty or undertaking which is not set forth in the Agreement.

**16.** **GOVERNING LAW** 

The Agreement shall be governed by and construed in accordance with the law of the State of New York, U.S.A.

**17.** **AMENDMENT** 

The Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to the Agreement, which agreement is executed by both of the parties hereto.

**18.** **WAIVER** 

Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under the Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

------

**19.** **NOTICES** 

All notices, requests, demands and other communications required or permitted under the Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party; or (iv) sent by e-mail with confirmation of receipt.

**20.** **COUNTERPARTS** 

The Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. The Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

**21.** **NO INTERPRETATION AGAINST DRAFTER** 

Each party recognizes that the Agreement is a legally binding contract and acknowledges that such party has had the opportunity to consult with legal counsel of choice. In any construction of the terms of the Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.

*[Remainder of the page intentionally left blank.]* 

------

**IN WITNESS WHEREOF**, the Agreement has been executed as of the date first written above.

---

| | |
|:---|:---|
| **COMPANY:** | **New Ruipeng Pet Group Inc.**<br> a Cayman Islands exempted company<br> New Ruipeng Pet Group Inc., |
|  | By: |
|  | Name:<br> Title: |
| **EXECUTIVE:** |  |
|  | <br> Name:<br> Address: |

---

------

**<u>Schedule A</u>**

**Cash Compensation** 

---

| | | |
|:---|:---|:---|
|  | **Amount** | **Pay Period** |
|  **Base Salary** |  |  |
|  **Cash Bonus** |  |  |

---

------

**<u>Schedule B</u>**

**List of Prior Inventions** 

---

| | | |
|:---|:---|:---|
| **Title** | **Date** | **Identifying Number**<br>**or Brief Description** |

---

---

| |
|:---|
| &nbsp;&nbsp;&nbsp; <u> </u> No inventions or improvements |
| &nbsp;&nbsp;&nbsp; <u> </u> Additional Sheets Attached |
| &nbsp;&nbsp;&nbsp; Signature of Executive:<u> </u> |
| &nbsp;&nbsp;&nbsp; Print Name of Executive:<u> </u> |
| &nbsp;&nbsp;&nbsp; Date:<u> </u> |

---

## Exhibit 10.4

**Exhibit 10.4** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on January 6, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. RP Pulse Holdings Limited, an exempted company duly incorporated with limited liability and validly existing
under the laws of the British Virgin Islands ()"**RP Pulse** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within ten (10) Business Days of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least five
(5) Business Days.

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

------

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous**.

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

Ruipeng Pet Group Inc.

Schedule of the Class A Ordinary Share Subscription Agreement

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **RP Pulse Holdings Limited** | **RP Pulse Holdings Limited** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

Ruipeng Pet Group Inc.

Schedule of the Class A Ordinary Share Subscription Agreement

## Exhibit 10.5

**Exhibit 10.5** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on May 28, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. 融汇瑞嘉（天津）资产管理合伙企业（有限合伙）,
 an exempted company duly incorporated with limited liability and validly existing under the laws of the People's Republic of China (the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within ten (10) Business Days of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least five
(5) Business Days.

Ruipeng Pet Group Inc.

Signature Page of the Class A Ordinary Share Subscription Agreement

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, represents and
warrants to the Company that:

Ruipeng Pet Group Inc.

Signature Page of the Class A Ordinary Share Subscription Agreement

------

**3.1** **Organization; Good Standing and Qualification**. It is duly organized, validly existing and in good
standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. It is not in, nor is it anticipated to enter into, liquidation, dissolution, bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. It has the requisite power, authority and capacity to enter into this Agreement and
to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement constitutes valid and
legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' s Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

Ruipeng Pet Group Inc.

Signature Page of the Class A Ordinary Share Subscription Agreement

------

**6.** **Miscellaneous.** 

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Party.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

Ruipeng Pet Group Inc.

Signature Page of the Class A Ordinary Share Subscription Agreement

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Party, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

Ruipeng Pet Group Inc.

Signature Page of the Class A Ordinary Share Subscription Agreement

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| |
|:---|
| **Ruipeng Pet Group Inc.** |
| By: <u>/s/ Yonghe Peng</u> |
| Name: Yonghe Peng |
| Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| |
|:---|
| **融汇瑞嘉（天津）资产管理合伙企业（有限合伙）** |
| By: <u>/s/ Lina Lu</u> |
| Name: Lina Lu |
| Title: Director |

---

## Exhibit 10.6

**Exhibit 10.6** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on May 29, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. RP Passion Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**RP Passion** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction**.

**1.1** **Sale and Issuance of the Class A Ordinary Shares**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within ten (10) Business Days of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least five
(5) Business Days.

------

**1.2** **Closing**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

------

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous**.

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **RP Passion Enterprise Management Company Limited** | **RP Passion Enterprise Management Company Limited** |
| By: | /s/ Dechao Xiong |
| Name: | Dechao Xiong |
| Title: | Director |

---

## Exhibit 10.7

**Exhibit 10.7** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on June 30, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. RP Passion Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**RP Passion** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within ten (10) Business Days of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least five
(5) Business Days.

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

------

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous.** 

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

------

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| Ruipeng Pet Group Inc. | Ruipeng Pet Group Inc. |
| By: | /s/ PENG Yonghe |
| Name: | PENG Yonghe |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **RP Passion Enterprise Management Company Limited** | **RP Passion Enterprise Management Company Limited** |
| By: | /s/ Xiong Dechao |
| Name: | Xiong Dechao |
| Title: | Director |

---

## Exhibit 10.8

**Exhibit 10.8** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on June 30, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. Vet Harvest Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**Vet Harvest** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within ten (10) Business Days of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least five
(5) Business Days.

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

------

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous.** 

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

------

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ PENG Yonghe |

---

Name: PENG Yonghe <br> Title: Director

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Vet Harvest Enterprise Management Company Limited** | **Vet Harvest Enterprise Management Company Limited** |
| By: | /s/ Liu Xiaohong |

---

Name: Liu Xiaohong <br> Title: Director

## Exhibit 10.9

**Exhibit 10.9** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on June 30, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. HAO's Holdings, Inc., a company duly incorporated with limited liability and validly existing under the
laws of the United States of America ()"**HAO's** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction**.

**1.1** **Sale and Issuance of the Class A Ordinary Shares**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within ten (10) Business Days of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least three
(3) Business Days.

------

**1.2** **Closing**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

------

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**3.4** **Accredited Investor; U.S. Person**. The Purchaser represents that it is an accredited investor within the
meaning of Regulation D under the Securities Act. The Purchaser represents that it is a U.S. person within the meaning of Regulation S under the Securities Act.

**3.5** **Restricted Securities.** The Purchaser understands, acknowledges and agrees that the Purchased Shares,
and, if issued, are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Shares, and if issued, the Conversion Shares indefinitely unless they are
subsequently registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Purchaser has been advised or is aware of the provisions of
Rule 144, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale
occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations. The Purchaser acknowledges that the Company has no obligation to register or
qualify the Shares and/or Conversion Shares for resale except as set forth in the Shareholders Agreement. The Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the holding period for the Shares and/or the Conversion Shares, and on requirements relating to the Company which are outside of the Purchaser's control, and which the
Company is under no obligation and may not be able to satisfy.

**3.6** **Legends**. The Purchaser understands that the Purchased Shares, and any securities issued in respect
thereof or exchange therefor, may bear one or all of the following legends:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any legend required by the securities laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous**.

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ PENG Yonghe |
| Name: | PENG Yonghe |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **HAO's Holdings, Inc.** | **HAO's Holdings, Inc.** |
| By: | /s/ Hao Zhongli |
| Name: | Hao Zhongli |
| Title: | Director |

---

## Exhibit 10.10

**Exhibit 10.10** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on June 26, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. Jin Rui Investment Co. Limited, a company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. As of the date hereof, China International Capital Corporation Limited (i.e.,
中国国际金融股份有限公司, "**CICC** "), an Affiliate of the Purchaser, and HHRP Holdings Limited, a wholly-owned subsidiary of the Company incorporated in the Hong
Kong Special Administrative Region of the PRC (the "**HK Subsidiary**") have entered into certain share transfer agreement (the "**Onshore STA** "), pursuant to which (i) the HK Subsidiary will purchase from CICC at a
consideration of USD10,730,000 (the "**Onshore Sale Price** "), and CICC will sell and transfer to the HK Subsidiary, all the equity interests held by CICC in New Ruipeng Pet Medical Group Limited (i.e.,
新瑞鹏宠物医疗集团有限公司, "**New Ruipeng** "), which is equal to registered capital of RMB4,900,000, and represents 1.3528% equity interest in New Ruipeng
(the "**Sold Onshore Shares** "); and (ii) in order to fund the payment of the Onshore Sale Price, the HK Subsidiary shall receive from the Company, and shall pay to CICC, the same amount of the Purchase Price to be paid by the
Purchaser pursuant to this Agreement.

C. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

------

**1.** **Definitions.** Unless otherwise provided herein, the capitalized terms used in this Agreement shall have
the meanings ascribed to them in the <u>Schedule of Definitions</u>.

**2.** **Transaction**.

**2.1** **Sale and Issuance of the Class A Ordinary Shares**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in <u>Schedule I</u> hereto (the "**Purchased Offshore Shares** "), for a purchase price as set forth therein (the
" **Purchase Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Subject to completion of Closing and the satisfaction or waiver of all the payment conditions set forth in <u>Section</u> <u>7.1</u> below, the Purchaser shall pay or cause its designated entity to pay the Purchase Price within five (5) Business Days upon the satisfaction or waiver by wire transfer of immediately available funds in U.S.
dollars to an account designated by the Company in writing no later than five (5) Business Days of the Closing.

**2.2** **Closing**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Offshore Shares pursuant to <u>Section</u> <u>2.1</u> (the "**Closing**") shall take place remotely via the exchange of documents and signatures upon the satisfaction or waiver of all closing conditions specified in <u>Section</u> <u>5</u> and <u>Section</u> <u>6</u> hereof. The Company's shareholding structure immediately prior to and after the Closing shall be as set forth in the Company's capitalization table attached hereto as <u>Schedule II</u>, in each case
assuming that no issuance of any new Equity Securities in the Company or transfer of any existing Equity Securities by a shareholder of the Company pursuant to the terms and conditions of the shareholders agreement of the Company then in effect has
occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, in addition to all other closing deliveries
set forth in <u>Section</u> <u>5</u> and <u>Section</u> <u>6</u> below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of the Purchaser representing the Purchased Offshore Shares being
subscribed for by the Purchaser at the Closing, in the form and substance satisfactory to the Purchaser, with the original duly executed share certificate delivered to the Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, in the form and substance satisfactory to the
Purchaser, certified by the registered office provider of the Company, reflecting the issuance to the Purchaser of the Purchased Offshore Shares being subscribed for by the Purchaser at the Closing.

------

**2.3** **Use of Proceeds**. The Company undertakes to the Purchaser that any and all the proceeds from the sale and
issuance of the Purchased Offshore Shares shall and shall only be used for the payment of the Onshore Sale Price by or on behalf of the HK Subsidiary to CICC as consideration for CICC's transfer and sale of the Sold Onshore Shares to the HK
Subsidiary under the Onshore STA.

**3.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the date of this Agreement and as of the Closing:

**3.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement  **** ** and other Transaction Documents to which it is a party, and
to carry on its business as now conducted and is duly qualified to transact business in each jurisdiction in which it operates business. The Companies is not in, or is anticipated to enter into, liquidation, dissolution, bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. This Agreement and other Transaction Documents have been duly executed and delivered
by the Company (to the extent it is a party), and when executed and delivered, constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms. All corporate action on the part of the
Company necessary for the authorization, execution and delivery of each Transaction Document, the authorization, issuance and delivery of all of the Purchased Offshore Shares, the consummation of other transactions contemplated by the Transaction
Documents and the performance of its obligations under each Transaction Document, has been taken or will be taken prior to the Closing.

**3.3** **Valid Issuance**. The Purchased Offshore Shares, when issued, sold and delivered in accordance with the
terms of this Agreement, will be duly and validly issued, and will be free of encumbrances and restrictions on transfer other than such restrictions on transfer as may be imposed by the shareholders agreement of the Company and the memorandum and
articles of association of the Company then in effect.

**3.4** **No Violation**. Neither the execution nor delivery of this Agreement and other Transaction Documents nor
the full performance by the Company of its obligations hereunder and thereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**4.** **Representations and Warranties of the Purchaser**. The Purchaser hereby represents and
warrants to the Company that:

**4.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to acquire the Purchased Offshore Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

------

**4.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of the Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms.

**4.3** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which the Purchaser is subject.

**5.** **Conditions of the Purchaser ' s Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under <u>Section</u> <u>2</u> of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:  **** ** 

**5.1** **Representations and Warranties**. The representations and warranties set forth in <u>Section</u> <u>3</u> shall be true and correct as of the Closing.

**5.2** **Authorization, Consents and Governmental Approvals of Company**. The Company shall, and shall procure the
relevant Group Company to, have obtained and completed any and all Governmental Approvals, third party consents and all corporate action necessary for the consummation of the transactions contemplated hereby (including without limitation, the sale
and issuance of the Purchased Offshore Shares to the Purchaser, and the payment of the Purchase Price to the HK Subsidiary) and the transactions contemplated by the Onshore STA, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.4** **No Injunction**. No laws shall have been enacted or promulgated by any governmental authority which
prohibit the consummation of the transactions contemplated in this Agreement and other Transaction Documents and there shall be no orders or injunctions from a court of competent jurisdiction in effect precluding or prohibiting consummation of such
transactions.

**5.5** **Execution.** Each relevant party shall have executed and delivered to the Purchaser this Agreement and
other Transaction Documents to which it is a party. In addition and without limiting the generality of the foregoing, the Company shall have executed and delivered the Onshore STA, and shall procure the execution and delivery of the Onshore STA by
the HK Subsidiary, to the Purchaser, dated as of the date hereof, which shall be in the form and substance satisfactory to the Purchaser.

**5.6** **Cayman Counsel Opinion**. The Purchaser shall have received a Cayman legal opinion issued by a qualified
Cayman Islands legal counsel, dated as of the Closing, addressed to the Purchaser, in the form and substance satisfactory to the Purchaser.

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**6.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under <u>Section</u> <u>2</u> of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following
conditions:

**6.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in <u>Section</u> <u>4</u> shall be true and correct as of the Closing.

**6.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**6.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

**7.** **Other Provisions**.

**7.1** **Additional Conditions for Payment of Purchase Price.** (i) The Purchaser has become the sole
beneficial and record owner of the Purchased Offshore Shares and has obtained the copy of the updated register of members of the Company in accordance with <u>Section</u> <u>2.2(ii)(b)</u> of this Agreement, (ii) The Company shall
procure New Ruipeng not to make any amendment to its register of members or file any change to shareholding with the competent level of authority within the SAMR in respect of the share transfer as contemplated by the Onshore STA prior to the
consummation of the Closing hereunder; and (iii) the Purchaser shall have established and maintained a Special Account for Assets Realization (i.e.,资产变现专用账户) with an onshore bank as
selected and determined in the Purchaser's sole discretion, which shall be capable of receiving the payment of the Onshore Sale Price by or on behalf of the HK Subsidiary pursuant to the Onshore STA.

**7.2** **Funding of Onshore Sale Price**. The Company shall (i) pay the full amount of the Purchase Price to
the HK Subsidiary promptly after its receipt of the Purchase Price from the Purchaser under this Agreement, such payment to be evidenced by delivery to the Purchaser of a copy of the irrevocable wiring instructions or other evidence reasonably
satisfactory to the Purchaser, and (ii) procure the HK Subsidiary to timely perform its payment obligations under the Onshore STA in accordance with the terms thereof.

**7.3** **Fees and Expenses**. Each Party shall pay all of its own costs and expenses incurred in connection with
the negotiation, execution, delivery and performance of this Agreement and other Transaction Documents and the transactions contemplated hereby and thereby, except that the Purchaser shall pay or cause its designated entity to pay the fees and
expenses charged by the Cayman legal counsel and the registered office provider of the Company in connection with the issuance of the Cayman legal opinion as contemplated by <u>Section</u> <u>5.6</u> of this Agreement, which shall
include the expenses incurred for the Company to apply for new certificates or other documents reasonably required by the Company's Cayman legal counsel for the issuance of the said legal opinion.

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**7.4** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**7.5** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**7.6** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations herein may not be assigned by any Party without the written consent of the
other Party.

**7.7** **Entire Agreement**. This Agreement and all other Transaction Documents, including any schedules and
exhibits hereto and thereto, shall constitute the entire understanding and agreement between the Parties with regard to the subjects hereof and thereof.

**7.8** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**7.9** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in <u>Schedule III</u> (or at such other address for a Party as shall be specified in a notice given in accordance with this <u>Section</u> <u>7.8</u>).

**7.10** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**7.11** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**7.12** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**7.13** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**7.14** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, Affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

------

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IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ PENG Yonghe |
| Name: PENG Yonghe | Name: PENG Yonghe |
| Title: Director | Title: Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Jin Rui Investment Co. Limited** | **Jin Rui Investment Co. Limited** |
| By: | /s/ Gong Shu |
| Name: | Gong Shu |
| Title: | Director |

---

## Exhibit 10.11

**Exhibit 10.11** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on August 16, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. RP Passion Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**RP Passion** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within [ten (10) Business Days] of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least [five
(5) Business Days].

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

------

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous.** 

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **RP Passion Enterprise Management Company Limited** | **RP Passion Enterprise Management Company Limited** |
| By: | /s/ Dechao Xiong |
| Name: | Dechao Xiong |
| Title: | Director |

---

## Exhibit 10.12

**Exhibit 10.12** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on August 16, 2021 by and between:

1. Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing under
the laws of the Cayman Islands (the "**Company** ");

2. Vet Harvest Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**Vet Harvest** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within [ten (10) Business Days] of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least [five
(5) Business Days].

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

------

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous.** 

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

------

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Ruipeng Pet Group Inc.** | **Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Vet Harvest Enterprise Management Company Limited** | **Vet Harvest Enterprise Management Company Limited** |
| By: | /s/ Xiaohong Liu |
| Name: | Xiaohong Liu |
| Title: | Director |

---

## Exhibit 10.13

**Exhibit 10.13** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CALSS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on October 11, 2021 by and between:

1. New Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing
under the laws of the Cayman Islands (the "**Company** ");

2. Vet Harvest Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**Vet Harvest** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction**.

**1.1** **Sale and Issuance of the Class A Ordinary Shares**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within [ten (10) Business Days] of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least [five
(5) Business Days].

------

**1.2** **Closing**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

------

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

------

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

**6.** **Miscellaneous**.

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

------

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **New Ruipeng Pet Group Inc.** | **New Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Vet Harvest Enterprise Management Company Limited** | **Vet Harvest Enterprise Management Company Limited** |
| By: | /s/ Xiaohong Liu |
| Name: | Xiaohong Liu |
| Title: | Director |

---

## Exhibit 10.14

**Exhibit 10.14** 

**CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT** 

This CLASS A ORDINARY SHARE SUBSCRIPTION AGREEMENT (this "**Agreement**") is made and entered into on December 28, 2021 by and between:

1. New Ruipeng Pet Group Inc., an exempted company duly incorporated with limited liability and validly existing
under the laws of the Cayman Islands (the "**Company** ");

2. Vet Time Enterprise Management Company Limited, an exempted company duly incorporated with limited liability
and validly existing under the laws of the British Virgin Islands ()"**Vet Time** ", or the "**Purchaser** ").

Each of the Parties to this Agreement is referred to herein individually as a "**Party**" and collectively as the "**Parties**".

**RECITALS** 

A. The Company desires to issue and sell to the Purchaser and the Purchaser desires to purchase from the Company a
certain number of Class A ordinary shares, with par value of US$0.000001 each (the "**Class A Ordinary Shares** "), in the Company pursuant to the terms and conditions of this Agreement.

B. The Parties intend to enter into this Agreement and make the respective representations, warranties, covenants
and agreements set forth herein.

**WITNESSETH** 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound hereto hereby agree as follows:

**1.** **Transaction.** 

**1.1** **Sale and Issuance of the Class A Ordinary Shares.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) At the Closing, subject to the terms and conditions hereof, the Purchaser agrees to purchase and subscribe for,
and the Company agrees to issue and allot to the Purchaser, the amount of Class A Ordinary Shares as set forth in Schedule I hereto (the "**Purchased Shares** "), for a purchase price as set forth therein (the "**Purchased Price** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At or after the Closing, subject to the satisfaction or waiver of all the conditions set forth in
Section 4 below, the Purchaser shall pay the Purchase Price within [ten (10) Business Days] of the Closing by wire transfer of immediately available funds in U.S. dollars to an account designated by the Company in writing at least [five
(5) Business Days].

------

**1.2** **Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Closing**. The consummation of the sale and issuance of the Purchased Shares pursuant to Section 1.1
(the "**Closing**") shall take place remotely via the exchange of documents and signatures as of the date hereof, subject to the satisfaction or waiver of all closing conditions specified in Section 4 and Section 5 hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Deliveries by the Company at the Closing**. At the Closing, subject to the satisfaction or waiver of all
the conditions set forth in Section 5 below, the Company shall deliver (or cause to be delivered) to the Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a copy of the share certificate in the name of such Purchaser representing the Purchased Shares being
subscribed for by such Purchaser at the Closing, with the original duly executed share certificate delivered to such Purchaser within twenty (20) Business Days after the Closing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) a copy of the updated register of members of the Company, certified by the registered office provider of the
Company, reflecting the issuance to the Purchaser of the Purchased Shares being subscribed for by the Purchaser at the Closing.

**2.** **Representations and Warranties of the Company.** The Company represents and warrants to the
Purchaser that the following statements will be true and correct as of the Closing:

**2.1** **Incorporation, Good Standing and Qualification**. The Company is duly incorporated, validly existing and
in good standing under the laws of jurisdiction of its incorporation, and the Company has all requisite power and authority to perform its obligations under this Agreement. The Company is not in, nor is it anticipated to enter into, liquidation,
dissolution, bankruptcy, insolvency or winding-up.

**2.2** **Due Authorization**. This Agreement has been duly executed and delivered by the Company, and when executed
and delivered, constitutes valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms.

**2.3** **Valid Issuance**. The Purchased Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued.

**2.4** **No Violation**. Neither the execution nor delivery of this Agreement nor the full performance by the
Company of its obligations hereunder will violate any applicable laws, any memorandum or articles of association or other constitutional document to which the Company is subject.

**3.** **Representations and Warranties of the Purchaser**. The Purchaser hereby, jointly and
severally, represents and warrants with respect to itself to the Company that:

------

**3.1** **Organization; Good Standing and Qualification**. The Purchaser is duly organized, validly existing and in
good standing under the laws of jurisdiction of its operation or establishment, and has all requisite power and authority to own the Purchased Shares. The Purchaser is not in, nor is it anticipated to enter into, liquidation, dissolution,
bankruptcy, insolvency or winding-up.

**3.2** **Due Authorization**. The Purchaser has the requisite power, authority and capacity to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary corporate or other action on the part of such Purchaser. This Agreement
constitutes valid and legally binding obligations of the Purchaser, enforceable against such Purchaser in accordance with its terms.

**3.3** **No Violation**. Neither the execution and delivery of this Agreement nor the full performance by the
Purchaser of its obligations hereunder violates any applicable laws, any memorandum or articles of association or other constitutional document to which such Purchaser is subject.

**4.** **Conditions of the Purchaser ' Obligations at the Closing**. The obligations of
the Purchaser to consummate the Closing under Section 1 of this Agreement are subject to the fulfillment or waiver by the Purchaser of the following conditions:

**4.1** **Representations and Warranties**. The representations and warranties set forth in Section 2 shall be
true and correct as of the Closing.

**4.2** **Approvals and Waivers**. The Company shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**4.3** **Performance.** The Company shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or complied with by it at or before the Closing.

**5.** **Conditions of the Company ' s Obligations at the Closing**. The obligations of the
Company owed to the Purchaser to consummate the Closing under Section 1 of this Agreement, unless otherwise waived in writing by the Company, are subject to the fulfillment at or before the Closing of each of the following conditions:

**5.1** **Representations and Warranties**. The representations and warranties of the Purchaser contained in
Section 3 shall be true and correct as of the Closing.

**5.2** **Approvals and Waivers**. The Purchaser shall have obtained any and all approvals and waivers necessary for
the consummation of the transactions contemplated hereby, each of which shall be in full force and effect as of the Closing.

**5.3** **Performance.** The Purchaser shall have performed and complied with all covenants, obligations and
conditions contained in this Agreement that are required to be performed or complied with by the Purchaser at or before the Closing.

------

**6.** **Miscellaneous**.

**6.1** **Governing Law.** This Agreement shall be governed by and construed exclusively in accordance with the laws
of Hong Kong without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the laws of Hong Kong to the rights and duties of the Parties hereunder.

**6.2** **Dispute Resolution**. Any dispute, controversy or claim arising out of, in connection with or
relating to this Agreement, including the interpretation, validity, invalidity, breach or termination thereof, shall be settled by arbitration. The arbitration shall be conducted in Beijing under the China International Economic and Trade
Arbitration Commission in force when the notice of arbitration is submitted in accordance with the said rules. The number of arbitrators shall be one (1) and arbitration proceedings shall be conducted in Chinese.

**6.3** **Successors and Assigns**. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the Parties. This Agreement and the rights and obligations therein may not be assigned by any Party without the written consent of
the other Parties.

**6.4** **Entire Agreement**. This Agreement, including any schedules and exhibits hereto, constitutes the
entire understanding and agreement among the Parties with regard to the subjects of this Agreement.

**6.5** **Amendments**. Any term of this Agreement may be amended only with the written consent of the
Parties.

**6.6** **Notice**. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile, email or registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the addresses specified in Schedule II (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.6).

**6.7** **Delays or Omissions; Waivers**. Upon any breach or default of any other Party under this Agreement,
no delay or omission to exercise any right, power or remedy accruing to any Party shall impair any such right, power or remedy of such Party nor shall it or any waiver of any other breach or default theretofore or thereafter occurring be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring. Any waiver by any Party of any condition or breach or default under this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by laws or otherwise afforded to any Party, shall be cumulative and not alternative.

------

**6.8** **Interpretation; Titles and Subtitles**. This Agreement shall be construed according to its fair
language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to sections, schedules and exhibits herein are to sections, schedules and exhibits of or to this Agreement. Unless a
provision hereof expressly provides otherwise: (i) the term "or" is not exclusive; (ii) the terms "herein," "hereof," and other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iii) the masculine, feminine, and neuter genders will each be deemed to include the others; (iv) the definitions of terms are equally applicable both to the singular and plural
forms of such terms; (v) references to an agreement or other document are to it as amended, supplemented, restated and otherwise modified from time to time and to any successor document (whether or not already so stated); (vi) references to a
Person are references to such Person's successors and permitted assigns (whether or not already so stated); and (vii) whenever the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."

**6.9** **Counterparts; Effectiveness**. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument. This Agreement shall become effective when each Party shall have signed a counterpart.

**6.10** **Severability**. If any provision of this Agreement is found to be invalid or unenforceable, then
such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if
no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties.
In such event, the Parties shall use reasonable best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly effects the Parties' intent in entering into this Agreement.

**6.11** **Confidentiality and Non-Disclosure**. Each Party shall keep
this Agreement and the transactions contemplated hereby confidential, and shall not disclose to any third party without the prior written consent of the other Parties, provided, that each Party may make disclosure to its shareholders, members,
directors, officers, affiliates, advisors and other representatives, on a need to know basis, or otherwise as required by applicable law.

[*REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK*]

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **New Ruipeng Pet Group Inc.** | **New Ruipeng Pet Group Inc.** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Director |

---

------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement on the date and year first above written.

---

| | |
|:---|:---|
| **Vet Time Enterprise Management Company Limited** | **Vet Time Enterprise Management Company Limited** |
| By: | /s/ Li Li |
| Name: | Li Li |
| Title: | Director |

---

## Exhibit 10.15

**Exhibit 10.15** 

Contract Number: No. <u>2020 SYXZ</u>

<u>Z0003</u> 

Comprehensive Credit Contract

(Version 1.0, 2014)

------

Instructions

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I. The Contract shall be completed with a blue-black or black signature pen or pen.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;II. The Contract shall be fully completed, with legible and neat handwriting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;III. The currency shall be written in Chinese and not be substituted with the currency symbol.

The Chinese name of the currency shall be added before the amount in words of the currency and the currency symbol shall be added before the amount in figures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IV. The extra space or the blank space in the Contract shall be handled through any of drawing a broken line or oblique line, stamping "No Text Below" or filling in "No Text Below".

------

Comprehensive Credit Contract

Credit receiver: New Ruipeng Pet Healthcare Group Co., Ltd.

(hereinafter referred to as the "Party A")

Domicile: 6306G, Building A, Kingkey Timemark, Xiasha Village, 9289 Binhe Road, Xiasha

Community, Shatou Sub-district, Futian District, Shenzhen

Postal code: 518000

Contact: Li Qian

Tel.: \*\*\*

Fax: /

E-mail: \*\*\*

Legal representative/principal: Peng Yonghe

Opening bank and account number: \*\*\*

Credit grantor: China CITIC Bank Co., Ltd. Shenzhen Branch (hereinafter referred to as the "Party B"）

Domicile: Floor 1 and Floor 5-10, Phase II of Times Square Excellence, 8 Zhongxin 3rd Road, Futian District, Shenzhen

Postal code: 518000

Contact: Dai Shuqin

Tel.: \*\*\*

Fax: /

Legal representative / principal: Lu Wei

------

Signed in: Shenzhen

The Contract is hereby concluded and entered into by and between Party A and Party B through consultation in the principles of good faith, equality and voluntariness pursuant to the provisions of the Law of the People's Republic of China on Commercial Banks, the Contract Law of the People's Republic of China and other applicable laws.

Article 1 Definition

Unless the context otherwise specifies, the following terms shall have the following meanings in this Contract:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 "Comprehensive Credit" refers to such a qualification or right provided by Party B for Party A to apply for a loan, handle discounted notes and corporate overdrafts, and issue bank acceptance bills, guarantees and letters of credit and other business with Party B within a certain period of time and a certain line based on the comprehensive evaluation of Party A's credit and its mortgage provided at Party A's application.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 "Credit Balance" refers to the sum of the principal amounts of debts resulting from using the comprehensive credit line under the Contract and not paid off by Party A. Among them; regarding the issue of the bank acceptance bill, it refers to the sum of the amounts of the bill of exchange which has been issued and not been paid by Party B under the Contract or specific business contracts; regarding the issue of the letter of credit, it refers to the sum of the amounts of letter of credit which has been issued and unpaid by Party B according to the Contract or specific business contracts; regarding the issue of the letter of guarantee, it refers to the sum of the amounts of letter of guarantee which has been issued and unpaid by Party B under the Contract or specific business contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 Specific business contracts refer to such documents and commitments (whatever their names) as are signed with Party B during the credit period and constitute the contractual relation under specific business between Party A and Party B under law when Party A uses the comprehensive credit line under the Contract, and the guarantee document for binding the guarantor under the specific business (if any); the above specific business contracts include but not limited to the contract, agreement, application, letter of commitment, guarantee contract/agreement and letter of guarantee related to businesses and the business vouchers issued by Party B or the agencies designated by Party B (including the relevant documents to be accepted by Party B which are unilaterally issued by Party A). Where Party B does not require to separately sign the formal specific business contract, the relevant clauses of the Contract and the relevant documents formed during handling the specific business automatically constitute the specific business contract between Party A and Party B.

Article 2 Comprehensive Credit Line and Type

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 During the term of the comprehensive credit line agreed in the Contract, such a comprehensive credit line as may be applied for use by Party A from Party B is: currency RMB (amount in words) RMB two hundred million **,** (amount in figures) 200,000,000.00 , among them the line of exposure is: currency RMB (amount in words) RMB one hundred million , (amount in figures) 100,000,000.00 .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 The applicable specific business type and their respective credit line under the comprehensive credit line provided under the Contract are the following method 1 :

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The credit line is used and managed unitedly, and is not classified by the business type;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The applicable specific business type and the separately-occupied credit line are (for only distinguishing the business type rather than separate occupy of credit line, tick it , with amount instead of "/") as follows:

☐ Loan line of current capitals: (amount in words) **<u>/</u>** , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Loan line of fixed assets: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Project financing line: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Line of issued bank acceptance bill: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Line of discount for bank acceptance bill: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Line of commitment discounting for bank acceptance bill: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Line of issued letter of credit: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Line of issued bank guarantee: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u>- 

☐ Trade financing line: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Corporate overdraft business: (amount in words) <u>/</u> , (amount in figures) **<u>/</u>** <u>;</u> 

☐ Others: <u>/</u> 

Where Party A requires to apply for other businesses out of the above scope of business type agreed within the credit line, it is necessary to submit a written application to Party B and obtain Party B's written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 The comprehensive credit line under the Contract shall be used pursuant to the following method <u>1</u> :

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) All credit lines shall be applied by Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The credit line may be jointly applied by Party A and other companies (see the attachment list) authorized by Party A; where other companies in the attachment list expect to use the comprehensive credit line under the Contract, it is necessary to separately sign the specific business contract with Party B.

Article 3 Term of Comprehensive Credit Line

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 The term of the comprehensive credit line as agreed on in the Contract shall commence on April 14 , 2020 and end on February 26 , 2021 (hereinafter referred to as "Date of Expiration of Credit Period").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 The date of commencement and date of expiry for specific business shall be otherwise agreed under the specific business contract; the date of commencement shall be included in the above term of comprehensive credit line, and the date of expiry may be earlier than, equal to or later than the date of expiration of credit period according to the business type. Unless otherwise agreed on in the Contract, the date of expiration of credit period shall not be interpreted as the date of expiry of any specific business.

Article 4 Use of Comprehensive Credit Line

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 Within the term and comprehensive credit line as agreed on in the Contract, Party A may apply for such comprehensive credit line with Party B in writing in one or several times.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 When applying for the comprehensive credit line, Party A shall submit the line use application in writing, specifying the proposed credit business type, credit period, amount, etc., and provide relevant materials and go through the formalities related to guarantee (if any) pursuant to Party B's requirements. Where the credit conditions and provisions of the Contract are considered to be satisfied, Party B shall sign the specific business contract or other legal documents acceptable to Party B with Party A.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 For the type, line, period, purpose, interest rate, exchange rate, discount rate, cost, other rights and obligations of Party A and Party B and other contents in relation to specific business, the provisions of specific business contract signed between the parties shall prevail. Party B shall only perform the corresponding obligation for granting load in accordance with the provisions of the specific business contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 In case of inconsistency between the specific business contract signed under the Contract between Party A and Party B and the provisions of the Contract, the specific business contract shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 Party A's credit balance formed during the term of comprehensive credit line shall not exceed the comprehensive credit line as agreed in Article 2.1 and the respective credit line of each business type agreed in Article 2.2 at any time. During the term of comprehensive credit line, Party B agrees to handle the comprehensive credit line paid off by Party A under the following method <u>1</u> , and the unused comprehensive credit line during the term of comprehensive credit line will automatically be canceled after the expiration of term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) It can be used on revolving basis, which means under the comprehensive credit line as agreed in Article 2 of the Contract, if Party A's debts owing to Party B have been paid off during the above term of comprehensive credit line, Party B recovers the corresponding line for Party A in regard of the paid-up part, and Party A may re-use it during the term of comprehensive credit line;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) It cannot be used on revolving basis, which means under the comprehensive credit line as agreed in Article 2 of the Contract, if Party A's debts to Party B have been paid off during the above term of comprehensive credit line, Party B does not recover the corresponding line for Party A in regard of the paid-up part, and Party A shall not re-use it during the term of comprehensive credit line.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 In case that Party A breaches the provisions of the Contract or the specific business contract, or the national or financial regulator adjusts the financial policy, monetary policy and credit policy, or Party B's credit policy is subject to material adjustments, or the industry and region involved in of Party A have adverse policy adjustments or financial risks, or Party A's operating or financial condition or Party A's enterprise mechanism changes or its solvency has material adverse changes, or Party B decreases Party A's scores or grade of credit rating, Party B shall have the right to adjust such a credit line as has not been actually used by Party A at any time after giving Party A a written notification, including but not limited to adjusting the amount of line, the scope of credit business type, whether it can be used on revolving basis or not and the credit period, and the adjustments immediately are effective when the written notification is sent to Party A.

Article 5 Representations and Warranties of Party A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 Party A is a Chinese corporate or other organization legally established in accordance with the laws of the People's Republic of China. Party A has the requisite rights and capacities for signing and performance of the Contract under the law, and can independently bear civil liabilities. Party A has obtained all necessary and legal internal and external approval and authorization for signing the Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 Party A hereby warrants that its signing and performance of the Contract do not violate the laws, regulations, rules, adjudications, verdicts, orders or its articles which shall be followed by itself, nor conflict with any contracts and agreements signed by it or any other obligations assumed by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 Party A confirms, upon signing of the Contract, not to conceal any litigations, arbitrations, administrative proceedings, measures of property preservation and mandatory enforcement procedure as have occurred or will occur, affecting or possibly affecting its signing or performance of the Contract, or possibly resulting in an adverse impact on its financial condition, or other events possibly resulting in an adverse impact on its operations; and that Party A will fulfill the disclosure obligation of the information above for Party B in time during the term of the Contract.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 Party A warrants to use the credit line in accordance with laws & regulations and the provisions of the Contract and specific business contract, and cooperate with Party B in the inspection on the performance of each relevant specific business contract pursuant to the requirement of Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 Party A warrants to promptly report the true financial statements and other materials representing the state of its production and operation pursuant to the requirement of Party B within the credit period, and warrants that the materials, documents, data and information provided by him are true, accurate, complete, legal and valid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6 Party A warrants to carry out production and operation activities under law, and take effective measures for preventing the occurrence of the events endangering and damaging or possibly endangering and damaging Party B's interest during the term of comprehensive credit line.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7 Party A agrees that Party B provides its credit information to the financial credit information basic database and/or the credit agency approved by the People's Bank of China, and authorizes and agrees Party B to inquire, download, copy, print and use its credit information from the financial credit information basic database and/or the credit agency approved by the People's Bank of China for the purpose of the Contract and to use it for legal and compliance purposes related to the Contract; if Party A fails to perform the relevant obligations pursuant to the provisions in the Contract or the specific business contract, the consequences of bad credit arising therefrom shall be borne by Party A itself.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8 Party A shall abide by the anti-money laundering laws & regulations issued by the People's Republic of China and shall not participate in illegal or criminal activities, such as money laundering, terrorist financing and proliferation financing; meanwhile, Party A shall actively cooperate with Party B in customer identification and due diligence, provide true, accurate and complete customer information, and comply with Party B's anti-money laundering and anti-terrorist financing management regulations. For customers suspected of money laundering and terrorist financing with reasonable reasons, Party B will take necessary control measures in accordance with the anti-money laundering regulations of the People's Bank of China.

Article 6 Rights and Obligations of Party A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 During the term of the comprehensive credit line, Party A shall notify Party B in writing at least thirty days in advance of any change in the operation decision of Party A, including but not limited to conversion, restructuring, merger, division, shareholding reform, joint venture, cooperation, associate, contractual lease, change of business scope and registered capital, etc., which may affect the rights and interests of Party B, and shall fulfill the settlement obligation of debts under the Contract as agreed by Party B in writing or repay debts in advance or provide a guarantee as recognized by Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 If Party A disposes of all or part of its assets or operating income or otherwise may affect the rights and interests of Party B by way of transferring, leasing or setting guarantees for debts other than those under the Contract, it shall notify Party B in writing at least thirty days in advance and obtain prior written consent from Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 If any such event occurs which adversely affects the performance of the obligations under the Contract, including but not limited to the events involving in lawsuits, arbitration, criminal prosecution, administrative penalties, termination of business, suspension of business, dissolution, declaration of bankruptcy, revocation of business license, cancellation, deterioration of the financial condition, etc., Party A shall notify Party B in writing within three days from the occurrence or possible occurrence of the aforesaid events.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 If the guarantor partially or fully loses the corresponding guarantee capacity of the Contract as a result of the cases including but not limited to termination of business, suspension of business, declaration of bankruptcy, dissolution, revocation of business license, cancellation and operating loss, etc., or has any cases unfavorable to the safety of Party B's creditor's right, including value reduction of collateral and pledge as guarantees under the Contract, Party A shall provide the new guarantees acceptable to Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 Without written consent from Party B, Party A shall not transfer all or part of the debts under the Contract to the third party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 Party A warrants to repay the credit principals and interests in time and timely pay the expenses payable. For Party A's due (including due in advance) unpaid payments payable under the Contract and the specific business contracts, including but not limited to the corresponding principals, interests, default interests and other expenses in connection with its use of the credit line, Party B shall have the right to make deductions from Party A's any account issued in China CITIC Bank, without obtaining Party A's consent in advance. When Party B makes deductions pursuant to provisions of the Contract and the specific business contracts, in case of difference between the currency of such account and the currency of business valuation, it shall be calculated and converted at the exchange rate issued by Party B on the settlement day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 In case of change of the name of the legal person, legal representative, project principal, domicile, telephone, fax, etc. during the term of comprehensive credit line, Party A shall inform Party B in writing within seven days after such change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.8 Party A shall, as required by Party B, provide the name of each member of the related groups, legal representatives, actual controllers, registered address, registered capital, main business, equity structure, state of senior management, financial condition, material asset items, guarantee, important lawsuit and other information to Party B, and warrant that these materials are true, accurate, complete, legal and valid. In case of change of the foregoing information of its group members, Party A shall notify Party B in writing within three days from the occurrence of the fact related to the change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.9 Party A shall promptly report to Party B in writing the related-party transactions which have occurred or will occur, accounting for more than 10% (including 10%) of Party A's net assets, including but not limited to the relationship between the parties to the transaction, transaction items and nature, transaction amount or corresponding proportion, and pricing policy (including the transaction without amount or with symbolic amount only).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.10 Party A shall not sign with any third party in relation to, or externally issue the contracts, commitments and other texts in prejudice of the realization of Party B's creditor's right under the Contract and the specific business contract, or conduct the transactions and behaviors damaging the realization of Party B's creditor's right.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.11 Where Party B makes external payments, compensations or advances as per the issued bank guarantees, letters of credit, bank acceptance bills, etc. of Party A, Party A shall unconditionally make confirmation and repay the corresponding payments, interests and expenses as have been made advances by Party B within the time limit agreed.

Article 7 Rights and Obligations of Party B

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 Party B shall have the right to decide whether to sign the specific business contracts with Party A pursuant to the relevant administrative regulations and credit approval procedure issued by China CITIC Bank, and have the right to inspect and supervise the performance of such specific business contracts at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 Party B shall keep confidential the data, documents and information about Party A provided by Party A, except those that should be inquired or disclosed as stipulated by laws & regulations or required by competent authorities.

------

Article 8 Guarantee

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 In order to ensure that the creditor's rights formed under the Contract may be paid off, the following guarantee method <u>/</u> shall be taken:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The guarantor <u>/</u> signs the <u>/</u> Contract with No. <u>/</u> with Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The mortgagor <u>/</u> signs the <u>/</u> Contract with No. <u>/</u> with Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The pledger <u>/</u> signs the <u>/</u> Contract with No. <u>/</u> with Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Others: <u>/</u> .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Upon signing the specific business contract under the Contract between Party A and Party B or during the actual performance of the Contract and the specific business contract, Party B shall have the right to require Party A to provide other guarantees in addition to this clause, and the credit line already used by Party A within the comprehensive credit line may also be included in the scope of the new guarantees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 If there are various types of guarantees under the comprehensive credit line, Party B shall have the right to choose either or all of the guarantees to realize the guarantee right. A waiver by Party B of any of its guarantee rights (whether the guarantee is provided by Party A or provided by a third party) or change in the order or content of its guarantee rights for any reason shall not affect Party B's priority in payment of the other security rights.

Article 9 Liabilities of Defaults

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 Party A and Party B shall strictly perform the provisions of the Contract and the specific business contract. If either party fails to perform or fully perform the agreed obligations, it shall bear the corresponding liabilities for breach of contract and indemnify the other party for the losses caused thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 During the performance of the Contract or the specific business contract, it is considered that Party A is in default if any of the following circumstances occurs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.1 During the term of the Contract, Party A expressly indicates or indicates by the behavior of itself that it is unable to perform its obligations in accordance with the Contract or the specific business contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.2 Party A is in breach of any provisions of the Contract or the specific business contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.3 The documents related to the Contract and the representations and warranties in Article 5 of the Contract submitted by Party A to Party B are proved to be untrue, inaccurate, incomplete or deliberately misunderstanding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.4 Party A ceases to pay its debts as they fall due or is unable or has indicated that it is unable to pay its debts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.5 Party A ceases business, suspends business, is declared bankrupt, is dissolved, its business license is canceled, is revoked, or it occurs any such litigation, arbitration or criminal or administrative penalty as adversely affects the operation or property status of Party A, and Party B considers that it may affect or impair or has affected or impaired the rights and interests of Party B under the Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.6 Party A changes its registered office, business scope, legal representative and other business registration matters or external investment, which may affect or threaten the realization of the creditor's rights of Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.7 Party A suffers financial loss, asset loss or asset loss due to its external guarantee, or other financial crises, and Party B considers that it may affect or impair or has affected or impaired Party B's rights and interests under the Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.8 Party A changes the use of credit without authorization;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.9 Party A's controlling shareholder and other affiliates experience a material crisis in operation or finance, or Party A enters into a major related party transaction with its controlling shareholder and other affiliates, which affects the normal operation of Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.10 There are adverse changes in the industry in which Party A operates, which may affect or threaten the realization of the creditor's rights of Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.11 The loss of contact, disappearance, death, declaration of disappearance, declaration of death or suspected corruption, bribery, fraud or illegal operation of the senior management of Party A, and Party B considers that it may affect or impair or has affected or impaired the rights and interests of Party B under the Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.12 Party A defaults on other creditors, affecting the realization of Party B's creditor's rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.13 Party A fails to provide any new guarantee that meets the requirements of Party B after the breach of the guarantee contract by the guarantor or the occurrence of a default under the guarantee contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.14 Party A fails to provide any new guarantee that meets the requirements of Party B after the mortgage or pledge under the Contract is under seizure, attachment, loss, suspension or is subject to other mandatory measures, ownership disputes, is or may be infringed by any third party, safety or good condition is adversely affected, or such mortgage or pledge has or will no longer have the ability to provide guarantee for the creditor's rights of Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.15 Party A uses false contracts with related parties or other parties to discount or pledge the creditor's rights such as bills receivable and accounts receivable with no actual trade as background to Party B to obtain Party B's funds or credit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.16 Party A refuses to accept Party B's supervision and inspection on the performance of each specific business contract and relevant operational and financial activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.17 Party A has evaded or attempted to evade its liabilities to Party B through related transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2.18 Any other event or circumstance that endangers, damages or may endanger or damage the rights and interests of Party B, or that Party B considers material to affect the debt repayment ability of Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 In the event of any of Article 9.2 above, Party B shall have the right to exercise one or more of the following measures, and Party A has no objection:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.1 To request Party A or the guarantor to rectify the default within a time limit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.2 To adjust, cancel or suspend the comprehensive credit line under the Contract, or adjust the term of use of the credit line;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.3 To stop the issuance of the comprehensive credit line under the Contract, declare that all or part of the obligations of Party A under the Contract (including the principal, interest, fees or other amounts payable corresponding to the used credit line) are immediately due, and require Party A to immediately repay all or part of the used credit line; if Party B has opened bank acceptance bills, letters of credit, letters of guarantee or assumed other contingent liabilities under the Contract, Party B shall have the right to require Party A to make up the security deposit or deposit the relevant funds into the designated account of Party B in accordance with the amount and term required by Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.4 To charge penalty interest and compound interest in accordance with the relevant regulations of the People's Bank of China and the terms of the business documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.5 To require Party A to provide a guarantee, mortgage, pledge or other guarantees approved by Party B, or take other measures to ensure that the legal rights and interests of Party B are not infringed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.6 The right to exercise the guarantee right;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.7 To directly deduct from any account opened by Party A with China CITIC Bank as agreed in the Contract, to settle all debts of Party A under the Contract and each specific business contract (including the debts required to be settled in advance by Party B), without prior consent from Party A; if Party B has opened bank acceptance bills, letters of credit, letters of guarantee or assumed other contingent liabilities for Party A under the specific business contract according to the application of Party A, Party B shall have the right to directly transfer the funds from any account opened by Party A with China CITIC Bank to Party B's account for provision or payment of corresponding payables, without the prior consent of Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3.8 To take other necessary measures as permitted by laws and regulations.

Under the above circumstances, Party A agrees to unconditionally waive the right of defense and bear all losses caused to Party B as a result of its breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 All expenses incurred by Party B as a result of the realization of creditor's rights (including but not limited to litigation fees, arbitration fees, travel expenses, legal fees, property preservation fees, announcement fees, notary fees, certification fees, translation fees, appraisal and auction fees) shall be borne by Party A.

Article 10 Accumulation of Rights

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. 1 The rights of Party B under the Contract are accumulative and do not affect and exclude any rights that Party B can enjoy against Party A under laws and other contracts. Unless Party B has indicated otherwise in writing, non-exercise, partial exercise and/or delay in the exercise of any rights by Party B shall not constitute a waiver or partial waiver of such rights, nor shall it affect, prevent or hinder the continuation of the exercise of such rights or the exercise of any other rights by Party B.

Article 11 Continuity of Obligations

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 All obligations and joint liabilities of Party A under the Contract shall be continuous, and shall be fully binding on its property successor or heir, legal agent, receiver, transferee and the entity after its merger, division, restructuring, shareholding reform, change of name, etc., and shall not be affected by any disputes, claims and legal proceedings and any contracts or documents entered into by and between the debtor of the main contract and any natural person or legal person, nor shall there be any changes due to the bankruptcy of the debtor of the main contract, insolvency, loss of enterprise qualification, change of articles of association and any changes in essence.

Article 12 Effectiveness, Change and Termination of the Contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 The Contract shall come into effect after being signed or sealed by the legal representative or authorized agent of Party A and the legal representative/responsible person or authorized agent of Party B and affixed with the common seal or contract seal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 After the Contract comes into effect, unless otherwise agreed in the Contract, neither party A nor B shall amend or terminate the Contract without agreement from the other Party; if it is necessary to amend or terminate the Agreement, the parties shall negotiate and reach a written agreement.

Article 13 Effectiveness of the Contract

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 If a clause or part of a clause of the Contract is or will be deemed invalid or revoked, the validity of the Contract and other clauses of the Contract or other part of the clause shall not be affected.

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Article 14 Other Agreed Matters

Party A may first use the credit line of up to RMB100 million under the Contract, and the remaining credit line of RMB100 million can only be used after the parties sign the relevant agreements to confirm and agree.

If there is any conflict between the provisions of this Article and other provisions, this Article shall prevail.

Article 15 Applicable Laws

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1 The Contract shall be governed by the laws of the People's Republic of China (for the purpose of the Contract, excluding the laws of Hong Kong, Macau and Taiwan).

Article 16 Resolution of Disputes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.1 Any dispute arising out of or in connection with the Contract shall be resolved through consultation between Party A and Party B; if the consultation fails, the parties agree to settle the dispute by the method <u>1</u> below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To apply for arbitration to the Shenzhen Arbitration Commission in accordance with the prevailing effective arbitration rules of the Commission at the time of application for arbitration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) To file a lawsuit with the people's court having jurisdiction at the domicile of Party B.

Article 17 Others

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.1 For matters not covered in the Contract, Party A and Party B may enter into a written agreement as an appendix to the Contract. Any annex, amendment or supplement to the Contract shall form an integral part of the Contract and shall have the equal legal effect as the Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.2 The contracts or agreements entered into by and between Party B and Party A for each specific business pursuant to the Contract are components of the Contract, constitute an integral contract, and have the equal legal effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.3 All matters related to this Contract, including notarization, registration, authentication, appraisal, custody, transfer and deposit, shall be handled by the relevant application party or in accordance with the law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.4 Notice and Service

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.4.1 Notices, requests under the Contract, legal documents of debt collection, litigation (arbitration) or other communications involved in the Contract may be delivered or sent to the address or contact information agreed to at the beginning of the Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.4.2 For any notice, request, debt collection letter or other communication given by Party B to Party A under the Contract, Party A is deemed to have been served once the telex, telephone, fax, e-mail, etc. are sent; Party A is deemed to have been served on the third day after the postal letter is posted; if a special course is delivered by a designated person, Party A is deemed to have been served on the date of acceptance. If Party A refuses to accept, the sender may record the delivery process by photo and video recording and keep the document, and it is also deemed served.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.4.3 The judicial authority or the arbitration institution may also send the relevant (legal) documents to Party A to the address and contact information agreed at the beginning of the Contract. If the postal letter is adopted, it shall be deemed to have been served to Party A on the third day after the date of posting; if Party A refuses to accept the service directly, the sender may record the service process by photo and video recording and keep the (legal) documents, and it is also deemed served.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.4.4 If there are any changes to the above contact information provided by Party A, Party B shall be notified in writing within three days after the change; after the debts under the Contract enter the litigation or arbitration stage, the trial authority shall be notified in writing. Otherwise, the notice or other documents sent through the original contact information shall be deemed valid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.5 The original Contract is made in <u>duplicate</u> , <u>one</u> for Party A, and <u>one</u> for Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.6 **Party B has drawn the attention of Party A to the terms under the Contract that exempt or restrict its responsibility by way of bold, black and highlight, and fully explained the relevant terms as required by Party A; Party A and Party B have no objection to the understanding of the contents of all clauses of the Contract.**

(No text below)

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(This page is for the signature of the Contract, no text)

**Party A (common seal or contract seal)** 

/s/ Seal of New Ruipeng Pet Healthcare Group Co., Ltd.

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| | |
|:---|:---|
| By: | /s/ Yonghe Peng |
| Title: Authorized Signatory | Title: Authorized Signatory |

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**Party B (common seal or contract seal)** 

/s/ Seal of China CITIC Bank Co., Ltd. Shenzhen Branch

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| | |
|:---|:---|
| By: | /s/ Zhijun Yan |
| Title: Authorized Signatory | Title: Authorized Signatory |

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Date: April 14, 2020

## Exhibit 10.16

**Exhibit 10.16** 

**Credit Agreement**

No.: <u>755XY2020000827</u>

Credit grantor: <u>Shenzhen Branch of China Merchants Bank Co., Ltd.</u> (hereinafter referred to as "Party A")

Credit applicant: <u>New Ruipeng Pet Healthcare Group Co., Ltd.</u> (hereinafter referred to as "Party B")

Upon the application of Party B, Party A agrees to provide a line of credit for use by Party B. The parties hereby have, through consultation, agreed upon the following terms and conditions and entered into this Agreement in accordance with the provisions of relevant laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Line of Credit

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 Under this Agreement, Party A will grant a line of credit (including revolving line of credit and/or one-off line of credit) in an amount of <u>RMB200</u> <u>million</u> (including the equivalent in other currencies, and the exchange rate shall be subject to the foreign exchange rate published by Party A upon occurrence of the applicable transaction) to Party B.

The outstanding balance, if any, of any transaction conducted under the former <u>Credit Agreement</u> (fill the document name of this Agreement here) numbered <u>755XY2019002553</u> signed by and between Party A (or the affiliates of Party A) and Party B shall be automatically incorporated into this Agreement and will be directly accounted for under the line of credit hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 The term of credit shall be <u>12 months</u>, namely <u>from January</u> <u>17, 2020 to January</u> <u>16, 2021</u>. Upon conducting credit business with the line of credit, Party B shall submit an application to use the line of credit during such term, and Party A will not accept the application of Party B to use the line of credit after the maturity date of the term of credit, unless otherwise specified herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 The types of credit businesses under the line of credit include but are not limited to one or more credit businesses such as loan/order loan, trade financing, note discount, commercial draft acceptance, factoring/discount of commercial acceptance draft, international/domestic letter of guarantee, guarantee for payment of customs duty, corporate account overdraft, derivatives trading and gold leasing.

"Trade financing" includes but is not limited to the international/domestic letter of credit, import bill advance, shipping guarantee, bill advance under import collection, package loan, export bill advance, export negotiation, bill advance under export collection, import/export remittance financing, credit insurance financing, factoring and bill guarantee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4 The revolving line means the maximum limit of the total principal balance of one or more credit businesses said above provided by Party A for Party B that can be used in a continuous and revolving manner during the term of credit.

The one-off line means that the cumulative outstanding amount of various credit businesses provided by Party A for Party B during the term of credit shall be no higher than the one-off line of credit approved by Party A. Party B shall not use the one-off line of credit in a revolving manner, and the corresponding amount of multiple credit business applied by Party B shall be accounted for under the one-off line of credit until it is fully used up.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Use of Credit Line

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 The specific credit businesses applied by Party B and approved by Party A during the credit period are automatically included in this Agreement and accounted for under the credit line provided under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 If Party A handles the factoring business with Party B as the payer (debtor of accounts receivable), the creditor's rights of accounts receivable transferred by Party A from a third party to Party B in this business shall account for the above credit line; If Party B applies to Party A for factoring business with Party B as the payee (creditor of accounts receivable), the purchase money/off-purchase money paid by Party A to Party B with its own funds or funds from other legal sources for purchasing the creditor's rights of accounts receivable held by Party B will account for the above credit line.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 If Party A entrusts other branches of China Merchants Bank to transfer the L/C to the beneficiary after opening the L/C according to the needs of its internal process, the above credit line shall be accounted for by the L/C opening and the bill-taking and delivery guarantee business under it.

When conducting import issuing business, if import bill negotiation actually happens subsequently under the same L/C, import issuing and import bill negotiation will account for the same amount at different stages. That is to say, when import bill negotiation business occurs, the amount recovered by the L/C after external payment is used to handle import bill negotiation, which is regarded as accounting for the same amount of the original import bill opening.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Approval and Use of Credit Line

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 The types of credit lines (revolving lines or one-off lines) and applicable credit businesses under this Agreement, the amount of credit lines corresponding to each credit business, whether each credit business can be adjusted and used, and the specific use conditions shall be subject to the contents approved by Party A. If Party A adjusts the original approval opinions of Party A based on Party B's application during the credit period, the subsequent approval opinions issued by Party A constitute a supplement and change to the original approval opinions, and so on.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 Party B shall apply for the use of the credit line on case-by-case basis, and submit the materials required by Party A, which will be approved by Party A on case-by-case basis. Party A has the right to comprehensively consider whether to agree with its internal management requirements and Party B's operating conditions, and has the right to unilaterally refuse Party B's application for the use without having to bear any legal liability to Party B. In case of any inconsistency between this clause and other clauses of this agreement, this clause shall prevail.

When conducting specific credit business after being approved by Party A, the specific business agreement (including but not limited to a single agreement/application form, framework agreement or specific business contract, etc.) signed by Party A and Party B for specific credit business constitutes an integral part of the Credit Agreement. Business elements such as specific amount, interest rate, term, purpose and cost of each loan or other credit business shall be determined by specific business agreement, business vouchers confirmed by Party A (including but not limited to loan receipt, etc.) and business records of Party A's system.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 The term of each loan or other credit within the credit line shall be specifically determined based on Party B's business needs and Party A's business management regulations, and the expiration date of each specific business may be later than the expiration date of the term of the credit (unless otherwise required by Party A).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 During the term of the credit, Party A has the right to evaluate Party B's operating and financial conditions regularly every year, and adjust the available credit line of Party B based on results of the evaluation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Rights and Obligations of Party B

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 Party B shall have the right to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.1 Request Party A to provide loans or other credits within the credit line under the terms of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.2 Use the credit line as agreed in this agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.3 Require Party A to keep confidential the production, operation, property and account provided by Party B, except as otherwise provided in this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.4 Transfer debts to any third party after obtaining the written consent of Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 Party B shall have the obligation to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.1 provide to Party A true documents and materials required by Party A (including but not limited to providing its true financial account books/statements and annual financial reports, major decisions and changes in production, operation and management, information on withdrawal/use of funds, collateral-related information, etc.), as well as all account opening banks, account numbers and deposit and loan balances, and cooperate with Party A's investigation, examination and inspection;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.2 Accept Party A's supervision of its use of credit funds and related production, operation and financial activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.3 Use the loans and/or other credits in accordance with provisions and/or purposes of this Agreement and each specific business agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.4 Make due repayment of the principal, interest and expenses of loans, advances and other credit debts in accordance with provisions of this Agreement and specific business agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.5 Obtain written consent of Party A prior to its transfer of all or part of the debts hereunder to any third party;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6 Immediately notify Party A of occurrence of any of the following circumstances, and actively cooperate with Party A to ensure the safe repayment of principal and interest of loans, advances and other credit debts and all related expenses under this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.1 Major financial losses, asset losses or other financial crises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.2 To provides loans or guarantees for third parties, or provides mortgage (pledge) guarantees with its own property (rights);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.3 In case of operation suspension, revoking or cancelation of its business license, application for bankruptcy or dissolution, etc., or the information of important enterprises has changed, such as the information of enterprise name, registered address, business place and beneficial owner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.4 In case of a major crisis in its controlling shareholder, other affiliated companies and actual controllers, which affects its normal operation; or the legal representative/principal responsible person, director or important senior management personnel of its controlling shareholder or other affiliated companies or actual controllers has undergone personnel changes, or have been punished/restricted in personal freedom by the state authorities for violations of laws and regulations, or have disappeared for more than 7 days, which may affect their normal operation;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.5 In case of related transactions between and its controlling shareholder, other affiliated companies and actual controllers, the amount of which reaches more than 10% of Party B's net assets (Party B's notice shall at least cover the relationship between the parties to the transaction, the transaction items and nature, the transaction amount or corresponding proportion, pricing policy (including transactions with no amount or only symbolic amount), etc.);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.6 Any lawsuit, arbitration, criminal or administrative punishment that has significant adverse effect on its business or property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.7 The legal representative/principal person in charge, director or important senior management personnel of Party B has undergone personnel changes, or have been punished/restricted in personal freedom by the state authorities for violations of laws and regulations, or have disappeared for more than 7 days, which may affect their normal operation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.8 Party B or its actual controller is involved in usury of significant amount, or has negative track record with other financial institutions regarding borrowing new and returning old, overdue repayment, and interest arrears; or the internal capital chain of Party B's affiliated enterprise is broken, resulting in a debt crisis; or Party B's project is stopped, delayed or Party B has committed material mistake in its investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.6.9 Other material events that may affect the solvency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.7 Not to omit managing and pursuing the due creditor's rights, or dispose of the existing main property without compensation or in other inappropriate ways;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.8 To obtain Party A's written consent before undertaking merger (merger), division, reorganization, a joint venture (cooperation), transfer of property (share) rights, shareholding system reform, foreign investment, increase of debt financing and other major matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.9 In case of pledge of accounts receivable, to guarantee that the credit balance at any time during the credit period is lower than <u>80%</u> of the pledged accounts receivable balance, otherwise Party B shall provide new accounts receivable recognized by Party A for pledge or deposits received (the account number shall be generated or recorded by Party A's system when the deposit is made, the same below) until the pledged accounts receivable balance is x <u>80%</u> + effective deposit > credit balance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.10 If Party B provides a security deposit pledge and the balance of the security deposit account is less than <u>95%</u> of the corresponding specific business amount due to exchange rate fluctuation, To add the corresponding amount of security deposit or other guarantees as required by Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.11 To ensure that the sales payment under import is returned from the account designated by Party A, and to transfer to Party A the bills and/or documents under the letter of credit to Party A under export negotiation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.12 To ensure that the income and expenditure activities such as settlement and payment are mainly carried out in the bank settlement account opened by Party A. During the credit period, the settlement transaction share of Party B in the designated account shall be at least not less than the financing share of Party B in all banks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Rights and Obligations of Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 Party A shall have the right to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.1 Require Party B to repay the principal, interest and expenses of loans, advances and other credit debts under this Agreement and specific contracts in full and on schedule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.2 Request Party B to provide information related to the use of its credit line;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.3 Know Party B's production, operation and financial activities;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.4 Supervise Party B's use of loans and/or other credits in line with the purposes provided under in this Agreement and various specific business agreements; to unilaterally and directly suspend or restrict the enterprise online banking function of Party B's account (including but not limited to closing online banking, presetting payment target list/single payment limit/stage payment limit, etc.) and other electronic payment channels, restricting the sale of settlement vouchers, or restricting counter payment and transfer of Party B's account, as well as payment and acceptance functions of non-counter channels such as telephone banking and mobile banking;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.5 Entrust other branches of China Merchants Bank located in the beneficiary's place to transfer the L/C to the beneficiary after accepting Party B's application for opening the L/C based on the needs of its internal process;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.6 Deduct money directly from the account opened by Party B in any institution of China Merchants Bank, and repay the debts owed by Party B under this Agreement and various specific business agreements (when the credit debt is not RMB, have the right to purchase foreign exchange directly from Party B's RMB account at the exchange rate announced by Party A at the time of deduction to repay the principal and interest of credit);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.7 Transfer its creditor's rights to Party B, and has the right to notify Party B of the transfer and collect payment from Party B by means it deems appropriate, including but not limited to fax, mail, delivery by a special person, announcement in public media, etc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.8 Supervise Party B's account and entrust other institutions of China Merchants Bank other than Party A to supervise Party B's account, and control the payment of loan funds in line with the loan purpose and payment scope agreed by the parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.9 Upon finding occurrence of any of the situations provided under Article 4.2.6 of this Agreement, require Party B to implement the guarantee measures for the safe repayment of the principal and interest of credit debts and all related expenses under this Agreement as required by Party A, and also has the right to directly take one or more default relief measures agreed in the "Default Events and Handling" clause of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.10 Other rights provided under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 Party A shall have the obligation to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.1 Lend loans or provide other credits to Party B within the credit line under the conditions provided under this Agreement and each specific contract; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2.2 Keep in confidence Party B's assets, finance, production and operation, except as otherwise provided by laws and regulations and required by regulatory authorities, or provided to Party A's superior or subordinate institutions, external auditors, accountants, lawyers and other professional institutions with equal confidentiality obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Party B Specifically warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 Party B is a corporate entity formally established and legally existing under the laws issued by the PRC. The registration and annual report publicity procedures are true, legal and effective, and Party B has sufficient civil capacity to sign and perform this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 The signing and performance of this agreement has been fully authorized by the board of directors or any other competent authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 The documents, materials and vouchers provided by Party B concerning Party B, the guarantor, the mortgagor (pledgor) and the security (pledge) are true, accurate, complete and valid, and do not contain any materials errors or omissions;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 It shall strictly abide by the specific business agreements and the stipulations of various letters and related documents issued to Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 There is no lawsuit, arbitration or criminal or administrative punishment that may have significant adverse consequences to Party B or its main property when signing this Agreement, and no such lawsuit, arbitration or criminal or administrative punishment will occur during the execution of this Agreement. In case of any occurrence, Party B shall immediately notify Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 It shall strictly abide by various national laws and regulations in business activities, carry out various businesses in strict accordance with the business scope stipulated in Party B's business license or approved under law, and handle the registration annual inspection procedures and business term extension/extension procedures on time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 Maintain or improve the existing management level, ensure the preservation and appreciation of existing assets, and do not give up any expired creditor's rights, nor dispose of existing major properties in a free or other inappropriate ways;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.8 Party B shall not pay off other long-term debts in advance without Party A's permission; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.9 When signing and performing this Agreement, it does not have any other major events affecting the performance of Party B's obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. Other Expenses

If this agreement involves notarization (except compulsory notarization) or other services to be provided by any third party, the relevant expenses shall be borne by the Party engaging such third party. If the parties jointly makes the engagement, they shall each bear 50% of such expenses.

In case that Party B fails to repay the debts owed to Party A under this Agreement on schedule, all expenses incurred by Party A for realizing the creditor's rights, such as attorney fees, legal fees, travel expenses, announcement fees and delivery fees, shall be borne by Party B in full, and Party B authorizes Party A to deduct them directly from Party B's bank account in Party A. If there is any shortfall, Party B shall guarantee to repay it in full after receiving Party A's notice, without Party A providing any proof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. Default Events and Handling

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 Party B shall be deemed to have defaulted under this Contract if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.1 Party B fails to perform or violate the obligations provided under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.2 Party B's special warranties provided under this agreement are untrue or incomplete, or Party B violates the special warranties and fails to correct them as required by Party A; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.3 Party B has committed material breach under the legal and valid contract signed by it with other creditors, which cannot be satisfactorily resolved within three months from the date of the breach.

**The above-mentioned material breach of contract means that Party B's breach of contract causes its creditors to have the right to claim compensation of more than RMB <u>1</u> <u>million</u>.** 

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.4 If Party B is an enterprise listed on the New Third Board or intends to apply for listing on the New Third Board, Party B's listing on the New Third Board encounters major obstacles or suspends its application for listing; Party B has been issued a warning letter, ordered to make corrections, restricted trading in securities accounts and other self-regulatory measures by the New Third Board market for more than three times, or has been disciplined or terminated from listing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.5 When Party B is the supplier of the government procurement entity, the government procurement entity has risk information that is unfavorable to Party A's credit repayment, such as continuous or cumulative three-time delayed payment, or Party B has been disqualified from supply (entered the blacklist of government procurement), delivered in time, the quality of products is unstable, the operation is difficult, the financial situation is obviously deteriorated (insolvent), and the project is stopped.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.6 Party B's financial indicators fail to continuously meet the requirements provided under this agreement/specific business agreement; or any precedent conditions provided under this agreement/specific business agreement that Party A provides credit/financing to Party B is not continuously met.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.7 Other situations that Party A considers to damage the legitimate rights and interests of Party A occur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Any of the following circumstances regarding the guarantor shall be deemed occurrence of an event of default if Party A thinks that it may affect the guarantor's guarantee ability, and requires the guarantor to eliminate the adverse effects caused by it, or requires Party B to increase or replace the guarantee conditions, for which the guarantor or Party B fails to cooperate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.1 One of the conditions similar to those described in Article 4.2.6 of this contract occurs, or Party A's consent is not obtained when the conditions described in Article 4.2.8 occur;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.2 When issuing an irrevocable guarantee, it conceals its actual ability to undertake the guarantee responsibility, or fails to obtain the authorization of the competent authority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.3 Failure to go through the annual inspection registration formalities and the business term extension/extension formalities on time; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2.4 Omission in managing and pursuing its due creditor's rights, or dispose of the existing main property without compensation or in other inappropriate ways.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 Any of the following circumstances regarding the mortgagor (or pledgor) shall be deemed occurrence of the event of default if Party A believes that the mortgage (or pledge) may not be established or the value of collateral (or pledge) is insufficient, and requires the mortgagor (or pledgor) to eliminate the adverse effects caused thereby, or requires Party B to increase or replace the guarantee conditions, for which the mortgagor (or pledgor) or Party B fails to cooperate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.1 There is no ownership or right to dispose of the collateral (or pledge), or there is a dispute over the ownership;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.2 Collateral (or pledge) has been leased, sealed up, detained, supervised, and has legal priority (including but not limited to priority of construction project payment), and/or conceals such situation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.3 The mortgagor transfers, leases, relocates or disposes of the collateral in any other inappropriate way without the written consent of Party A, or the proceeds from disposing of the collateral are not used to repay the debts owed by Party B to Party A as required by Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.4 The mortgagor fails to properly keep, maintain and repair the mortgaged property, resulting in obvious depreciation of the value of the mortgaged property; Or the mortgagor's behavior directly endangers the collateral, resulting in a decrease in the value of the collateral; Or the mortgagor fails to insure/renew the mortgaged property as required by Party A during the mortgage period;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.5 The mortgaged property has been or may be included in the scope of government demolition and expropriation, and the mortgagor fails to inform Party A immediately and fulfill relevant obligations as agreed in the mortgage contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.6 If the mortgagor uses its mortgaged property in China Merchants Bank to provide residual value mortgage guarantee for the business under this agreement, and before Party B pays off the credit under this agreement, the mortgagor settles his personal mortgage loan in advance without the consent of Party A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.7 If the pledgor pledges the wealth management products, the source of subscription funds for the wealth management products is illegal/compliant; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3.8 The mortgaged (pledged) property happens or may happen other matters that affect the value of the mortgaged (pledged) property or the mortgage (pledged) right of Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 When the guarantee under this agreement includes the pledge of accounts receivable, if the debtor of accounts receivable suffers from obvious deterioration in operation, transfers property/withdraws funds to avoid debts, colludes with the pledgor of accounts receivable to change the collection path, resulting in the failure of accounts receivable to enter the collection account, loss of commercial reputation, loss or possible loss of performance ability or other major events affecting its solvency, Party A has the right to require Party B to provide the corresponding guarantee or provide new effective accounts receivable for the pledge. If Party B fails to provide it, it shall be deemed that the event of default has occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5 In case of any of the above default events, Party A has the right to take the following measures separately or jointly:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.1 Reduce the credit line under this Agreement, or stop using the remaining credit line;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.2 Recover the principal and interest of the loan and related expenses within the credit line in advance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.3 For bills of exchange accepted by Party A or letters of credit, guarantees and delivery guarantees opened (including entrusted re-opening) during the credit period, regardless of whether Party A has made advances or not, Party A may require Party B to add the margin amount, or transfer the deposits of Party B in other accounts opened by Party A to its margin account as the margin for repaying Party A's future advances under this Agreement, or hand over the corresponding funds to a third party for deposit as the margin for Party A's future advances to Party B;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.4 Party A has the right to require Party B to immediately fulfill its repurchase obligations and take other recovery measures in accordance with relevant specific business agreements for the outstanding creditor's rights of accounts receivable transferred by Party A from Party B under factoring business; Party A has the right to immediately pursue the creditor's rights of accounts receivable transferred by Party A to Party B under the factoring business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.5 Party A may also directly request Party B to provide other assets acceptable to Party A as a new guarantee. If Party B fails to provide a new guarantee as required, it shall bear the liquidated damages equivalent to 30% of the credit line under this agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.6 Directly freeze/deduct deposits in any settlement account and/or other accounts opened by Party B in China Merchants Bank, stop opening new settlement accounts for Party B, and stop opening new credit cards of legal representatives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.7 Submit Party B's information on breach of contract and dishonesty to credit reporting agencies and banking associations, and have the right to share such information among banking institutions and even disclose it to the public through appropriate means;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.8 Dispose of the collateral and/or claim compensation from the guarantor under the provisions of the guarantee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5.9 Carry out recourse provided under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6 The money obtained by Party A's recourse shall be repaid for outstanding credit line in the reverse order of their time of maturity. Specifically, each credit shall be paid off in the order of expenses, liquidated damages, compound interest, default interest, interest and the final credit principal until all principal and interest and all related expenses are paid off.

Party A has the right to unilaterally adjust the above repayment sequence, unless otherwise required by laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. Guarantee Terms

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 For all debts owed by Party B to Party A under this Agreement, Party B or a third party acceptable to Party A shall provide collateral as security or joint guarantee, and Party B or the third party as guarantor shall issue or sign the guarantee separately as required by Party A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 If the guarantor fails to sign the guarantee and complete the guarantee formalities under the provisions of this Article (including the debtor's defense against the accounts receivable before the pledge of the accounts receivable), Party A has the right to refuse to provide credit to Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 When the mortgagor provides a real estate mortgage for all debts owed by Party B to Party A under this Agreement, if Party B knows that the collateral has been or may be included in the government demolition and expropriation plan, it shall immediately inform Party A, and urge the mortgagor to continue to provide guarantee for Party B's debts with compensation products provided by the demolition party under the mortgage contract, and timely complete the corresponding guarantee procedures, or provide other guarantee measures acceptable to Party A as required by Party A.

If the collateral is in any of the situations as mentioned in the preceding paragraph and needs to be reset or other safeguard measures are taken, the relevant expenses incurred shall be borne by the mortgagor, and Party B shall bear joint and several liabilities for the expenses. Party A has the right to directly deduct such expenses from Party B's account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. Other Matters

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 During the effective period of this Agreement, any waiver, grace or delay in the implementation of Party A's rights and interests under this Agreement by Party A shall not damage, affect or restrict all rights and interests that Party A shall enjoy as a creditor in accordance with relevant laws and regulations and this Agreement, nor shall it be regarded as Party A's permission or acknowledgement of any violation of this Agreement, nor shall it be regarded as Party A's waiver of the right to take action against existing or future violations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 If this Agreement becomes legally invalid for any reason, or if some clauses are invalid, Party B shall still assume the responsibility of repaying all debts owed to Party A under this Agreement. In case of the above situation, Party A has the right to terminate performance of this Agreement and immediately recover all debts owed by Party B under this Agreement.

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In case of any change in applicable laws and policies, resulting in new costs incurred by Party A in fulfilling its obligations under this Agreement, Party B shall compensate the new costs incurred by Party A according to Party A's requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 Notices, requirements or other documents related to this Agreement from Party A and Party B shall be sent in writing (including but not limited to letter, fax, E-mail, online banking of Party A, mobile phone SMSs or WeChat).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.1 If the document is sent through personal delivery (including but not limited to delivery by lawyer/notary, express delivery, etc.), it shall be deemed delivered when it is received and signed by the recipient (in case of rejection by the recipient, it shall be deemed delivered on the date of rejection/date of return or 7 days after the sending day, whichever is earlier); if the document is sent by mail, it shall be deemed delivered 7 days after the sending day; if the document is sent by fax, E-mail, online banking notice of Party A, mobile phone SMSs or WeChat, it shall be deemed delivered on the date of successful delivery displayed in the corresponding system of the sender.

If Party A notifies Party B of the assignment of debt or the collection of debt from Party B by means of announcements on the public media, it shall be deemed delivered on the date of the announcement.

If either party changes its contact address, E-mail address, fax number or mobile phone number or WeChat ID, it shall notify the other party of the changed information within five working days from the date of change, otherwise the other party shall have the right to deliver the information to the original contact address or information. If the delivery fails due to the change of address or information, it shall be deemed delivered on the date of return or 7 days after the sending day, whichever is earlier. The legal effect of service shall not be affected if the party making the change bears the possible loss thus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.2 The contact address, email, fax number, mobile phone number and WeChat ID listed in this Agreement shall be taken as the same as the delivery address of their notarial documents and judicial documents (including but not limited to pleadings/application for arbitration, evidence, summons, notice of appearance, notice of proof, notice of court, notice of hearing, written judgment/arbitral award, written verdict, conciliation statement, notice on performance within a time limit and other legal documents for the trial and execution phase). The service shall be deemed to be effective if the litigated court and the public certification authority send the service to the address in writing as agreed herein (the specific service standard shall be subject to the provisions of the preceding paragraph).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 The Parties agree that, for each business application under the trade financing business, Party B shall affix its seal filed with Party A and the Parties shall acknowledge the validity of such seal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5 When Party B submits all applications for credit business through Party A's online banking system, **its electronic signature generated in the form of a digital certificate shall be deemed as Party B's valid signature and seal** and shall represent Party B's true intention. Party A shall have the right to fill in the relevant business vouchers based on the application information sent online, and Party B shall acknowledge the authenticity, accuracy and legality of such documents and be bound by them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.6 The written supplementary agreements reached by the Parties on matters not covered herein and matters changed herein through consultation, as well as the specific business agreements hereunder shall constitute an integral part hereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.7 To facilitate business handling, any business office of Party A may handle the transaction-related operations of Party A (including but not limited to application acceptance, information review, lending, transaction confirmation, deduction, inquiry, receipt printing, collection, deduction of payment and various notices), and generate, sign and issue related letters. The business operations and letters of such office shall be deemed as the acts of Party A and be binding on Party B.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.8 The annexes hereunder constitute an integral part hereof and automatically apply to the corresponding specific business between the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.9 Party B shall, at the request of Party A (tick the appropriate box):

☐ To insure its core assets and designate Party A as the primary beneficiary;

☐ Not to sell or pledge the <u>/</u> assets designated by Party A prior to the settlement of the credit debt;

☐ To impose the following restrictions on the dividends of its shareholders prior to the settlement of the credit debt:

<u>/</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.10 Party B shall ensure that its financial indicators during the credit period shall be not below the following requirements:

<u>/</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.11 Party B acknowledges the content of the cooperation agreement on the Group credit business (including the adjustments and supplements thereto made by the signing parties from time to time) No.<u>/</u> signed by China Merchants Bank <u>/</u> and the Parent Company/Head Office/Holding Company of Party B <u>/</u> (enterprise name). Party B agrees to be bound by this Agreement and to undertake the due obligations as a subordinate unit of the Group under this Agreement.

If there is a breach, it shall be deemed committed by Party B, and Party A shall have the right to take various default relief measures as stipulated in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12 Other contractual matters:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12.1 Party A and Party B specifically agree on and confirm that under any circumstance as agreed in Article 4.2.6 hereof or under any of the following circumstances that Party A considers may endanger the security of its creditor's rights, Party A shall have the right to require Party B to implement the measures to safeguard the repayment of the principal and interest of the loan, advance and other credit debts under this Agreement and all relevant expenses, or adopt one or more relief measures as agreed in Article 8.5 hereof:

Party B's shareholders/de facto controllers abuse the Company's independent legal person status or shareholder's limited liability, evade debt, suspend production, cease operation, be deregistered or have its business license revoked, apply for or be applied for bankruptcy, dissolve, be punished by competent authorities, constitute a criminal offense, be involved in major legal disputes, encounter serious difficulties in production and operation, or see its financial position deteriorate;

If there is any discrepancy between this article and other articles of this Agreement, the provisions of this Article shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12.2 Party A shall have the right to adjust the benchmark interest rate of the loan/other credits or the pricing method of interest rate under this Agreement in light of market conditions or its own credit policies. Such adjustment shall take effect after Party A notifies Party B (by way of announcements at the outlet or official website of Party A, or by sending a notice to Party B at the reserved contact address/with the reserved method in this Agreement). If Party B does not accept the adjustment, early repayment may be made; otherwise, the adjusted interest rate stated in the notice shall be deemed applied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.12.3 <u>/</u>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. Applicable Laws and Resolution of Disputes

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 The conclusion, interpretation and resolution of disputes of this Agreement shall be governed by the laws of the People's Republic of China (for purpose of this Agreement, excluding laws of Hong Kong, Macao and Taiwan), and the rights and interests of the parties are protected by the laws of the People's Republic of China.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 Any dispute between Party A and Party B during the performance of this Agreement shall be resolved by the parties through consultation. If consultation fails, either party can (tick the box to choose one of the two):

☐ ![LOGO](g134595dsp12a.jpg) 11.2.1 Bring lawsuit to the people's court with jurisdiction in the place where Party A is located;

☐ 11.2.2 Apply for arbitration to <u>/</u> (fill in the name of the arbitration institution), and the place of arbitration is <u>/</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 After this Agreement and each specific business agreement have been notarized for compulsory execution effect, Party A may directly apply to a people's court with jurisdiction for enforcement in order for the recourse to debts owed by Party B under this Agreement and each specific business agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. Agreement Coming into Effect

This Agreement shall take effect from the signature (or name seal) of the legal representative/person in charge or authorized agent of both parties and stamped with the official seal/contract seal of the Company, and shall automatically be invalid on the day of the expiration of the credit period or the completion of repayment of all debts owed to Party A and all other related expenses under this Agreement (whichever is the later).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. Supplementary Provisions

This Agreement shall be made in <u>duplicate</u>, with Party A and Party B holding such one duplicate each as have the equal legal effect.

Attachment: 1. Special Terms on Cross-Border Linkage Trade Financing Business

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Special Terms on Buyer/Import Factoring

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Special Terms on Order Loan Business

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Special Terms on Guaranteed Discount of Commercial Acceptance Draft Business

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Special Terms on Derivative Trading Business

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Special Terms on Gold Leasing Business

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(The signature column of the "Credit Agreement" numbered <u>755XY2020000827</u> is shown below)

Party A: <u>/s/ Seal of Shenzhen Branch of China Merchants Bank Co., Ltd.</u>

(Signature and seal of Bank)

By: <u>/s/ Ying Qiu</u>

Title: Authorized Signatory

Contact address: <u>Shenzhen Branch Building, China Merchants Bank, 2016 Shennan Avenue, Futian District, Shenzhen</u>

Company email: <u>/</u>

Company fax number: <u>/</u>

Mobile phone number of contact: <u>/</u>

Company WeChat account: <u>/</u>

Party B: <u>/s/ Seal of New Ruipeng Pet Healthcare Group Co., Ltd.</u>

Legal representative/Person in charge or authorized agent (signature/name seal):

By: <u>/s/ Yonghe Peng</u>

Title: Authorized Signatory

Contact address: <u>6306G, Building A,</u> Kingkey Timemark, Xiasha Village, 9289 Binhe Road, Xiasha Community, Shatou Sub-district<u>, Futian District, Shenzhen, Guangdong Province</u>

Company email: <u>[\*\*\*]</u>

Company fax number: <u>/</u>

Mobile phone number of contact: <u>[\*\*\*]</u>

Company WeChat account: /

Date: February 24, 2020

## Exhibit 10.17

**Exhibit 10.17** 

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**Blanket Merger Agreement** 

by and between

**Ruipeng Pet Healthcare Group Co., Ltd.** 

**Peng Yonghe, Liu Lang, Zhang Yanzhong, Zhang Wei, and Wang Liesheng** 

**Hillhouse Capital Management Ltd.** 

**Skyfield (Shanghai) Investment Co., Ltd.** 

and

Other related **parties**

on

January 23, 2019

------

**Contents** 

---

| | | |
|:---|:---|:---|
|  |  | Page |
|  Article 1 | Definitions and Interpretations | 3 |
|  Article 2 | Scope and Valuation of Underlying Assets | 8 |
|  Article 3 | Transaction Steps | 9 |
|  Article 4 | Closing Preconditions | 15 |
|  Article 5 | Representations and Warranties of the Parties | 16 |
|  Article 6 | Transitional Period and Relevant Arrangements | 17 |
|  Article 7 | Undertakings | 22 |
|  Article 8 | Shareholder's Rights | 25 |
|  Article 9 | New Ruipeng Group's Management Organization | 31 |
|  Article 10 | Financial, Accounting and Auditing Systems | 39 |
|  Article 11 | Employees | 41 |
|  Article 12 | Liquidation | 41 |
|  Article 13 | Confidentiality | 43 |
|  Article 14 | Taxes & Expenses | 44 |
|  Article 15 | Liability for Breach of Agreement | 44 |
|  Article 16 | Effectiveness & Termination | 46 |
|  Article 17 | Notice | 48 |
|  Article 18 | Applicable Law & Settlement of Dispute | 48 |
|  Article 19 | Miscellaneous | 49 |
|  Annex 1: Underlying Asset Equity Structure on the Signature Day of This Agreement | Annex 1: Underlying Asset Equity Structure on the Signature Day of This Agreement |  |
|  Annex 2: Equity Structure of New Ruipeng Group | Annex 2: Equity Structure of New Ruipeng Group |  |
|  Annex 3: Templates for Confidentiality Agreement, IPR Attribution and Non-Competition Agreement | Annex 3: Templates for Confidentiality Agreement, IPR Attribution and Non-Competition Agreement |  |
|  Annex 4: Representation and Warranty | Annex 4: Representation and Warranty |  |
|  Annex 5: Way of Notification | Annex 5: Way of Notification |  |

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**Blanket Agreement for Merger** 

The blanket agreement for merger (this "**Agreement**") was concluded and entered into by and between the following **parties** on January 23, 2019:

(1) **Ruipeng Pet Healthcare Group Co., Ltd.**, a joint stock company incorporated under **the laws of China**, with the domicile at 6306G, Building A, Jingji Binhe Times Square, Xiasha Village, 9289 Binhe Road, Xiasha Area, Shatou Sub-district, Futian District, Shenzhen City, Guangdong Province
(" **Ruipeng** ");

(2) **Peng Yonghe**, a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address of
Room 2704, Jinghuayuan East Building, Armed Police Building, Futian District, Shenzhen City, Guangdong Province;

(3) **Liu Lang**, a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address of
Room 302, Unit 2, Building 11, Zone 3, Middle Building, 50 Xingshikou Road, Haidian District, Beijing;

(4) **Zhang Yanzhong**, a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address
of Room 5B, Building 43, Cuizhuyuan, 2057 Dongmen North Road, Luohu District, Shenzhen City, Guangdong Province;

(5) **Zhang Wei**, a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address of
320 Huayuanzha Village, Gaobeidian Town, Chaoyang District, Beijing;

(6) **Wang Liesheng**, a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address
of Room 1403, Yingyuexuan, East Block of Jiashi Garden, Binjiang East Road, Haizhu District, Guangzhou;

(7) The existing shareholders of **Ruipeng** listed in **Annex 1-1** Existing Shareholding Structure of **Ruipeng** (except Peng Yonghe and Zhang Yanzhong);

(8) **Hillhouse Capital Management Ltd.**, a limited liability company incorporated under the laws of the Cayman
Islands, with the registered address of 27 Hospital Road, George Town, Grand Cayman KY1-9008, the Cayman Islands ()"**Hillhouse Capital** ");

(9) **Skyfield Holdings Limited**, a limited liability company incorporated under the laws of Hong Kong, with
the registered address of Unit 1001, 10/F., Infinitus Plaza, 199 Des Voeux Road Central, Hong Kong ()"**Hong Kong Skyfield** ");

(10) **Skyfield (Shanghai) Investment Co., Ltd.**, a limited liability company incorporated under **the laws of China**, with the domicile at Units 2901, 2903-2904, Capital Square, 268 Hengtong Road, Jing'an District, Shanghai ()"**Skyfield** ");

(11) **Zhuhai Gaoling Tiancheng Equity Investment Fund (L.P.)**, a limited partnership established under **the laws of China**, with the domicile at Room 105-38161 (Centralized Office Area), 6 Baohua Road, Hengqin New District, Zhuhai City ()"**Gaoling Tiancheng** ");

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(12) **Shanghai Ceerhang Enterprise Management Consulting Co., Ltd.**, a limited liability company incorporated
under **the laws of China**, with the domicile at Room 1108, 968 Beijing West Road, Jing'an District, Shanghai ()"**Ceerhang** ");

(13) **Yunchong (Beijing) Animal Hospital Technology Co., Ltd.**, a limited liability company incorporated under **the laws of China**, with the domicile at Room 1129, 1/F, Building 23, 72 Qinghe 3rd Street, Haidian District, Beijing ()"**Yunchong** ");

(14) The existing shareholders of **Yunchong** listed in **Annex 1-3** Existing Shareholding Structure of **Yunchong** (except **Skyfield** and **Gaoling Tiancheng**);

(15) **Shanghai Anan Pet Co., Ltd.**, a limited liability company incorporated under **the laws of China**,
with the domicile at Room 919, 9/F, 4229 Baoan Road, Jiading District, Shanghai ()"**Anan** ");

(16) The existing shareholders of **Anan** listed in **Annex 1-4** Existing Shareholding Structure of **Anan** (except **Skyfield** and **Gaoling Tiancheng**), and the existing management of **Anan Kan Jiansheng** (a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address
of Room 7, 208 Nanyang Road, Jing'an District, Shanghai) and **Xu Jing** (a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address of Room 7, 208 Nanyang Road, Jing'an District, Shanghai);

(17) **Qingdao Ainuo Animal Hospital Management Co., Ltd.**, a limited liability company incorporated under **the laws of China**, with the domicile at Room 207, Unit 5, 3 Yangxin Road, Shibei District, Qingdao City, Shandong Province ()"**Ainuo** ", together with **Ceerhang**, **Yunchong** and **Anan**, collectively referred to as
" **Skyfield's Platform Companies** ");

(18) The existing shareholders of **Ainuo** listed in **Annex 1-5** Existing Shareholding Structure of **Ainuo** (except **Skyfield**), and the existing management of **Ainuo Zhao Qing** (a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address of Room 304, 1 Wudi Wei First
Road, Shibei District, Qingdao City, Shandong Province) and **Wei Rensheng** (a natural person of **Chinese** nationality, with the ID No. of [\*\*\*] and the address of Room 1003, Unit 3, Building 35, 3 Tongle 3rd Road, Shibei District, Qingdao
City, Shandong Province).

The parties who actually execute **this Agreement** are **hereinafter** referred to as "**a Party**" or "**such Party**" individually and as the "**Parties**" collectively.

**Whereas:** 

(1) **The Parties** expect to merge and consolidate the business and/or equity of **Ruipeng's Underlying Assets** and **Skyfield's Underlying Assets** through the restructuring set out in **this Agreement** (the "**Restructuring** "), where **the Existing Shareholders of Ruipeng** and **the Existing Shareholders of Skyfield's Underlying Assets** will jointly hold the equity of the operating entity after the merger (the "**New Ruipeng Group**") upon the completion of **the Restructuring**, **New Ruipeng Group** will hold all the **Underlying Assets**, and other relevant transactions recognised by **the Management Shareholder of Ruipeng** and **Hillhouse Capital** jointly will be carried out; and

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(2) **Hillhouse Capital** or its **related parties** will increase the capital of **New Ruipeng Group** upon the completion of **the Restructuring** (the "**Capital Increase** ", together with **the Restructuring**, collectively referred to as the "**Transaction** ").

**The Parties**, through friendly consultation, hereby reach the following **agreements** on **the Transaction**:

**Article 1 Definitions and Interpretations** 

1.1 **Definitions**

Unless otherwise specified in the context, the bold terms used in **this Agreement** shall be interpreted as follows:

"**Existing Shareholders of Underlying Assets**" shall refer to **the Existing Shareholders of Skyfield's Underlying Assets** and **the Existing Shareholders of Ruipeng**.

"**Beijing Sunshine**" shall refer to Beijing Sunshine Ronghui Sunshine Ronghui Healthcare Industry Growth Investment Management Center (Limited Partnership).

"**Concordia**" shall refer to **Concordia Pet Care Limited**, a limited liability company incorporated under **the laws of Hong Kong**, with the domicile at Unit 1001, 10/F., Infinitus Plaza, 199 Des Voeux Road Central, Hong Kong.

"**Board of Directors**" shall refer to the board of directors of **New Ruipeng Group**.

"**Liabilities**" shall refer to, in relation to any **person**, all the debts and the liabilities of any other nature actually incurred or likely to be incurred by the **person**, whether or not they shall be disclosed in the **person**'s accounts according to their nature.

"**Business Day**" shall refer to any day other than Saturdays, Sundays, statutory holidays or other days on which commercial banks are closed in **China**.

"**General Meeting**" shall refer to the general meeting of **New Ruipeng Group**.

"**Equity Securities**" shall refer to, in relation to any **person**, the **perso**n's equity, shares, preferred stock, shareholder's equity, partnership interests, interests in registered capital, joint venture interests or other ownership interests, and the options, warrants or other rights or securities that may be converted, exercised or exchanged, directly or indirectly, for the said interests. Any reference to a **person**'s "equity" or "equity interest" shall include **equity securities**, unless it is clearly illogical to use such an interpretation in the context. The "**person**" as mentioned in this definition shall exclude the natural person.

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"**Key Employees**" shall refer to Peng Yonghe, Liu Lang, Zhang Yanzhong, Zhang Wei, Dong Yi, Mao Junfu, Kan Jiansheng, Wei Rensheng, Wang Liesheng, Li and Wang Rong.

"**Related party**" of a **person** (**the "Person"**) shall refer to: (i) In case **the Person** is not a natural person, a **person** who directly or indirectly controls **the Person**, or is controlled by **the Person**, or **is controlled** together with **the Person**; and (ii) In case **the Person** is a natural person, a **person** who is directly or indirectly **controlled** by **the Person**, or an **immediate family** of **the Person**, or a **person** who is directly or indirectly **controlled** by such an **immediate family**.

"**Related Transaction**" shall refer to: (1) In relation to **Ruipeng Group**, the transaction between a **Ruipeng Group member** and any of the following **persons** (except the transaction between the **Ruipeng Group members**): (i) the shareholder, ultimate controller, director or senior officer of any **Ruipeng Group member**, or the **person** who is considered the related person of a **Ruipeng Group member** in accordance with **the US Accounting Standards** or Accounting Standards for Business Enterprises No. 36 - Related Party Disclosure; (ii) **the related party** of the **person** stated in item (i) and the director or senior officer of such a **related party**. (2) In relation to **Skyfield Group**, the transaction between a **Skyfield Group member** and any of the following **persons** (except the transaction between the **Skyfield Group members**): (i) the shareholder, ultimate controller, director or senior officer of any **Skyfield Group member**, or the **person** who is considered the related person of a **Skyfield Group member** in accordance with t**he US Accounting Standards** or Accounting Standards for Business Enterprises No. 36 - Related Party Disclosure; (ii) the r**elated party** of the **person** stated in item (i) and the director or senior officer of such a **related party**. (3) In relation to **the Group**, the transaction between a **Group member** and any of the following **persons** (except the transaction between the **Group members**): (i) the shareholder, ultimate controller, director or senior officer of any **Group member**, or the **person** who is considered the related person of a **Ruipeng Group member** in accordance with **the US Accounting Standards** or Accounting Standards for Business Enterprises No. 36 - Related Party Disclosure; (ii) the **related party** of the **person** stated in item (i) and the director or senior officer of such a **related party**.

"**Closing Date**" shall refer to September 30, 2019, provided that with the joint agreement of **Ruipeng Management Shareholders** and **Hillhouse Capital**, the **Closing Date** can be extended twice at most, each of which shall be not more than 6 months

"**Listing**" shall refer to the initial public offering of the shares of **New Ruipeng Group** and its listing on any of the following stock exchanges or any other stock exchange jointly recognized by **Ruipeng Management Shareholders** and **Hillhouse Capital**: (i) the New York Stock Exchange; (ii) NASDAQ; or (iii) the Stock Exchange of Hong Kong Limited.

"**The Group**" shall refer to **New Ruipeng Group**, **Ruipeng Group** and **Skyfield Group**; the "**Group Member**" shall refer to any of the aforesaid companies.

"**Transaction Documents**" shall refer to **this Agreement** and other relevant documents executed by **the Parties** for **the Transaction** in accordance with **this Agreement**.

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The "**Immediate Family**" of a natural person shall refer to his/her spouse and the parents, grandparents, children, grandchildren, siblings, uncles, aunts, nephews, nieces, or great-grandparents of that person or his/her spouse.

"**Control**" over a **person** shall refer to: (i) holding more than 50% of the issued shares or other equity or registered capital of the **person**; or (ii) the power to determine the management or policy of the **person** by holding more than 50% of the voting power of the **person**, by owning the voting proxy who holds more than 50% of the voting rights of that **person**, or by having the power to appoint a majority of the members of the board of directors or similar governing organizations, or through contractual arrangements or otherwise. The "**person**" as mentioned in this definition shall exclude the natural person.

"**Skyfield's Underlying Companies**" shall refer to **Skyfield's Platform Companies** and **Concordia**.

"**Existing Shareholders of Skyfield's Underlying Assets**" shall refer to the existing shareholders of **Skyfield's Platform Companies** as of the signing date of **this Agreement** (as detailed in <u>Annex 1-2 to Annex 1-6</u>) and **Hong Kong Skyfield**, including any **person** that has acquired **Skyfield's Underlying Assets** held by **Gaoling Tiancheng** prior to the **Closing Date** according to **this Agreement** (if applicable; if **Gaoling Tiancheng** no longer holds any **Skyfield's Underlying Assets** at that time, **Gaoling Tiancheng** shall no longer be deemed the Existing Shareholder of **Skyfield's Underlying Assets**).

"**Skyfield's Participation Equity**" shall refer to the 22.24% and 11.36% (33.6% in total) equity of **Shanghai Naughty** and 17.34% and 13.31% (30.65% in total) equity of **Nanjing Ai-Bi** respectively held by **Hong Kong Skyfield** and **Skyfield**.

"**Skyfield Parties**" shall refer to **Skyfield's Underlying Companies**, **Hong Kong Skyfield**, **Skyfield** and **Gaoling Tiancheng**.

"**Skyfield Group**" shall refer to **Skyfield's Underlying Companies** and their **subsidiaries**; "**Skyfield Group Member**" shall refer to any of the aforesaid companies.

"**Skyfield's Minority Shareholders**" shall refer to the existing shareholders of **Skyfield's Platform Companies** other than **Skyfield** and **Gaoling Tiancheng**.

"**Disclosure Letters**" shall refer to the disclosure letters provided by **Ruipeng Parties** and **Ruipeng Investor Shareholders** to **Hillhouse Capital**, and the disclosure letters provided by **Skyfield Parties** and **Skyfield's Minority Shareholders** to **Ruipeng Management Shareholders**. The information disclosed in the foregoing Disclosure Letters constitutes the representations and warranties of **the parties** concerned.

"**Encumbrances**" shall refer to (i) any mortgage, pledge, lien, other security interest, priority, delegation of voting rights, or restriction on transfer of any particular property; (ii) compulsory measures on any particular property such as sealing up, detaining and freezing; and (iii) claims attached to any particular property in respect of the ownership, possession, use, disposition, or profit thereof granted by any **person** or arising by reason of contract or law.

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"**Person**" shall refer to an individual, company, enterprise, partnership, trust, government, governmental department, governmental agency or other entities.

"**Ruipeng Parties**" shall refer to **Ruipeng, Shanghai Ruichen, Shanghai Yourui, Shanghai Beiye, Pengsheng Investment, Pengcheng Investment** and **Ruipeng Management Shareholders**.

"**Ruipeng Group**" shall refer to **Ruipeng** and its **subsidiaries**; "**Ruipeng Group Member**" shall refer to any of the aforesaid companies.

"**Ruipeng Investor Shareholders**" shall refer to **the existing shareholders of Ruipeng** other than **Shanghai Ruichen, Shanghai Yourui, Shanghai Beiye, Pengsheng Investment, Pengcheng Investment** and **Ruipeng Management Shareholders**.

"**Ruipeng Management Shareholders**" shall refer to Peng Yonghe, Liu Lang, Zhang Yanzhong, Zhang Wei and Wang Liesheng; for the matters stated in **this Agreement** which shall be agreed upon or decided by **Ruipeng Management Shareholders**, if **Ruipeng Management Shareholders** fail to reach a consensus, the opinion of Mr. Peng Yonghe shall prevail.

"**Existing Shareholders of Ruipeng**" shall refer to the existing shareholders of **Ruipeng** as of the signing date of **this Agreement**, as detailed in <u>Annex 1-1</u>.

"**Applicable Laws**" or "**Laws**" shall refer to, in relation to a **person**, the open, valid and applicable treaties, laws, administration regulations, local regulations, rules, judicial interpretations, judgments, rulings, arbitral awards and other normative documents applicable to the **person** or binding on the **person** or its property.

"**Taxes**" shall refer to the taxes and tax-like charges of all forms levied, withheld or assessed by the central or local government of **China** or any other jurisdiction, as well as interest, penalties, surcharges or penalties in connection with the foregoing. The terms "**tax**", "**taxation**", "**scot**" or "**levy**" used in **this Agreement**, unless otherwise specified, shall be construed in the same way as **tax**.

"**Action**" shall refer to any claim, lawsuit, **legal** action, demand, audit, inquiry, investigation, request, hearing, notice of violation, litigation, action, proceeding or arbitration, whether civil, criminal, administrative or other similar nature.

"**Shenzhen Dachen**" shall refer to Shenzhen Dachen Chuanglian Equity Investment Fund Partnership (Limited Partnership) and/or Shenzhen Dachen Chuangfeng Equity Investment Enterprise (Limited Partnership).

"**Property Defect**" shall refer to the defect in the title of the property occupied or used by **the Group Member** (including the own property and leased property), the use of the property in a manner inconsistent with the planned use, the use of the property without going through proper completion and fire acceptance procedures, and the problem that lessor of the leased property has no right to lease the relevant leased property.

"**Yuan**" shall refer to the Renminbi, the legal currency of **China**, unless otherwise stated.

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"**Governmental Agency**" shall refer to a competent government or its affiliates, a department of a government or its affiliates, a court or arbitral tribunal, and the regulatory authorities of a stock exchange.

"**Government Approval**" shall refer to the rights, licenses, permits, approvals, exemptions, consents and authorisations granted by **governmental agencies**, as well as the registration and filing with the **governmental agencies**.

"**Intellectual Property**" shall refer to the patents, trademarks, service marks, registered design, domain name, utility models, copyright, inventions, confidential information, trade secrets, proprietary production technology and equipment, brand name, database rights, trade name and any other similar right in any country, and the interests of the aforesaid (whether registered or not, and including the grant of the above applications and the right to apply for them anywhere in the world).

"**China**" or "**the PRC**" shall refer to the People's Republic of China, but for the purpose of **this Agreement**, excluding the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan;

"**Chinese Accounting Standards**" shall refer to the accounting standards applicable to enterprises in **China** for the time.

"**US Accounting Standards**" shall refer to the US Generally Accepted Accounting Principles.

"**Principal Business**" shall refer to the animal diagnosis and treatment, animal grooming, animal food and supplies sales and other pet-related businesses carried out by **the Group**, including but not limited to the Internet, software development, education and training, supply chain, and media business.

"**Subsidiaries**" shall refer to, in relation to a **person**, other **persons** (other than the natural person) directly or indirectly controlled by the **Person** on or after the signing date of **this Agreement**.

"**Assets"** shall refer to the assets, rights and privileges, tangible or intangible, of any nature (including rights relating to **intellectual property**).

"**Material Adverse Impact**" or "**Material Adverse Change**" shall refer to the occurrence or non-occurrence of anything, circumstance or event which, alone or together with occurrence or non-occurrence of any other thing, circumstance or event, has or can reasonably be expected to have a material adverse impact on the business, operations, development, assets, property, qualifications, financial position or business results of **the Group**.

"**Important Contracts**" shall refer to the following contracts that have been signed but not completed or in dispute: (a) the contract signed outside ordinary business course; (b) any contract related to **related transactions**; (c) the joint venture contract, partnership contract, shareholder agreement, strategic cooperation or alliance agreement; (d) the loan contract or other financing contracts, guarantee contracts; (e) the contract relating to the acquisition of any entity or the business or a material part of any entity's assets, or the disposal of all or a material part of its assets; (f) the agreement with any shareholder, director, senior officer or **key employee** or a **related party** of such a **person** (excluding the employment agreement, the non-disclosure agreement consistent with normal business practices, and the non-competition agreement with such **persons**, if such employment agreements are materially identical except the remuneration provisions); (g) any contract that has the value of more than RMB 5 million or has not been performed for more than three (3) months; (h) any other agreement that is of great significance to its business, financial position or business results; and (i) the lease agreement concerning the land, building or house.

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1.2 **Interpretation**

(a) The phrase "directly or indirectly" means directly or indirectly through its **related parties** or by contract or other arrangements.

(b) The headings are for convenience only and shall not affect the construction or interpretation of **this Agreement**.

(c) "Including" and the similar expressions shall be construed as "including but not limited
to".

(d) Any reference to **this Agreement** shall be deemed to include annexes and schedules to **this Agreement**, which shall form an integral part of **this Agreement**.

**Article 2 Scope and Valuation of Underlying Assets** 

2.1 **Scope of Ruipeng's Underlying Assets and the Corresponding Valuation** 

The underlying assets that **the Existing Shareholders of Ruipeng** intend to include in **the Restructuring** ("**Ruipeng's Underlying Assets**") shall be 100% of the shares of **Ruipeng** and all the interests and rights they represent (including the interests of **Ruipeng** in the **Subsidiaries** it holds and the entities it participates in the shareholding (for the list and the specific proportion of interests as well as the equity and rights they represent, please refer to <u>Annex 1</u>) and the business of **Ruipeng** and its **Subsidiaries**). The valuation of **Ruipeng's Underlying Assets** is RMB 4.2 billion ("**Valuation of Ruipeng's Underlying Assets**").

2.2 **Scope of Skyfield's Underlying Assets and the Corresponding Valuation**

The underlying assets that **the Existing Shareholders of Skyfield** intend to include in **the Restructuring** ("**Skyfield's Underlying Assets**") shall be (i) 100% of the equity of **Skyfield's Platform Companies** and all the interests and rights they represent; (ii) 90.43% of the shares of **Concordia** and all the interests and rights they represent; and (iii) **Skyfield's Participation Equity** (the **Skyfield's Underlying Assets** shall include the interests of **Skyfield's Platform Companies** and **Concordia** in the **Subsidiaries** they hold, and the business of the **Subsidiaries** held by **Skyfield's Platform Companies** and their **Subsidiaries** and **Concordia**, and **Skyfield's Participation Equity**. For the list and specific proportion of equity, please refer to <u>Annex 1</u>. **Ruipeng's Underlying Assets** and **Skyfield's Underlying Assets** are collectively referred to as the "**Underlying Assets**"). The valuation of **Skyfield's Underlying Assets** is RMB 4.2 billion. The valuation of each asset is set out below:

(1) 100% of the equity of **Ceerhang**, with a valuation of RMB 1.484016 billion;

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(2) 100% of the equity of **Yunchong**, with a valuation of RMB 0.947412 billion;

(3) 100% of the equity of **Anan**, with a valuation of RMB 1.354826 billion;

(4) 100% of the equity of **Ainuo**, with a valuation of RMB 0.185159 billion;

(5) 33.6% of the equity of **Shanghai Naughty** held by **Hong Kong Skyfield** and **Skyfield**, with a
valuation of RMB 66.156 million;

(6) 30.65% of the equity of **Nanjing Ai-Bi** held by **Hong Kong Skyfield** and **Skyfield**, with a valuation of RMB 0.125256 billion;

(7) 90.43% of the equity of **Concordia** held by **Hong Kong Skyfield** through its wholly-owned subsidiary
Concordia Holdings Limited, with a valuation of RMB 37.175 million.

2.3 Determination of the scope of **Underlying Assets** involved in **the Restructuring** and the **Valuation of the Underlying Assets of the Signing Shareholders** (as defined below)

If any **Existing Shareholders of the Underlying Assets** fail to sign **this Agreement** and deliver the signature page to the **other parties** on or before the **Deadline for Signing the Agreement**, **the Existing Shareholder of the Underlying Assets** shall not be considered **a Party to this Agreement**, and its **Underlying Assets** shall not be included in t**he Transaction**. In the above situation, **the Parties** agree to calculate the valuation of **the Underlying Assets** in **the Transaction** according to the proportion of **the Underlying Assets** held by **the Existing Shareholders of the Underlying Assets** who have signed **this Agreement** in the relevant **Underlying Assets** stated in Articles 2.1 and 2.2 of **this Agreement**, and correspondingly calculate and adjust the Valuation of **the Underlying Assets of the Signing Shareholders** and the shareholding proportion of the relevant **Existing Shareholders of the Underlying Assets** in **New Ruipeng Group**.

**Article 3 Transaction Steps** 

3.1 **Restructuring Scheme and Its Implementation** 

(1) **Restructuring Principle** 

**The Parties** agree to carry out **the Restructuring** according to the Restructuring Scheme (the "**Restructuring Scheme**") set out in item (2) of Article 3.1, where **the Existing Shareholders of the Underlying Assets** shall merge the **Underlying Assets** they hold, the new legal entity established **the Parties** shall hold the **Underlying Assets** as **New Ruipeng Group**, and **the Existing Shareholders of the Underlying Assets** shall hold the equity of **New Ruipeng Group** according to the proportion of the valuation of **the Underlying Assets** they invest into **New Ruipeng Group**.

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(2) **Restructuring Scheme and Steps** 

(a) Skyfield Holdings (Cayman) Inc. ()"**Cayman Skyfield**") shall establish a shareholding entity in
the British Virgin Islands ()"**BVI SPV** "), and then the **BVI SPV** shall establish a shareholding entity in Hong Kong ()"**HK SPV** "). **Hong Kong Skyfield** and **Skyfield** shall simultaneously spin off the
assets they hold other than the **Underlying Assets** (including but not limited to the equity of **Subsidiaries** not belonging to the **Underlying Assets**, except Concordia Holdings Limited ()"**Concordia Cayman**") and **Skyfield**) and assign them to **Hillhouse Capital** or its designated party, and allocate the post-tax consideration (if any) to **Cayman Skyfield**.

(b) **Ruipeng** shall be changed from a joint stock company to a limited liability company at an appropriate
time.

(c) **Ruipeng Management Shareholders** (and other ultimate individual shareholders of **Ruipeng** with **Chinese** nationality, if required) shall establish one or more shareholding entities overseas ()"**Natural Person BVI of Ruipeng**") and complete the relevant registration according to **Circular No.37 issued by the State Administration of Foreign Exchange**.

(d) The ultimate individual shareholders with **Chinese** nationality among the **minority shareholders of Skyfield** who become **a Party to this Agreement** shall establish one or more shareholding entities overseas ()"**Natural Person BVI of Skyfield**") and complete the relevant registration according to **Circular No.37 issued by the State Administration of Foreign Exchange**.

(e) **Institutional Shareholders of Ruipeng** who become **a Party to this Agreement** shall complete the
procedures for overseas direct investment ()"**ODI** "), or establish a shareholding entity at the Cayman Islands ()"**New Ruipeng Group** "), which shall serve as the listed entity in the future, with the **Natural Person BVI of Ruipeng** through its overseas **related parties**.

Steps (a) to (e) may be carried out simultaneously.

(f) **HK SPV** shall increase the capital of Ruipeng based on **Ruipeng** 's net asset value (or other
valuations) according to the principle of optimizing the tax cost of restructuring permitted by law or competent authorities, and acquire 5% of Ruipeng's equity after its capital increase, as to change **Ruipeng** into a Sino-foreign joint
venture. **New Ruipeng Group** shall simultaneously subscribe for the new shares issued by **Hong Kong Skyfield** at nominal consideration, with the valuation of the acquired shares equal to the valuation of the Ruipeng shares held by **HK SPV** less the capital contribution of **HK SPV** to **Ruipeng** in its capital increase.

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(g) **Skyfield** shall acquire the 44.8% equity of **Yunchong** and 30.65% equity of **Anan** held by **Gaoling Tiancheng** at an appropriate time at the price determined by **Hillhouse Capital** and **the minority shareholders of Skyfield**. Whether **Gaoling Tiancheng** will subscribe for the shares of **New Ruipeng Group** through **ODI** is determined by **Hillhouse Capital**. If **Gaoling Tiancheng** elects to subscribe for the shares of **New Ruipeng Group** through **ODI**, **Gaoling Tiancheng** shall invest the post-tax proceeds it obtains from **Skyfield** for the transfer of the 44.8% equity of **Yunchong** and 30.65% equity of **Anan** it holds into **New Ruipeng Group**. For the avoidance of doubt, if **Gaoling Tiancheng** will not subscribe for the shares of **New Ruipeng Group** through **ODI**, **the contribution for capital increase** shall not be used as the above-mentioned acquisition consideration.

(h) The following steps shall be implemented simultaneously to complete **the Restructuring**:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Cayman Skyfield** shall subscribe for the new shares of **New Ruipeng Group** with all the shares of **Hong Kong Skyfield** it holds, so as to change **Hong Kong Skyfield** into a wholly-owned subsidiary of **New Ruipeng Group**, with the valuation of the shares of **New Ruipeng Group** acquired by **Cayman Skyfield** equal to the
valuation of **Skyfield's Underlying Assets** formerly held by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) **Skyfield** shall acquire all the equity of **Yunchong**, **Anan** and **Ainuo** held by **the minority shareholders of Skyfield** who become **a Party to this Agreement** based on the investment cost of such minority shareholders in **Yunchong, Anan** and **Ainuo** (or other valuation) according to the principle of optimizing the
tax cost of restructuring permitted by law or competent authorities. The transfer proceeds of the **minority shareholders of Skyfield** after income tax shall be returned to **Skyfield's Platform Companies** in a specific way.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) **New Ruipeng Group** shall issue new shares to **Natural Person BVI of Skyfield** at nominal
consideration, with the share valuation equal to the valuation of the equity of **Skyfield's Platform Companies** held by **the minority shareholders of Skyfield** corresponding to such **Natural Person BVI of Skyfield**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) **HK SPV** shall acquire all the equity of **Ruipeng** held by **the existing shareholders of Ruipeng** who become **a Party to this Agreement** based on the net asset value of **Ruipeng** (or other valuation) according to the principle of optimizing the tax cost of restructuring permitted by law or competent authorities, so as to
change **Ruipeng** into a subsidiary of **HK SPV**. **The existing shareholders of Ruipeng** who become **a Party to this Agreement** (other than the institutional shareholders of **Ruipeng**) shall return the transfer proceeds after
income tax to **Ruipeng**, and the institutional shareholders of **Ruipeng** shall inject their transfer proceeds after income tax into **New Ruipeng Group** through Step (e).

**The Parties** hereby agree and acknowledge that with the mutual consent of **Hillhouse Capital** and **Ruipeng Management Shareholders**, the aforesaid **Restructuring Scheme** can be adjusted to achieve the purpose of **the Restructuring**, provided that the adjustment shall be based on the principle of optimizing the overall benefits of the **Existing Shareholders of Underlying Assets** who sign **this Agreement**, minimizing the tax burden and tax base damage of **the Restructuring**, and reducing the amount of cash flow required. If the relevant **Existing Shareholders of Underlying Assets** cannot complete the overseas restructuring due to **applicable laws** or regulatory reasons, such **Existing Shareholders of Underlying Assets** shall negotiate with **Hillhouse Capital** and **Ruipeng Management Shareholders** to reach solutions, including transferring their equity in **Ruipeng** or **Skyfield's Platform Companies**.

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**The Parties** undertake to restructure the **Underlying Assets** they hold according to **this Agreement** and the above **Restructuring Scheme** (including the adjustment made by **Hillhouse Capital** and **Ruipeng Management Shareholders** from time to time based on the above principle), and take all action (including but not limited to signing the relevant agreements for **the Restructuring**, obtaining all the applicable internal and external approvals, and completing the relevant approval/registration/filing procedures), in order to complete **the Restructuring** as soon as possible. To facilitate the implementation and adjustment to the **Restructuring Scheme**, **the Transaction** and other related matters, with the consent of **Hillhouse Capital** and **Ruipeng Management Shareholders**, the equity transfer between the **Existing Shareholders of Underlying Assets**, their **related parties** and the third parties designated by the above-mentioned **persons** shall not be restricted, and other **parties** agree to waive any preemption or other rights, if any, in respect of the transferred equity.

3.2 **Closing of the Restructuring** 

(1) Determination of **valuation of shareholder's underlying assets for closing** 

If any **Existing Shareholders of Underlying Assets** that have signed **this Agreement** fail to register the **underlying assets** they hold in the name of **New Ruipeng Group** or its wholly-owned **subsidiary** on or prior to the **Closing Date**, **the Parties** agree to calculate the valuation of the registered underlying assets in **the Restructuring** according to the proportion of the underlying assets registered in the name of **New Ruipeng Group** or its wholly-owned **subsidiary** on or prior to the **Closing Date** in the relevant **underlying asset** as set out under Articles 2.1 and 2.2 of **this Agreement**, and correspondingly calculate and adjust the **valuation of the shareholders' underlying assets upon closing** and the shareholding proportion of the relevant **Existing Shareholders of Underlying Assets** in **New Ruipeng Group**.

All the **Existing Shareholders of Underlying Assets** that have had their **Underlying Assets** registered in the name of **New Ruipeng Group** or its wholly-owned **subsidiary** shall hold the shares of **New Ruipeng Group** and be registered as shareholders according to the proportion of the valuation of their **underlying assets** registered in the name of **New Ruipeng Group** or its wholly-owned **subsidiary** in the **valuation of the shareholders' underlying assets upon closing** (that is, the sum of the valuations of all the **underlying assets** that have been registered in the name of **New Ruipeng Group** or its wholly-owned **subsidiary**, "**Valuation of the Shareholders' Underlying Assets upon Closing**") (If all the **Existing Shareholders of Underlying Assets** have all their **underlying assets** registered in the name of **New Ruipeng Group** or its wholly-owned **subsidiary**, the **Valuation of the Shareholders' Underlying Assets upon Closing** shall be RMB 8.4 billion). The number of shares of **New Ruipeng Group** shall be determined by **Ruipeng Management Shareholders** and **Hillhouse Capital** jointly in good faith and according to the common practices for similar transactions. If all the **Existing Shareholders of Underlying Assets** have all their **underlying assets** registered in the name of **New Ruipeng Group** or its wholly-owned **subsidiary**, the shareholding proportion of the **Existing Shareholders of Underlying Assets** in **New Ruipeng Group** is as set out in <u>Annex 2</u>.

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(2) **Closing Arrangement** 

When the **closing preconditions** are fully satisfied or jointly exempted in writing by **Ruipeng Management Shareholders** and **Hillhouse Capital**, **the Restructuring** shall be deemed to have been closed ("**Closing**") The **date of closing** of **the Restructuring** shall be the "**Closing Date**". Prior to the **Closing Date**,

(a) **Ruipeng Management Shareholders** shall complete the injection of all the **Ruipeng Underlying Assets** held by them and their **related parties** into **New Ruipeng Group** and complete the business registration procedures, and make best efforts to help other **existing shareholders of Ruipeng** inject all their **Ruipeng underlying assets** into **New Ruipeng Group** and complete the business registration procedures.

(b) **Hillhouse Capital** shall complete the injection of all the **Skyfield Underlying Assets** held by its **related parties** into **New Ruipeng Group** and complete the business registration procedures, and make best efforts to help other **Existing Shareholders of Skyfield's Underlying Assets** inject all their **Skyfield underlying assets** into **New Ruipeng Group** and complete the business registration procedures.

(c) **Ruipeng Management Shareholders** and **Hillhouse Capital** shall cause **New Ruipeng Group** to
issue the corresponding equity to **the parties** that have injected the **Underlying Assets**.

3.3 **The Capital Increase**

(1) Payment of contribution for **capital increase**

Within ten (10) **business days** after the **Closing Date**, **Hillhouse Capital** or its designated **related party** shall pay the balance of RMB 1.6 billion (the "**Contribution for Capital Increase**") to the account (**New Ruipeng Group** shall, at least five (5) **business days** in advance, inform in writing **Hillhouse Capital** or its **related party** of such account information) designated by **New Ruipeng Group** according to the **Valuation of the Shareholders' Underlying Assets** less the **Working Capital for Transitional Period** and the **Paid Contribution for Capital Increase of Ceerhang** paid in November 2018. **Hillhouse Capital** and/or its **related party** shall be entitled to the following proportion of shares to be issued by **New Ruipeng Group** on a fully diluted basis for the payment of **Contribution for Capital Increase**: RMB 1.6 billion/ (RMB 1.6 billion + **Valuation of the Shareholders' Underlying Assets**).

(2) **Working Capital for Transitional Period**

(a) On the signing date of **this Agreement**, **Ruipeng Management Shareholders** and **Hillhouse Capital** shall jointly develop the plan for the use of working capital of **New Ruipeng Group** (the "**Plan for Use of Working Capital for Transitional Period** "), in order to support the business operation of **New Ruipeng Group**. **The Plan for the Use of Working Capital for Transitional Period** shall be developed in the following basic principles: (i) meeting the actual business operation needs of **New Ruipeng Group** in the **transitional period**, with the
total amount of not more than RMB 500 million (the "**Working Capital for Transitional Period** "); (ii) the **Working Capital for Transitional Period** shall be paid in two or three installments, with the first installment being
RMB 250 million; (iii) the **Working Capital for Transitional Period** shall be paid to the **Group Members** according to the **applicable laws**, including by means of a loan, capital increase or otherwise; (iv) the reason
for and purpose of the funds required shall be stated in the plan and all the relevant documents shall be provided. Subject to conformity with the basic principles of **the Plan for the Use of Working Capital for Transitional Period**, **Hillhouse Capital** or its **related party** shall pay the **Working Capital for Transitional Period** of the corresponding amount to the relevant **Group Members** according to **the Plan for the Use of Working Capital for Transitional Period** within fifteen (15) **business days** after signing **this Agreement**.

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(b) **The Working Capital for Transitional Period** actually paid by **Hillhouse Capital** or its **related party** according to the above provision shall be automatically converted into the **Contribution for Capital Increase** on the **Closing Date**.

(3) **Skyfield's Loan in 2018, the Paid Contribution for Capital Increase of Ceerhang** and the relevant
matters

(a) **The Parties** hereby agree and acknowledge that (i) **Skyfield** provided a loan of RMB
50 million to **Ruipeng** according to the Loan Agreement signed on December 20, 2018 ()"**Skyfield's Loan in 2018** "); (ii) **Ruipeng** shall repay the principal of **Skyfield's Loan in 2018** within five
(5) **business days** after receiving the first installment of the **Working Capital for Transitional Period** (if **the Restructuring** is **closed**, **Ruipeng** is not required to pay the interest of **Skyfield's Loan in 2018**). After **Skyfield** receives such repayment, it shall pay all of it to **Skyfield's Underlying Companies** for daily operation; (iii) **Ruipeng** 's repayment for **Skyfield's Loan in 2018** shall not be used
to offset the **Contribution for Capital Increase** of the corresponding amount.

(b) **The Parties** hereby acknowledge that the contribution of RMB 50 million that **Hillhouse Capital** or its **related party** paid for the capital increase of **Ceerhang** in November 2018 (the "**Paid Contribution for Capital Increase of Ceerhang**") has been used for the actual operation of **Ceerhang**, and the **Paid Contribution for Capital Increase of Ceerhang** constitutes a part of the **Contribution for Capital Increase**.

(c) **The Parties** hereby acknowledge that since January 6, 2019, the provision of funds by **Hillhouse Capital** or its **related party** to **Skyfield's Underlying Companies** shall be executed according to the **Plan for the Use of Working Capital for Transitional Period**. The capital increase, loan or other payment made
inconsistent with the **Plan for the Use of Working Capital for Transitional Period** shall not increase the valuation of each of **Skyfield's Underlying Assets** under **this Agreement** and/or the overall valuation of **Skyfield's Underlying Assets**, nor shall it increase the shareholding proportion of **Hillhouse Capital** and/or its **related party** in **New Ruipeng Group**, or be used to offset the **Contribution for Capital Increase** of
the corresponding amount.

(4) Equity Structure of **New Ruipeng Group** after **the Capital Increase**

If all the **Existing Shareholders of Underlying Assets** have all their **underlying assets** registered in the name of **New Ruipeng Group** or their wholly-owned **subsidiarie**s, the equity structure of **New Ruipeng Group** is as set out in Annex 2 after completion of **this Transaction**.

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**Article 4 Closing Preconditions** 

The **Closing** can be carried out only when the following conditions (the "**Closing Preconditions**") are satisfied on or before the **Closing Date** or jointly exempted in writing by **Ruipeng Management Shareholders** and **Hillhouse Capital**:

(1) **This Agreement** has been duly signed by the relevant **Parties** and taken effect;

(2) Each **Party** has performed and complied with all the undertakings and obligations stated in the **Transaction Documents** to which it is a **party** that it shall perform and comply with on or prior to the **Closing Date** in all material aspects;

(3) The representations and warranties of **the Parties** are true, accurate and complete in all material
aspects as of the signing date of **this Agreement** and the **Closing Date**;

(4) There is no **material adverse change** in the **Underlying Assets** since the signing date of **this Agreement**;

(5) The board of directors and general meeting of **Ruipeng** have approved through resolutions **the Transaction** (**Ruipeng Parties** (except for **Ruipeng**) hereby agree that they will vote for **the Transaction** on the relevant meeting of the board of directors and general meeting of **Ruipeng** considering and approving the
Transaction), and the **Existing Shareholders of Ruipeng** (other than those who have not become **a party to this Agreement**) have waived their pre-emptive right, right of first refusal or other
similar rights (if any) for **the Restructuring**, equity transfer or change, and the **Capital Increase** involved in **the Transaction** and other relevant transactions jointly approved by **Ruipeng Management Shareholders** and **Hillhouse Capital**;

(6) The board of directors and general meeting of **Skyfield's Underlying Companies** have approved through
resolutions **the Transaction** (**Skyfield** and **Gaoling Tiancheng** hereby agree that they will vote for the Transaction on the relevant meeting of the board of directors and general meeting of **Skyfield's Underlying Companies** considering and approving the Transaction), and the **Existing Shareholders of Skyfield's Underlying Assets** (other than those who have not become **a party of this Agreement**) have waived their pre-emptive right, right of first refusal or other similar rights (if any) for **the Restructuring**, equity transfer or change, and the **Capital Increase** involved in **the Transaction** and other
relevant transactions jointly approved by **Ruipeng Management Shareholders** and **Hillhouse Capital**;

(7) There is no **applicable law** or action of **governmental agencies** that restricts, prohibits or
cancels **the Transaction**; All the required **government approvals** that shall be obtained prior to the **Closing Date** for **the Transaction** (if any) have been obtained and remain effective;

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(8) Each **Key Employee** has signed the confidentiality agreement, IP ownership agreement and non-competition agreement set out in <u>Annex 3</u> with **New Ruipeng Group, Ruipeng** or **Skyfield's Platform Companies**;

Each **party** shall ensure the satisfaction of the **Closing Preconditions** prior to the **Closing Date** as soon as possible.

**Article 5 Representations and Warranties of the Parties** 

5.1 **Representations and Warranties of Ruipeng Parties** 

**The Parties** agree that unless otherwise disclosed to **Hillhouse Capital** by **Ruipeng Parties**, **Ruipeng Parties** shall jointly and severally ensure that the representations and warranties listed in <u>Annex 4-1</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**. **Ruipeng Parties** acknowledge that the execution of **this Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of **Ruipeng Parties** in all respects.

5.2 **Representations and Warranties of Ruipeng Investor Shareholders**

**The Parties** agree that unless otherwise disclosed to **Hillhouse Capital** by **Ruipeng Investor Shareholders**, **Ruipeng Investor Shareholders** shall jointly and severally ensure that the representations and warranties listed in <u>Annex 4-2</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**. **Ruipeng Investor Shareholders** acknowledge that the execution of **this Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of **Ruipeng Investor Shareholders** in all respects.

5.3 **Representations and Warranties of Skyfield Parties**

**The Parties** agree that unless otherwise disclosed to **Ruipeng Management Shareholders** by **Ceerhang, Skyfield** and **Hong Kong Skyfield**, **Ceerhang, Skyfield** and **Hong Kong Skyfield** shall jointly and severally ensure that the representations and warranties about **Ceerhang** and themselves listed in <u>Annex 4-3</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**. The aforesaid **parties** acknowledge that the execution of **this Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of the aforesaid **parties** in all respects.

**The Parties** agree that unless otherwise disclosed to **Ruipeng Management Shareholders** by **Yunchong, Skyfield** and **Hong Kong Skyfield**, **Yunchong, Skyfield** and **Hong Kong Skyfield** shall jointly and severally ensure that the representations and warranties about **Yunchong** and themselves listed in <u>Annex 4-3</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**. The aforesaid **parties** acknowledge that the execution of **this Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of the aforesaid **parties** in all respects.

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**The Parties** agree that unless otherwise disclosed to **Ruipeng Management Shareholders** by **Anan, Skyfield** and **Hong Kong Skyfield**, **Anan, Skyfield** and **Hong Kong Skyfield** shall jointly and severally ensure that the representations and warranties about **Anan** and themselves listed in <u>Annex 4-3</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**. The aforesaid **parties** acknowledge that the execution of **this Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of the aforesaid **parties** in all respects.

**The Parties** agree that unless otherwise disclosed to **Ruipeng Management Shareholders** by **Ainuo, Skyfield** and **Hong Kong Skyfield**, **Ainuo, Skyfield** and **Hong Kong Skyfield** shall jointly and severally ensure that the representations and warranties about **Ainuo** and themselves listed in <u>Annex 4-3</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**. The aforesaid **parties** acknowledge that the execution of t**his Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of the aforesaid **parties** in all respects.

5.4 **Representations and Warranties of Minority Shareholders of Skyfield** 

**The Parties** agree that unless otherwise disclosed to **Ruipeng Management Shareholders** by **the minority shareholders of Skyfield**, **the minority shareholders of Skyfield** shall severally but not jointly ensure that the representations and warranties listed in <u>Annex 4-4</u> to **this Agreement** are true, accurate and complete as of the signing date of **this Agreement** and the **Closing Date**, and shall be jointly liable for the representations and warranties related to **Skyfield's Platform Companies** they directly or indirectly hold which are made by **Skyfield's Platform Companies** and **Hong Kong Skyfield** they directly or indirectly hold and listed in <u>Annex 4-3</u> to **this Agreement**. The **minority shareholders of Skyfield** acknowledge that the execution of **this Agreement** by other **parties** relies on the truthfulness, accuracy and completeness of the representations and warranties of the **minority shareholders of Skyfield** in all respects.

**Article 6 Transitional Period and Relevant Arrangements** 

6.1 **Restrictions on action within the transitional period** 

Except (i) otherwise specified in the **Transaction Documents**, (ii) the action required by the **general meeting, board of directors** and management of **New Ruipeng Group** according to **this Agreement**, or (iii) the action that it can not fully control because the relevant **Ruipeng Group Member** or **Skyfield Group Member** is not its wholly-owned **subsidiary** (in these situations, if the **Ruipeng Group Member** or **Skyfield Group Member** needs to make a decision according to the Articles of Association or other corporate governance documents of the relevant **subsidiaries**, they shall obtain the prior approval of **Hillhouse Capital** and **Ruipeng Management Shareholders**), from the signing date of **this Agreement** to the **Closing Date** (this period is referred to the "**Transitional Period**"), without the prior approval of **Hillhouse Capital** and **Ruipeng Management Shareholders** or their authorised representatives, **Ruipeng Parties** shall ensure that they and their related **Ruipeng Group Members**, **Skyfield Parties** and the **minority shareholders of Skyfield** shall ensure that they and their related **Skyfield Group Members** will not take any of the following action:

(a) Modifying or agreeing to modify its Articles of Association, changing its equity structure, or issuing or
repurchasing or agreeing to issue or repurchase or **transferring** any **equity securitie** s;

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(b) Changing its business scope, or expanding in non- **principal busines** s areas;

(c) Causing any **Ruipeng Group Members** or **Skyfield Group Members** to be acquired, liquidated, merged or
restructured or any similar action;

(d) Concluding any **major contract**, except in the normal business course;

(e) Terminating, amending or changing in any material aspect any major license, except (x) based on the
requirement of any **governmental agency**; or (y) in the normal business course;

(f) Establishing any **subsidiary** or subscribing for, purchasing or accepting the **equity securities** of
any **person**;

(g) Making any capital expenditure or making any undertaking to create or oblige any **Ruipeng Group Members** or **Skyfield Group Members** to make capital expenditure;

(h) Conducting any **related transaction**, except **those** disclosed in the **Disclosure Letters**;

(i) Applying for loans or borrowings from third parties, or providing any form of guarantee for third parties;

(j) Waiving the debts of third parties;

(k) Reach settlement for any litigation, arbitration or dispute;

(l) Distributing dividends or any other form of distribution to their respective shareholders;

(m) Changing the accounting policies;

(n) Transferring, licensing, selling, mortgaging, pledging, leasing or otherwise disposing of its **assets** or
creating any other **encumbrance** thereon, except in the normal business course;

(o) Increasing the salary payments of any of its employees, adopting new benefit plans or paying any bonus, benefit
or other direct or indirect compensation, other than the salary adjustments consistent with market practices;

(p) Increasing the rents of any **Ruipeng Group Members** or **Skyfield Group Members** or their respective
leased stores, except for the rent adjustments pursuant to the signed lease agreements or in accordance with market practice after the lease agreements expire;

(q) Signing agreements or making undertakings for the above matters.

6.2 **Establishment of Structure of New Ruipeng Group, Its Business, Operation and Management** 

(1) **The Parties** agree that, since the signing date of **this Agreement**:

(a) **New Ruipeng Group** (whether actually established or not) shall be deemed to hold all the **Underlying Assets** of the **Existing Shareholders of Underlying Assets** who have signed **this Agreement** (whether the equity registration procedures for the **Underlying Assets** have been completed or not);

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(b) The **Existing Shareholders of Underlying Assets** who have signed **this Agreement** shall hold the
equity of **New Ruipeng Group** according to the proportion of the valuation of their **underlying assets** in the **valuation of the underlying assets of the signing shareholders** (that is, the sum of the valuations of the **Underlying Assets** held by all the **Existing Shareholders of Underlying Assets** who have signed **this Agreement**, "**Valuation of Underlying Assets of Signing Shareholders**") (If all the **Existing Shareholders of Underlying Assets** have signed **this Agreement**, the **Valuation of Underlying Assets of Signing Shareholders** shall be RMB 8.4 billion) (whether the equity registration procedures of **New Ruipeng Group** have been completed or not). If all the **Existing Shareholders of Underlying Assets** signed **this Agreement**, the shareholding proportion of the **Existing Shareholders of Underlying Assets** in **New Ruipeng Group** is as set out in <u>Annex 2</u>;

(c) **The Parties** shall establish the general meeting, board of directors and management of **New Ruipeng Group** according to Article 9 of **this Agreement** (whether the relevant registration/filing procedures can be handled or not), and take charge of the operation and management of the **Underlying Assets** according to Article 9 of **this Agreement**, with **each party** providing all the necessary cooperation.

(2) During the **Transitional Period**, each of **Ruipeng Parties** shall ensure the normal business
operation of each **Ruipeng Group company**, and each of **Skyfield Parties** shall ensure the normal business operation of each **Skyfield Group company**.

(3) **The Parties** agree that since the signing date of **this Agreement**, whether or not the relevant
entities of **New Ruipeng Group** have been established, the registration/filing procedures for the general meeting, board of directors and management of **New Ruipeng Group** have been completed, the general meeting, board of directors and
management of **New Ruipeng Group** shall be fully responsible for the operation and management of all the **underlying assets** held by t **he Existing Shareholders of Underlying Assets** who have signed **this Agreement**, the relevant **Existing Shareholders of Underlying Assets** agree to and shall cause the board of directors or management of **Ruipeng Group members**, **Skyfield Group members** to agree to provide all the necessary approvals and cooperation, including
but not limited to:

(a) Making the general meeting resolutions/shareholder decisions, resolutions of board of directors/decisions of
executive directors of **Ruipeng Group members**, **Skyfield Group members** as requested by the general meeting, board of directors and management of **New Ruipeng Group**. Without the approval of the general meeting, board of directors or
the management of **New Ruipeng Group** (the specific approval authorities shall be determined in accordance with the provisions in Article 9 of **this Agreement**), **Ruipeng Group members** and **Skyfield Group members** shall not make
any general meeting resolutions/shareholder decisions, resolutions of the board of directors/decisions of executive directors, except the operation and management of the **Underlying Assets** by **Ruipeng Group members** and **Skyfield Group members** within the scope of authorisation by the general meeting, board of directors and management of **New Ruipeng Group**;

(b) Adjusting the functions and power of the general meeting of **Ruipeng Group members** and **Skyfield Group members** according to the functions and power of the general meeting of **New Ruipeng Group**, and delegating the exercise of the shareholder's rights of **Ruipeng Group members** and **Skyfield Group members** to the shareholders
of **New Ruipeng Group** (if required);

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(c) Adjusting the functions, power and composition of the board of directors of **Ruipeng Group members** and **Skyfield Group members** according to the functions and power of the board of directors of **New Ruipeng Group** (if required);

(d) Adjusting the functions, power and composition of the management of **Ruipeng Group members** and **Skyfield Group members** according to the functions, power and composition of the management of **New Ruipeng Group** (if required);

(e) Implementing new (if any) financial management systems, applicable accounting policies and methods and other
financial management requirements in **Ruipeng Group members** and **Skyfield Group members** according to the arrangements of the management of **New Ruipeng Group** and **Hillhouse Capital** (the management of **New Ruipeng Group** and **Hillhouse Capital** shall appoint financial management personnel to take over all or part of the financial management of **Ruipeng Group members** and **Skyfield Group members** (including taking over the bank accounts and the
passwords, management authorities, etc.) when necessary);

(f) Implementing new (if any) company seals, license management, management systems, work standards, processes,
training system and supporting documents (if any) in **Ruipeng Group members** and **Skyfield Group members** according to the arrangements of the management of **New Ruipeng Group** and **Hillhouse Capital**, handing over the company
seals and licenses to the designated person of the management of **New Ruipeng Group** and **Hillhouse Capital** (if required), who shall be in charge of the application and use of the seals and licenses;

(g) **Ruipeng Group members** and **Skyfield Group members** shall provide the management authorities of the
relevant financial and business management systems (including the Warmsoft system) to the persons designated by the management of **New Ruipeng Group** and **Hillhouse Capital**, and adjust the rules of use of the relevant system software, the
permissions of the users and other usage matters according to the requirements of the management of **New Ruipeng Group** and **Hillhouse Capital**;

(h) Implementing new (if any) HR management systems, veterinary practice management systems and other personnel
management requirements in **Ruipeng Group members** and **Skyfield Group members** according to the arrangements of the management of **New Ruipeng Group** and **Hillhouse Capital**, and adjusting the employees and posts of **Ruipeng Group members** and **Skyfield Group members** when necessary;

(i) Setting up, deciding and adjusting the organizational structure of the **group members**, internal
organization/management structure/institution, department structure, responsibilities and authority of each department and its members, basic (operation) management systems, employment and dismissal of accounting firms according to the joint
approval of the co-chairmen of **New Ruipeng Group**.

(4) **The Parties** agree that since the signing date of **this Agreement**, whether or not the relevant
entities of **New Ruipeng Group** have been established, the registration/filing procedures for the general meeting, board of directors and management of **New Ruipeng Group** have been completed, **Ruipeng Management Shareholders** and **Hillhouse Capital** or its **related party** and their respective authorised representatives shall have the right to check and take stock of the accounting books and records and/or assets of (i) **Ruipeng Group members** and all
their stores; and (ii) **Skyfield Group members** and all their stores, and shall ensure the integrity of the assets and businesses; while **Ruipeng Group members, Skyfield Group members, Hillhouse Capital** or its **related party** and their store managers shall provide all the necessary cooperation. In addition to complying with the restrictions on action within the **Transitional Period** set out in Article 6.1, **Hillhouse Capital**, **minority shareholders of Skyfield** and **Ruipeng Management Shareholders** shall make their best efforts to supervise the business operation of the relevant **group members**, and maintain the stability of the assets, customers, employees and business of the
relevant **group members** and all the stores.

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6.3 **Information provision** 

During the **Transitional Period**, the relevant **parties** shall ensure that with reasonable notice, **Ruipeng Management Shareholders** and **Hillhouse Capital** and their respective authorised representatives can reasonably access the offices of **Ruipeng Group members** and **Skyfield Group members** and obtain the property and accounting books and records as well as additional financial and operational data and other information about the business that **Ruipeng Management Shareholders** and **Hillhouse Capital** may reasonably request from time to time.

6.4 **Exclusivity** 

Since the signing date of **this Agreement**, except for **the Transaction** carried out by **the Parties** according to the **Transaction Documents**, **Ruipeng Parties** shall not, and shall not permit or authorise any of its **related parties** or their respective officers, directors, employees, consultants, agents or representatives to, directly or indirectly, (i) invite and accept the offers or intentions from **anyone** other than **Hillhouse Capital** and its **related parties** to purchase, subscribe for, replace or otherwise invest in or acquire the **underlying assets of Ruipeng** or its **related parties** ("**Investment Offer**"); (ii) discuss or negotiate the **Investment Offer** or provide any due diligence materials or information to any **person** in connection with the **Investment Offer**; or (iii) enter into or execute any contract or arrangement (including any letter of intent or similar document, whether legally binding or not) in connection with the **Investment Offer**.

Since the signing date of **this Agreement**, except for **the Transaction** carried out by **the Parties** according to the **Transaction Documents**, **Hillhouse Capital** and **Skyfield Parties** shall not, and shall not permit or authorise any of their **related parties** or their respective officers, directors, employees, consultants, agents or representatives to, directly or indirectly, (i) invite and accept the **Investment Offer** from **anyone** other than **Ruipeng Parties** and their **related parties** to purchase, subscribe for, replace or otherwise invest in or acquire the **underlying assets of Skyfield** or their **related parties**; (ii) discuss or negotiate the **Investment Offer** or provide any due diligence materials or information to any **person** in connection with the **Investment Offer**; or (iii) enter into or execute any contract or arrangement (including any letter of intent or similar document, whether legally binding or not) in connection with the **Investment Offer**.

Since the signing date of **this Agreement**, except for **the Transaction** carried out by **the Parties** according to the **Transaction Documents**, the **minority shareholders of Skyfield** and **Ruipeng Investor Shareholders** shall not, and shall not permit or authorise any of their **related parties** or their respective officers, directors, employees, consultants, agents or representatives to, directly or indirectly, (i) invite and accept the **Investment Offer** from **anyone** other than **Ruipeng Parties** or **Hillhouse Capital** and their respective **related parties** to purchase, subscribe for, replace or otherwise invest in or acquire the **underlying assets of Ruipeng, the underlying assets of Skyfield** or their **related parties**; (ii) discuss or negotiate the **Investment Offer** or provide any due diligence materials or information to any **person** in connection with the **Investment Offer**; or (iii) enter into or execute any contract or arrangement (including any letter of intent or similar document, whether legally binding or not) in connection with the **Investment Offer**.

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6.5 **Notice of Event of Default** 

If any **parties** breach the **Transaction Documents** to which they are a party prior to the **Closing Date**, **the party** shall immediately notify the other **parties** of the incident.

**Article 7 Undertakings** 

7.1 **Further Action**

**New Ruipeng Group's Board of Directors** shall, and the **parties** shall do their best to procure each **Group Member** to, take the following action as soon as possible after the signature date of **this Agreement**, so as to avoid any material obstacle to the **Listing** of **New Ruipeng Group**:

(1) Obtain relevant **government approvals** in accordance with **applicable laws** or **Government Authorities** ' requirements;

(2) Standardize the financial system of each **Group Member**, and declare and pay taxes in accordance with law;

(3) Timely declare and pay all applicable social insurance premium and housing provident fund for all the employees
of **the Group Members**, withhold such amount of social insurance premium and housing provident fund as payable by employees themselves, and pay any balance of, or make appropriate accounting provision for, any omitted or underpaid amount of
social insurance premium and housing provident fund, in accordance with **applicable laws**;

(4) Timely declare and withhold relevant **taxes**, upon payment of any amount to the **persons** of **the Group Members** who are obliged to pay any amount to be withheld, including but not limited to employees, shareholders, etc., and make appropriate accounting provision for any omitted or underpaid amount of withheld **taxes**, in accordance
with **applicable laws**;

(5) Gradually eliminate any **Property Defect** of **the Group Members**, including but not limited to
disclosure of any **Property Defect** listed in the **Disclosure Letter**;

(6) Properly deal with the legitimate rights or claims of the minority shareholders, of **Skyfield Underlying Companies** and the hospitals acquired by it, and of the **Subsidiaries** directly or indirectly held by **Ruipeng**, including any potential priority or other rights to **this Transaction**, the right to conduct the roll-over of the
equity held in a **Subsidiary** into that in **New Ruipeng Group** or any other right and claim;

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(7) Gradually rectify any other non-compliance of **the Group Members** as disclosed in **the Disclosure Letter**, and comply with all **applicable laws** in management and business operation.

7.2 **Undertaking for Employment and Non-competition**

(1) Unless otherwise disclosed in the **Disclosure Letter** jointly agreed or accepted by **Ruipeng's Management Shareholders** and **Hillhouse Capital**, Peng Yonghe, Liu Lang, Zhang Yanzhong, Zhang Wei, Wang Liesheng, Dong Yi, Mao Junfu, Kan Jiansheng and Wei Rensheng hereby severally but not jointly undertake, to the other **Parties,** to
perform full-time work and services for **New Ruipeng Group**, until (a) the date when the six (6) years from the **Closing Date** expire, if the **Listing** of **New Ruipeng Group** fails to be completed during the said
period; or (b) the date when the two (2) years after completion of the **Listing** of New **Ruipeng Group** expire, if the **Listing** of **New Ruipeng Group** is completed within six (6) years from the **Closing Date**.

(2) Unless otherwise disclosed in the **Disclosure Letter** jointly accepted by **Ruipeng's Management Shareholders** and **Hillhouse Capital**, **Ruipeng's Management Shareholders** and **Skyfield's Minority Shareholders** severally but not jointly undertake, to **Hillhouse Capital**, that, except for **New Ruipeng Group**, they and their respective **related parties** will not separately operate or invest, participate or otherwise engage in any business competitive with **New Ruipeng Group's Principal Business** from the signature date of **this Agreement**, until the date when the two years (which shall be adjusted into three years, if it is dismissed by **New Ruipeng Group** due to its any fault) after the following date, whichever the latter, expires: (i) the date when it
leaves **New Ruipeng Group**, (ii) the date when the percentage of the aggregate shares of **New Ruipeng Group** directly and/or indirectly held by itself and/or through its **related parties** on a fully diluted basis is less than
0.5%, (iii) the date when the percentage of the aggregate shares of **New Ruipeng Group** directly and/or indirectly held by itself and/or through its related parties is less than 15% of the aggregate shares of **New Ruipeng Group** directly
and/or indirectly held by it, including it and its **related parties**, on the **Closing Date**.

(3) **Hillhouse Capital** undertakes, to **Ruipeng's Management Shareholders**, that, **Hillhouse Capital** and its related parties shall not establish any new holding or investment platforms in pet medical industry, without **New Ruipeng Group** 's consent, except for any investment and business platforms already disclosed to **Ruipeng**, (a) if the percentage of the aggregate shares of **New Ruipeng Group** directly and/or indirectly held by **Hillhouse Capital** itself and/or through its **related parties** on a fully diluted basis is more than 30% of
the aggregate shares of **New Ruipeng Group** directly and/or indirectly held by it, including it and its **related parties**, on the **Closing Date**, or (b) during the period from the signature date of this **Agreement** to
(x) the date when the six (6) years from the **Closing Date** expire, if the **Listing** of **New Ruipeng Group** fails to be completed during the said period, or (y) to the date when the two (2) years after completion
of the **Listing** of **New Ruipeng Group** expire, if the **Listing** of **New Ruipeng Group** is completed within six (6) years from the **Closing Date**.

(4) **Skyfield's Minority Shareholders** hereby severally but not jointly undertake, to the other **Parties**, that, from the signature date of this **Agreement**, they shall and shall ensure that its **related parties** shall:

(a) use the **Group** as the sole platform for operating the **Principal Business**, and conduct businesses,
acquisition, etc. related to the **Principal Business** through the **Group**;

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(b) not, in the capacity of director, senior manager, employee, partner, shareholder, consultant or otherwise,
directly or indirectly establish or invest or participate in any entity directly or indirectly competitive with any **Group Member** 's **Principal Business** or any third party directly or indirectly competitive with the **Group's Principal Business** as determined by **New Ruipeng Group's Board of Directors** (each hereinafter referred to as "**Competitor** "), or own any equity, join or hold any position in, manage, operate, control, cooperate with, or
lend any money or provide any financial or other assistance to any **Competitor**; except for only holding a total of no more than one percent (1%) of any **Competitor** 's listed, marketed and outstanding equity without any other
relations or relationships;

(c) not solicit any **Group Member** s' any employees to leave his/her job.

(5) **Ruipeng Investor's Shareholders** (except that the percentage of the aggregate shares of **New Ruipeng Group** directly and/or indirectly held by them and their **related parties** at that time is less than 0.6%) hereby severally but not jointly undertake, to the other **Parties**, that, unless otherwise jointly agreed by **Ruipeng's Management Shareholders** and **Hillhouse Capital**, from the signature date of this **Agreement**, they shall and shall ensure that its **related parties** shall:

(a) use the **Group** as the sole platform for operating animal diagnosis and treatment businesses, and conduct
and acquire animal diagnosis and treatment business through the **Group**;

(b) not, in the capacity of director, senior manager, employee, partner, shareholder, consultant or otherwise,
establish or invest or participate in any entity directly or indirectly competitive with any **Group Member** 's animal diagnosis and treatment businesses or any third party directly or indirectly competitive with the **Group** 's
animal diagnosis and treatment businesses as determined by **New Ruipeng Group's Board of Directors**, or own any equity, join or hold any position in, manage, operate, control, cooperate with, or lend any money or provide any financial or
other assistance to any such third party; except for only holding a total of no more than one percent (1%) of any such third party's listed, marketed and outstanding equity without any other relation or relationship;

(c) not solicit any **Group Member** s' any employees to leave his/her job.

7.3 **Management Incentive Plan**

After the **Closing Date**, the **Parties** shall agree to, or shall ensure its **related parties** to, cast an affirmative vote at the **Shareholders' Meeting** on the proposal related to the management incentive plan (the "**Management Incentive Plan**") to be led and implemented in **New Ruipeng Group**. The **Management Incentive Plan** shall comply with the following: (1) the management' total option shares will reach 5% of **New Ruipeng Group**'s all shares on a fully diluted basis for a moment after completion of **this Transaction**, which shall be granted to the different relevant management specified in the **Management Incentive Plan**, at different time, within three (3) years after **Management Incentive Plan** is approved by the **Shareholders' Meeting**; (2) after the three (3) years following approval on the **Management Incentive Plan** by the **Shareholders' Meeting** expires, the **Parties** shall agree to, or shall ensure its **related parties** to, approve relevant proposals at the **Shareholders' Meeting** to increase management' incentive options, depending on **New Ruipeng Group**'s business development status, but the number to be increased shall not exceed 3% of **New Ruipeng Group**'s all shares on a fully diluted basis for a moment after completion of **this Transaction**. The **Parties** confirm that Mr. Peng Yonghe and Mr. Zhang Yanzhong, before December 31, 2020 or before completion of the **Listing** of **New Ruipeng Group**, actively waive participation in the **Management Incentive Plan** and possible profits.

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7.4 **Other Undertakings**

The **Parties** confirm that such undertaking made by **Ruipeng's Management Shareholders** or their **related parties** to repurchase the equity held by other **Existing Shareholders of Ruipeng** as disclosed by them in the **Disclosure Letter** will be accepted and performed by **New Ruipeng Group** or its designated third party after signature hereof (**New Ruipeng Group** shall assume joint and several liability at that time). For the avoidance of doubt, the **Parties** confirm that, after the signature of **this Agreement**, under no circumstances will any **Ruipeng's Management Shareholders** continue to assume the said equity repurchase obligation, unless otherwise specified in Article 19.3 hereof.

7.5 **Implementation of Existing Employee Equity Incentive Plan**

For any indirect change to **Underlying Companies**' equity, arising from the implementation of the **Underlying Company**'s existing employee equity incentive plan (including any platform entity partnership agreement, Articles of Association or other organizational documents established for the implementation of such a plan) as disclosed in the **Disclosure Letter,** between or among the platform entity or its general partners, or corresponding current or former employees established for the implementation of such a plan, or for any change to the shares in **New Ruipeng Group** corresponding to such equity, the **Parties** shall agree to waive the requirement to obtain their consent, or the right of first refusal or other similar rights (if applicable), and the agreement on the share of **transfer** under Article 8.1 (a) (i) and (ii) of this **Agreement** shall not apply to the said changes.

**Article 8 Shareholder's Rights** 

8.1 **Restriction on Transfer of Shares by Shareholders**

Unless otherwise specified herein, any transfer of shares by **New Ruipeng Group**'s shareholders shall be subject to this Article 8 from the **Closing Date**, until the **Listing** of **New Ruipeng Group** is completed. The **Transferee** compliant with this Article shall sign a written agreement to agree to accept and comply with all of the **Transferring Shareholder**'s obligations hereunder.

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(a) Unless it is agreed by **Hillhouse Capital** and **Ruipeng's Management Shareholders** in written in
prior, any **Ruipeng Party** (other than **Ruipeng**), **Skyfield's Minority Shareholders** and/or any **related parties** of the said entities directly or indirectly holding **New Ruipeng Group'** s shares shall not directly
or indirectly sell, gift, transfer, pledge, establish **Encumbrance** on or otherwise dispose any **New Ruipeng Group'** s shares held by it/them, including disposal of any right to profit, rights or interests corresponding to the shares
(for the purpose of **this Agreement**, in each case of disposal, no matter voluntarily or involuntarily, including but not limited to any disposal due to change in individual marital status or bankruptcy or insolvency or otherwise, each
hereinafter referred to as "**transfer** "), but, for any said **Transferring Shareholder**, the following circumstances shall be excluded, which do not require the consent from **New Ruipeng Group** 's any other shareholder:
(i) the total shares **transferred** cumulatively through a single or a series of transaction do not exceed 5% of the total shares in **New Ruipeng Group** held by them respectively on the **Closing Date**, or (ii) where the **Listing** of **New Ruipeng Group** fails to be realized on the date when the six (6) years from the **Closing Date** expires, the total shares **transferred** cumulatively through a single or a series of transactions thereafter do
not exceed 20% of the total shares in **New Ruipeng Group** held by them respectively on the **Closing Date** (in case of any **transfer** under Article 8.1 (a) (i) hereof, related share shall be included and calculated), however, the **Transferring Shareholder** shall not **transfer New Ruipeng Group** 's shares held by it to any **Competitor**, and **New Ruipeng Group** 's other shareholders shall be entitled to the **right of first refusal**, but
not **tag-along right**, to such **transfer** under the same conditions.

(b) Unless it is agreed by **Hillhouse Capital** and **Ruipeng's Management Shareholders** in written in
prior, any **Ruipeng Investor's Shareholder** shall not directly or indirectly **transfer** the **New Ruipeng Group** 's shares held by it, but, for any said **Transferring Shareholder**, the following circumstances shall be
excluded, which do not require the consent from **New Ruipeng Group** 's any other shareholder: (i) transfer by **Ruipeng Investor's Shareholder** to the fund managed by its fund manager or to its **related parties**;
(ii) that the total shares **transferred** cumulatively through a single or a series of transactions do not exceed 30% of the total shares in **New Ruipeng Group** held by them respectively on the **Closing Date**, during the three
(3) year from the **Closing Date**, or (iii) **transfer** after the three (3) year from the **Closing Date** expires. In any case, the **Transferring Shareholder** shall not **transfer New Ruipeng Group** 's
shares held by it to any **Competitor**, and **New Ruipeng Group** 's other shareholders shall be entitled to the **right of first refusal**, but not **tag-along right**, to the **transfer** under clause (ii) under the same conditions.

(c) Unless it is agreed by **Hillhouse Capital** and **Ruipeng's Management Shareholders** in written in
prior, **Hillhouse Capital** or its **related parties** holding **New Ruipeng Group** 's shares shall not directly or indirectly **transfer** the **New Ruipeng Group** 's shares held by it or them, but, for any said **Transferring Shareholder**, the following circumstances shall be excluded, which do not require the consent from **New Ruipeng Group** 's any other shareholder: (i) transfer to the fund managed by its fund manager or to its **related parties**; or (ii) that the percentage of the total shares in **New Ruipeng Group** held by it after a single or a series of **transfers** is not less than the sum of 5% and the percentage of the total shares in **New Ruipeng Group** directly and indirectly held by **Ruipeng Parties** at that time (in case of indirect shareholding, it shall be the number obtained by multiplying fully based on the shareholding ratio of **Ruipeng Parties**), but the **Transferring Shareholder** shall not **transfer New Ruipeng Group** 's shares held by it to any **Competitor**, and **New Ruipeng Group** 's other shareholders shall be entitled to the **right of first refusal**, but
not **tag-along right**, to the **transfer** under clause (ii) under the same conditions.

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(d) No matter whether there are any contrary provisions specified herein, there is no restriction on the transfer
by **Gaoling Tiancheng** (including any relevant party holding **New Ruipeng Group** 's shares for **Gaoling Tiancheng** for the purpose of completing this Transaction, if applicable) of **New Ruipeng Group** 's shares held by
it. Other shareholders shall not be entitled to the **right of first refusal** or any other rights. **Gaoling Tiancheng** shall notify **New Ruipeng Group** within three (3) **business days** after completing the said **transfer**; For the avoidance of doubt, the said **transfer** by **Gaoling Tiancheng** shall not result in a breach by it of Article 8.1(c) hereof.

8.2 **Right of First Refusal**

(a) Subject to Article 8.1, if a shareholder of **New Ruipeng Group** (referred to as "**Transferring Shareholder**" at that time) intends to transfer **New Ruipeng Group** 's shares (referred to as "**Sales Shares**" at that time) held by it to any **person** ()"**Transferee**") directly or indirectly
(" **proposed transfer** "), **New Ruipeng Group** 's other shareholders shall be entitled to the **right of first refusal** in accordance with Article 8.2.

(b) Before the **proposed transfer**, the **Transferring Shareholder** shall, send to **New Ruipeng Group** 's other shareholders (referred to as "**Offerees**" at that time) a written notice ()"**Transfer Notice**") constituting an offer, specifying: (i) **Transferring Shareholder** 's name;
(ii) **Transferee** 's name and address; (iii) the number of **Sales Shares**; (iv) the amount and form of the consideration for the **proposed transfer**; and (v) other terms and conditions of the **proposed transfer**. If any considerations other than cash are included in the consideration for the **proposed transfer**, the calculation of the fair market value of such consideration and explanation of the calculation basis shall also be included in
the **Transfer Notice**.

(c) The **Offerees** shall be entitled ()"**right of first refusal**") to exercise its right, by
delivering written notice, to purchase the **Sales Shares** fully or partially, based on the price, terms and conditions specified in the **Transfer Notice** and on their respective **Share in the Right of First Refusal**, within 20 **business days** from the Closing Date of the **Transfer Notice** ()"**Right of First Refusal Exercising Period** "). **Share in the Right of First Refusal** refers to the result calculated as follows: the number of **Sales Shares** \* **New Ruipeng Group** 's shares held by the **Offerees** exercising the **right of first refusal** on the **Transfer Notice** date / the total shares in **New Ruipeng Group** held by all the **Offerees** exercising the **right of first refusal** on the **Transfer Notice** date.

(d) If any **Offerees** fail to exercise or fails to fully exercise their **right of first refusal**, other **Offerees** who fully exercise their **right of first refusal** shall have the right, within 10 business days after the **Right of First Refusal Exercising Period**, to require to purchase the **Sales Shares** to which the **right of first refusal** has not been exercised ()"**Remaining Sales Shares** "); if the number of the **Remaining Sales Shares** that all the **Offerees** who fully exercise their **right of first refusal** intend to purchase exceeds
the total number of the **Remaining Sales Shares**,, any **Offeree** that intends to purchase the **Remaining Sales Shares** and fully exercises its **right of first refusal** shall have the right to purchase the number of the **Remaining Sales Shares** calculated by multiplying the **Remaining Sales Shares** by a fraction, where the numerator is the number of the **Remaining Sales Shares** that such **Offeree** intends to purchase, and the denominator is the
total number of the **Remaining Sales Shares** that all the **Offeree** s who intend to purchase the **Remaining Sales Shares** intend to purchase.

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(e) Subject to Article 8.3, **Transferring Shareholder** may transfer the **Sales Shares** that the **Offerees** do not undertake to purchase in accordance with Article 8.2 to the **Transferee**, based on the price, terms and conditions, specified in the **Transfer Notice**, provided that: (i) the **proposed transfer** shall be
completed within 60 **business days** after the date when a **Transfer Notice** is sent (otherwise, the restrictions specified in Article 8.2 will be re-initiated for the outstanding **proposed transfer**); and (ii) the **Transferee** shall accept, as a successor, the **Transferring Shareholder** 's rights and obligations hereunder corresponding to the **Sales Shares** transferred to the **Transferee**.

(f) If an **Offeree** exercises the **right of first refusal**, **New Ruipeng Group** and each shareholder
shall, upon the **Offeree** 's requirement, immediately sign all such documents and take all such action as necessary for completing such **transfer**.

8.3 **Tag-along Right**

(a) If the **Offeree** fails to exercise the **right of first refusal**, the **Transferring Shareholder** shall send to the **Offeree** a written notice specifying that **tag-along right** may be exercised, within 5 **business days** from the expiration date of the **Right of First Refusal Exercising Period**.

(b) Subject to Article 8.1 of **this Agreement**, any **Offeree** (referred to "**Tag-along Right Holder**" at that time) shall be entitled ()"**tag-along right**") to exercise its right, by delivering written notice to the **Transferring Shareholder**, within 20 **business days** after the date when the notice specified in Article 8.3 (a) is delivered, to require the **Transferee** or the **Offeree** exercising the **right of first refusal** (if
applicable) to buy a certain number of shares from such **Tag-along Right Holder** at such same price and on such same terms and conditions as proposed to be offered to the **Transferring Shareholder**.
The maximum of such number shall be: the number of **Sales Shares** \* (total shares in **New Ruipeng Group** held by such **Tag-along Right Holder** on the **Transfer Notice** date/sum of the total
shares in **New Ruipeng Group** held by all the **Tag-along Right Holders** exercising the **tag-along right** and by **Transferring Shareholder** on the **Transfer Notice** date).

(c) If **Tag-along Right Holder** has exercised **tag-along right**, but the **Transferee** or the **Offeree** exercising the **right of first refusal** (if applicable) fails to purchase relevant shares from the **Tag-along Right Holder**, the **Transferring Shareholder** shall not make a **proposed transfer**.

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8.4 **Preemption Right**

(a) After the **Closing Date**, **New Ruipeng Group** shall, before proposing to issue ()"**proposed issuance**") any **Equity Securities** to any person ()"**Proposed Subscriber** "), first make an offer to **New Ruipeng Group** 's each **shareholder** in accordance with this Article 8.4 to enable **New Ruipeng Group** 's each shareholder (referred to as "**Preemption Right Holder**" at that time) to be entitled to subscribe such **Equity Securities**, in cash, on the same conditions, at the same unit price, based on its shareholding
ratio in **New Ruipeng Group** before such issuance ()"**preemption right** ").

(b) Before a **proposed issuance**, **New Ruipeng Group** shall deliver a written notice about **proposed issuance** ()"**Proposed Issuance Notice**") to each **Preemption Right Holder**, specifying: (i) the number, type and terms of the **Equity Securities** to be issued this time; (ii) the consideration to be obtained by
the **New Ruipeng Group** after implementation of the **proposed issuance**; and (iii) the name(s) and address(s) of **Proposed Subscriber(s)**. If any considerations other than cash are included in the consideration for the **proposed issuance**, the calculation of the fair market value of such consideration and explanation of the calculation basis shall also be included in the **Proposed Issuance Notice**.

(c) If, within 20 **business days** after the **Proposed Issuance Notice** is delivered ()"**Preemption Right Exercising Period** "), any **Preemption Right Holder** s choose to exercise their **preemption right**, such **Preemption Right Holder** shall deliver a written notice to **New Ruipeng Group** specifying the number and type
of the **Equity Securities** proposed to be subscribed by it.

(d) If any **Preemption Right Holder** s fail to exercise or fails to fully exercise their **preemption right**, other **Preemption Right Holders** who fully exercise their **preemption right** shall have the right, within 10 **business days** after the **Preemption Right Exercising Period**, to require to subscribe for the **Equity Securities** to which the **preemption right** has not been exercised ()"**Remaining Additionally-issued Shares** "); if the number of the **Remaining Additionally-issued Shares** that the **Preemption Right Holders** who fully
exercise their **preemption right** intend to purchase exceeds the total number of the **Remaining Additionally-issued Shares**, any **Preemption Right Holder** that intends to purchase the **Remaining Additionally-issued Shares** and
fully exercises its **preemption right** shall have the right to purchase the number of the **Remaining Additionally-issued Shares** calculated by multiplying the **Remaining Additionally-issued Shares** by a fraction, where the numerator
is the number of the **Remaining Additionally-issued Shares** that such **Preemption Right Holder** intends to purchase, and the denominator is the total number of the **Remaining Additionally-issued Shares** that all the **Preemption Right Holders** who intend to purchase the **Remaining Additionally-issued Shares** intend to purchase.

(e) **New Ruipeng Group** shall complete the issuance of the **Equity Securities** not subscribed for by the **Preemption Right Holder** to the **Proposed Subscriber**, in accordance with the terms and conditions specified in the **Proposed Issuance Notice**, within 40 **business days** after the **Preemption Right Exercising Period** expires, provided that the **Proposed Subscriber** shall join this **Agreement** as a party and shall be subject to all the terms and conditions hereunder that apply to the **Parties**. If **New Ruipeng Group** fails to complete the
issuance within such 40 **business days**, it shall not make **proposed issuance** without re-execution of the requirements specified in Article 8.4.

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(f) For the purpose of Article 8.4, **proposed issuance** shall not cover: (i) the **Equity Securities** issued by **New Ruipeng Group** in accordance with the **Restructuring Scheme** and for the **Capital Increase**; (ii) the **Equity Securities** issued by **New Ruipeng Group** under equity incentive plan; (iii) the **Equity Securities** newly issued by **New Ruipeng Group** since the issued **Equity Securities** are converted, exercised or replaced; (iv) the **Equity Securities** issued by **New Ruipeng Group** upon **Listing**; and
(v) the **Equity Securities** issued by **New Ruipeng Group** due to subdivision of shares, shares dividends, or other similar matters that all **Preemption Right Holders** are entitled to participate in based on their shareholding
ratio in **New Ruipeng Group**.

(g) If any **Preemption Right Holders** choose to exercise **preemption right**, **New Ruipeng Group** and
each shareholder shall sign and take all the documents and action necessary for completing such subscription, upon such **Preemption Right Holder** 's requirements, under the pre-condition that the **proposed issuance** has been properly approved by **New Ruipeng Group** 's Shareholder' Meeting.

8.5 **Anti-dilution**

From the **Closing Date** to the completion of the **Listing** of **New Ruipeng Group**, upon **proposed issuance** by **New Ruipeng Group** to any person (except for the matters specified in Article 8.4(f) hereof), the issuance price of **New Ruipeng Group**'s each share ("**Unit Price of Shares for New Shareholders**") shall not be less than the costs paid by **Hillhouse Capital** or its **related parties** (only **Hillhouse Capital** or its **related parties** subscribing this **Capital Increase**, hereinafter referred to as "**Anti-dilution Right Shareholder**") for such **New Ruipeng Group**'s each share as obtained by it or them through this **Capital Increase** ("**Unit Price for the Capital Increase**"). **Unit Price for the Capital Increase** = **Contribution for Capital Increase** / the number of **New Ruipeng Group**'s shares obtained by **Anti-dilution Right Shareholder** through this **Capital Increase** (in case of subdivision of shares, shares dividends, or other similar events, the number of shares shall be adjusted accordingly). Otherwise, (1) **Anti-dilution Right Shareholder**'s prior written consent shall be obtained for such **proposed issuance**, and (2) **New Ruipeng Group** shall issue partial shares to **Anti-dilution Right Shareholder** for free or, by any other means in compliance with **applicable laws**, make the unit price of **New Ruipeng Group**'s each share obtained by **Anti-dilution Right Shareholder** through this **Capital Increase** equaling to the **Unit Price of Shares for New Shareholders**; Nevertheless, regardless of the number of shares to be issued by **New Ruipeng Group** in the proposed issuance, the **New Ruipeng Group**'s shares obtained by **Anti-dilution Right Shareholder** by exercising anti-dilution right shall comply with the following requirement, i.e. (The total shareholding ratio in **New Ruipeng Group** of **New Ruipeng Group**'s all other shareholders than **Anti-dilution Right Shareholder(s)** at the time immediately after **Anti-dilution Right Shareholder(s)** obtains **New Ruipeng Group**'s shares for free by exercising anti-dilution right) / (the total shareholding ratio in **New Ruipeng Group** of **New Ruipeng Group**'s all other shareholders than **Anti-dilution Right Shareholder(s)** at the time immediately before **Anti-dilution Right Shareholder(s)** obtains **New Ruipeng Group**'s shares for free by exercising anti-dilution right) shall not be less than 80%.

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8.6 **Drag-along Right**

(a) After the **Closing Date**, if **Hillhouse Capital** and **Ruipeng Parties** agree to a transaction
with a third party (excluding **Hillhouse Capital'** s and **Ruipeng Parties** ' **related parties**), including but not limited to any merger, acquisition, reorganization, share transfer and issuance or for **New Ruipeng Group**, or any transaction that may make **New Ruipeng Group** 's all or substantially whole **assets** to be sold (such transaction is hereinafter referred to as "**Sale of Company** "), and the evaluated amount of **New Ruipeng Group** upon **Sale of Company** is not less than the evaluated amount of **New Ruipeng Group** at the time immediately after completion of this **Transaction**, **Hillhouse Capital** and **Ruipeng Parties** shall have the
right to send a written notice to each other shareholder to require them to immediately sign and take all the documents and action necessary for completing such transaction, including but not limited to casting affirmative votes at the
Shareholders' Meeting, and procuring the directors nominated by them to cast affirmative votes at the Board of Directors meeting, held for approving such transaction and, where applicable, selling the **New Ruipeng Group** 's shares held
by them.

(b) If any other shareholders do not agree to the transaction of **Sale of Company**, or are not willing to sell
the **New Ruipeng Group** 's shares held by them, such shareholders shall buy, at one time, all the shares in **New Ruipeng Group** planned to be sold by **Hillhouse Capital** and **Ruipeng's Management Shareholders**, at the
price per share of the shares planned to be sold to a third party by **Hillhouse Capital** and **Ruipeng's Management Shareholders** and on other terms and conditions, or at the income from each share which would be obtained by **Hillhouse Capital** and **Ruipeng's Management Shareholders** if the transaction of **Sale of Company** would have been approved. Where such shareholders do not purchase the shares, such **shareholder** s shall agree to and procure
the transaction of **Sale of Company** and/or sell the **New Ruipeng Group** 's shares held by them, in accordance with this Article 8.6.

**Article 9 New Ruipeng Group's Management Organization** 

9.1 **New Ruipeng Group's Management Organization**

The **Parties** agree that **New Ruipeng Group**'s **Shareholders' Meeting**, **Board of Directors** and management shall be deemed established and shall exercise related power in accordance with this Article 9 from the signature date of this **Agreement**, no matter whether the entity of **New Ruipeng Group** has been established or not, and no matter whether the relevant formalities for registration of **New Ruipeng Group**'s **Shareholders' Meeting**, **Board of Directors** and management have been completed or not. The **Parties** agree to accordingly adjust **New Ruipeng Group**'s management organization and its power, in accordance with the requirements of the **applicable laws** in the place where **New Ruipeng Group** is registered, after the establishment of **New Ruipeng Group** is completed, provided that they shall remain substantially the same with this Article 9 to the maximum extent permitted by **applicable laws**; and the **Parties** shall, or shall ensure its **related parties** to, formulate and sign, as specified herein, **New Ruipeng Group**'s shareholders' agreement and Articles of Association.

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9.2 **Shareholders' Meeting**

(1) **Shareholders ' Meeting**, composed of **New Ruipeng Group** 's all shareholders,
is its organ of authority, and shall exercise the following power:

(a) Determine business policies and investment plans for **New Ruipeng Group**;

(b) Elect and change directors, and determine the remuneration of relevant directors;

(c) Review and approve the **Board of Directors** ' reports;

(d) Review and approve profits distribution schemes and loss recovery plans for **New Ruipeng Group**;

(e) Make resolutions on increase or decrease in **New Ruipeng Group** 's authorized capital, and on issuance
or repurchase of any **Equity Securities**;

(f) Make resolutions on issuance by the **Group** of securities with a single amount (for the avoidance of
doubt, a series of related transactions shall be deemed "single", the same below), or cumulative amount within 12 consecutive months, exceeding RMB 500 million, no matter issuance by several times or by one time;

(g) Make resolutions on the merger, separation, dissolution, liquidation or company form change of **New Ruipeng Group**;

(h) Amend **New Ruipeng Group** 's Articles of Association;

(i) Approve **New Ruipeng Group** 's **Listing** scheme;

(j) Review and approve any loan by the **Group** to the external with a single amount, or cumulative amount
within 12 consecutive months, exceeding RMB 500 million or other matters which may cause liabilities, except for any loan within the **Group** or bank credit;

(k) Review and approve any guarantee by the **Group** to the external with a single amount, or cumulative amount
within 12 consecutive months, exceeding RMB 50 million or other matters which may cause liabilities or contingent liabilities, except for any mutual guarantee in the **Group** and any guarantee for any **Group Member** 's approved
debt;

(l) Review and approve the **transfer** by the **Group** of major assets or **Equity Securities** with a
single transaction amount exceeding RMB 50 million or cumulative transaction amount within 12 consecutive months exceeding RMB 200 million;

(m) Review and approve the purchase, subscription or acceptance by the **Group** of major assets or **Equity Securities** with a single transaction amount exceeding RMB 300 million or cumulative transaction amount within 12 consecutive months exceeding RMB 500 million;

(n) The **Group** 's **Related Transactions** with a single amount (except for any cash assets received
by the **Group** as a gift and acceptance of any guarantee provided by the counterparty of **Related Transactions**), or cumulative amount within 12 consecutive months, exceeding RMB 10 million;

(o) Incur any expenditure beyond the **Group** 's properly approved annual budget, with a single transaction
or expenditure amount, or cumulative amount within any 12 consecutive months, exceeding RMB 150 million; For the avoidance of doubt, the provisions concerning the authority for approval as specified in Articles 9.2(1)(m), 9.3(4)(q) and
9.4(4)(e) hereof shall apply to any purchase, subscription or acceptance by the **Group** of major assets or **Equity Securities**;

(p) Review and approve **New Ruipeng Group** 's equity incentive plan;

(q) Review and approve other matters which shall be decided by the **Shareholders ' Meeting** as specified in **applicable laws**, **New Ruipeng Group** ' shareholders' agreement or Articles of Association.

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(2) **New Ruipeng Group** 's shareholders (including shareholder's agents) shall exercise their voting
rights based on the number of voting shares represented by them, and each shareholder shall have one vote with each share held by it; if, before **New Ruipeng Group** is listed, **New Ruipeng Group** 's shares directly and indirectly held
by **Hillhouse Capital** are more than the total shares in **New Ruipeng Group** held by **Ruipeng's Management Shareholders** and its **related parties**, **Hillhouse Capital** shall agree to keep the decisions related the
exceeded shares consistent with that of **Ruipeng's Management Shareholders**, without prejudice to the interest of other shareholders.

(3) Upon review and approval on relevant **Related Transactions** at **Shareholders' Meeting**, the
shareholders who are **related parties** shall not participate in voting, and the number of voting shares represented by them shall not be included in the total number of effective votes.

(4) The resolutions of **Shareholders' Meeting** are classified into ordinary and special resolutions. The
ordinary resolutions made by the **Shareholders' Meeting** shall be passed by more than 1/2 of the voting rights held by the shareholders (including shareholder's agents) present at the **Shareholders' Meeting**, and shall be
approved by **Hillhouse Capital** or its **related parties** and **Ruipeng's Management Shareholders**; The special resolutions made by the **Shareholders' Meeting** shall be passed by more than 2/3 of the voting rights held by
the shareholders (including shareholder's agents) present at the **Shareholders' Meeting**, and shall be approved by **Hillhouse Capital** or its **related parties** and **Ruipeng's Management Shareholders** The
resolutions made by the **Shareholders' Meeting** on the amendment to **New Ruipeng Group** 's Articles of Association, on increase or decrease in authorized capital, on issuance or repurchase of any **Equity Securities**, and on
the merger, separation, dissolution or company form change of **New Ruipeng Group** may be implemented by special resolutions; Other matters reviewed by the **Shareholders' Meeting** may be implemented by ordinary resolutions.

(5) Annual **Shareholders' Meeting** shall be held once a year; In case of any following conditions,
extraordinary **Shareholders' Meeting** shall be held within two months:

(a) The number of directors is less than the minimum number stipulated by **applicable laws**, or less than 2/3
of the number specified in this **Agreement**;

(b) **Ruipeng's Management Shareholders** or **Hillhouse Capital** and/or its any related parties
holding **New Ruipeng Group** 's shares propose to hold;

(c) It is necessary in the **Board of Directors** ' opinion;

(d) Other conditions specified in **Applicable laws** or **New Ruipeng Group** 's Articles of
Association.

(6) **Shareholders' Meeting** shall be convened by the **Board of Directors**, while, if the **Board of Directors** cannot or fails to perform such duty, **Ruipeng's Management Shareholders** or **Hillhouse Capital** and/or its any **related parties** holding **New Ruipeng Group** 's may convene and preside over by
itself/themselves.

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(7) The convener will notify each shareholder in written (including email, etc., the same below) 20 days, or a
shorter time as agreed by the shareholders holding two-thirds or more of shares, before the annual **Shareholders' Meeting** is held. For extraordinary **Shareholders' Meeting**, each
shareholder will be notified in written 15 days, or a shorter time as agreed by the shareholders holding two-thirds or more of shares, before the meeting is held. Upon the calculation of the period, the
current day when the meeting is held shall not be inclusive. The following contents shall be contained in the notice of a **Shareholders' Meeting**:

(a) The time, place and duration of the meeting;

(b) The matters and proposals to be submitted for review at the meeting;

(c) Express context description: All shareholders shall have the right to attend the **Shareholders' Meeting**, and may authorize agent in writing to attend the meeting and participate in voting. Such shareholder's agent is not required to be the company's shareholder.

(d) The convener of the meeting.

(8) Where **New Ruipeng Group** holds a **Shareholders' Meeting**, **Board of Directors** and the
shareholders individually or collectively holding more than 10% of the company's shares may make a proposal(s) to **New Ruipeng Group** 10 days, or a shorter time as agreed by the shareholders holding two-thirds or more of shares, before the annual **Shareholders' Meeting** is held. The convener shall notify the other shareholders within 2 days after receiving the proposals, and submit the temporary
proposal(s) to the **Shareholders' Meeting** for review. After issuing the notice of the **Shareholders' Meeting**, the convener shall not revise any proposals specified in the notice or add any new proposals therein, except for
adding the aforementioned additional temporary proposal(s) into the notice of the **Shareholders' Meeting**. The **Shareholders' Meeting** shall not vote nor make resolutions on any proposals not specified in the notice of the **Shareholders' Meeting**.

(9) The **Shareholders' Meeting** shall be presided over by two co-chairmen of the Board of Directors in turn. The first meeting shall be presided over by Mr. Peng Yonghe; if the chairman of the Board of Directors who shall preside over at the **Shareholders' Meeting** cannot do the same, another chairman of the Board of Directors shall do that for instead. If the two directors cannot or fail to perform such duty, it shall be presided over by a director jointly elected by over half of the directors. A **Shareholders' Meeting** convened by the shareholders themselves shall be presided over by a representative elected by the convener.

9.3 **Board of Directors**

(1) A **Board of Directors** hall be established for **New Ruipeng Group** and be responsible for **Shareholder' Meeting**. The **Board of Directors** is composed of 10 members, who shall be elected or replaced by **Shareholder' Meeting**, including four (4) nominated by **Hillhouse Capital** or its **related parties** (in case of failure in reaching agreement by the directors nominated by **Hillhouse Capital** or its **related parties**, it shall subject to the opinion of the co-chairman appointed by it or
them), and four (4) nominated by **Ruipeng's Management Shareholders**, and another two (2) nominated by **Shenzhen Dachen** and **Beijing Sunshine** respectively (if the number of **New Ruipeng Group** 's shares held
by **Shenzhen Dachen** or **Beijing Sunshine** at that time is less than 70% of the number of **New Ruipeng Group** 's shares held by them respectively on the Closing Date, it will lose the right to nominate director, and it shall
procure the director nominated by it to resign, in this case, the **Board of Directors** members will decrease accordingly). The **Parties** undertake to or ensure its **related parties** to take all necessary action, including but not
limited to electing or removing the aforementioned appointed or removed persons as a director or from the position of a director for or of **New Ruipeng Group** in accordance with **applicable laws**; The **Parties** shall agree, before the **Delivery**, to hereby authorize **Ruipeng's Management Shareholders** and **Hillhouse Capital** (or its **related parties**) to elect directors for, or remove any director from the position of a director of, **New Ruipeng Group**, on behalf of the **Parties** in accordance with this Article 9.1. Unless otherwise removed by the appointing shareholder or voluntarily resigned, the tenure of **New Ruipeng Group** 's director shall be three (3) years, and
the same person may be re-elected upon expiration of the tenure.

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(2) Co-chairmen system is adopted for **New Ruipeng Group's Board of Directors**. One director (i.e. Mr. Peng Yonghe) shall be nominated by **Ruipeng's Management Shareholders** and one director (of **Hillhouse Capital** 's partner level) shall be nominated by **Hillhouse Capital** or its **related parties** to jointly act as co-chairman, but **New Ruipeng Group** 's chairman who shall be reported to **Government Authorities** for registration shall be served by the director (i.e.
Mr. Peng Yonghe) nominated by **Ruipeng's Management Shareholders.** 

(3) If the number of the Board of Directors members is less than the statutory minimum number due to resignation or
removal of any director, the former director (except for removal) shall still fulfill its duties as a director, before re-elected director assumes the office, in accordance with **applicable laws** and **New Ruipeng Group** 's Articles of Association.

(4) The **Board of Directors** shall be responsible for **Shareholders' Meeting**, and shall exercise
the following powers:

(a) Convene and report work to **Shareholders' Meeting**;

(b) Implement the resolutions of **Shareholders' Meeting**;

(c) Determine specific business plans and investment schemes for the **Group** in accordance with the business
policies and investment plans determined by the **Shareholders' Meeting**;

(d) Formulate profits distribution schemes and loss recovery plans for **New Ruipeng Group**;

(e) Make resolutions on the merger, separation, dissolution, liquidation or company form change of brand platform
companies ()"**Brand Platform Companies** ");

(f) Draft schemes for **New Ruipeng Group** 's merger, separation, dissolution or form change;

(g) Formulate schemes for increase or decrease in **New Ruipeng Group** 's authorized capital, and for
issuance or repurchase of any **Equity Securities**;

(h) Make resolutions on increase and decrease in authorized or issued capital, repurchase of shares, or issuance of
any **Equity Securities**, of or by the **Brand Platform Companies** with RMB 10 million of assets under **New Ruipeng Group** 

(i) Make resolutions on issuance by any **Group Member** of securities with a single amount, or cumulative
amount within 12 consecutive months, exceeding RMB 500 million, no matter issuance by several times or by one time;

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(j) Determine whole annual financial budget plans and final account schemes for the **Group**;

(k) Change the **Principal Business** of any **Group Member**, any Group Members engages in new business or
withdraw from **existing business**;

(l) Determine the remuneration, rewards and punishments of, to and on the president, vice president, chief
financial officer and **other senior officers** of **New Ruipeng Group**;

(m) Approve the **Group** 's remuneration system;

(n) Review and approve any loan by the **Group** to the external with a single amount, or cumulative amount
within 12 consecutive months, reaching or exceeding RMB 20 million but not exceeding RMB 500 million or other matters which may cause liabilities, except for any loan within the **Group** or bank credit;

(o) Review and approve any guarantee by the **Group** to the external with a single amount, or cumulative amount
within 12 consecutive months, not exceeding RMB 50 million or other matters which may cause liabilities or contingent liabilities, except for any mutual guarantee in the **Group** and any guarantee for any **Group Member** 's approved
debts;

(p) Review and approve the **transfer** by the **Group** of major assets or **Equity Securities** with a
single transaction amount reaching or exceeding RMB 20 million but not exceeding RMB 50 million or cumulative transaction amount within 12 consecutive months reaching RMB 30 million but not exceeding RMB 200 million;

(q) Review and approve purchase, transfer or acceptance by the **Group** of major assets or **Equity Securities** with a single transaction amount reaching or exceeding RMB 50 million but not exceeding RMB 300 million or cumulative transaction amount within 12 consecutive months reaching or exceeding RMB 50 million but not
exceeding RMB 500 million;

(r) The **Group** 's **Related Transactions** with a single amount (except for any cash assets received
by the **Group** as a gift and acceptance of any guarantee provided by the counterparty of **Related Transactions**), or cumulative amount within 12 consecutive months, not exceeding RMB 10 million;

(s) Incur any expenditure beyond the **Group** 's properly approved annual budget, with a single transaction
or expenditure amount, or cumulative amount within any 12 consecutive months, reaching or exceeding RMB 20 million but not exceeding RMB 150 million;

(t) Review and approve the equity incentive plan of **New Ruipeng Group** 's **Subsidiaries**;

(u) Approve any donation to the external by **Group Member** with a single amount, or cumulative amount within
12 consecutive months, reaching or exceeding RMB 2 million;

(v) Obtain the work reports from **New Ruipeng Group** 's president and check the president's work;

(w) Reach a compromise for any litigation, arbitration or other dispute involving the **Group** with an amount
reaching or exceeding RMB 2 million;

(x) Draft for and formulate the place, stock exchange, valuation, amount to be raised, and sponsor/underwriter,
etc. for the **Listing** of **New Ruipeng Group**;

(y) Formulate investing and financing management systems;

(z) Other powers granted by **applicable laws** and **New Ruipeng Group** 's Articles of Association, or
other matters beyond the scope of the resolutions of Shareholders' Meeting and of **president** 's powers.

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(5) The **Board of Directors** meeting may be held only if over half of the directors attend. When voting on a
resolution of the **Board of Directors**, one person shall have one vote. The resolutions made by the **Board of Directors** shall be passed by over half of all the directors; the joint consent from 3 or more directors nominated by **Ruipeng's Management Shareholders** and 3 or more directors nominated by **Hillhouse Capital** shall be obtained for the matters specified in Articles 9.3(4)(h) to (s). If any directors fail to be present (present in person, by
representative, on site, or by telephone, video or other means shall be deemed present) at the **Board of Directors** meeting for 3 consecutive times without proper reason, such directors shall immediately resign from its position as a director,
or replaced by the **Shareholder' Meeting**. The shareholder who has the right to appoint the director shall appoint another director for the vacancy arising from that, in accordance with this **Agreement**.

(6) The **Board of Director** ' meeting shall be held at least twice each year. The meeting shall be
convened by any chairman of the **Board of Directors**. All directors shall be notified in written at least 10 days, or a shorter time as agreed by all the directors, before the meeting is held. The shareholders representing over 1/10 of voting
rights or over 1/3 of the directors may propose to hold the interim meeting of the **Board of Directors**, and there's no said notice time requirement.

(7) The **Board of Directors** meeting shall be attended by directors personally; if any directors cannot attend
due to any reason, it may authorize other directors to do the same. The letter of authorization shall specify the agent's name, authorized issues, scope of authorization and effective term, and shall be signed or stamped with the name of the
authorizer. The director present at the meeting as an agent shall exercise the director's rights within the scope of authorization. If any directors have neither attended nor authorized a representative to attend the Board of Directors meeting,
it shall be deemed a waiver - of voting rights at such a meeting.

9.4 **Management**

(1) One president shall be established for **New Ruipeng Group**. The number of vice presidents shall be
determined by co-chairmen jointly depending on **New Ruipeng Group** 's business development needs. One chief financial officer and one secretary to the **Board of Directors** shall be established.

(2) **New Ruipeng Group's** president, vice president, chief financial officer and secretary of the **Board of Directors** as well as other persons recognized by the **Board of Directors** are the **senior officers** of **New Ruipeng Group** ()"**senior officers** ").

(3) The **Parties** agree that: (a) **New Ruipeng Group** 's president shall be appointed and
removed by **Ruipeng's Management Shareholders**, and the first president shall be served by Mr. Peng Yonghe; (b) **Hillhouse Capital** or its **related parties** shall have the right to appoint and remove the chief financial
officer and the secretary of the **Board of Directors**, and **Hillhouse Capital** shall agree to maintain, at present, the current secretary of **Ruipeng's Board of Directors**; (c) Vice presidents shall be nominated by the
president, and appointed and removed as decided by co-chairmen jointly.

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(4) The **company** 's president shall be responsible to the **Board of Directors** and will exercise the
following powers (the **company** 's president may delegate partial power-related matters to **senior officers** for implementation, depending on **New Ruipeng Group** 's actual operation status):

(a) Be in charge of the **Group** 's production, operation and management, and organize for implementation
of the resolutions of, and report work to, the **Board of Directors**;

(b) Organize for implementation of the **Group** 's specific annual business plans and investment schemes;

(c) Review and approve any loan by the **Group** to the external with a single amount, or cumulative amount
within 12 consecutive months, not reaching RMB 20 million or other matters which may cause liabilities, except for any loan within the **Group** or bank credit;

(d) Approve **transfer** by the **Group** of major assets or **Equity Securities** with a single
transaction amount not reaching RMB 20 million or cumulative transaction amount within 12 consecutive months not reaching RMB 30 million;

(e) Approve the purchase, subscription or acceptance by the **Group** of major assets or **Equity Securities** with a single amount, or cumulative amount within 12 consecutive months, not reaching RMB 50 million;

(f) Incur any expenditure beyond the **Group** 's properly approved annual budget, with a single transaction
or expenditure amount, or cumulative amount within any 12 consecutive months, not exceeding RMB 20 million;

(g) Approve any donation, to the external, or accepted, by **Group Member** with a single amount, or cumulative
amount within 12 consecutive months, not reaching RMB 2 million;

(h) Draft schemes for establishment of the **Group** 's internal management structure;

(i) Formulate basic operation and management system for the **Group**;

(j) Formulate specific rules and systems for the **Group**;

(k) Make decisions on engagement or dismissal of the management persons other than those whom shall be engaged or
dismissed as decided by the **Board of Directors** and co-chairmen; engage or dismiss the management persons of the **Brand Platform Companies** under **New Ruipeng Group**;

(l) Draft the **Group** 's remuneration system;

(m) Propose to hold an interim meeting of the **Board of Directors**;

(n) Reach a compromise for any litigation, arbitration or other dispute involving the **Group** with an amount
not exceeding RMB 2 million;

(o) Advise the **Board of Directors** on whether **senior officers** (including vice presidents, chief
financial officer, the secretary of the **Board of Directors**, etc.) are competent;

(p) Other powers granted by **New Ruipeng Group** 's Articles of Association or the **Board of Directors**.

(5) The chief financial officer shall be responsible to the president and the **Board of Directors**, and for
the financial affairs of the **Group**, and she/she will exercise the following powers:

(a) Guide and manage budget, plan for and forecast process; and work with other members from the management team to
develop action plans to achieve financial and operating goals;

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(b) Engage, dismiss and supervise financial and accounting personnel, but the engagement and dismissal of the
financial and accounting personnel who directly report to the chief financial officer in accordance with financial system shall be agreed by the president;

(c) Be fully in charge of the **Group** 's financial and audit work, including review and approval on
accounting books and financial statements;

(d) Guide and manage tax declaration and plan for taxes to ensure compliance with **applicable laws** concerning
taxation;

(e) Prepare monthly, quarterly and annual reports to be reported to the president and the Board of Directors;

(f) Guide and manage the **Group** 's funds to ensure that cash and cash equivalents are managed and
controlled reasonably, and supervise the using status of the **Group** 's funds;

(g) Attend the **Board of Directors meeting** if necessary;

(h) Coordinate the relation between the **Group** and banks and **Government Authorities** for financial and
tax matters;

(i) Formulate, implement and maintain accounting practices and standards in the **Group**;

(j) Approve, in accordance with the **Group** 's financial system, the fund transfer, use, expenditure and
borrowing by the **Group Members** with a single amount reaching RMB 1 million or cumulative amount of a series of relevant transactions within 12 consecutive months reaching RMB 3 million; and

(k) Other responsibilities and obligations as directed by the president or the **Board of Directors**.

(6) **Hillhouse Capital** will be responsible for the **Group'** s capital operation (to be implemented
in accordance with **New Ruipeng Group** 's corporate governance mechanism), technological empowerment, and external cooperation. **Hillhouse Capital** undertakes that it will fully take advantage of and utilize its resources in
Internet-related industries to provide **New Ruipeng Group** with advantageous resources (including but not limited to Tencent, JD and other resources).

(7) If there are any positions for supervisors actually established in **New Ruipeng Group**, the candidates
shall be nominated by **Ruipeng's Management Shareholders**.

(8) The **Parties** will jointly create a management system with multi-brand operating by using **New Ruipeng Group** as a platform.

**Article 10 Financial, Accounting and Auditing Systems** 

10.1 **Systems**

Applicable accounting principles shall be chosen for **New Ruipeng Group**'s financial and accounting system by its **Board of Directors**, in accordance with the chief financial officer's suggestions, by referring to its specific conditions, in accordance with the relevant **applicable laws** of its future **Listing** place, based on New **Ruipeng Group**'s specific status and the regulatory requirements of the **Listing** place**. New Ruipeng Group**'s financial and accounting system may be implemented after it is approved by the **company**'s Board of Directors.

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10.2 **Fiscal Year**

The fiscal year of **New Ruipeng Group** shall start from January 1st of each year to December 31st of the current year; however, the last fiscal year of **New Ruipeng Group** shall finish on the date of its termination. In order to satisfy the needs for **Listing** as soon as possible, **New Ruipeng Group's Board of Directors** may change the fiscal year in accordance with the chief financial officer's suggestions.

10.3 **Currency**

**New Ruipeng Group** shall adopt RMB as bookkeeping base currency.

10.4 **Bank Account**

**New Ruipeng Group** shall, and shall procure each of its **Subsidiaries** to, open and maintain bank account(s) in its or their own name(s) with officially licensed bank(s). **New Ruipeng Group** shall procure all the income and expenditures of each **Group Member** to be deposited into and withdrawn from the said account.

10.5 **Statements**

(1) **New Ruipeng Group** 's financial statements shall give a true, complete and fair view of its financial
status as of the date of the financial statements and its operating results and cash flows for the accounting period covered by such financial statements.

(2) **New Ruipeng Group** shall consolidate its accounts and the accounts of its **Subsidiaries** in
accordance with **applicable accounting principles** each year, and then make adjustments and audits.

(3) **New Ruipeng Group** shall submit the annual financial statements and annual audit report of its each **Group Member** to finance and taxation departments and other **Government Authorities** in accordance with relevant **applicable laws**.

10.6 **Right to Information**

In respect of each **Group Member**, **New Ruipeng Group** shall provide **Hillhouse Capital**, **Ruipeng's Management Shareholders**, the shareholders holding more than 4% of **New Ruipeng Group**'s shares at that time, and the shareholders having the right to nominate directors for **New Ruipeng Group** by then with:

(1) consolidated annual financial statements prepared in accordance with **applicable accounting principles** and audited by an independent auditor, within 120 days after each fiscal year finishes;

(2) unaudited consolidated semi-annual financial statements prepared in accordance with **applicable accounting principles,** within 60 days after each half a year finishes;

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(3) unaudited management statements prepared in accordance with **applicable accounting principles**, within 20
days after each fiscal month finishes;

(4) Other business and financial information reasonably required by **Hillhouse Capital** and/or **Ruipeng ' s Management Shareholders**.

The financial statements specified in the above item (1) to item (2) shall include the income statement, balance sheet and cash flow statement.

10.7 **Taxes**

**New Ruipeng Group** shall pay and/or withhold **taxes** in accordance with **applicable laws**, and submit all tax filing documents.

10.8 **Distribution of Profits**

If **New Ruipeng Group**'s Shareholders' Meeting determines to distribute profits, the distribution shall be made based on the shareholding ratio of the shareholders at that time; **New Ruipeng Group** shall have the right to withhold any tax on the profits to be distributed, in accordance with **applicable laws**.

**Article 11 Employees** 

11.1 **Compliance with Laws**

The recruitment, transfer, dismissal, resignation, salary, welfare, labor insurance, protection and disciplines, as well as other affairs of and for each **Group Member**'s employees shall be subject to relevant **applicable laws**.

11.2 **Employee Benefits**

The benefits, bonuses, assessment, labor protection and insurance, as well as other affairs to, on and of each **Group Member**'s employees shall be specified in the labor contracts between the **Group Member** and such employees and/or in the rules of the **Group Member**, depending on the specific condition of such **Group Member,** by referring to related local **applicable laws**.

**Article 12 Liquidation** 

12.1 **Liquidation Events**

In case of any following liquidation event or event considered as liquidation event ("**Liquidation Event**") happened to **New Ruipeng Group**, its Shareholders' Meeting shall make distribution to its shareholders, in accordance with Article 12.2, in accordance with **applicable laws**, this **Agreement** and **New Ruipeng Group**'s Articles of Association.

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(a) Bankruptcy, dissolution or liquidation of **New Ruipeng Group**;

(b) Sell, lease, transfer, assign or otherwise disposal by **New Ruipeng Group** of more than 50% of its assets;

(c) **New Ruipeng Group** 's merger, reorganization, or consolidation into any company or entity, resulting
in any change in the control right of **New Ruipeng Group** prior to such merger, reorganization or consolidation; or

(d) Other events specified in **New Ruipeng Group** 's Articles of Association.

12.2 **Distribution of Income**

Subject to the order of priority provided by **applicable laws**, **New Ruipeng Group**'s assets available for distribution to shareholders ("**Distributable Liquidation Properties**") shall be distributed in accordance with the following plan and order:

(1) Firstly, **Hillhouse Capital** or its **related parties** shall be entitled to obtain, whichever the
higher: (a) the amount after deducting the bonus obtained from **New Ruipeng Group** by **Hillhouse Capital** or its **related parties** by virtue of its or their shares obtained by it or them based on the **Contribution for Capital Increase**, from the **Contribution for Capital Increase** and the amount calculated (from the date when the relevant amount is actually paid (no matter as loan, capital increase or otherwise) to the date when this **Capital Increase Priority-based Amount in Liquidation** is actually settled) at the annual rate of return 10% (simple interest), or (b) the **Distributable Liquidation Properties** that **Hillhouse Capital** or its **related parties** shall be
entitled to obtain in the distribution based on its or their shareholding ratio corresponding to its or their **Contribution for Capital Increase** ()"**Capital Increase Priority-based Amount in Liquidation** ");

(2) Secondly, if there are any **Distributable Liquidation Properties** remained after this **Capital Increase Priority-based Amount in Liquidation** is paid in full as aforementioned, **Beijing Sunshine**, **Shenzhen Dachen**, **Hillhouse Capital** or its **related parties** (except for **New Ruipeng Group** 's shares obtained by this **Capital Increase**) shall be entitled to obtain, with priority, whichever the higher: (a) the amount after deducting the bonus obtained from **New Ruipeng Group** by them respectively (for **Hillhouse Capital** or its **related parties**, such bonus corresponding to **New Ruipeng Group** 's shares as obtained by it or them through this **Capital Increase** shall not be included), from their respective original investment costs for restructuring into **New Ruipeng Group's Underlying Assets** and the amount calculated (from the date when relevant original investment is actually paid (no matter as loan, capital increase or otherwise) to the date when this **Investors' Shareholders' Priority-based Amount in Liquidation** is actually settled) at the annual rate of return 10% (simple interest), or (b) the **Distributable Liquidation Properties** that **Beijing Sunshine**, **Shenzhen Dachen**, **Hillhouse Capital** or its **related parties** shall be entitled to obtain in the distribution based on its or their shareholding ratio (except for **New Ruipeng Group** 's shares obtained through this **Capital Increase**)
(" **Investors' Shareholders' Priority-based Amount in Liquidation** "). If **Distributable Liquidation Properties** cannot be used to pay **Investors' Shareholders' Priority-based Amount in Liquidation** in
full, the distribution shall be made among the said shareholders based on the ratio of their respective original investment costs (excluding **Contribution for Capital Increase**) and the amount calculated at the annual rate of return 10% (simple
interest).

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(3) Finally, if there are any **Distributable Liquidation Properties** remained after the **Investors' Shareholders' Priority-based Amount in Liquidation** is paid in full as aforementioned, **New Ruipeng Group** 's other shareholders (excluding the shareholders who have obtained **Capital Increase Priority-based Amount in Liquidation** or **Investors' Shareholders' Priority-based Amount in Liquidation**) shall be entitled to obtain the **Distributable Liquidation Properties** available for distribution based on their shareholding ratios.

**New Ruipeng Group**'s all shareholders shall take all effective measures in compliance with **applicable laws** to ensure **Distributable Liquidation Properties** to be distributed as aforementioned.

**Article 13 Confidentiality** 

13.1 **General Obligations**

Each **Party** undertakes, to the other **Parties**, not to disclose any **Confidential Information** to any third party without relevant Party's prior written agreement, and each **Party** shall procure its respective directors, equity holders, current or future partners, shareholders, consultants and bankers, officials, employees, agents, advisors, professional consultants and **related parties**, as well as its each **Affiliate**'s directors, equity holders, current or future partners, shareholders, consultants and bankers, officials, employees, agents, advisors and professional consultants (collectively referred to "**Representatives**") to abide by the said provision. For the purpose hereof, "**Confidential Information**" refers to: (i) any information about the organization, businesses, technologies, finance, customers, suppliers, transactions or affairs of the **Group** or other **Party**, or about their respective directors, officers or employees (no matter whether such information is provided in written, orally or in any other manner before, after or on the signature date hereof); (ii) the terms of the **Transaction Documents** and the identity of the **Parties** and their respective **related parties**; and (iii) any information or materials prepared by a **Party** or its **Representatives** containing or otherwise reflecting or derived from **Confidential Information**.

13.2 **Exceptions**

The above Article 13.1 will not apply to:

(a) Any **Confidential information** already generally disclosed or known to the public, unless it is disclosed
due to or resulting from any breach hereof by a **Party** or its **Representatives**;

(b) Any disclosure of **Confidential Information** by a **Party** to its **Representatives**, provided
that the **Representatives** shall (i) subject to similar confidentiality obligations, or (ii) otherwise subject to any binding occupational confidentiality obligation; or

(c) Any disclosure made by **such Party** due to the requirements of the department in charge of **Listing**,
securities trading rules, **applicable laws**, or any litigation or legal proceedings arising from or related to the **Transaction Documents**, but **such Party** shall, before making such disclosure, negotiate with the other **Parties** on the time, contents and method of such disclosure and shall keep the confidentiality, as far as possible, of the partial contents reasonably required by the other **Parties**.

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13.3 **Advertising to News** 

Any **Party** shall not disclose any details of this **Transaction** or the cooperation among the **Parties** to the external (news, media, etc.) without the written agreement made by **Ruipeng's Management Shareholders** and **Hillhouse Capital**.

**Article 14 Taxes & Expenses** 

14.1 **Taxes**

For any tax incurred in this **Restructuring**, (x) if relevant **Parties** have not obtained any profits actually but need to pay any tax, or relevant **Parties** have not obtained any profits in real time but have obtained profits in a deferred way, **New Ruipeng Group** may provide **such Parties** with necessary assistance in loan, but **such Parties** shall repay relevant loans to **New Ruipeng Group** upon realization of profits or withdrawal from **New Ruipeng Group**; (y) if relevant **Parties** have obtained any profit in real time, **such Parties** shall bear relevant costs on its own; (z) in case of any transfer or change of or to the tax base or other tax benefits of or among the **Parties** due to this **Restructuring**, the relevant **Parties** obtained profits shall compensate the relevant **Parties** suffered damage to interests, by using the profits obtained by them, based on their corresponding proportions of the amount of interests damaged, upon realization of profits or withdrawal from **New Ruipeng Group**.

Unless otherwise provided for in the **Transaction Documents** and **Restructuring Scheme**, the **Parties** shall bear any tax payable due to performance and completion of this **Transaction**.

14.2 **Fees & Expenses**

The reasonable expenses incurred to **Ruipeng Parties** and **Skyfield Parties** due to the due diligence on this **Transaction**, the drafting, negotiation and signature of and on the **Transaction Documents**, and completion of this **Transaction** shall be borne by **New Ruipeng Group** after the **Delivery**. However, if this **Transaction** fails to be completed finally, the **Parties** shall bear relevant fees respectively.

**Article 15 Liability for Breach of Agreement** 

15.1 **Liability for Compensation for Breach of Agreement and for Damage**

In case of any loss, damage, liability, claim, **litigation**, **Dispute**, expense or expenditure (collectively referred to as "**loss**") suffered by other **Parties** due to breach by any **Party** ("**Defaulting Party**") of any statements, guarantees, obligations or undertakings specified herein, **such Defaulting Party** shall compensate the other **Parties** for such **loss**.

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Notwithstanding the foregoing, the upper limit of each **Defaulting Party**'s compensation liability hereunder shall be 100% of the evaluated amount of the **Object Assets** held by it and included in the scope of this **Transaction**, and the **Defaulting Party** shall be obliged to make compensation to the other **Parties** after the amount of total **loss** exceeds RMB 2 million ("**Compensation Threshold**"); if the amount of **loss** exceeds the **Compensation Threshold**, the **Defaulting Party** shall make compensation only for the amount of the **loss** exceeded the **Compensation Threshold**.

15.2 **Handling in case of Failure to Register Object Assets in the Group's Name**

(1) Unless otherwise specified in Article 15.2(2) hereof, if any **Underlying Assets' Current Shareholders** who have signed this **Agreement** fail to register the **Object Assets** held by them, under the name of **New Ruipeng Group** or its wholly-owned **Subsidiary,** before the **Closing Date**, in accordance with the **Restructuring Scheme**, **New Ruipeng Group** or its wholly-owned **Subsidiary** shall have the right, within 90 **business days** after **Closing Date**, (a) acquire such **Object Assets** based on the corresponding net
asset value of the **Object Assets** held by such **Object Assets' Current Shareholder**, or (b) such **Object Assets' Current Shareholder** shall pay its corresponding evaluated amount of the **Contracted Shareholder's Object Asset** s to **New Ruipeng Group** or its wholly-owned **Subsidiary** as compensation. If the **Object Assets' Current Shareholder** has done its best to take all actions, including signing and delivering all relevant documents
to implement this **Restructuring**, but it still fails in registering the **Object Assets** held by it, under the name of **New Ruipeng Group** or its wholly-owned **Subsidiary**, on or before the **Closing Date**, not due to its
subjective reason(s), this Article 15.2(1) shall not apply. If any **Ruipeng Investor's Shareholder** s or **Gaoling Tiancheng** fails in completing this **Restructuring** due to their (its) failure to get bridge funds or **ODI** cannot be approved, which results in breach hereof by it, it shall not assume liability for breach of this Agreement.

(2) Where any **Underlying Assets' Current Shareholders** have disclosed, in the **Disclosure Letter**,
on the signature date hereof, that this **Restructuring** of partial **Object Assets** subject to any third party's consent or right of first refusal, and the relevant third party has not given consent to, and/or waived the right of first
refusal for, this **Restructuring** of such **Object Assets**, on the signature date of this **Agreement**, the said Article 15.2(1) shall not apply to such Underlying Assets' Current Shareholders and they shall not assume the
liability for breach of Agreement hereunder for that, if such **Underlying Assets' Current Shareholders** have provided the other **Parties** with sufficient evidence proving that the third party has not given consent to, and/or has
actually exercised the right of first refusal for, this **Restructuring** of such **Object Assets**.

15.3 **Other Remedies**

In case of breach hereof by any **Party**, the rights and remedies of the other **Parties** under or in accordance with **this Agreement** shall be cumulative, without prejudice to their other rights or remedies under **applicable laws**.

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**Article 16 Effectiveness & Termination** 

16.1 **Effectiveness**

This **Agreement** shall be established and become effective for the **Parties** who sign it, from the date of signature by the **Parties**. If, as at January 31, 2019 ("**the Deadline for Signing the Agreement**"), **Ruipeng Parties** and **Skyfield Parties** have signed, but any other **Party** or parties (collectively "**Unsigned Party**") still fail to sign, this **Agreement**, it shall become effective for the relevant **Parties** who have signed it from the day (such date shall be deemed the signature date hereof) immediately after the **Deadline for Signing the Agreement**.

16.2 **Events for Termination**

**This Agreement** may be terminated by the relevant **Parties** in the following ways:

(1) If the **Delivery** fails to occur as at the **Closing Date**, any **Party** shall have the right to
unilaterally terminate the right and obligation relation hereunder applicable to it (but, if the failure to realize the **Delivery** before the **Closing Date** is caused by or results from such **Party** 's failure to fulfill any of
its obligations hereunder, including that specified in Article 15.2 (1) hereof, such **Party** shall have no right to terminate such right and obligation relation), in this case, this **Agreement** shall remain effective among the other **Parties**, however, if any **Ruipeng's Management Shareholder** s or **Hillhouse Capital** has chosen to terminate the right and obligation relation hereunder applicable to it, this **Agreement** shall terminate fully; or

(2) This **Agreement** may be terminated upon the written consent reached by the **Parties**, before the **Closing Date**.

16.3 **Consequence of Termination**

(1) If **this Agreement** is terminated fully or for relevant parties in accordance with Article 16.2, it shall
be terminated so, but the **Parties** shall continue to be subject to this Article 16.3 and Article 13 (Confidentiality), Article 14 (Taxes & Expenses), Article 15 (Liability for Breach of Agreement) and Article 18 (Applicable
Law & Settlement of Dispute). This Article 16.3 shall not be deemed exempting any **Party** from its liability for any breach hereof before the termination date.

(2) If this **Agreement** is terminated fully in accordance with Article 16.2, the **Parties** shall sign all
documents and take all action, as soon as possible, in the principle of restoring to original status, to make the **Parties** restore to the status before the signature date hereof, including but not limited to that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) **Hillhouse Capital** and its **related parties** are not required to pay any outstanding **Contribution for Capital Increase** in accordance with this **Agreement**;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Corresponding interest on **Skyfield's Loan in 2018** shall be paid to **Hillhouse Capital** and its **Affiliates** at the annual interest rate 6% from the calculation commencement date of the loan term, until actual settlement date;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If **Hillhouse Capital** or its **Affiliates** have paid the **Operating Funds for Transitional Period** or **Contribution for Capital Increase** to **New Ruipeng Group**, **Ruipeng** or its **Subsidiaries** fully or partially as agreed in Article 3.3 hereof, **New Ruipeng Group**, **Ruipeng** or its **Subsidiaries** shall, within ten (10) **business days** after the termination date hereof, refund to **Hillhouse Capital** or its **Affiliates** the principal of the **Operating Funds for Transitional Period** or **Contribution for Capital Increase** actually paid by **Hillhouse Capital** or its **Affiliates** and the interest calculated (from the date when any amount is actually paid (no matter as loan, capital increase or otherwise) to the date when the principal of such amount and the interest accrued thereon are actually settled) based on the benchmark interest rate for loan published by the Bank of **China** for the same period, while, (x) if **New Ruipeng Group**, **Ruipeng** or its **Subsidiaries** has paid the **Operating Funds for Transitional Period** and/or **Contribution for Capital Increase** to **Skyfield Underlying Companies** as capital increase, loan or otherwise before termination hereof, **New Ruipeng Group**, **Ruipeng** or its **Subsidiaries** shall have no obligation to refund to **Hillhouse Capital** or its **Affiliates** such amount already paid to **Skyfield Underlying Companies**, provided that **New Ruipeng Group**, **Ruipeng** or its **Subsidiaries** has returned to **Hillhouse Capital** or its **Affiliates** the corresponding equity, debts or other corresponding rights obtained by the said payment made as capital increase, loan or otherwise. For the avoidance of doubt, in respect of **Skyfield's Loan in 2018** repaid by **Ruipeng** to **Skyfield** in accordance with Article 3.3(3)(a) hereof, if **Skyfield** fully pays such amount to **Skyfield Underlying Companies** for use in its daily operation, **Ruipeng** shall not be required to refund corresponding amount to **Hillhouse Capital** or its **Affiliates**; (y) if the **Operating Funds for Transitional Period** has been used for the operation of **New Ruipeng Group** (such as construction of headquarters' platform) and it cannot be get clear as directly corresponding to the operation, expenses, costs, fees or otherwise of **Ruipeng Group** or **Skyfield Underlying Companies**, **Ruipeng's Management Shareholders** and **Hillhouse Capital** shall make negotiation on the proportion for sharing the said used **Operating Funds for Transitional Period** among the **Parties**, and shall determine the proportion for bearing relevant amounts through negotiation in good faith in the principles of equality, reasonableness and bearing-fee-based-on-the-proportion-of-benefits, etc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If the **Operating Funds for Transitional Period** and/or **Contribution for Capital Increase** have and/or has been used for making capital increase for **Skyfield's Platform Companies**, such Contribution for Capital Increase shall be refunded to **Hillhouse Capital** or its **Affiliates** in full by targeted capital decrease, or handled in any other way agreed by **Hillhouse Capital** and relevant **Skyfield's Minority Shareholders**.

(3) For the avoidance of doubt, (i) where this **Agreement** is terminated fully, any Contribution for
Capital Increase and/or loan provided by **Hillhouse Capital** or its **related parties** to **Skyfield's Platform Companies** directly or indirectly since the signature date hereof (no matter whether recognized by **Ruipeng's Management Shareholders** or not) shall not be deemed paid **Contribution for Capital Increase**, and **New Ruipeng Group** shall have no obligation to refund any amount, provided that **New Ruipeng Group** or **Ruipeng Group** has
returned to **Hillhouse Capital** or its **Affiliate** the corresponding equity, debts or other corresponding rights obtained by the said payment made as capital increase, loan or otherwise; (ii) If **Hillhouse Capital** or its **related parties** have held any share in **Ruipeng Group**, or any **Ruipeng Party** has held the shares in **Hong Kong Skyfield** or its **related parties** overseas, based on **Restructuring Scheme**, **Hillhouse Capital** or its **related parties**, **Hong Kong Skyfield** or its **related parties**, **Ruipeng Group**, **Ruipeng's Management Shareholders** and/or relevant **Skyfield's Minority Shareholders** shall refund to **Hillhouse Capital** or its **related parties** the consideration paid by **Hillhouse Capital** or its **related parties** for subscription of **Ruipeng Group** 's shares, and refund to **Ruipeng Party** the consideration paid by **Ruipeng Party** to **Hong Kong Skyfield** or its **related parties**, within thirty (30) **business days** after this **Agreement** terminates fully, and change all the equity, the changes to which have been registered, into
their status before the transfer within thirty (30) **business days** after this **Agreement** terminates fully (in case of delay in completion due to **Government Authorities** ' reason, the relevant **Parties** shall do their
best to complete it thereafter as soon as possible), and sign all documents and take all action to reverse such an equity transfer.

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**Article 17 Notice** 

The notices, requirements or other communications hereunder shall be made in writing, and sent, delivered or mailed to the addresses or email addresses of related **Parties** as specified in <u>Annex 5</u> (or any other address or email address specified in the written notice sent by the receiving **Party** to the other **Parties** ten (10) days in advance).

The notices, requirements or other communications sent or delivered in accordance with this Article 17 shall be deemed delivered: (i) on the third (3rd) **business day** after the date when the notices, requirements or other communications with the receiving **Party**'s said address indicated therein are sent at the post office and the receipt issued by the post office is obtained, if they are sent by registered mail or secured mail, (ii) upon delivery of the relevant notices, requirements or other communications to the receiving **Party**'s said address, if they are sent by courier company or delivered in person, and (iii) when the relevant notices, requirements or other communications are sent to the receiving **Party**'s said email address (the sender shall not receive any return notice), if they are sent by email.

**Article 18 Applicable Law & Settlement of Dispute** 

18.1 **Applicable Law**

The **laws of China** shall apply to **this Agreement**.

18.2 **Arbitration**

Any dispute, controversy or disagreement over, including, the existence, effect, interpretation, performance, breach or termination hereof, or any dispute, arising from or related to **this Agreement** shall be submitted to China International Economic and Trade Arbitration Commission for arbitration in Beijing in accordance with its arbitration rules then in effect at the time of application for arbitration. The arbitration award shall be final and binding upon relevant **Parties**.

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**Article 19 Miscellaneous** 

19.1 **Transfer**

Unless otherwise specified in the **Transaction Documents**, any **Party** shall not transfer any of its rights or obligations under this **Agreement**. However, **Hillhouse Capital, Skyfield Parties** and **Ruipeng Investor's Shareholders** may transfer any of its rights or obligations hereunder to their **related parties**, with written notification to the other **Parties** 10 **business days** in advance.

19.2 **Waiver**

Waiver by any **Party** of any of its rights, power or remedies hereunder may become effective only after the relevant written document is signed by such **Party**. Any **Party**'s failure to exercise or delay in exercising any right, power or remedy hereunder shall not be deemed a waiver, nor any single or partial exercising of relevant rights, powers or remedies shall prevent further exercising of such rights, powers or remedies or of any other right, power or remedy.

19.3 **Entire Agreement**

The **Transaction Documents** (including the annexes thereto and other documents referred to therein) shall constitute the entire agreement among the **Parties** for this **Transaction**, and shall supersede any previous letter of intent, arrangements or understandings concerning such subject concluded by the **Parties**, including the Cooperation Agreement signed by **Ruipeng**, **Ruipeng's Management Shareholders** and **Hillhouse Capital** on December 11, 2018.

All the contracts and agreements as well as the annexes, supplemental agreements and other instruments thereto and thereof related to investment in **Ruipeng** signed by **Ruipeng Investor's Shareholders** with all or partial **Ruipeng Parties** before signing this **Agreement** ("**Ruipeng Previous Investment Agreement**") shall terminate automatically from the signature date hereof, except for the matters specified in Article 7.4 of this **Agreement**, in this case, **Existing Shareholders of Ruipeng** shall not claim against any **Ruipeng Party** for any rights specified in **Ruipeng Previous Investment Agreement**; however, if the **Delivery** fails to be completed for this **Restructuring** before the **Closing Date**, **Ruipeng Previous Investment Agreement**, including repurchase terms, will revive to be effective to applicable relevant parties, excluding any relevant party that causes the failure to complete the **Delivery** for this **Restructuring** before the **Closing Date** due to its reason.

19.4 **Severability**

If any one or more provisions of **this Agreement** are judged as invalid, illegal or unenforceable in any aspect in accordance with **applicable laws**, the validity, legality and enforceability of the remaining terms and conditions hereof shall not be affected or impaired in any aspect arising from that. The **parties** shall, through negotiation in good faith, strive to replace any of these invalid, illegal or unenforceable clauses with the valid, legal and enforceable ones with the economic effect similar to that of such invalid, illegal or unenforceable clauses as possible as it can. Any unenforceability of this **Agreement** to one **Party** shall not affect its enforceability to the other **parties**.

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19.5 **Duplicate**

**This Agreement** may be signed in more than one duplicates. Signed duplicates shall include paper ones and the ones sent by fax and electronically, and each of them shall be deemed an original, but all the signed duplicates shall be regarded as a complete document.

19.6 **Version for Government**

If any other simple agreements shall be signed by the **Parties** for **this Transaction** separately as necessary for making a request to **Government Authorities** for taking certain specific action, **this Agreement** shall predominate over such a simple agreement fully, and such a simple agreement shall only be used for making the request to **Government Authorities** for taking such specific action and shall not be used for establishing or certifying any rights or obligations to which relevant parties are entitled to as specified therein.

(No text below)

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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|:---|:---|
| **瑞鹏宠物医疗集团股份有限公司 (seal)** | **瑞鹏宠物医疗集团股份有限公司 (seal)** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Authorized Signatory |

---

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **上海祐瑞企业咨询有限公司 (seal)** | **上海祐瑞企业咨询有限公司 (seal)** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Authorized Signatory |

---

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **上海瑞忱企业管理中心(有限合伙) (seal)** | **上海瑞忱企业管理中心(有限合伙) (seal)** |
| By: | /s/ Yonghe Peng |
| Name: | Yonghe Peng |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **深圳市鹏胜投资机构(有限合伙) (seal)** | **深圳市鹏胜投资机构(有限合伙) (seal)** |
| By: | /s/ Yanzhong Zhang |
| Name: | Yanzhong Zhang |
| Title: | Authorized Signatory |

---

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **深圳市鹏诚投资机构(有限合伙) (seal)** | **深圳市鹏诚投资机构(有限合伙) (seal)** |
| By: | /s/ Yanzhong Zhang |
| Name: | Yanzhong Zhang |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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|:---|:---|
| **上海北业企业管理中心（有限合伙） (seal)** | **上海北业企业管理中心（有限合伙） (seal)** |
| By: | /s/ Lang Liu |
| Name: | Lang Liu |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Liesheng Wang |
| /s/ Liesheng Wang |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Yonghe Peng |
| /s/ Yonghe Peng |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Lang Liu |
| /s/ Lang Liu |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Yanzhong Zhang |
| /s/ Yanzhong Zhang |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Wei Zhang |
| /s/ Wei Zhang |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **宁波梅山保税港区海布里投资合伙企业（有限合伙） (seal)** | **宁波梅山保税港区海布里投资合伙企业（有限合伙） (seal)** |
| By: | /s/ Tao Wang |
| Name: | Tao Wang |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **深圳市达晨创联股权投资基金合伙企业（有限合伙） (seal)** | **深圳市达晨创联股权投资基金合伙企业（有限合伙） (seal)** |
| By: | /s/ Zhou Liu |
| Name: | Zhou Liu |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Bing Xiao |
| /s/ Bing Xiao |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **深圳市达晨创丰股权投资企业（有限合 伙） (seal)** | **深圳市达晨创丰股权投资企业（有限合 伙） (seal)** |
| By: | /s/ Zhou Liu |
| Name: | Zhou Liu |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| | |
|:---|:---|
| **新希望医疗健康南京投资中心（有限合伙） (seal)** | **新希望医疗健康南京投资中心（有限合伙） (seal)** |
| By: | /s/ Jianxin Yang |
| Name: | Jianxin Yang |
| Title: | Authorized Signatory |

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

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| |
|:---|
| Lijun Sheng |
| /s/ Lijun Sheng |

---

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| |
|:---|
| Xiaoqi Hu |
| /s/ Xiaoqi Hu |

---

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| |
|:---|
| Zhifeng Liu |
| /s/ Zhifeng Liu |

---

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In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **烟台中宠食品股份有限公司** | **烟台中宠食品股份有限公司** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **北京阳光融汇医疗健康产业成长投资管理中心（有限合伙） (seal)** | **北京阳光融汇医疗健康产业成长投资管理中心（有限合伙） (seal)** |
| By: | /s/ Lina Lu |
| Name: | Lina Lu |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **东方证券股份有限公司 (seal)** | **东方证券股份有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **高瓴资本管理有限公司 (seal)** | **高瓴资本管理有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **青岛嘉润祥和动物医院管理有限公司 (seal)** | **青岛嘉润祥和动物医院管理有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **青岛信德博泰动物医院管理有限公司 (seal)** | **青岛信德博泰动物医院管理有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **青岛爱诺动物医院管理有限公司 (seal)** | **青岛爱诺动物医院管理有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **青岛倬盈动物医院管理有限公司 (seal)** | **青岛倬盈动物医院管理有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **上海策而行企业管理咨询有限公司 (seal)** | **上海策而行企业管理咨询有限公司 (seal)** |
| By: | /s/ Rong Wang |
| Name: | Rong Wang |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| |
|:---|
| Jiansheng Kan |
| /s/ Jiansheng Kan |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **上海安安宠物有限公司 (seal)** | **上海安安宠物有限公司 (seal)** |
| By: | /s/ Jiansheng Kan |
| Name: | Jiansheng Kan |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **上海宠安企业管理合伙企业（有限合伙） (seal)** | **上海宠安企业管理合伙企业（有限合伙） (seal)** |
| By: | /s/ Jiansheng Kan |
| Name: | Jiansheng Kan |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **上海骅欣工贸有限公司 (seal)** | **上海骅欣工贸有限公司 (seal)** |
| By: | /s/ Jiansheng Kan |
| Name: | Jiansheng Kan |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **珠海高瓴天成股权投资企业（有限合伙）(seal)** | **珠海高瓴天成股权投资企业（有限合伙）(seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **Skyfield Holdings Limited (seal)** | **Skyfield Holdings Limited (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **瓴域（上海）投资有限公司 (seal)** | **瓴域（上海）投资有限公司 (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **宁波梅山保税港区惠宠投资管理合伙企业（有限合伙） (seal)** | **宁波梅山保税港区惠宠投资管理合伙企业（有限合伙） (seal)** |
| By: | /s/ Authorized Signatory |
| Name: |  |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| |
|:---|
| Fujun Mao |
| /s/ Fujun Mao |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| |
|:---|
| Yi Dong |
| /s/ Yi Dong |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| | |
|:---|:---|
| **云宠（北京）动物医疗科技有限公司 (seal)** | **云宠（北京）动物医疗科技有限公司 (seal)** |
| By: | /s/ Yi Dong |
| Name: | Yi Dong |
| Title: | Authorized Signatory |

---

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

Name: Rensheng Wei <br> Title: Rensheng Wei

------

In witness whereof, the **Parties** have caused **this Agreement** to be executed on the date specified in the first page hereof.

---

| |
|:---|
| Qing Zhao |
| /s/ Qing Zhao |

---

## Exhibit 10.18

**Exhibit 10.18** 

**Comprehensive Credit Contract** 

2021. v01

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Comprehensive Credit Contract

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**Comprehensive Credit Contract** 

Contract No.: <u>213220211</u>

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| | | |
|:---|:---|:---|
| Grantee: <u>Skyfield (Shanghai) Investment Co., Ltd.</u> | Grantee: <u>Skyfield (Shanghai) Investment Co., Ltd.</u> | Tel.: _________ |
| Principal premise (communication address): <u>Building T10, Sincere Center II, Lane 151, Huaihong Road, Minhang District, Shanghai</u> | Principal premise (communication address): <u>Building T10, Sincere Center II, Lane 151, Huaihong Road, Minhang District, Shanghai</u> | Principal premise (communication address): <u>Building T10, Sincere Center II, Lane 151, Huaihong Road, Minhang District, Shanghai</u> |
| Postal code: <u>201100</u> | Postal code: <u>201100</u> |  |
| Legal representative (responsible person): <u>Peng Yonghe</u> | Legal representative (responsible person): <u>Peng Yonghe</u> | Tel.: _________ |
| Contact person: <u>Chen Qinyi</u> | Fax: _________ |  |
| Email: ____________ | Tel.: <u>\*\*\*</u> |  |
| Grantor: Bank of Shanghai <u>Caohejing Sub-branch</u> | Grantor: Bank of Shanghai <u>Caohejing Sub-branch</u> |  |
| Principal premise (communication address): <u>No.6 Caobao Road, Xuhui District, Shanghai</u> | Principal premise (communication address): <u>No.6 Caobao Road, Xuhui District, Shanghai</u> | Principal premise (communication address): <u>No.6 Caobao Road, Xuhui District, Shanghai</u> |
| Legal representative (responsible person): <u>Lu Xin</u> | Legal representative (responsible person): <u>Lu Xin</u> |  |
| Contact person: <u>Wu Yanxin</u> | Fax: ___________ |  |
| Email: ______________ | Tel: <u>\*\*\*</u> |  |

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Whereas: The Grantee applies for comprehensive credit from the Grantor. In order to clarify the rights and obligations of both parties, the two parties agree to enter into this Contract through friendly negotiation according to the relevant laws and regulations in force and the related regulatory requirements. (Note: ☐ in this Contract indicates selection. If selected, it is √; if not selected, it is ×.)

**Chapter I Credit Line** 

Article 1 The credit line that the Grantee applies from the Grantor during the validity period of the credit set out in this Contract (the "Credit Period") shall be (in word) the equivalent of RMB Six Hundred Million.

The credit line herein refers to the maximum credit amount for the comprehensive credit business that can be used by the Grantee according to this Contract.

If the currency used in the comprehensive credit business is different from the currency used in the credit line, it shall be converted into the currency used in the credit line at the exchange rate determined by Bank of Shanghai only for the purpose of determining the balance of the credit line. In case of any change in the exchange rate, the Grantor has the right to convert the currency according to the exchange rate after the change to determine the use of the credit line.

Article 2 The credit line under this Contract can be used for the following one or more types of credit business, **provided that it shall comply with the policies and requirements of the specific credit business of the Grantor at that time:**

---

| | |
|:---|:---|
| ☑ Working capital loans; | ☒ Bill acceptance; |
| ☒ Discount of commercial acceptance bill; | ☒ Discount guarantee of commercial acceptance bill; |
| ☒ Non-financing letter of guarantee; | ☒ Export letter of credit packing loan; |
| ☒ Issuance of letter of credit; | ☒ Import bill advance; |
| ☒ Negotiation under documentary credit; | ☒ Collection bill purchased; |
| ☒ Export factoring; | ☑ Others: <u>Liquidity revolving loan</u> |

---

Article 3 The maximum credit limit and/or margin ratio of a single type of credit business stated above are agreed as follows: <u>RMB600</u> <u>million for the comprehensive credit line, including RMB 500</u> <u>million for working capital loans and RMB100</u> <u>million for liquidity revolving loan.</u>

**Chapter II Credit Period** 

Article 4 The Credit Period under this Contract shall be from <u>August</u><u> </u>, <u>2022</u> to <u>August</u> <u>1, 2023</u>.

Article 5 **The Grantor shall have the right to inspect the use of the credit line hereunder from time to time, and to unilaterally terminate the remaining credit line and the Credit Period in advance in case the Grantee violates the provisions of Article 33 hereof.**

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**Chapter III Use of Credit Line** 

Article 6 The Grantee shall submit written application to the Grantor if it wants to use the credit within the Credit Period and credit line set out in this Contract. The written application shall specify the type of credit, term of use, amount of use and other relevant information. If the Grantor approves the application, it shall separately sign a specific business contract/agreement for the single type of credit business with the Grantee (the "Specific Business Contract").

Article 7 The Grantee shall satisfy the following conditions when applying for the use of credit line:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) This Contract and the guarantee contract (if any) have entered into force and remain in force;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Grantee has submitted the application for the use of the credit line and the relevant information required by the Grantor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) There is no material adverse change in the business and financial condition of the Grantee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The statements and warranties of the Grantee are true, accurate, complete and valid, the Grantee can effectively perform the obligations agreed herein, and no breach of this Contract has occurred or may occur.

Article 8 The balance of the credit line used by the Grantee (that is, the accumulated amount of the credit line that is being used but not yet paid off) shall not exceed the credit line at any point during the Credit Period. During the Credit Period, the Grantee may apply for the use of the credit line that it has paid off, unless otherwise stipulated in this Contract or the Specific Business Contract. The credit line unused during the Credit Period shall be automatically terminated upon expiration of the Credit Period.

Article 9 If the maximum credit limit is specified for any single type of credit business in this Contract, the Grantee shall, in addition to complying with the provisions of Article 8, ensure that the credit line used for the specific type of credit business shall not exceed the maximum credit limit for such single type of credit business as set out in this Contract at any point during the Credit Period.

Article 10 Specific business contracts shall be signed during the term of the comprehensive credit contract, provided that the occurrence date of each business under any specific business contract shall not be later than <u>August</u> <u>1, 2023</u>, while the final maturity date of each business may exceed the above time limit, depending on the Specific Business Contract.

**If the Credit Period is terminated in advance, the deadline for the occurrence of the above business shall be advanced accordingly.** 

**Chapter IV Expenses** 

Article 11 The Grantor provides comprehensive credit service for the Grantee in accordance with the relevant laws and regulations and charges the "credit line occupancy fee" at the rate of ___<u>/</u>_% of the amount of credit line occupied. The fee calculation formula is as follows:

Charge amount = Σ (the amount of credit line occupied \* rate \* credit lien occupation days/360)

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Where: the amount of credit line occupied = the amount of credit line - the balance of credit line

Article 12 The Grantee shall pay the credit line occupancy fee calculated according to the formula in Article 11 to the Grantor through one of the following methods:

☒ "Quarterly charge": After this Contract enters into force, the Grantor shall calculate and charge from the Grantee quarterly the credit line occupancy fee according to the actual amount and days of credit line occupied by the Grantee;

☒ "One-off charge": The Grantor shall calculate and charge from the Grantee at one time upon the expiry of the Credit Period the credit line occupancy fee according to the actual amount and days of credit line occupied by the Grantee;

☒ Other covenants: ___<u>/</u>____

Article 13 The interest rate, exchange rate, discount rate and other rates applicable to the individual credit business hereunder shall be separately agreed upon by the Grantee and the Grantor in the Specific Business Contract.

**Chapter V Guarantee** 

Article 14 When signing this Contract with the Grantor, the Grantee shall provide one or several of the following guarantees, or may be exempted from providing guarantees:

☑ The Guarantor, <u>Shanghai Anan Pet Co., Ltd.</u>, shall sign the Maximum Amount Guarantee Contract (with the number of <u>ZDB2132202110101</u>) with the Grantor (i.e., the Creditor).

☑ The Guarantor, <u>Yunchong (Beijing) Animal Hospital Technology Co., Ltd.</u>, shall sign the Maximum Amount Guarantee Contract (with the number of <u>ZDB2132202110102</u>) with the Grantor (i.e., the Creditor).

☒ The Mortgagor ___<u>/</u>__ shall sign the Maximum Amount Mortgage Contract (with the number of___<u>/</u>__) with the Grantor (i.e., the Mortgagee).

☑ The Pledgor, <u>New Ruipeng Pet Group Inc.</u>, shall sign the Maximum Amount Pledge Contract (with the number of <u>ZDB213220211020</u>) with the Grantor (i.e., the Pledgee).

☒ This Contract is for credit granting, and the relevant provisions of guarantee are not applicable.

If there is any pledge or mortgage, when the collateral is destroyed or impaired, the Grantor has the right to require the Grantee and/or Guarantor to restore the value of the collateral or provide security equivalent to the impaired value.

Article 15 When the Grantee enters into specific business contracts with the Grantor under this Contract, the Grantor has the right to require the Grantee to provide other guarantees other than those provided in Article 14 of this Contract.

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**Chapter VI Representations and Warranties of the Grantee** 

Article 16 The Grantee is an enterprise, public institution or other organization lawfully established and validly existing in accordance with the laws of China, which can perform the obligations hereunder and bear civil liabilities in its own name.

Article 17 The signing and performance of this Contract is the true expression of the intention of the Grantee, for which all the necessary consents, approvals and authorizations have been obtained without any legal defects.

Article 18 All the documents, statements, materials and information provided by the Grantee to the Grantor during the signing and performance of this Contract are true, accurate, complete and valid, and the Grantee has not withheld from the Grantor any relevant information that may affect its financial position and performance ability.

**Chapter VII Obligations and Undertakings of the Grantee** 

Article 19 The use of credit line by the Grantee shall comply with the provisions of this Contract and the Specific Business Contract. The Grantor shall have the right to inspect the performance of the Specific Business Contract by the Grantee.

Article 20 The Grantee shall submit true and complete financial reports, all bank account numbers, balances of deposits and loans and other information as required by the Grantor during the Credit Period.

Article 21 The Grantee shall obtain the approval of the Grantor before it can carry out such important events as making outbound investment, substantial increase in debt financing, merger, division and equity transfer during the Credit Period.

Article 22 The Grantee shall ensure that there is no material change in the nature or scope of its business after the signing of this Contract.

Article 23 During the Credit Period, if the Grantee adopts any form of asset reorganization such as merger, acquisition, consolidation and division, or undertakes contracting, leasing and other activities that may change its business operation, or conducts activities to change its organizational structure and operation mode, or has any change in its registered capital, equity structure or major investment, it shall provide written notice to the Grantor 30 working days in advance. If the above changes will affect the solvency of the Grantee, the Grantee shall take corresponding remedial measures as required by the Grantor.

Article 24 In case of any change to the legal representative (responsible person) or domicile or business place of the Grantee, it shall provide written notice to the Grantor 30 working days in advance.

Article 25 The Grantee shall pay the principal and interest of the funds payable, the related expenses and other amounts payable on time in accordance with the provisions of this Contract and the Specific Business Contract.

Article 26 The Grantee shall not refuse to pay to the Grantor any money which has been advanced by the Grantor and due to be paid by the Grantee with any excuse such as business dispute.

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Article 27 **For any amount due (including those due for acceleration of maturity) and payable by the Grantee under this Contract and the Specific Business Contract, the Grantor may deduct directly from any account opened by the Grantee with Bank of Shanghai (including its branches) in any currency, with the interest and/or exchange rate loss arising therefrom borne by the Grantee. If currency conversion is involved, the exchange rate published by the Bank of Shanghai at the time of deduction shall be used for calculation. Upon debt repayment, the Grantor shall have the right to decide the order in which the debts shall be paid off (whether it is the order of principal, interest [including compound interest], penalty interest, fee and liquidated damages in multiple debts or single debts), unless otherwise required by laws, regulations or regulatory authorities.** 

Article 28 The Grantee shall promptly report to the Grantor any connected transactions valued more than 10% of the net assets of the Grantee, including but not limited to the affiliations of the parties to the transaction, the transaction item and the nature of the transaction, the transaction amount or the corresponding proportion, and the pricing policy (including the transaction with zero or nominal amount).

Article 29 The Grantee shall take the Grantor as the principal cooperating bank and pledge that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The settlement amount of import and export business funds through the Grantor shall not be less than RMB ___<u>/</u>__ during the Credit Period. Where: the settlement amount of export business funds shall not be less than RMB ___<u>/</u>__.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Other covenants: ___<u>/</u>_________

Article 30 **The Grantee pledges that it will provide credit materials related to its performance and repayment ability according to the request of the Grantor. If there is any residential real estate under the name of the Grantee, the Grantee shall inform the Grantor in advance whether the residence right of the real estate has been established or will be established, so as to facilitate the evaluation by the Grantor.** 

Article 31 **If the Grantee is an affiliate of the Grantor or becomes an affiliate of the Grantor during the term of this Contract, the Grantee pledges that it will cooperate with the management measures taken by the Grantor to meet the regulatory requirements of connected transactions.**

Article 32 **The Grantee acknowledges and understands that if the credit extended and/or maintained by the Grantor under this Contract is illegal and non-compliant due to any reason such as enactment or amendment of laws, policy changes, or regulatory requirements, the Grantor shall have the right to terminate the credit line under this Contract and require the Grantee to repay all or part of the principal, interest and related expenses of the debt under the relevant specific business contract, to which the Grantee shall have no objection.**

**Chapter VIII Breach of Contract and Remedies for Breach of Contract** 

Article 33 The Grantee shall be deemed to breach this Contract if any of the following occurs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Grantee fails to pay any debts due on time, including but not limited to any principal, interest or other expenses agreed under this Contract or the Specific Business Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Grantee fails to use the credit funds in accordance with the purposes specified in this Contract or other contracts signed with the Grantor;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The Grantee fails to perform or fully perform any representation, warranty, undertaking or obligation under this Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) The Grantee breaches any other contract it has entered into with Bank of Shanghai (and/or any of its branches) or other financial institutions or other third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The Grantee breaches any guarantee documents under this Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) The Grantee defaults on its debts in the open market, including but not limited to failure to pay on schedule under the bonds issued on the stock exchange or other markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Bankruptcy, liquidation, insolvency or other loss of solvency of the Grantee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) The Grantee or Guarantor is involved or will be involved in material litigation, arbitration and/or other legal disputes; or the legal representative or main responsible person of the Grantee or Guarantor has fled or disappeared, is suspected of committing a crime, or is subject to compulsory measures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Any other major event related to this Contract that will endanger or damage the rights and interests of the Grantor occurs to the Grantee, who fails to take corresponding remedial measures as required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) The guaranty capacity of the Guarantor (if any) is obviously insufficient, or the pledges or collateral provided as guaranty under this Contract are damaged or their value is significantly reduced, and the Grantee fails to take the corresponding remedial measures as required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) The purpose of the contract as stipulated in Article 36 hereof cannot be achieved;

(12**)** The Grantee fails to pay the credit line occupation fee as agreed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) Adverse circumstances which may seriously affect the solvency of the Grantee.

Article 34 In case of any of the above breaches, the Grantor has the right to take any or all of the following actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To adjust, suspend or terminate the remaining credit line, credit period and credit type under this Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) To declare the acceleration of maturity of part or all of the debts under this Contract and/or the Specific Business Contract and require immediate repayment by the Grantee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) To require the Grantee to bear the expenses incurred by the Grantor in realizing the creditor's right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) To require the Grantee to provide additional security, the forms of which include but are not limited to guarantee, mortgage and pledge;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) To collect penalty interest (if applicable) in accordance with the relevant provisions of this Contract and/or the Specific Business Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) To deduct the funds from the Grantee's account to pay off debts in accordance with the relevant provisions of this Contract;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) To exercise the relevant security rights in accordance with legal provisions and/or contractual provisions, including but not limited to taking recourse action against the Guarantor, disposing of the relevant collateral and pledge and being paid in priority with the proceeds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) To require the Grantee to provide additional margin to 100% of the nominal amount of the business for the off-balance sheet credit business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) To take other actions permitted by the relevant laws, regulations and financial regulators or set out in this Contract.

Article 35 All the expenses (including but not limited to litigation, arbitration, lawyer, preservation, insurance, appraisal, evaluation, registration, transfer of ownership, translation, authentication, and notary fees) incurred in the realization of creditor's rights by the Grantor shall be borne by the Grantee.

**Chapter IX The Purpose of the Contract Cannot Be Realized** 

Article 36 **For the avoidance of doubt, both parties agree and acknowledge that the basis for the conclusion of this Contract no longer exists or the purpose of this Contract cannot be achieved under any such circumstances as bankruptcy, liquidation, business termination of the Grantee, or the performance of this Contract is not legal and compliant due to laws, regulations or regulatory factors. Such event constitutes a fundamental breach under this Contract, and the Grantor shall have the right to immediately declare the acceleration of maturity of all the claims under this Contract, and recover all the claims including but not limited to principal, interest and expenses (if any) in accordance with the relevant provisions of Article 34.**

**Chapter X VAT** 

Article 37 All the prices and fees (such as commission, etc.) involved in this Contract are tax inclusive, including but not limited to VAT and other relevant taxes and fees. In case of any adjustment of the national tax rate during the performance of this Contract, the Grantor shall have the right to adjust all the prices and fees under this Contract according to the change of the national tax rate.

Article 38 Within 90 natural days after the date of payment (including the date of payment), the Grantee may request the Grantor to issue the corresponding VAT invoice in accordance with relevant national regulations and policies. **The Grantor shall have the right to refuse to issue any invoice beyond the aforesaid time limit.**

Article 39 If the Grantee requests the Grantor to issue the VAT invoice, it shall first go through the customer information registration at the Grantor and provide the corresponding taxpayer identity documents and invoicing information. The Grantee shall confirm that the invoicing materials and relevant information provided are true and accurate. In case of any information change, the Grantee shall apply for the change of invoicing information to the Grantor in time. **If invoice is mistakenly issued or the Grantee is unable to enjoy credit for input tax because the above information is wrong, false, incomplete or fails to be updated in time, the relevant liabilities shall be assumed by the Grantee.** 

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Comprehensive Credit Contract

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Article 40 **If the Grantor fails to issue the VAT invoice in time due to force majeure such as natural disasters, government actions, epidemic prevention and control, abnormal social events, or the reasons of the tax authorities, the Grantor shall not bear the relevant liabilities.**

Article 41 **If the Grantee is unable to receive the VAT invoice or enjoy credit for input tax due to the reasons other than the fault of the Grantor, such as the loss, damage or overdue of the VAT invoice after it is received by the Grantee or delivered to a third party mail service by the Grantor, the relevant liabilities shall be assumed by the Grantee.**

Article 42 In case of the need to invalidate the VAT invoice or issue the VAT red-letter special invoice, the parties to the contract shall operate in accordance with the relevant laws, regulations and policy documents.

**Chapter XI Notice and Service** 

Article 43 **Notices, agreements and other documents concerning the relevant matters of the parties to the contract, as well as the relevant documents and legal documents in case of disputes arising from the contract, shall be served in written form (including electronic equipment terminals, such as mobile phones, fax numbers and email addresses) to the following addresses and contact persons:**

Address for service of Grantor: <u>No.6, Caobao Road, Shanghai</u> Contact person: <u>Wu Yanxin</u>

Address for service of Grantee: <u>Building T10, Sincere Center II, Lane 151, Huaihong Road, Minhang District, Shanghai</u> Contact person: <u>Chen Qinyi</u>

Mobile phone number for service of Grantee (name of phone owner): <u>\*\*\* Chen Qinyi</u>

Email address for service of Grantee:<u> </u>

**The application scope of the above address for service includes the non-lawsuit stage and the first instance, second instance, retrial and execution procedure after the dispute enters the litigation procedure.** 

**In case of any change in the address for service, contact person or other matters of the Grantee, the Grantee shall notify the Grantor in writing within two working days at the latest.** 

**If the Grantee fails to perform the above notification obligation, the address for service it has confirmed will still be deemed as the address for service. In case the Grantee fails to notify the Grantor of the change of its address for service in a timely manner, if the Grantor delivers the relevant notice or document to the original address, or the delivery is rejected due to the inaccurate address for service provided by the Grantee after the change, it shall be deemed to have been served.** 

**If the notice is delivered according to the method set out in this Contract, the date of service shall be the date of posting the postmark of the registered letter when delivered by mail; the date of service shall be the date on which the recipient signs for receipt when delivered through personal delivery; the date of service shall be the date on which the telegram or fax reaches the other party when sent by telegram or fax; the date of service shall be the date of sending by the sender when sent by electronic equipment terminal.** 

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Comprehensive Credit Contract

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**Chapter XII Effectiveness of Contract** 

Article 44 This Contract shall take effect after being signed and stamped with the common seal of special seal for contract by the legal representatives (responsible persons) or authorized agents of the two parties.

**Chapter XIII Governing Law and Dispute Resolution** 

Article 45 This Contract shall be governed by the laws of Mainland China. The place of performance of this Contract shall be the place of the Grantor. If any dispute arises between the two parties during the performance of this Contract, it may be settled through negotiation. If the negotiation fails, either party shall bring a lawsuit to the people's court at the place where the contract is performed. During negotiation or litigation, the provisions of this Contract not involved in the dispute shall still be performed.

**Chapter XIV Supplementary Provisions** 

Article 46 The Grantor's rights and obligations may be enjoyed and performed by the Grantor under this Contract or the supervising authority of the Grantor (on behalf of the Grantor).

Article 47 The Specific business contract signed by the Grantee and the Grantor in accordance with this Contract for each specific credit business shall be an integral part of and constitute a whole contract with this Contract. **In case of any inconsistency between the Specific Business Contract and this Contract, the Specific Business Contract shall prevail.** 

Article 48 This Contract shall be in <u>duplicate</u>, with the Grantee and the Grantor holding <u>one</u> copy each, and the Guarantor holding __<u>/</u>_ copies, and each copy shall have the same legal effect.

Article 49 Other matters agreed upon by the two parties

(No text below)

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**(This is the signature page of the Comprehensive Credit Granting Contract with the number of <u>213220211</u>)** 

**When this Contract is signed, the Grantor has explained in detail all the terms of this Contract (especially those in bold) to the Grantee, both parties have no doubt about all the terms of the Contract and have an accurate understanding of the legal meaning of the terms of rights and obligations as well as the limitation or waiver of liabilities.** 

---

| | |
|:---|:---|
| Grantee:<br>/s/ Seal of Skyfield (Shanghai)<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment Co., Ltd. | Grantor:<br>/s/ Seal of Shanghai Bank<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Caohejing Branch) |
| Legal representative (Responsible person) | Legal representative (Responsible person) |
| Or authorized agent: | Or authorized agent: |
| /s/ Yonghe Peng | /s/ Authorized Signatory |

---

Signing date: <u>August</u> <u>6, 2022</u>

Signing place: <u>No.6 Caobao Road, Shanghai</u>

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## Exhibit 10.19

**Exhibit 10.19** 

**EXECUTION VERSION** 

**CONVERTIBLE NOTE PURCHASE AGREEMENT** 

This Convertible Note Purchase Agreement (this "<u>Agreement</u>") is made as of December 23, 2022 by and between:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) New Ruipeng Pet Group Inc., an exempted company incorporated with limited liability under the laws of the
Cayman Islands (the " <u>Company</u> ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Each of the entities listed in Schedule 1 (each a " <u>Major Subsidiary</u> " and collectively the
" <u>Major Subsidiaries</u> "; together with the Company, the " <u>Warrantors</u> "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) NESTLE TREASURY CENTRE - MIDDLE EAST & AFRICA LTD., a company incorporated in Dubai International
Financial Center (the " <u>Purchaser</u> ").

The Warrantors and the Purchaser may hereinafter be collectively referred to as the "<u>Parties</u>", and each as a "<u>Party</u>".

<u>W</u> <u>I</u> <u>T</u> <u>N</u> <u>E</u> <u>S</u> <u>S</u> <u>E</u> <u>T</u> <u>H</u>:

WHEREAS, the Company expects to file a registration statement on Form F-1 (as may be amended from time to time, the "<u>Registration Statement</u>") with the United States Securities and Exchange Commission (the "<u>SEC</u>") in connection with the initial public offering by the Company of American Depositary Shares ("<u>ADSs</u>") representing ordinary shares of par value US$0.000001 per share (such ordinary shares, "<u>Ordinary Shares</u>") of the Company as specified in the Registration Statement (this offering, or another initial public offering of the Company's ADSs or Ordinary Shares on an internationally recognized stock exchange, the "<u>Offering</u>"); and

WHEREAS, the Purchaser wishes to invest in the Company by acquiring a convertible note, in the form attached hereto as <u>Exhibit A</u> (the "<u>Note</u>"), in a transaction exempt from registration pursuant to Regulation S ("<u>Regulation S</u>") of the U.S. Securities Act of 1933, as amended (the "<u>Securities Act</u>");

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Parties hereto agree as follows:

**ARTICLE I** 

**<u>ISSUANCE AND PURCHASE</u>**

Section 1.1 <u>Issuance and Purchase of the Note</u>. Upon the terms and subject to the conditions of this Agreement, the Purchaser hereby agrees to purchase, and the Company hereby agrees to issue, sell and deliver to the Purchaser, at the Closing (as defined below), the Note, for an aggregate purchase price of US$50,000,000 (the "<u>Purchase Price</u>").

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Section 1.2 <u>Closing</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Closing</u>. The closing of the sale and purchase of the Note pursuant to <u>Section 1.1</u> (the "<u>Closing</u>") shall take place remotely on a date mutually agreed by the Parties as soon as practicable and in any case within twenty (20) Business Days after the satisfaction or waiver of the conditions as set forth in ARTICLE III and ARTICLE IV (other than those conditions that by their terms cannot be satisfied until Closing but subject to them having been satisfied or otherwise waived on Closing), or at such other time and place as mutually agreed by the Parties (the date of Closing, the "<u>Closing Date</u>") via the exchange of documents and signatures. "<u>Business Day</u>" means any day that is not a Saturday, a Sunday, a public holiday or another day on which commercial banks in Vevey (Switzerland), the PRC, the Cayman Islands or the Hong Kong Special Administrative Region are closed**.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Payment and Delivery</u>. At the Closing, the following events shall occur simultaneously: (i) the Purchaser shall (x) pay and deliver the Purchase Price to the Company in U.S. dollars by wire transfer, or by such other method mutually agreeable to the Company and the Purchaser, of immediately available funds to such bank account designated in writing at least five (5) Business Days in advance by the Company and (y) deliver to the Company the duly executed deed of adherence in the form of Exhibit B dated the Closing Date (the "<u>Deed of Adherence</u>"), in addition to any item the delivery of which is made an express condition pursuant to ARTICLE IV, and (ii) the Company shall deliver to the Purchaser, in addition to any item the delivery of which is made an express condition pursuant to ARTICLE III, the duly executed Note, dated the Closing Date, with an aggregate principal amount of the Purchase Price, free and clear of Encumbrances.

Section 1.3 <u>Reliance on Regulation S</u>. The purchase, issuance, sale and delivery of the Note shall be made pursuant to and in reliance upon Regulation S. Each of the terms of "United States", "U.S. Person", "Directed Selling Efforts", "Offshore Transaction", "Foreign Issuer" used in this Agreement has the meaning assigned to it under Regulation S.

**ARTICLE II** 

**<u>REPRESENTATIONS AND WARRANTIES</u>**

Section 2.1 <u>Representations and Warranties of the Warrantors</u>. The Warrantors jointly and severally represent and warrant to the Purchaser, as of the date hereof and as of the Closing Date, each of the following statements in this <u>Section 2.1</u> (collectively referred to as "<u>Fundamental Warranties</u>", and each, a "<u>Fundamental Warranty</u>") and the statements set forth in <u>Schedule 3</u> is true, accurate and not misleading. In this Agreement, any reference to the "**knowledge**" of a Party means such Party's reasonable knowledge after due and diligent inquiries of officers, directors and employees of such Party reasonably believed to have knowledge of the matter in question.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Due Formation</u>. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Cayman Islands, with requisite power and authority (corporate and other) to own, lease or operate its properties and conduct its business as now conducted. Each of the other Group Companies is duly organized, validly existing and qualified to transact business and is in good standing (or equivalent status in the relevant jurisdiction) in each jurisdiction in which the conduct of their respective businesses or their respective ownership, leasing or operation of property requires such qualification.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Subsidiaries</u>. The information relating to the structure of the Group included in the Disclosed Information as fairly disclosed was prepared in compliance with the Securities Act and U.S. securities laws and regulations (including applicable stock exchange requirements), to the extent applicable (the "<u>Group Chart</u>"), and is true and correct as of the date hereof and the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Authority</u>. Each of the Warrantors has the requisite corporate power and authority to enter into, execute and deliver this Agreement and other Transaction Documents to which it is a party, and each agreement, certificate, document and instrument to be executed and delivered by each of the Warrantors pursuant to the Transaction Documents and to perform its obligations hereunder and thereunder and consummate the transactions contemplated hereby and thereby. The execution and delivery by each of the Warrantors of the Transaction Documents, any agreements, certificates, documents and instruments to be executed and delivered by each of Warrantors pursuant to this Agreement and other Transaction Documents to which it is a party and the performance by each of the Warrantors of its obligations hereunder and thereunder have been duly authorized by all requisite actions on its part.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Valid Agreement</u>. The Transaction Documents to which any Warrantor is a party have been duly executed and delivered by such Warrantor and constitute the legal, valid and binding obligations of such Warrantor, enforceable against such Warrantor in accordance with the terms of each such Transaction Document, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Capitalization</u>. Immediately prior to the Closing, the authorized share capital of the Company is US$50,000.00 divided into 50,000,000,000 shares, comprising of 47,847,597,810 Class A Ordinary Shares of a nominal or par value of US$0.000001 each, and 2,152,402,190 Class B Ordinary Shares, of a nominal or par value of US$0.000001 each. Immediately prior to the Closing, 11,845,433,566 Class A Ordinary Shares and 1,718,846,894 Class B Ordinary Shares are issued and outstanding. Except as fairly disclosed in the Disclosure Schedule, there are no options, warrants, conversion privileges or other rights, or agreements with respect to the issuance thereof, presently outstanding to purchase any equity interest or registered capital of any Group Company, and none of the Group Companies has any outstanding bonds, debentures, notes or other obligations, the holder of which have the right to vote with the shareholders of the Group Companies on any matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Valid Issuance of Shares</u>. All issued and outstanding shares of capital stock of the Company and the outstanding share capital or registered capital of each other Group Company, have been duly and validly issued, fully paid, and non-assessable, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Such shares and all outstanding options and other securities of the Company and each other Group Company have been issued and/or will have been issued in full compliance with the requirements of all applicable securities laws and regulations including, to the extent applicable, the registration and prospectus delivery requirements of the Securities Act, or in compliance with applicable exemptions therefrom, and all other provisions of applicable securities laws and regulations.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Non-Contravention</u>. Neither the execution and the delivery of this Agreement or any other Transaction Document, nor the consummation of the transactions contemplated hereby or thereby, will (i) violate any provision of the memorandum and articles of association or other constitutional documents of the Group Companies or (ii) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Entity to which any Group Company 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 of the Group Companies is a party or by which the Group Company is bound or to which the Group Companies' assets are subject. There is no action, suit or proceeding, pending or, to the knowledge of the Warrantors, threatened against any of the Group Companies that questions the validity of this Agreement or any other Transaction Document or the right of the Warrantors to enter into this Agreement or any other Transaction Document to consummate the transactions contemplated hereby or thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Due Issuance of the Note and the Conversion Shares</u>. The issuance of the Note and the Conversion Shares (as defined in the Note) will have been duly authorized upon Closing and, when issued and delivered to the Purchaser, will be validly issued, fully paid and non-assessable, free and clear of all Encumbrances except as imposed by appliable securities laws, and will be issued in compliance with all applicable federal and state securities laws, and upon delivery and entry into the register of members of the Company will transfer to the Purchaser good and valid title to the Conversion Shares, free and clear of all Encumbrances except as imposed by appliable securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Insolvency</u>. None of the Significant Subsidiaries (as defined in the Note) and any other Group Companies listed in the Group Chart is unable to pay its debts as and when they fall due or is subject to any insolvency proceedings or has had a receiver, liquidator or administrator appointed over its assets. To the knowledge of the Warrantors, none of any other Group Companies is unable to pay its debts as and when they fall due or is subject to any insolvency proceedings or has had a receiver, liquidator or administrator appointed over its assets except as would not reasonably be expected to have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Securities Laws</u>. (a) No Directed Selling Efforts into the United States with respect to the Note 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 Note to the Purchaser under this Agreement requiring registration under the Securities Act or any U.S. state securities laws. The Company is a Foreign Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>No Registration</u>. No registration under the Securities Act is required for the offer and sale of the Note by the Company to the Purchaser as contemplated hereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Consents and Approvals</u>. Neither the execution and delivery by the Warrantors of this Agreement or any other Transaction Document, nor the consummation by the Warrantors of any of the transactions contemplated hereby or thereby, nor the performance by the Warrantors of this Agreement or any other Transaction Document in accordance with its terms requires the consent, approval, order or authorization of, or registration with, or the giving notice to, any Governmental Entity, except such as have been or will have been obtained, made or given on or prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Holding Companies</u>. Except as fairly disclosed in the Disclosure Schedule, none of the Group Companies incorporated outside the PRC (i) is engaged in any business other than holding equity interests in another Group Company or (ii) has or has had any employees.

Section 2.2 <u>Representations and Warranties of the Purchaser</u>. The Purchaser represents and warrants, to the Company, as of the date hereof and as of the Closing Date that each of the following statements is true, accurate and not misleading:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Due Formation</u>. The Purchaser is duly organized, validly existing and in good standing (or the foreign equivalent to the extent the concept is applicable in such jurisdiction) in the jurisdiction of its organization. The Purchaser has all requisite power and authority to carry on its business as it is currently being conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Authority</u>. The Purchaser has the requisite corporate or other applicable organizational power and authority to enter into, execute and deliver this Agreement, other Transaction Documents and each agreement, certificate, document and instrument to be executed and delivered by the Purchaser pursuant to the Transaction Documents and to perform its obligations hereunder and thereunder. All corporate or other applicable organizational action on the part of the Purchaser, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, other Transaction Documents and any agreements, certificates, documents and instruments to be executed and delivered by the Purchaser pursuant to the Transaction Documents and the performance of all obligations of the Purchaser hereunder and thereunder have been taken and no other corporate or other applicable organizational proceedings on the part of the Purchaser, its officers, directors or shareholders are necessary to authorize and approve the Transaction Documents or the transactions contemplated hereby and thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Valid Agreement</u>. This Agreement and other Transaction Documents to which the Purchaser is a party have been duly executed and delivered by the Purchaser and constitute the legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Consents and Approvals</u>. Neither the execution and delivery by the Purchaser of this Agreement or any other Transaction Document, nor the consummation by the Purchaser of any of the transactions contemplated hereby or thereby, nor the performance by the Purchaser of this Agreement or any other Transaction Document in accordance with its terms requires the consent, approval, order or authorization of, or registration with, or the giving notice to, any Governmental Entity, except such as have been or will have been obtained, made or given on or prior to the Closing Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Experience</u>. The Purchaser acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Note and the Conversion Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Purchase Entirely for Own Account</u>. The Purchaser hereby confirms that the Note and the Conversion Shares will be acquired for investment for the Purchaser's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or direct or indirect arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the Note or any of the Conversion Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>No General Solicitation</u>. The Purchaser did not contact the Company as a result of any general solicitation or directed selling efforts in the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Offshore Transaction</u>. The Purchaser is acquiring the Note in an Offshore Transaction in reliance upon the exemption from registration provided by Regulation S, and specifically:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) at the time of offering to the Purchaser and communication of such Purchaser's order to purchase the Note and at the time of such Purchase's execution of this Agreement, the Purchaser or persons acting on the Purchaser's behalf in connection therewith were located outside the United States; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) on Closing Date, the Purchaser or persons acting on the Purchaser's behalf in connection therewith will be located outside the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Non U.S. Person</u>. The Purchaser certifies it is not a U.S. Person and is not acquiring the Note or the Conversion Shares for the account or benefit of any U.S. Person.

**ARTICLE III** 

**<u>CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING</u>** 

The obligation of the Purchaser to purchase the Note at the Closing is subject to the fulfillment, to the satisfaction of the Purchaser, or waiver by the Purchaser, on or prior to the Closing, of the following conditions:

Section 3.1 <u>Representations and Warranties True and Correct</u>. The representations and warranties contained in <u>Schedule 3</u> and <u>Section 2.1</u> shall be true, correct and not misleading when made as of the date hereof, and shall be true, correct and not misleading as of the Closing Date.

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Section 3.2 <u>Performance of Obligations</u>. Each Group Company that is a party to any Transaction Document shall have performed and complied with all agreements, obligations and covenants contained in such Transaction Document that are required to be performed or complied with by it on or before the Closing, and shall have obtained all approvals, consents, waivers and qualifications necessary to complete the transactions contemplated hereby.

Section 3.3 <u>Deed of Adherence</u>. The entry into of the Deed of Adherence by the Purchaser shall have been duly approved by the shareholders of the Company in accordance with the Shareholders' Agreement (including in accordance with the requirements set forth in Section 8 (*Amendment and Termination*) of the Shareholders' Agreement).

Section 3.4 <u>Proceedings and Documents</u>. All corporate and other proceedings in connection with the transactions contemplated by the Transaction Documents and all documents and instruments incident to such transactions to be passed, have been executed and/or delivered by each Group Company that is a party to any Transaction Document.

Section 3.5 <u>No Prohibitions</u>. There shall not have been any Governmental Order or any condition imposed under any laws which would (a) prohibit or restrict (i) the sale and issuance of the Note or (ii) the consummation of the transactions contemplated by the Transaction Documents, (b) subject the Purchaser or any Group Company to any material penalty or onerous condition under or pursuant to any law if the Note was to be sold and/or issued hereunder or (c) restrict the operation of any Group Companies in any material respect.

Section 3.6 <u>No Material Adverse Effect</u>. There shall have been no Material Adverse Effect since the date of this Agreement.

Section 3.7 <u>Compliance Certificate</u>. At the Closing, the Company shall deliver to the Purchaser a certificate, dated as of the Closing Date, certifying that all the conditions specified in this ARTICLE III (other than <u>Section 3.5</u>) have been fulfilled.

Section 3.8 <u>Opinion of Company's Cayman Counsel</u>. The Purchaser shall have received from the Cayman Islands counsel to the Company a legal opinion addressed to the Purchaser, dated as of Closing, in form and substance reasonably satisfactory to the Purchaser.

**ARTICLE IV** 

**<u>CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING</u>**

The obligation of the Company to issue the Note at the Closing is subject to the fulfillment, to the satisfaction of the Company, or waiver by the Company, on or prior to the Closing, of the following conditions:

Section 4.1 <u>Representations and Warranties True and Correct</u>. The representations and warranties contained in <u>Section 2.2</u> shall be true, correct and not misleading when made as of the date hereof, and shall be true, correct and not misleading as of the Closing Date.

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Section 4.2 <u>Performance of Obligations</u>. The Purchaser shall have performed and complied with all agreements, obligations and covenants contained in the Transaction Document that are required to be performed or complied with by it on or before the Closing, and shall have obtained all approvals, consents, waivers and qualifications necessary to complete the transactions contemplated hereby.

Section 4.3 <u>Proceedings and Documents</u>. All corporate and other proceedings in connection with the transactions contemplated by the Transaction Documents and all documents and instruments incident to such transactions to be passed, have been executed and/or delivered by the Purchaser.

Section 4.4 <u>No Prohibitions</u>. There shall not have been any Governmental Order or any condition imposed under any laws which would (a) prohibit or restrict (i) the sale and issuance of the Note or (ii) the consummation of the transactions contemplated by the Transaction Documents, (b) subject the Purchaser or any Group Company to any material penalty or onerous condition under or pursuant to any law if the Note was to be sold and/or issued hereunder or (c) restrict the operation of any Group Companies in any material respect.

Section 4.5 <u>Compliance Certificate</u>. At the Closing, the Purchaser shall deliver to the Company a certificate, dated as of the Closing Date, certifying that all the conditions specified in this ARTICLE IV (other than <u>Section 4.4</u>) have been fulfilled.

**ARTICLE V** 

**<u>COVENANTS</u>** 

Section 5.1 <u>Lock-up</u>. The Purchaser shall, in connection with the Offering and if so requested by the Company, execute a separate lock-up undertaking (the "<u>Lock-up Agreement</u>") in favor of the Company in respect of the Conversion Shares held by it for a period of no more than six (6) months (the "<u>Lock-up Period</u>") after the Offering, which undertaking shall be consistent with the lock-up undertakings agreed and given by all other investor shareholders of the Company.

Section 5.2 <u>Distribution Compliance Period</u>. The Purchaser agrees not to resell, pledge or transfer the Note within the United States or to any U.S. Person, as each of those terms is defined in Regulation S, during the forty (40) days following the Closing Date except pursuant to an exemption from, or in a transaction not subject to, the registration requirement under the Securities Act and applicable U.S. state law.

Section 5.3 <u>Further Assurances</u>. The Warrantors shall use their best efforts to fulfill or obtain the fulfillment of the conditions precedent to the consummation of the transactions contemplated hereby as soon as practicable after the date of this Agreement. Each Party shall from time to time and at all times hereafter make, do, execute or cause to be made, done and executed such further acts, deeds, conveyances, consents and assurances, without further consideration, which may reasonably be required to give full effect to the terms of this Agreement or to vest in any other Party such other Party's full rights and entitlements hereunder (including that the Company shall procure any required alternation to the memorandum and articles of associate of the Company to resolve any conflict or inconsistency with the Deed of Adherence upon any conversion, if applicable. Notwithstanding the generality of the foregoing, the Company and the other Warrantors shall provide such reasonable assistance to the Purchaser as may be reasonably requested by the Purchaser from time to time to the extent necessary to satisfy mandatory requests from the statutory auditors of or competent Governmental Entities having authority over the Purchaser, Nestlé S.A. and/or Société des Produits Nestlé S.A).

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Section 5.4 <u>Reservation of Shares</u>. At all times for so long as the Note 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 Conversion Shares necessary to provide for the complete issuance of the Conversion Shares underlying the Note.

Section 5.5 <u>Use of Proceeds</u>. The Company shall use the proceeds received from the issuance of the Note in the ordinary course of the Main Business in compliance with applicable law.

Section 5.6 <u>Pre-Closing Covenants</u>. From the date of this Agreement until the Closing Date, the Warrantors shall procure each Group Company to, take all reasonable measures to preserve and protect the assets of Group Companies, conduct the existing business of the Group Companies and maintain the relationships with suppliers, partners, clients and employees in the ordinary course of business in a manner consistent with past practice and prudent business practices, ensure the normal operation of the Group Companies, and ensure that there is no material adverse change to the goodwill and operations of the Group Companies.

**ARTICLE VI** 

**<u>INDEMNIFICATION</u>**

Section 6.1 <u>Indemnification</u>. The Warrantors (each an "<u>Indemnifying Party</u>") shall jointly and severally indemnify and hold the Purchaser and its Affiliates, and their respective directors, officers, employees, advisors and agents (each an "<u>Indemnified Party</u>") harmless from and against any losses, claims, damages, fines, costs, expenses and liabilities of any kind or nature whatsoever, including but not limited to any reasonable investigative, legal and other expenses incurred in connection with, and any amounts paid in settlement of, any pending or threatened legal action or proceeding, and any taxes or levies that may be payable by such person by reason of the indemnification of any indemnifiable loss hereunder (collectively, "<u>Losses</u>") resulting from or arising out of any breach or violation of, or inaccuracy in, any representation, warranty, agreement or covenants of any Indemnifying Party contained in this Agreement.

Section 6.2 <u>Specific Indemnification</u>. Without limiting the generality of <u>Section 6.1</u>, and whether or not any representations, warranties or covenants have been provided by the Warrantors in favor of the Purchaser, and notwithstanding anything to the contrary herein, the Warrantors shall also indemnify and hold harmless each applicable Indemnified Party against any and all Losses suffered by such Indemnified Party resulting from, arising out of, or due to, directly or indirectly, (i) any and all liabilities to tax, (including, without limitation, withholding and other relevant taxes, and amounts payable to tax authorities, whether such amounts are due as taxes, interest, or fines) which has been made or may hereafter be made against any Group Company wholly or substantially in respect of or in consequence of any event occurring or any income, profits or gains earned, accrued or received by any Group Company, in each case on or before the Closing, including (without limitation) the settlement of any claim for any such taxes (including, without limitation, withholding and other relevant taxes); and (ii) any claim made or may hereafter be made against any Group Company for any failure on or before the Closing to pay for social insurance premiums and housing accumulation funds in full for all employees of such Group Company and its branches in the PRC.

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Section 6.3 <u>Third-Party Payments</u>. In calculating the amount of any Losses of an Indemnified Party hereunder, there shall be subtracted the amount of any insurance proceeds and third-party payments that have been actually received by the Indemnified Party with respect to such Losses, if any.

Section 6.4 <u>Tax Gross Up</u>. If, in respect of or in connection with any indemnification claim against any Indemnifying Party under this Agreement, any amount payable to any Indemnified Party is subject to taxation (including any charge, tax, duty, levy, impost and withholding having the character of taxation, wherever chargeable, imposed for support of national, state, federal, cantonal, municipal or local government or any other Governmental Entity, including (without limitation) tax on gross or net income, profits or gains, taxes on receipts, sales, use, occupation, franchise, transfer, value added, real property, immovable property, land-use right and personal property), such additional amounts shall be paid to the Purchaser or such Indemnified Party so as to ensure that the net amount received by the Purchaser or such Indemnified Party is equal to the full amount payable to the Purchaser or such Indemnified Party under this Agreement.

Section 6.5 <u>Limitation of Liability</u>. Notwithstanding anything to the contrary contained herein,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) for any claim for the recovery of indemnifiable Losses made based on <u>Section 6.2</u>, no Indemnified Party shall be entitled to recover from the Indemnifying Party for any indemnifiable Losses until the total amount which such Indemnified Party would recover thereunder exceeds US$10,000,000, in which case such Indemnified Party shall be entitled to recover the indemnifiable Losses for the entire amount of such Losses minus US$10,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) for any claim for the recovery of indemnifiable Losses other than those made based on <u>Section 6.2</u>, no Indemnified Party shall be entitled to recover from the Indemnifying Party for any indemnifiable Losses until the total amount which such Indemnified Party would recover thereunder exceeds US$1,000,000, in which case such Indemnified Party shall be entitled to recover the indemnifiable Losses for the entire amount of such Losses minus US$1,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Warrantors' accumulative aggregate liabilities to all applicable Indemnified Parties under this Agreement shall in no event be higher than the Purchase Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The aforesaid limitations shall not limit the liabilities of the Warrantors for fraud or willful misconduct by any Group Company.

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**ARTICLE VII** 

**<u>MISCELLANEOUS</u>**

Section 7.1 <u>Survival of the Representations and Warranties</u>. All representations and warranties made by any Party shall survive the Closing Date and shall terminate and be without further force or effect on the date that is twenty-four (24) months from and after the Closing Date, provided however, the Fundamental Warranties and the Tax Warranties shall survive the Closing Date and shall terminate and be without further force or effect on the date that is three (3) years from and after the Closing Date. The obligations under and any claim relating to the matters arising under <u>Section 6.2</u> shall survive the Closing Date and shall terminate and be without further force or effect on the date that is six (6) years from the Closing Date. None of the limitations contained in this <u>Section 7.1</u> shall apply to any claim if and to the extent it arises as a result of any acts of fraud or fraudulent misrepresentation.

Section 7.2 <u>Governing Law; Arbitration</u>. This Agreement shall be governed and interpreted in accordance with the laws of the State of New York. Any dispute arising out of or relating to this Agreement, including any question regarding its existence, validity or termination ("<u>Dispute</u>") 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. There shall be three arbitrators. Each Party has the right to appoint one 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 the Hong Kong Special Administrative Region. Each of the Parties 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.

Section 7.3 <u>Amendment</u>. This Agreement shall not be amended, changed or modified, except by another agreement in writing executed by the Parties.

Section 7.4 <u>Binding Effect</u>. This Agreement shall inure to the benefit of, and be binding upon, the Purchaser, the Warrantors, and their respective heirs, successors and permitted assigns.

Section 7.5 <u>Assignment</u>. Neither this Agreement nor any of the rights, duties or obligations hereunder may be assigned by any Party without the express written consent of the other Parties, except that the Purchaser's rights and obligations hereunder may be (i) wholly (but not in part) assigned to one (but not more than one at a time) Affiliate of the Purchaser or (ii) assigned on a proportionate basis and to the extent applicable to any Affiliate of the Purchaser (x) to whom the Purchaser transfers any portion of the Note as permitted under the Note immediately before such portion is converted into Conversion Shares or (y) to whom the Purchaser transfers any Conversion Shares, without the consent of any other Party. Any purported assignment in violation of the foregoing sentence shall be null and void.

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Section 7.6 <u>Notices</u>. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of actual delivery if delivered personally to the Party to whom notice is to be given, on the date sent if sent by telecopier, tested telex or prepaid telegram, on the next business day following delivery to Federal Express properly addressed or on the day of attempted delivery by the postal service if mailed by registered or certified mail, return receipt requested, postage paid, and properly addressed as follows:

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| | |
|:---|:---|
| If to any Warrantor, at: | New Ruipeng Pet Group Inc.<br> 11h Floor, Building B, Kingkey Timemark<br> No.9289 Binhe Boulevard, Futian District<br> Shenzhen, Guangdong Province 518042<br> The People's Republic of China<br> E-mail: \*\*\*<br> Attn: Song Tiezheng |
| If to the Purchaser, at: | NESTLE TREASURY CENTRE - MIDDLE EAST & AFRICA LTD.<br> Office S21-08, South Tower, Emirates Financial Towers, Dubai International Financial Center, P. O. Box 17327, Dubai, United Arab Emirates<br> E-mail: \*\*\*<br> Attn: Maple Zhang, Nicolas Heffinck, Alejandro Mila Valle and Osvaldo Ernesto Baglietto |

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Any Party may change its address for purposes of this <u>Section 7.6</u> by giving the other Party written notice of the new address in the manner set forth above.

Section 7.7 <u>Entire Agreement</u>. This Agreement, the Note together with the Lock-up Agreement constitutes the entire understanding and agreement between the Parties with respect to the matters covered hereby, and all prior agreements and understandings, oral or in writing, if any, between the Parties with respect to the matters covered hereby are merged and superseded by such agreements.

Section 7.8 <u>Severability</u>. 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.

Section 7.9 <u>Fees and Expenses</u>. Except as otherwise provided in this Agreement, the Parties will bear their respective 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.

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Section 7.10 <u>Confidentiality</u>. (a) each Party 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 Representatives in connection with this Agreement or the transactions contemplated hereby, other than to its Representatives who have a need to know such information, and (b) each Party shall ensure that its Representatives to whom any such non-public information is disclosed 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) subject to <u>Section 7.13</u>, that may be required by applicable law, statute, treaty, rule, regulation, order, right, privilege, qualification, license or franchise or determination of a Governmental Entity.

Section 7.11 <u>Specific Performance</u>. The Parties agree that irreparable damage would occur in the event any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity.

Section 7.12 <u>Termination</u>. In the event that the Closing shall not have occurred by sixty (60) days following the date hereof, either the Company or the Purchaser may terminate this Agreement with no further force or effect, except for the provisions of ARTICLE VII, which shall survive any termination under this <u>Section 7.12</u>, provided that (a) no Party who is then in a material breach of this Agreement shall be entitled to terminate this Agreement, and (b) such termination shall be without prejudice to the rights of any Party in respect of a breach of this Agreement prior to such termination.

Section 7.13 <u>Description of Purchaser</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall afford the Purchaser a reasonable opportunity to review and comment on any description of the Purchaser and the transaction contemplated by this Agreement that is to be included in the Registration Statement or other SEC filings required in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Purchaser hereby consents and undertakes to promptly provide a description of its organization and business activities to the Company to the extent reasonably required by the Company as necessary to be included in the Registration Statement and the prospectus therein (the "<u>Purchaser Description</u>") to be used solely in the Registration Statement and the prospectus therein, and hereby represents that its Purchaser Description will be true and accurate in all material respects and will not be misleading in any material respect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Purchaser hereby agrees and consents to the use of and references to its name, the inclusion of any description of the Purchaser consistent with the Purchaser Description, and the disclosure of the transactions contemplated under this Agreement in the Registration Statement and other SEC filings required in connection with the Offering and any press release or other marketing materials mutually agreed to by the Company and the Purchaser, and the filing of this Agreement as an exhibit to the Registration Statement and other SEC filings required in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Purchaser acknowledges that the Company will rely upon the truth and accuracy of its Purchaser Description in the preparation of the Registration Statement and the prospectus therein, and it agrees to notify the Company promptly in writing if any of the content contained therein ceases to be accurate and complete or becomes misleading; provided that, for the avoidance of doubt, following the consummation of the Offering, the Purchaser is not required to notify the Company of any update of its Purchaser Description that takes place thereafter.

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Section 7.14 <u>Headings</u>. The headings of the various articles and sections of this Agreement are inserted merely for the purpose of convenience and do not expressly or by implication limit, define or extend the specific terms of the section so designated.

Section 7.15 <u>Execution in Counterparts</u>. For the convenience of the Parties and to facilitate execution, this Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

Section 7.16 <u>No Waiver</u>. 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 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, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other Party; (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of that Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement.

Section 7.17 <u>Certain Rights</u>. The Parties acknowledge and agree that the Purchaser is entitled to certain rights as a holder of the Note or as a shareholder of the Company (as applicable) on terms and subject to the conditions specified in the Note and the Deed of Adherence.

Section 7.18 <u>References to Documents</u>. References to this Agreement include the Schedules and Exhibits, which form an integral part hereof. A reference to any Section, Schedule or Exhibit is, unless otherwise specified, to such Section of, or Schedule or Exhibit to this Agreement. The words "hereof", "hereunder" and "hereto", and words of like import, unless the context requires otherwise, refer to this Agreement as a whole and not to any particular Section hereof or Schedule or Exhibit hereto. A reference to any document (including this Agreement) is, unless otherwise specified, to that document as amended, restated, consolidated, supplemented, novated or replaced from time to time.

[*Signature pages follow*] 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| New Ruipeng Pet Group Inc. | New Ruipeng Pet Group Inc. |
| By: | /s/ Yonghe PENG |
| Name: | Yonghe PENG 彭永鹤 |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| HHRP Holdings (Cayman) Inc. | HHRP Holdings (Cayman) Inc. |
| By: | /s/ Haihong LIU |
| Name: | Haihong LIU |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| HHRP Holdings Limited | HHRP Holdings Limited |
| By: | /s/ Haihong LIU |
| Name: | Haihong LIU |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of New Ruipeng Pet Healthcare Group Co., Ltd. (新瑞鹏宠物医疗集团有限公司) | /s/ Seal of New Ruipeng Pet Healthcare Group Co., Ltd. (新瑞鹏宠物医疗集团有限公司) |
| By: | /s/ Yonghe PENG |
| Name: | Yonghe PENG 彭永鹤 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| Skyfield Holdings (Cayman) Inc. | Skyfield Holdings (Cayman) Inc. |
| By: | /s/ Haihong LIU |
| Name: | Haihong LIU |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| Skyfield Holdings Limited | Skyfield Holdings Limited |
| By: | /s/ Haihong LIU |
| Name: | Haihong LIU |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of Skyfield (Shanghai) Investment Co., Ltd. (瓴域(上海)投资有限公司) | /s/ Seal of Skyfield (Shanghai) Investment Co., Ltd. (瓴域(上海)投资有限公司) |
| By: | /s/ Yonghe PENG |
| Name: | Yonghe PENG 彭永鹤 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| Concordia Holdings Limited | Concordia Holdings Limited |
| By: | /s/ Haihong LIU |
| Name: | Haihong LIU |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| Concordia Pet Care Limited | Concordia Pet Care Limited |
| By: | /s/ Yufei HE |
| Name: | Yufei HE 何玉菲 |
| Title: | Director |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of Skyfield (Shenzhen) Investment Co., Ltd.（瓴域(深圳)投资有限公司） | /s/ Seal of Skyfield (Shenzhen) Investment Co., Ltd.（瓴域(深圳)投资有限公司） |
| By: | /s/ Yonghe PENG |
| Name: | Yonghe PENG 彭永鹤 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of Yunchong (Beijing) Animal Hospital Technology Co., Limited (云宠(北京)动物医疗科技有限公司) | /s/ Seal of Yunchong (Beijing) Animal Hospital Technology Co., Limited (云宠(北京)动物医疗科技有限公司) |
| By: | /s/ Rong WANG |
| Name: | Rong WANG 王榕 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of Shanghai Anan Pet Co., Limited (上海安安宠物有限公司) | /s/ Seal of Shanghai Anan Pet Co., Limited (上海安安宠物有限公司) |
| By: | /s/ Rong WANG |
| Name: | Rong WANG 王榕 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of Shanghai Ce Er Xing Management and Consulting Co., Limited (上海策而行企业管理咨询有限公司) | /s/ Seal of Shanghai Ce Er Xing Management and Consulting Co., Limited (上海策而行企业管理咨询有限公司) |
| By: | /s/ Rong WANG |
| Name: | Rong WANG 王榕 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| /s/ Seal of Qingdao Ainuo Animal Hospital Management Co., Limited (青岛爱诺动物医院管理有限公司) | /s/ Seal of Qingdao Ainuo Animal Hospital Management Co., Limited (青岛爱诺动物医院管理有限公司) |
| By: | /s/ Shuxin LIU |
| Name: | Shuxin LIU 刘树新 |
| Title: | Authorized Representative |

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first above written.

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| | |
|:---|:---|
| NESTLE TREASURY CENTRE - MIDDLE EAST & AFRICA LTD. | NESTLE TREASURY CENTRE - MIDDLE EAST & AFRICA LTD. |
| By: | /s/ OSVALDO BAGLIETTO |
| Name: | OSVALDO BAGLIETTO |
| Title: | MANAGER |

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**Schedule 1** 

**List of Major Subsidiaries** 

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**Schedule 2** 

**Definitions** 

In this Agreement, unless the context otherwise requires the following words and expressions have the following meanings:

1. "<u>Affiliate</u>" means (i) in the case of a person other than a natural person, any other person that directly or indirectly Controls, is Controlled by or is under common Control with such person; and (ii) in the case of a natural person, any other person that directly or indirectly is Controlled by such person, or a Relative of such person or any other person that directly or indirectly Controlled by a Relative of such person.

2. "<u>Anti-Corruption Law</u>" means: (i) the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; (ii) the Foreign Corrupt Practices Act of 1977 of the United States of America, as amended by the Foreign Corrupt Practices Act Amendments of 1988 and 1998, and as may be further amended and supplemented from time to time; (iii) the UK Bribery Act 2010; (iv) the PRC Criminal Law, (v) the PRC Anti-Unfair Competition Law and (vi) any other applicable law which: (x) prohibits the conferring of any gift, payment or other benefit on any person or any officer, employee, agent or adviser of such person; and/or (y) is broadly equivalent to (ii) or (iii) or was intended to enact the provisions of the OECD Convention described in (i) or which has as its objective the prevention of corruption.

3. "<u>Anti-Money Laundering Laws</u>" means applicable anti-money laundering statutes of all jurisdictions, including, without limitation, all Switzerland, PRC, U.K. and U.S. anti-money laundering laws, the rule and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity. "<u>Control</u>" of a given person means (i) holding 50% or more of the issued shares, other equity interest or registered capital of that entity or (ii) the power or authority, to determine the management and policies of such entity, whether through the ownership of more than fifty percent (50%) voting right of that entity, through the voting proxy of more than fifty percent (50%) voting right of that entity, through the power to control the composition of a majority of the board of directors of such entity or through contractual arrangement or other means. The terms "<u>Controlled</u>" and "<u>Controlling</u>" have meanings correlative to the foregoing.

4. "<u>Disclosed Information</u>" means: the package of documents and information provided by the Company, through its legal adviser, to the Purchaser's legal adviser, in an email with the subject "[CONFIDENTIAL] Ruipeng Disclosures to Nestle," on November 29, 2022, and the Disclosure Schedule.

5. "<u>Disclosure Schedule</u>" means <u>Schedule 4</u> to this Agreement.

6. "<u>Encumbrance</u>" 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, possession, or use, and includes any agreement or arrangement for any of the same.

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7. "<u>fairly disclosed</u>" means facts, matters or other information which have been included or provided or referred to in the Disclosed Information in such a manner and with such detail that a prudent person who is knowledgeable in the relevant field reviewing the relevant information should reasonably be able to identify the financial, legal, commercial or other relevance of such disclosure.

8. "<u>Governmental Entity</u>" shall mean any transnational or supranational, domestic or foreign federal, national, state, provincial, local or municipal governmental, regulatory, judicial 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.

9. "<u>Governmental Order</u>" means any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award, judgment, injunction (whether temporary or permanent) or other similar determination or finding by, before or under the supervision of any Governmental Entity.

10. "<u>Group Companies</u>" or "<u>Group</u>" means collectively the Company and the entities and branches, directly or indirectly, Controlled by the Company, and a "<u>Group Company</u>" shall mean any of them.

11. "<u>Main Business</u>" means the business conducted by the Group Companies, which includes animal hospital, animal grooming, sale of animal food and products, and other pet-related businesses, including but not limited to the internet, software development, education and training, supply chain, media, etc.

12. "<u>Material Adverse Effect</u>" means any change, effect, event, state of fact or development that, individually or in the aggregate with any other changes, effects, events, states of facts or developments, which has had resulted in or would reasonably be expected to result in a material adverse effect on (i) the financial condition, assets, liabilities, results of operations, business, or operations of the Group Companies taken as a whole; or (ii) the ability of any Warrantor to consummate the transactions contemplated by this Agreement and to timely perform its obligations under the Agreement, in each case except to the extent that any such Material Adverse Effect results from (a) changes in applicable laws or generally accepted accounting principles that are generally applicable to comparable companies, (b) changes in general economic and market conditions, which do not have a unique or disproportionate impact on the Group Companies taken as a whole when compared to other entities operating in the same industry and the same markets, (c) the taking or refraining from taking of any action required to be taken or refrained from being taken under this Agreement or (d) any action taken by, or at the request of, any Purchaser.

13. "<u>person</u>" means any individual, company, corporation, partnership, trust, government, department or agency of government, the Governmental Entity or other entity.

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14. "<u>PRC</u>" means the People's Republic of China but, solely for purposes of this Agreement, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and the territory of Taiwan.

15. "<u>Public Official</u>" means any person who is (i) employed by, is acting in an official capacity for, or performs public functions (e.g., professionals working for water authorities or planning officials) for any Governmental Entity or any state-owned or Controlled entity, (ii) elected, appointed, or holds a legislative, administrative, or judicial position; or (iii) a candidate for political office and political party officials (including political parties themselves).

16. "<u>Relative</u>" means a husband, wife and husband's or wife's father, mother, grandparent, son, daughter, grandchild, brother, sister, uncle, aunt, nephew, niece, or grand grandparent.

17. "<u>Representatives</u>" means, with respect to any person, its Affiliates, its and its Affiliates' respective directors, officers, employees, agents, members, legal and financial advisers, accountants and consultants.

18. "<u>Shareholders' Agreement</u>" means the amended and restated shareholders' agreement of the Company dated September 25, 2020, as may be amended from time to time.

19. "<u>Tax Warranty</u>" means any of the Business Warranties as set forth in paragraph 12 of <u>Schedule 3</u>.

20. "<u>Transaction Document</u>" means this Agreement, the Note, the Deed of Adherence, and any agreement, instrument, document or guarantee entered into in connection with this Agreement, or any other document as may be designated as a "Transaction Document" as agreed between the Company and the Purchaser.

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**Schedule 3** 

**Business Warranties** 

1. <u>Compliance with Laws; Consents and Permits</u>. Except as fairly disclosed in the Disclosed Information,
(i) none of the Group Companies is in violation of any applicable law, statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties in any material respect, (ii) each Group Company has all material permits, licenses and any similar authority necessary for the conduct of its business as now being conducted and as proposed to be conducted by
it, (iii) none of the Group Companies is in default under any of such material permits, licenses and any similar authority, nor is it in receipt of any letter or notice from any relevant authority notifying revocation of any such material
permits, licenses and any similar authority issued to it for noncompliance or the need for compliance or remedial actions in respect of the activities carried out by such Group Company in material aspects, and (iv) in respect of any such
material permits, licenses and any similar authority which are subject to periodic renewal by any Governmental Entity, to the knowledge of the Warrantors, none of the Group Company has any reasonable reason to believe that such requisite renewals
will not be granted by the relevant Governmental Entities.

2. <u>Compliance with Other Instruments and Agreements</u>. No Group Company is in, nor shall the conduct of its
business as currently or proposed to be conducted result in, any violation, breach or default of any term of its constitutional documents (which may include, as applicable, memoranda and articles of association, by-laws, joint venture contracts,
feasibility studies and the like) in any material respect.

3. <u>Liabilities</u>. Except for as fairly disclosed in the Financial Statements (as defined below), as incurred
with respect to the ordinary course of business of any of the Group Companies, or as incurred with financial institutions, the Group Companies do not have any material indebtedness as of the date hereof for borrowed money that it has directly or
indirectly created, incurred, assumed, or guaranteed, or with respect to which any Group Company has otherwise become directly or indirectly liable.

4. <u>Title to Properties and Assets</u>. Except as fairly disclosed, each Group Company is in possession of and
has good title to, or has valid leasehold interests in or valid rights under contract to use, all machinery, equipment, furniture, fixtures, vehicles and other properties and assets material for its business as currently conducted.

5. <u>Real Property</u>. No Group Company owns any real property. With respect to each of the real properties
occupied or otherwise used for the Group Companies' business as currently conducted, the Group Company has valid and binding leasehold interests in all such real properties, free of any Encumbrance of any party other than the lessors of such
property and assets (as applicable), except as fairly disclosed.

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6. <u>Status of Proprietary Assets</u>. For purpose of this Agreement, (i) " <u>Proprietary Assets</u> " shall mean all patents, patent applications, trademarks, service marks, trade names, domain names, copyrights, copyright registrations and applications and all other rights corresponding thereto, inventions, databases and all rights
therein, all computer software including all source code, object code, firmware, development tools, files, records and data, including all media on which any of the foregoing is stored, formulas, designs, trade secrets, confidential and proprietary
information, proprietary rights, know-how and processes of a company, and all documentation related to any of the foregoing; and (ii) " <u>Registered Intellectual Property</u> " means all Proprietary Assets of the Group Companies,
wherever located, that is the subject of an application, certificate, filing, registration or other document issued by, filed with or recorded by any government authority. Except as fairly disclosed, each Group Company (i) has developed and
owns free and clear of all Encumbrances, or (ii) has a valid right or license to use, all Proprietary Assets, including Registered Intellectual Property, necessary and appropriate for its business as now conducted, to the knowledge of the
Warrantors, without any conflict with or infringement of the rights of others. Except as fairly disclosed, none of the Group's Proprietary Assets, and the validity or subsistence of the Group Companies' right, title and interest therein,
is the subject of any current, pending or threatened challenge, claim or proceedings, including for opposition, cancellation, revocation or rectification, or has during the past three years been the subject of any challenge, claim or proceeding, and
to the knowledge of the Warrantors, there are no facts or matters which might give rise to any such challenge, claim or proceedings.

7. <u>Material Contracts and Obligations</u>. All agreements, contracts, leases, licenses, instruments,
commitments (oral or written), indebtedness, liabilities and other obligations to which any Group Company is a party or by which it is bound that are material to the conduct and operations of its business and properties and the Transaction Documents
(collectively, the " <u>Material Contracts</u> "), are valid, binding and enforceable obligations of the parties thereto and the terms thereof have been complied with by the relevant Group Company and all the other parties thereto. There are
no circumstances likely to give rise to any material breach of such terms, no grounds for rescission, avoidance or repudiation of any of the Material Contracts which would have a Material Adverse Effect and no notice of termination or of intention
to terminate has been received in respect of any Material Contract. For purposes of this paragraph, " <u>material</u> " shall mean (i) having an aggregate value, cost or amount, or imposing liability or contingent liability on any Group
Company, in excess of RMB30,000,000, (ii) containing exclusivity, non-competition, or similar clauses that impair, restrict or impose conditions on any Group Company's right to offer or sell products or services in specified areas, during
specified periods, or otherwise, (iii) transferring or licensing any Proprietary Assets to or from any Group Company (other than licenses granted in the ordinary course of business or licenses from commercially readily available "off the
shelf" computer software), or (iv) the termination of which would otherwise be reasonably likely to have a Material Adverse Effect.

8. <u>Litigation</u>. Except as fairly disclosed, there is no material action, suit, proceeding, claim,
arbitration or investigation (" <u>Action</u> ") in a single amount of more than RMB2,000,000 pending against any Group Company.

9. <u>Disclosure</u>. No representation or warranty by the Warrantors in this Agreement and no information or
materials provided by the Group Companies to the Purchaser in connection with its due diligence investigation of the Group Companies or the negotiation and execution of this Agreement contains or will contain any untrue statement of a material fact,
or omits or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they are made, not misleading.

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10. <u>Financial Statements</u>. The consolidated financial statements (" <u>Financial Statements</u> ") as
of June 30, 2022 (" <u>Balance Sheet Date</u> ") and as of December 31, 2020 and 2021 respectively of the Company (a) are prepared in accordance with the books and records of each Group Company, (b) are true, correct and
complete and present fairly the financial condition of the Group Companies at the date or dates therein indicated and the results of operations for the period or periods therein specified, and (c) have been prepared in accordance with the U.S.
generally accepted accounting principles (" <u>GAAP</u> ") applied on a consistent basis. Specifically, but not by way of limitation, the Financial Statements disclose all of the Group Companies' material debts, liabilities and
obligations of any nature, whether due or to become due, as of their respective dates (including, without limitation, absolute liabilities, accrued liabilities, and contingent liabilities) to the extent such debts, liabilities and obligations are
required to be disclosed in accordance with GAAP. Except as fairly disclosed in the Financial Statements, none of the Group Companies is a guarantor or indemnitor of any indebtedness of any other person or entity that is not a Group Company. The
Group Companies maintain a standard system of accounting established and administered in accordance with GAAP.

11. <u>Activities Since Balance Sheet Date</u>. Since the Balance Sheet Date, (a) the Group Companies, taken
as a whole, have conducted their respective businesses in ordinary course, in substantially the same manner in which they had been previously conducted, and (b) with respect to the Group Companies, taken as a whole, there has not been:

(i). any change in the assets, liabilities, financial condition or operating results of the Group Companies from that reflected in the Financial Statements, except for changes in the ordinary course of business or those that have not, in the aggregate, resulted in any Material Adverse Effect;

(ii). any material change in the contingent obligations of the Group Companies by way of guarantee, endorsement, indemnity, warranty or otherwise, except for changes in the ordinary course of business or those that have not, in the aggregate, resulted in any Material Adverse Effect;

(iii). any damage, destruction or loss, whether or not covered by insurance, having any Material Adverse Effect, except for the damage or destruction or loss in the ordinary course of business;

(iv). any waiver or compromise by the Group Companies of a valuable right or of a material debt owed to it, except for the waiver or compromise in the ordinary course of business or those that have not, in the aggregate, resulted in any Material Adverse Effect;

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|:---|:---|
| (v). | any satisfaction or discharge of any lien, claim or other Encumbrance or payment of any obligation by the Group Companies, except for the satisfaction, discharge or payment made in the ordinary course of business or the satisfaction, discharge or payment that is not material to the assets, properties, financial condition, operating results or business of the Group Companies;  |

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(vi). any material change or amendment to a Material Contract or arrangement by which a Group Company or any of its assets or properties is bound or subject, except for changes in the ordinary course of business or those that have not, in the aggregate, resulted in a Material Adverse Effect;

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| | |
|:---|:---|
| (viii). | any debt, obligation, or liability incurred, assumed or guaranteed by any Group Company individually in excess of US$5,000,000 or in excess of US$20,000,000 in the aggregate, except those incurred in the ordinary course of business of the Group Companies;  |

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(ix). any transactions out of ordinary course of business with any of the Major Members;

(x). any failure to conduct business in the ordinary course, consistent with the Group Companies' reasonably prudent past practices; or

(xi). any dividend or other distributions declared or made by any Group Company.

12. <u>Tax Matters</u>. Since December 3, 2019, the Group Companies have complied in material respects with
applicable laws relating to the taxes and have paid or made provision for the payment of all taxes that have become due pursuant to the tax returns, applicable laws or otherwise. Since December 3, 2019, the Group Companies have complied in
material respects with applicable laws relating to the withholding of taxes and, subject to the foregoing, have, within the time and manner prescribed by law, withheld and paid over to the proper Governmental Entities all amounts required to be
withheld and paid over under applicable laws.

13. <u>Information Technology and Data</u>. The Group Companies have complied with all applicable laws regarding
cybersecurity, data protection and personal information protection in all material respects. To the knowledge of the Warrantors, none of the Group Companies is currently subject to any cybersecurity review under the Cybersecurity Review Measures of
the PRC. To the knowledge of the Warrantors, none of the Group Companies holds any "important data" as defined under the Regulations on Network Data Security Management (Draft fort Comments)
(网络数据安全管理条例 (征求意见稿)), released
on November 14, 2021. Except as fairly disclosed, none of the Group Companies has experienced any known or alleged data breach within the last three years, including claims or complaints by individuals against any Group Companies for breach of
data protection legislation in any material respect. The Group Companies have adopted to ensure personal information processing conforms to the provisions of laws and administrative regulations, and prevent unauthorized access to as well as leaks or
theft, distortion, or deletion of personal information.

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14. <u>Interested Party Transactions</u>. None of the Ruipeng Management Members (as defined in the
Shareholders' Agreement) or any of their respective Affiliates (collectively, the " <u>Major Members</u> ") or any Affiliate of the Company (except for the Group Companies) has any agreement, understanding, proposed transaction with, or
is indebted to, any Group Company, nor is any Group Company indebted (or committed to make loans or extend or guarantee credit) to any of them (other than for accrued salaries, reimbursable expenses or other standard employee benefits). None of the
Major Members has any direct or indirect ownership interest in any firm or corporation (except for a Group Company) with which a Group Company is affiliated or with which a Group Company has a business relationship, or any firm or corporation that
competes with the Group Companies. None of the Major Members (except for the Group Companies) conducts any business that is similar to or competitive with the Main Business, and none of the Ruipeng Management Members or any of their Affiliates is a
shareholder, director, employee, consultant, representative or agent of any of the foregoing persons. None of the Ruipeng Management Members or any Affiliate of such Ruipeng Management Member has had, either directly or indirectly, a material
interest in: (a) any person or entity which purchases from or sells, licenses or furnishes to the Group Companies any goods, property, intellectual or other property rights or services; or (b) any contract or agreement to which a Group
Company is a party or by which it may be bound or affected.

15. <u>Obligations of</u> <u>Ruipeng Management Member</u>. Each Ruipeng Management Member is currently devoting
substantially all of his working time to the conduct of the business of the Group Companies. None of the Group Companies is aware that any Ruipeng Management Member intends to terminate his employment, nor does such Group Company has a present
intention to terminate the employment of any Ruipeng Management Member. None of the Ruipeng Management Members is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would materially interfere with such Ruipeng Management Member's ability to promote the interest of any Group Company or that would conflict with any Group Company's
business as proposed to be conducted. Neither the execution or delivery of the Transaction Agreements, nor the carrying on of any Group Company's business by the Ruipeng Management Members, nor the conduct of any Group Company's business
as now conducted and as presently proposed to be conducted, will conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any contract, covenant or instrument under which any Ruipeng Management
Member is now obligated. Each Ruipeng Management Member has entered into an employment agreement, a confidentiality agreement, and a non-compete agreement with the Group Companies.

16. <u>Employee Matters</u>. Except as fairly disclosed, each Group Company has complied with all applicable
employment and labor laws including without limitation, laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, pensions, lowest salary, working hours or the like, in all material aspects.

17. <u>Environment</u>. Except as fairly disclosed, to the knowledge of the Warrantors, (i) each of the Group
Companies is in material compliance with applicable laws concerning health, safety or matters related to pollution or protection of the environment which are applicable to any of the Group Companies (the " <u>Environmental Law</u> "), and
(ii) each of the Group Companies has obtained all material permits required by it under the Environmental Law from the competent government authority, if any, for the conduct of its business, except in the case of (i) and (ii) where
the failure to be so in compliance or receive such permits would not cause a severe interruption of the businesses of the Group Companies taken as a whole.

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18. <u>Accuracy of Information</u>. As of their respective filing dates, or if amended prior to the date hereof, as
of the date of the last such amendment: (A) each of the registration statements and other documents filed or furnished by the Company with the SEC or the applicable stock exchange together with all exhibits included therein and financial
statements, notes and schedules thereto and documents incorporated by reference therein (collectively, the " <u>Filed Documents</u> ") complied in all material respects with the applicable requirements of the Securities Act, the United
States Securities Exchange Act of 1934, as amended, and the Sarbanes-Oxley Act of 2002, as amended, and any rules and regulations promulgated thereunder applicable to the Filed Documents (as the case may be) and (B) none of the Filed 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.

19. <u>Anti-Corruption</u>. None of the Group Companies and their respective directors or senior officers nor (to
the knowledge of the Warrantors) any other persons acting on behalf of any Group Company has offered, paid, promised to pay or authorised the payment of any money, or offered, given, promised to give or authorised the giving of anything of value, to
any Public Official or to any person under circumstances where such person knew or had reasonable reason to know that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any Public
Official, for the purpose of (a) influencing any act or decision of any Public Official in his official capacity, (b) inducing any Public Official to do or omit to do any act in relation to his lawful duty, (c) securing any improper
advantage or (d) inducing any Public Official to influence or affect any act or decision of any Governmental Authority, in each case in order to assist any Group Company in obtaining or retaining business for or with, or directing business to,
any Group Company or in connection with receiving any approval of the transactions contemplated under the Transaction Documents.

20. <u>Anti-Money Laundering</u>. The operations of the Company and each other Group Company are, and have at all
times been, conducted in compliance with all Anti-Money Laundering Laws and to the knowledge of the Warrantors, no investigation, action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
any Group Company with respect to Anti-Money Laundering Laws is pending and, to the knowledge of the Warrantors, no such actions, suits or proceedings are threatened or contemplated.

21. <u>Internal Controls</u>. The Group has designed, implemented and continued to maintain reasonable internal
policies, procedures, and controls reasonably designed to ensure compliance with Anti-Corruption Laws and Anti-Money Laundering Laws, including reasonable policies, procedures, and controls reasonably designed to ensure procure that none of the
Group Companies and persons acting on behalf any Group Company make payments in violation of Anti-Corruption Laws and Anti-Money Laundering Laws.

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**Schedule 4** 

**Disclosure Schedule** 

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**Exhibit A** 

**Form of Convertible Note** 

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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.

**<u>CONVERTIBLE NOTE</u>**

**Date of Issuance: [ ], 2022** 

**US$50,000,000** 

FOR VALUE RECEIVED, New Ruipeng Pet Group Inc., an exempted company with limited liability incorporated under the laws of the Cayman Islands (the "<u>Company</u>"), hereby issues to NESTLE TREASURY CENTRE - MIDDLE EAST & AFRICA LTD., a company incorporated under the laws of Dubai (the "<u>Purchaser</u>"), this convertible note (the "<u>Note</u>") with a principal amount of US$50,000,000 (the "<u>Principal Amount</u>") and a maturity date on [ ], 2023 (the "<u>Maturity Date</u>").

The Note is issued pursuant to the Convertible Note Purchase Agreement, dated , 2022, by and between the Company and the Purchaser (the "<u>Convertible Note Purchase Agreement</u>"), and is subject to the terms and conditions thereof. In case of any conflict between the 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 the Note is subject, and to which the Purchaser, by the acceptance of the Note, agrees:

1. <u>Interest</u>. The Note shall bear interest only if the Principal Amount or any portion of it is required to
be repaid or is prepaid as expressly provided in <u>Section 3</u> <u>(g), 3(h) or 5(a)</u> or if otherwise agreed in writing. If the Principal Amount or any portion of it is repaid otherwise in accordance with the Note or is duly converted into
the Conversion Shares in accordance with the Note, no interest shall accrue thereon.

2. <u>Seniority</u>. The Note ranks senior in right of payment to any of the Company's other indebtedness
that is expressly subordinated in right of payment to the Note and *pari passu* in right of payment to any of the Company's other unsecured indebtedness and liabilities that are not so subordinated.

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3. <u>Conversion and Repayment</u>.

(a) <u>IPO Conversion Amount</u>. Subject to <u>Section 3(c)</u>, US$25,000,000 of the Principal Amount (the "<u>IPO Conversion Amount</u>") shall be converted into Conversion Shares (as defined below) in the following manner:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If the Company completes a Qualified Subsequent Private Equity Financing prior to an Offering and no Specified
Event has occurred by then, the IPO Conversion Amount shall be automatically converted upon the completion (where there are multiple completions, the first completion) of such Qualified Subsequent Private Equity Financing into a number of Conversion
Shares equal to the higher of (x) the amount determined on the basis of the same pre-money equity valuation of the Company implied in such Qualified Subsequent Private Equity Financing and (y) the Minimum Number.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If no Qualified Subsequent Private Equity Financing is completed prior to an Offering and an Offering is
completed on an internationally recognized stock exchange in the US or Hong Kong (such Offering, the " <u>Qualified Offering</u> ") and no Specified Event has occurred by then, then, concurrently with the completion of the Qualified
Offering, the IPO Conversion Amount shall be automatically converted into a number of Conversion Shares equal to the higher of (x) the quotient obtained by dividing the IPO Conversion Amount by the IPO Conversion Price (as defined below) and
(y) the Minimum Number.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If no Qualified Subsequent Private Equity Financing is completed prior to an Offering and an Offering which is
not a Qualified Offering (such Offering, the " <u>Alternative Offering</u> ") is completed, then, the Purchaser shall have the option (but shall not be obliged) to, by written notice to the Company (" <u>Conversion Exercise Notice</u> ") at least seven (7) Business Days in advance, either (x) convert the IPO Conversion Amount concurrently with the completion of the Alternative Offering, into a number of Conversion Shares equal to the higher of
(A) the quotient obtained by dividing the IPO Conversion Amount by the IPO Conversion Price and (B) the Minimum Number or (y) convert the IPO Conversion Amount at any time following the completion of the Alternative Offering, into a
number of Conversion Shares equal to the higher of (A) the quotient obtained by dividing the IPO Conversion Amount by the Five-Day Average Price (or by dividing the IPO Conversion Amount by the IPO Conversion Price if the conversion is to take
place on or prior to the fifth (5th) trading day following the completion of the Alternative Offering) and (B) the Minimum Number.

(b) <u>Remaining Conversion Amount</u>. Subject to <u>Section 3(c)</u>, the remaining US$25,000,000 of the Principal Amount (the "<u>Remaining Conversion Amount</u>") shall be converted in the following manner:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If the Company completes any Qualified Subsequent Private Equity Financing prior to an Offering, the Purchaser
shall have the option (but shall not be obliged) to, by Conversion Exercise Notice at least seven (7) Business Days in advance, convert the Remaining Conversion Amount upon the completion of any such Qualified Subsequent Private Equity
Financing into a number of Conversion Shares equal to the higher of (x) the amount determined on the basis of the same pre-money equity valuation of the Company implied in such Qualified Subsequent Private Equity Financing and (y) the
Minimum Number (such option, the " <u>Pre-IPO Conversion Option</u> ").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If no Pre-IPO Conversion Option has been exercised prior to an Offering and an Offering is subsequently
completed, then subject to <u>Section 3(b)(iii)</u> below, the Purchaser shall have the option (but shall not be obliged) to, by Conversion Exercise Notice at least seven (7) Business Days in advance, convert the Remaining Conversion
Amount at any time following the completion of the Offering, into a number of Conversion Shares equal to the higher of (A) the quotient obtained by dividing the Remaining Conversion Amount by the Five-Day Average Price (or by dividing the
Remaining Conversion Amount by the IPO Conversion Price if the conversion is to take place on or prior to the fifth (5th) trading day following the completion of the Offering) and (B) the Minimum Number (such option, the " <u>Post-IPO Conversion Option</u> ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Notwithstanding <u>Section 3(b)(ii)</u> above, if (A) no Pre-IPO Conversion Option has been exercised
prior to an Offering, (B) a Qualified Offering is subsequently completed and is completed by December 31, 2025, (C) the average closing price of the Company's ADSs (or Ordinary Shares, as applicable) quoted on the stock exchange
where such ADSs (or Ordinary Shares, as applicable) are listed during the last five (5) trading days of the Lock-up Period (such average price of ADSs divided by the number of Ordinary Shares represented by one ADS, or, if Ordinary Shares are
listed, such average price of Ordinary Shares, the " <u>Lock-up Period Five-Day Average Price</u> ") is higher than the Offering Price, (D) no Post-IPO Conversion Option has been exercised on or prior to the expiration of the Lock-up
Period and (E) no Specified Event has occurred by then, then on the first day immediately after the expiry of the Lock-up Period, the Remaining Conversion Amount shall be automatically converted into a number of Conversion Shares equal to the
higher of (x) the quotient obtained by dividing the Remaining Conversion Amount by the Lock-up Period Five-Day Average Price and (y) the Minimum Number.

(c) <u>Conversion Option Upon Maturity Date</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event that any portion of the Principal Amount has not been converted pursuant to <u>Section 3(a) or 3(b)</u> and has not been repaid otherwise in accordance with the Note prior to the Maturity Date, the Purchaser shall have the option (but shall not be obliged) to, by Conversion Exercise Notice at least seven (7) Business Days in advance,
convert such portion of the Principal Amount on the Maturity Date into a number of Conversion Shares determined in accordance with (where <u>Section 3(a) or 3(b)</u> is also applicable) <u>Section 3(a) or 3(b)</u> or (where <u>Section 3(a) or 3(b)</u> is not applicable) based on valuation to be further agreed in good faith between the Purchaser and the Company (such option, the " <u>Maturity Conversion Option</u> ").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If the Purchaser does not exercise the Maturity Conversion Option, then, to the extent permitted by applicable
laws, the Maturity Date shall be extended by another 364 days (the so extended Maturity Date, the " <u>Extended Maturity Date</u> "), whereby during the extended period, all the terms of the Note shall continue to apply and the Maturity
Conversion Option shall continue to apply with respect to the Extended Maturity Date, and if the Purchaser does not exercise the Maturity Conversion Option to convert upon the Extended Maturity Date, the Extended Maturity Date shall be extended by
another 364 days and the extension process will be repeated until finally extended to December 31, 2026 (or such later date that may be further agreed by the Purchaser and the Company in writing, the " <u>Final Repayment Date</u> "), by
when the Company shall be obliged to repay the outstanding Principal Amount and interest accrued thereon in accordance with <u>Section 3(g)</u>. In the event any such extension cannot be achieved due to restrictions imposed by any applicable
law or Governmental Order, the Company and the Purchaser shall discuss in good faith possible alternative arrangements relating to the Note.

(d) <u>No Fractional Shares</u>. Upon the conversion of the Note into the Conversion Shares, in lieu of any fractional shares to which the Purchaser would otherwise be entitled, the Company shall pay the Purchaser cash equal to such fraction multiplied by the applicable conversion price.

(e) <u>Mechanics of Conversion</u>. Upon any conversion in accordance with the Note, the Company shall as soon as practicable thereafter take all actions and execute all documents necessary to effect the issuance of the Conversion Shares (including giving all necessary instructions to update the register of members to effect such issuance) and deliver to the Purchaser a certificate or certificates for the number of fully paid Conversion Shares issuable upon such conversion in accordance with the Note and the updated register of members of the Company indicating that the Purchaser is the holder of such Conversion Shares, provided that to effect the full and final conversion of the Note, the Purchaser shall surrender the Note (or in lieu thereof shall deliver an affidavit of lost Note and indemnity therefor in a form to the reasonable satisfaction of the Company) to the Company in advance and the Company shall not be required to issue or deliver the relevant Conversion Shares upon the full and final conversion until the Purchaser has surrendered the Note (or in lieu thereof an affidavit of lost Note and indemnity therefor in a form to the reasonable satisfaction of the Company) to the Company. The issue of such Conversion Shares shall be effected upon the date of automatic conversion contemplated in accordance with the Note or upon the date of conversion set forth in the conversion notice issued by the Purchaser in compliance with the Note. In the event that the conversion takes place upon or following the completion of an Offering where ADSs are listed, the Company shall do and perform, or cause to be done and performed, all such acts and things (including to provide any consent or confirmation and to satisfy any other procedural or substantive requirements under the applicable deposit agreement) as may be necessary, in order to promptly facilitate the conversion of the Conversion Shares then held by the Purchaser into ADSs.

(f) <u>Payment of Taxes</u>. The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of any Conversion Shares.

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(g) <u>Repayment by Final Repayment Date</u>. Notwithstanding anything to the contrary in the Note, in the event that any Principal Amount (other than any portion of the Principal Amount already converted pursuant to this <u>Section 3</u>) remains outstanding as of the Final Repayment Date, the Company shall immediately repay to the Purchaser such outstanding amount together with interest accrued on such outstanding amount at a simple rate of 7% per annum to the Purchaser with respect to the outstanding amount for the period commencing from the Closing Date until the outstanding amount is repaid in full.

(h) <u>Voluntary Prepayment</u>. The Company shall not have the right to prepay any portion of the IPO Conversion Amount. The Company may, by written notice to the Purchaser at least fifteen (15) Business Days in advance, prepay the whole (and not a portion) of the Remaining Conversion Amount at any time prior to the Remaining Conversion Amount having been converted or the Purchaser having exercised its option to convert the Remaining Conversion Amount in accordance with the Note (for the avoidance of doubt, prior to the Remaining Conversion Amount being prepaid by the Company in accordance with this <u>Section 3(h)</u>, the Purchaser may choose to convert (in lieu of getting the Remaining Conversion Amount repaid), by a Conversion Exercise Notice at least seven (7) Business Days in advance, the Remaining Conversion Amount on a date prior to the prepayment date into a number of Conversion Shares determined in accordance with (where <u>Section 3(a)</u> or <u>3(b)</u> is also applicable) <u>Section 3(a)</u> or <u>3(b)</u> or (where <u>Section 3(a)</u> or <u>3(b)</u> is not applicable) based on valuation to be further agreed in good faith between the Purchaser and the Company); provided that, if the Company elects to prepay the Remaining Conversion Amount, it shall also pay to the Purchaser an interest accrued on the Remaining Conversion Amount at a simple rate of 7% per annum to the Purchaser with respect to the Remaining Conversion Amount for the period commencing from the Closing Date until the Remaining Conversion Amount is prepaid in full.

(i) <u>Repayment upon Mutual Agreement</u>. Notwithstanding anything to the contrary in the Note, the Company and the Purchaser may, at any time and from time to time, mutually agree to have the Note be repaid in advance (and/or the terms and conditions applicable to such repayment) in whole or in part.

(j) <u>Surrender of Note</u>. Upon the full repayment of the outstanding amount under the Note, the Purchaser shall immediately surrender the Note to the Company (or in lieu thereof shall deliver an affidavit of lost Note and indemnity therefor in a form to the reasonable satisfaction of the Company).

(k) <u>Notification of Qualified Subsequent Private Equity Financing</u>. The Company shall notify the Purchaser of any Qualified Subsequent Private Equity Financing before the earlier of (i) the signing of any definitive purchase agreement with respect to such Qualified Subsequent Private Equity Financing and (ii) fifteen (15) Business Days prior to the completion (where there are multiple completions, the first completion) of such Qualified Subsequent Private Equity Financing.

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4. <u>Events of Default and Acceleration Events</u>.

(a) <u>Events of Default</u>. Each of the following events shall be considered an event of default (an "<u>Event of Default</u>") with respect to the Note:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Failure to Convert.</u> The Company fails to comply with its obligation to effect any conversion in
accordance with the Note, and such failure continues for a period of ten (10) days thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Misrepresentation.</u> Any representation, warranty or statement made or deemed to be made by or on behalf
of any Group Company in the Convertible Note Purchase Agreement is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Breach of Other Obligations.</u> Any Group Company fails to perform or comply with any of its obligations in
the Note or any other Transaction Document in any material respect, provided that no Event of Default will occur under this <u>Section 4(a)(iii)</u> if the failure to perform or comply is capable of remedy and is remedied within thirty
(30) days after the earlier of (i) the date on which the Purchaser gives notice to the Company and (ii) the date on which the Company or any other Group Company becomes aware of such failure to perform or comply.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Repudiation.</u> Any Group Company rescinds or repudiates (or purports to rescind or repudiate) the Note or
the Convertible Note Purchase Agreement or evidences an intention to rescind or repudiate the Note or the Convertible Note Purchase Agreement.

(b) <u>Acceleration Events</u>. Each of the following events shall be considered an acceleration event (an "<u>Acceleration Event</u>") with respect to the Note:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Voluntary Bankruptcy or Insolvency Proceedings</u>. The Company or any of its Significant Subsidiaries (as
defined below) (i) applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) admits in writing its inability to pay its debts generally as
they mature, (iii) makes a general assignment for the benefit of its or any of its creditors, (iv) is dissolved or liquidated, (v) commences 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) takes any action for the purpose of effecting any of the foregoing. " <u>Significant Subsidiary</u> " means any Major Subsidiary or any other subsidiary of the Company, the total assets or
total revenues (after intercompany eliminations) of which exceeds fifteen percent (15%) of the consolidated total assets or total revenues of the Company and its Subsidiaries as of the end of the Company's most recently completed fiscal
year.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Involuntary Bankruptcy or Insolvency Proceedings</u>. 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 is commenced and either (i) an order for relief is entered or (ii) such proceeding is
not be dismissed or discharged within forty-five (45) days of commencement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Winding up, etc.</u> An order is made by any governmental authority 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 on the solvent basis, provided that the assets of such Significant Subsidiary subject to amalgamation, reorganization or restructuring are substantially retained by the Company directly or indirectly).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Liquidation Event.</u> The occurrence of any Liquidation Event (as defined in the Shareholders Agreement) or
Disposal Transaction (as defined in the Shareholders Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) <u>Change of Control</u>. The occurrence of any Change of Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) <u>Redemption.</u> Any shareholder of the Company becomes entitled to deliver a Redemption Notice (as defined
in the Shareholders Agreement) to the Company in accordance with the Shareholders Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) <u>Cross-default.</u> Any Significant Indebtedness (as defined below) 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 any Group Company, or any Group
Company fails to pay when due any amount payable by it under any guarantee or indemnity of any Significant Indebtedness. For the purpose of this clause, " <u>Significant Indebtedness</u> " means, with respect to each event mentioned above,
one or more indebtedness owed by any Group Company to any shareholder of the Company in the form of loans or owed by any Group Company to any financial institution, together with an aggregate amount of no less than US$30,000,000 or its equivalent in
any other currency or currencies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) <u>Unsatisfied Judgment.</u> A final judgment or order for the payment of RMB100,000,000 (or the foreign
currency equivalent thereof) or more (excluding any amounts covered by insurance) rendered against any Group Company, which judgment is not paid, bonded or otherwise discharged or stayed within forty-five (45) days after (i) the date on
which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) <u>Cease to be a Public Company.</u> Following an Offering, (i) the Company's ordinary shares (or
ADSs, as applicable) cease to be publicly traded on such stock exchange where the Offering took place, or (ii) the Company receives any notice from the stock exchange where the Offering took place or the applicable securities regulator
evidencing the final decision of such stock exchange or regulator on revocation of the listing or the delisting of the Company's ordinary shares (or ADSs, as applicable), provided that in each case of (i) and (ii), no Acceleration Event
shall occur under this <u>Section 4(b)(ix)</u> if at the time the event described in (i) or (ii) occurs, the Company's ordinary shares or ADSs still remain publicly traded on another internationally recognized stock exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) <u>Cessation of Business.</u> The Group suspends or ceases to carry on (or threatens to suspend or cease to
carry on) all or a material part of its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) <u>Unlawfulness and Invalidity.</u> (i) It is finally determined by a Governmental Entity to be or becomes
unlawful for any Group Company to perform any of its obligations under any Transaction Document (including any payment or conversion obligations). (ii) Any obligation or obligations of any Group Company under any Transaction Document (including
any payment or conversion obligations) is not or ceases to be legal, valid, binding or enforceable. (iii) The Note or the Convertible Note Purchase Agreement ceases to be in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) <u>Material Breach of Law</u>. Any Group Company violates any applicable law, statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties (each a " <u>Non-Compliance Event</u> "), which causes or will cause a
fine or other penalty to be imposed by a Governmental Entity on any Group Company to exceed (together with fines or other penalties on any Group Company resulting or arising from all other Non-Compliance Events) US$50,000,000 or its equivalent in
any other currency or currencies in the aggregate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) <u>Reputational Event</u>. The occurrence of a Reputational Event. " <u>Reputational Event</u> " means
any change, effect, event, state of fact or development that, individually or together with any one or more changes, effects, events, states of facts or developments, which (i) has had or would have a material adverse reputational impact or
material reputational damages on (x) the Purchaser or any of its Affiliates or (y) the Company or any of its Affiliates and is as a result of fraud, fraudulent acts or willful misconducts on the part of the Company or any of its
Affiliates, or (ii) has had or would have a material adverse reputational impact or material reputational damages on the Company or any of its Affiliates that would in turn be reasonably and objectively expected by the Purchaser to have a
material adverse reputational impact on the Purchaser or any of its Affiliates as well, in each case as a result of the Purchaser's investment in the Company.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) <u>Material Adverse Effect</u> The occurrence of any change, effect, event, state of fact or development that,
individually or together with any one or more changes, effects, events, states of facts or developments, which has had or would have a Material Adverse Effect.

(c) <u>Notification</u>. The Company shall notify the Purchaser of any Specified Event promptly upon becoming aware of the occurrence of an event that in the Company's reasonable judgment constitutes a Specified Event.

5. <u>Remedies.</u> Upon the occurrence of an Event of Default or an Acceleration Event, at the Purchaser's
sole discretion, the Purchaser may:

(a) by written notice to the Company, immediately and without expiration of any grace period, require (x) the outstanding Principal Amount (other than any portion of the Principal Amount already converted pursuant to <u>Section 3</u> of the Note), and, solely in the case of an Event of Default (but not an Acceleration Event that does not also constitute an Event of Default), (y) interest accrued on such outstanding amount at a simple rate of 7% per annum to the Purchaser with respect to the outstanding amount for the period commencing from the Closing Date until the outstanding amount is repaid in full to become immediately due and payable by the Company;

(b) by Conversion Exercise Notice to the Company, require conversion of the outstanding Principal Amount (other than any portion of the Principal Amount already converted pursuant to <u>Section 3</u> of the Note) into a number of Conversion Shares determined in accordance with (where <u>Section 3(a)</u> or <u>3(b)</u> is also applicable) <u>Section 3(a)</u> or <u>3(b)</u> or (where <u>Section 3(a)</u> or <u>3(b)</u> is not applicable) based on valuation to be further agreed in good faith between the Purchaser and the Company; and/or

(c) exercise any and all other remedies granted to it at law, in equity or otherwise.

All payments made by or on behalf of the Company pursuant to this <u>Section 5</u> shall be credited first to accrued interest due and payable and any remainder shall be applied to outstanding Principal Amount.

Upon the due conversion in full of the Note pursuant to and in accordance with the Note or the full repayment pursuant to and in accordance with the Note, any and all of the payment and conversion obligations of the Company under the Note and the Convertible Note Purchase Agreement shall be fully discharged.

6. <u>Default Interest</u>. Notwithstanding anything to the contrary in the Note (including <u>Section 1</u>), if the Company fails to pay any amount payable by it under the Note on its due date (the " <u>Due Date</u> "), and such non-payment continues for a period of forty-five (45) days thereafter, then default interest
shall accrue on the overdue amount at a simple rate of 14% per annum for the period commencing from the Due Date until the overdue amount is repaid in full. Any interest accruing under this <u>Section 6</u> shall be immediately payable by
the Company on demand by the Purchaser.

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7. <u>Payments; Taxation.</u> 

(a) All payments made by or on behalf of the Company under or in respect of the Note 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 any tax or other authority, unless the withholding or deduction of such taxes, duties, assessments or governmental charges is required by law. Where such withholding or deduction is made by the Company, the Company will pay such additional amounts as will result in receipt by the Purchaser after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required. Any reference in the Note to Principal Amount or interest shall be deemed to include any additional amounts in respect of Principal Amount or interest (as the case may be) which may be payable under this <u>Section 7(a)</u> or any undertaking given in addition to or in substitution of this <u>Section 7(a)</u>.

(b) All payments made by or on behalf of the Company under or in respect of the Note shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

8. <u>Undertakings</u>. The undertakings by the Company in Exhibit A shall remain in full force and effect at all
times from (and including) the Closing Date until the completion of an Offering for so long as any amount is outstanding under the Note.

9. <u>No Other Rights as Shareholder Prior to Conversion</u>. 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 until the Note shall have
been duly converted as provided for in the Note and the Convertible Note Purchase Agreement, other than such rights expressly set forth in Exhibit A to the Note and Section 7.17 of the Convertible Note Purchase Agreement. For the avoidance of
doubt, the Purchaser shall be conferred with all rights of a shareholder holding Conversion Shares immediately upon any conversion in whole or in part of the Note with respect to such Conversion Shares.

10. <u>Termination of Rights</u>. All rights under the Note shall automatically terminate when (a) all amounts
owing on the Note have been paid in full or (b) the Note is converted in full pursuant to the Note. Upon the termination of all rights under the Note, the Note shall be surrendered by the Purchaser to the Company and the 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 the Note, and shall remain in force and effect or terminate
pursuant to the terms thereof.

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11. <u>Amendments and Waivers; Notice</u>. The amendment or waiver of any term of the 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. <u>Successors and Assigns</u>. The 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 rights or obligations under the Note without the written consent of the other party hereto, except that (i) the Purchaser's rights and obligations
hereunder may be wholly (but not in part) assigned to one (but not more than one at a time) Affiliate of the Purchaser, who is not a U.S. Person, without the consent of the Company and (ii) any portion of the Note may be transferred by the
Purchaser to any Affiliate of the Purchaser, who is not a U.S. Person, immediately before such portion is converted into Conversion Shares in accordance with the Note in order for such Affiliate to hold such Conversion Shares upon conversion. Any
transfer of the Note may take effect by surrender of the Note to the Company and reissuance of a new note to the transferee.

13. <u>Governing Law; Dispute Resolution</u>. The Note shall be governed by and construed under the laws of the
State of New York. The resolution of any controversy or claim arising out of or relating to the Note shall be conducted pursuant to the terms of the Convertible Note Purchase Agreement.

14. <u>Certain Additional Defined Terms</u>. For the purpose of the Note, unless the context otherwise requires the
following words and expressions have the following meanings:

"<u>ADS</u>" means American depositary share or any other depositary share if the Offering takes place on a stock exchange outside of the US.

"<u>Change of Control</u>" means any change of Control of the Company.

"<u>Conversion Shares</u>" means (i) with respect to any portion of the Principal Amount that is converted upon or following the completion of an Offering, the Ordinary Shares; (ii) with respect to any portion of the Principal Amount that is converted upon the closing of a Qualified Subsequent Private Equity Financing or otherwise prior to the completion of an Offering, Class B Ordinary Shares.

"<u>Five-Day Average Price</u>" means the average closing price of the Company's ADSs (or Ordinary Shares, as applicable) quoted on the stock exchange where such ADSs (or Ordinary Shares, as applicable) are listed during the last five (5) trading days immediately prior to the date of the Conversion Exercise Notice divided by (if applicable) the number of Ordinary Shares represented by one ADS.

"<u>IPO Conversion Price</u>" means the price per ADS set forth on the cover of the Company's final prospectus in connection with an Offering (the "<u>Offering Price</u>") divided by the number of Ordinary Shares represented by one ADS; "<u>IPO Conversion Price</u>" and "<u>Offering Price</u>" shall be adjusted, *mutatis mutandis*, if the Offering is with respect to the listing of Ordinary Shares directly and not to the listing of ADS.

"<u>Minimum Number</u>" with respect to the conversion of either the IPO Conversion Amount or the Remaining Conversion Amount (as applicable), 65,082,399 (which shall be appropriately adjusted to take into account any bonus share issue, share subdivision, share combination, share split, recapitalization, reclassification or similar event affecting the share capital of the Company after the Closing Date).

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"<u>ODI Procedures</u>" means approval, registration or filing procedures with competent PRC Governmental Entities in relation to outbound investment by PRC enterprises.

"<u>Qualified Subsequent Private Equity Financing</u>" means any round of *bona fide* private equity financing by way of issuance of shares by the Company (or by way of issuance of warrants by the Company to any non-Affiliated RMB Investor but only to the extent that it will provide a loan to a designated Group Company established in the PRC, which loan will directly or indirectly be converted into share capital of the Company upon exercise of the warrants following completion of ODI Procedures and other necessary procedures) raised from non-Affiliated persons by the Company after the Closing Date and prior to the completion of an Offering in which the largest participating investor is not an existing shareholder of the Company or any Affiliate of an existing shareholder (unless the existing shareholder is a Specified Shareholder) and the total cash proceeds raised by the Company (excluding, for the avoidance of doubt, any portion of the Note that may be converted in connection with such round) in such round is of US$50,000,000 or more.

"<u>RMB Investor</u>" means any person that is required to complete requisite ODI Procedures for any proposed sale and issuance of shares by the Company to such person.

"<u>Specified Event</u>" means an Event of Default, an Acceleration Event or a Strategic Investment Event.

"<u>Specified Shareholder</u>" means any shareholder of the Company set forth in Exhibit C and any of their respective Affiliates.

"<u>Strategic Investment Event</u>" means the entry into of legally binding documentation or the consummation of a transaction pursuant to which a Strategic Investor will become a holder of any equity security of any Group Company.

"<u>Strategic Investor</u>" means any person (or any person directly or indirectly operates under the brand name) set forth in Exhibit B and any of their respective Affiliates.

[*Remainder of Page Intentionally Left Blank*]

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IN WITNESS WHEREOF, the Company has executed the Note as of the date first above written.

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| |
|:---|
| **New Ruipeng Pet Group Inc.** |
| By: |
| Name: |
| Title: |

---

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**Exhibit B** 

**Deed of Adherence**

## Exhibit 21.1

**Exhibit 21.1** 

**List of Principal Subsidiaries of the Registrant** 

---

| | |
|:---|:---|
| **Subsidiaries** | **Place of Incorporation** |
|  Skyfield Holdings (Cayman) Inc. | Cayman Islands |
|  Concordia Holdings Limited | Cayman Islands |
|  HHRP Holdings (Cayman) Inc. | Cayman Islands |
|  Skyfield Holdings Limited | Hong Kong |
|  Concordia Pet Care Limited | Hong Kong |
|  HHRP Holdings Limited | Hong Kong |
|  Skyfield (Shanghai) Investment Co., Ltd. | PRC |
|  Nanjing Aibr Pet Co., Ltd. | PRC |
|  Yunchong (Beijing) Animal Hospital Technology Co., Ltd. | PRC |
|  Qingdao Ainuo Animal Hospital Management Co., Ltd. | PRC |
|  Shanghai Anan Pet Co., Ltd. | PRC |
|  Shanghai Ce Er Xing Management and Consulting Co., Ltd. | PRC |
|  New Ruipeng Pet Healthcare Group Co., Ltd. | PRC |
|  Beijing Community and Asset Management Co., Ltd. | PRC |
|  Guangzhou Ruipeng Animal Hospital Co., Ltd. | PRC |
|  Shenzhen Futian Ruipeng Pet Hospital Co., Ltd. | PRC |
|  Shenzhen Ruipeng Pet Hospital Co., Ltd. | PRC |
|  Sichuan Southwest Ruipeng Pet Hospital Co., Ltd. | PRC |
|  Shanghai Ruipeng Pet Hospital Co., Ltd. | PRC |
|  Shenzhen Great Sun Network Technology Co., Ltd. | PRC |
|  Jichongjia (Shanghai) Enterprise Management Co., Ltd. | PRC |
|  Nanjing Jichong Intelligent Technology Co., Ltd. | PRC |
|  Runhe Supply Chain Group Co., Ltd. | PRC |

---

## Exhibit 23.1

**Exhibit 23.1** 

**Consent of Independent Registered Public Accounting Firm** 

We consent to the reference to our firm under the caption "Experts" and to the use of our report dated May 17, 2022, in the Registration Statement (Form F-1) and related Prospectus of New Ruipeng Pet Group Inc. dated January 23, 2023.

/s/ Ernst & Young Hua Ming LLP

Shanghai, The People's Republic of China

January 23, 2023

## Exhibit 99.1

**Exhibit 99.1** 

**NEW RUIPENG PET GROUP INC.** 

**CODE OF BUSINESS CONDUCT AND ETHICS** 

**I.** **PURPOSE** 

This Code of Business Conduct and Ethics (the "**Code**") contains general guidelines for conducting the business of New Ruipeng Pet Group Inc., a Cayman Islands company, and its subsidiaries and affiliates (collectively, the "**Company**") consistent with the highest standards of business ethics, and is intended to qualify as a "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. To the extent this Code requires a higher standard than required by commercial practice or applicable laws, rules or regulations, we adhere to these higher standards.

This Code is designed to deter wrongdoing and to promote:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between
personal and professional relationships;

• full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with,
or submits to, the U.S. Securities and Exchange Commission (the "**SEC**") and in other public communications made by the Company;

• compliance with applicable laws, rules and regulations;

• prompt internal reporting of violations of the Code; and

• accountability for adherence to the Code.

**II.** **APPLICABILITY** 

This Code applies to all directors, officers and employees of the Company, whether they work for the Company on a full-time, part-time, consultative or temporary basis (each, an "**employee**" and collectively, the "**employees**"). Certain provisions of the Code apply specifically to our chief executive officer, chief financial officer, senior finance officer, controller, senior vice presidents, vice presidents and any other persons who perform similar functions for the Company (each, a "**senior officer**," and collectively, the "**senior officers**").

The Board of Directors of the Company (the "**Board**") has appointed Ms. Wang Rong as the Compliance Officer for the Company (the "**Compliance Officer**"). If you have any questions regarding the Code or would like to report any violation of the Code, please email the Compliance Officer at **ethics@rp-pet.cn**.

This Code has been adopted by the Board and shall become effective (the "**Effective Time**") upon the effectiveness of the Company's registration statement on Form F-1 filed by the Company with the SEC relating to the Company's initial public offering.

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**III.** **CONFLICTS OF INTEREST** 

***Identifying Conflicts of Interest***

A conflict of interest occurs when an employee's private interest interferes, or appears to interfere, in any way with the interests of the Company as a whole. An employee should actively avoid any private interest that may impact such employee's ability to act in the interests of the Company or that may make it difficult to perform the employee's work objectively and effectively. In general, the following should be considered conflicts of interest:

• <u>Competing Business</u>. No employee may be employed by a business that competes with the Company or deprives
it of any business.

• <u>Corporate Opportunity</u>. No employee should use corporate property, information or his/her position with the
Company to secure a business opportunity that would otherwise be available to the Company. If an employee discovers a business opportunity that is in the Company's line of business through the use of the Company's property, information or
position, the employee must first present the business opportunity to the Company before pursuing the opportunity in his/her individual capacity.

• <u>Financial Interests</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) No employee may have any financial interest (ownership or otherwise), either directly or indirectly through a
spouse or other family member, in any other business or entity if such interest adversely affects the employee's performance of duties or responsibilities to the Company, or requires the employee to devote time to it during such employee's
working hours at the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) No employee may hold any ownership interest in a privately held company that is in competition with the
Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) No employee shall hold any ownership interest in a company that is in competition with the Company if such
ownership interest adversely affects the employee's performance of duties or responsibilities to the Company, and he/she must report to the Compliance Officer before holding or acquiring any such ownership interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) No employee may hold any ownership interest in a company that has a business relationship with the Company if
such employee's duties at the Company include managing or supervising the Company's business relations with that company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Notwithstanding the other provisions of this Code,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) a director or any family member of such director (collectively, "**Director Affiliates**") or a senior officer or any family member of such senior officer (collectively, "**Officer Affiliates**") may continue to hold his/her investment or other financial interest in a business or entity (an "**Interested Business**") that:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) was made or obtained either (x) before the Company invested in or otherwise became interested in such business or entity; or (y) before the director or senior officer joined the Company (for the avoidance of doubt, regardless of whether the Company had or had not already invested in or otherwise become interested in such business or entity at the time the director or senior officer joined the Company); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) may in the future be made or obtained by the director or senior officer, provided that at the time such investment or other financial interest is made or obtained, the Company has not yet invested in or otherwise become interested in such business or entity;

provided that such director or senior officer shall disclose such investment or other financial interest to the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) an interested director or senior officer shall refrain from participating in any discussion among senior officers of the Company relating to an Interested Business and shall not be involved in any proposed transaction between the Company and an Interested Business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) before any Director Affiliate or Officer Affiliate (i) invests, or otherwise acquires any equity or other financial interest, in a business or entity that is in competition with the Company; or (ii) enters into any transaction with the Company, the related director or senior officer shall obtain prior approval from the Audit Committee of the Board.

• <u>Loans or Other Financial Transactions</u>. No employee may obtain loans or guarantees of personal obligations
from, or enter into any other personal financial transaction with, any company that is a material customer, supplier or competitor of the Company. This guideline does not prohibit arms-length transactions with recognized banks or other financial
institutions.

• <u>Service on Boards and Committees</u>. No employee shall serve on a board of directors or trustees or on a
committee of any entity (whether profit or not-for-profit) whose interests could reasonably be expected to conflict with those of the Company. Employees must obtain
prior approval from the Board before accepting any such board or committee position. The Company may revisit its approval of any such position at any time to determine whether an employee's service in such position is still appropriate.

The above is in no way a complete list of situations where conflicts of interest may arise. The following questions might serve as a useful guide in assessing a potential conflict of interest situation not specifically addressed above:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Is the action to be taken legal?

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Is it honest and fair?

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Is it in the best interests of the Company?

***Disclosure of Conflicts of Interest***

The Company requires that employees fully disclose any situations that could reasonably be expected to give rise to a conflict of interest. If an employee suspects that he/she has a conflict of interest, or a situation that others could reasonably perceive as a conflict of interest, the employee must report it immediately to the Compliance Officer. Conflicts of interest may only be waived by the Board, or the appropriate committee of the Board, and will be promptly disclosed to the public to the extent required by law and applicable rules of the applicable stock exchange. 

***Family Members and Work***

The actions of family members outside the workplace may also give rise to conflicts of interest because they may influence an employee's objectivity in making decisions on behalf of the Company. If a member of an employee's family is interested in doing business with the Company, the criteria as to whether to enter into or continue the business relationship and the terms and conditions of the relationship must be no less favorable to the Company compared with those that would apply to an unrelated party seeking to do business with the Company under similar circumstances.

Employees should report any situation involving family members that could reasonably be expected to give rise to a conflict of interest to their supervisor or the Compliance Officer. For purposes of this Code, "family members" or "members of employee's family" include an employee's spouse, parents, children and siblings, whether by blood, marriage or adoption or anyone residing in such employee's home.

**IV.** **GIFTS AND ENTERTAINMENT** 

The giving and receiving of appropriate gifts may be considered common business practice. Appropriate business gifts and entertainment are welcome courtesies designed to build relationships and understanding among business partners. However, gifts and entertainment should never compromise, or appear to compromise, an employee's ability to make objective and fair business decisions.

It is the responsibility of employees to use good judgment in this area. As a general rule, employees may give or receive gifts or entertainment to or from customers or suppliers only if the gift or entertainment is in compliance with applicable law, insignificant in amount and not given in consideration or expectation of any action by the recipient. All gifts and entertainment expenses made on behalf of the Company must be properly accounted for on expense reports.

Employees shall report to the human resources department of the Company via email within two business days after they received any of the following for free from any party other than the Company: gifts, cash, product samples, rebates, services, or rebates in the form of tickets or coupon for entertainment activities, currency or commodities. Employees shall submit the gifts received to the human resources department of the Company, who shall evaluate the value of the gifts, confirm whether the gifts can be returned and process the gifts received as follows:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Returnable gifts: return to the original party within three business days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Non-returnable gifts: those with a value of less than RMB50 shall be submitted to the direct supervisor of the employee who received the gifts; those with a value of RMB50 or more shall be submitted to the human resources department of the Company within two business days after the employee received the gifts.

Bribes and kickbacks are criminal acts, strictly prohibited by law. An employee must not offer, give, solicit or receive any form of bribe or kickback anywhere in the world.

**V.** **FCPA COMPLIANCE FCPA** 

The U.S. Foreign Corrupt Practices Act ("**FCPA**") prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. A violation of FCPA does not only violate the Company's policy but also constitute a civil or criminal offense under FCPA which the Company is subject to after the Effective Time. No employee shall give or authorize directly or indirectly any illegal payments to government officials of any country. While the FCPA does, in certain limited circumstances, allow nominal "facilitating payments" to be made, any such payment must be discussed with and approved by an employee's supervisor in advance before it can be made.

**VI.** **PROTECTION AND USE OF COMPANY ASSETS** 

Employees should protect the Company's assets and ensure their efficient use for legitimate business purposes only. Theft, carelessness and waste have a direct impact on the Company's profitability. Any use of the funds or assets of the Company, whether for personal gain or not, for any unlawful or improper purpose is strictly prohibited.

To ensure the protection and proper use of the Company's assets, each employee should:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• exercise reasonable care to prevent theft, damage or misuse of the Company's assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• promptly report any actual or suspected theft, damage or misuse of the Company's assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• safeguard all electronic programs, data, communications and written materials from unauthorized access; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• use the Company's assets only for legitimate business purposes.

Except as approved in advance by the Chief Executive Officer or Chief Financial Officer of the Company, the Company prohibits political contributions (directly or through trade associations) by any employee on behalf of the Company. Prohibited political contributions include:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any contributions of the Company's funds or other assets for political purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• encouraging individual employees to make any such contribution; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reimbursing an employee for any political contribution.

**VII.** **INTELLECTUAL PROPERTY AND CONFIDENTIALITY** 

Employees should abide by the Company's rules and policies in protecting the intellectual property and confidential information, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• All inventions, creative works, computer software, and technical or trade secrets developed by an employee in the
course of performing the employee's duties or primarily through the use of the Company's assets or resources while working at the Company shall be the property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Employees should maintain the confidentiality of information entrusted to them by the Company or entities with
which the Company has business relations, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that might be of use to competitors, or harmful
to the company or its business associates, if disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company maintains a strict confidentiality policy. During an employee's term of employment with the
Company, the employee shall comply with any and all written or unwritten rules and policies concerning confidentiality and shall fulfill the duties and responsibilities concerning confidentiality applicable to the employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In addition to fulfilling the responsibilities associated with his/her position in the Company, an employee shall
not, without obtaining prior approval from the Company, disclose, announce or publish trade secrets or other confidential business information of the Company, nor shall an employee use such confidential information outside the course of his/her
duties to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Even outside the work environment, an employee must maintain vigilance and refrain from disclosing important
information regarding the Company or its business, business associates or employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• An employee's duty of confidentiality with respect to the confidential information of the Company survives
the termination of such employee's employment with the Company for any reason until such time as the Company discloses such information publicly or the information otherwise becomes available in the public sphere through no fault of the
employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Upon termination of employment, or at such time as the Company requests, an employee must return to the Company
all of its property without exception, including all forms of medium containing confidential information, and may not retain duplicate materials.

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**VIII.** **ACCURACY OF FINANCIAL REPORTS AND OTHER PUBLIC COMMUNICATIONS** 

Upon the Effective Time, the Company will be required to report its financial results and other material information about its business to the public and the SEC. It is the Company's policy to promptly disclose accurate and complete information regarding its business, financial condition and results of operations. Employees must strictly comply with all applicable standards, laws, regulations and policies for accounting and financial reporting of transactions, estimates and forecasts. Inaccurate, incomplete or untimely reporting will not be tolerated and can severely damage the Company and result in legal liability.

Employees should be on guard for, and promptly report, any possibility of inaccurate or incomplete financial reporting. Particular attention should be paid to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Financial results that seem inconsistent with the performance of the underlying business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Transactions that do not seem to have an obvious business purpose; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Requests to circumvent ordinary review and approval procedures.

The Company's senior financial officers and other employees working in the finance department have a special responsibility to ensure that all of the Company's financial disclosures are full, fair, accurate, timely and understandable. Any practice or situation that might undermine this objective should be reported to the Compliance Officer.

Employees are prohibited from directly or indirectly taking any action to coerce, manipulate, mislead or fraudulently influence the Company's independent auditors for the purpose of rendering the financial statements of the Company materially misleading. Prohibited actions include but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issuing or reissuing a report on the Company's financial statements that is not warranted in the
circumstances (due to material violations of U.S. GAAP, generally accepted auditing standards or other professional or regulatory standards);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not performing audit, review or other procedures required by generally accepted auditing standards or other
professional standards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not withdrawing an issued report when withdrawal is warranted under the circumstances; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• not communicating matters required to be communicated to the Company's Audit Committee.

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**IX.** **COMPANY RECORDS** 

Accurate and reliable records are crucial to the Company's business and form the basis of its earnings statements, financial reports and other disclosures to the public. The Company's records are a source of essential data that guides business decision-making and strategic planning. Company records include, but are not limited to, booking information, payroll, timecards, travel and expense reports, e-mails, accounting and financial data, measurement and performance records, electronic data files and all other records maintained in the ordinary course of business.

All Company records must be complete, accurate and reliable in all material respects. There is never an acceptable reason to make false or misleading entries. Undisclosed or unrecorded funds, payments or receipts are strictly prohibited. An employee is responsible for understanding and complying with the Company's recordkeeping policy. An employee should contact the Compliance Officer if he/she has any questions regarding the recordkeeping policy.

**X.** **COMPLIANCE WITH LAWS AND REGULATIONS** 

Each employee has an obligation to comply with the laws of the cities, provinces, regions and countries in which the Company operates. This includes, without limitation, laws covering commercial bribery and kickbacks, patent, copyrights, trademarks and trade secrets, information privacy, insider trading, offering or receiving gratuities, employment harassment, environmental protection, occupational health and safety, false or misleading financial information, misuse of corporate assets and foreign currency exchange activities. Employees are expected to understand and comply with all laws, rules and regulations that apply to their positions at the Company. If any doubt exists about whether a course of action is lawful, the employee should seek advice immediately from the Compliance Officer.

**XI.** **DISCRIMINATION AND HARASSMENT** 

The Company is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment based on race, ethnicity, religion, gender, age, national origin or any other protected class. For further information, employees should consult the Compliance Officer.

**XII.** **FAIR DEALING** 

Each employee should endeavor to deal fairly with the Company's customers, suppliers, competitors and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.

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**XIII.** **HEALTH AND SAFETY** 

The Company strives to provide employees with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for other employees by following environmental, safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. Violence or threats of violence are not permitted.

Each employee is expected to perform his/her duty to the Company in a safe manner, not under the influence of alcohol, illegal drugs or other controlled substances. The use of illegal drugs or other controlled substances in the workplace is prohibited.

**XIV.** **VIOLATIONS OF THE CODE** 

All employees have a duty to report any known or suspected violation of this Code, including any violation of laws, rules, regulations or policies that apply to the Company. Reporting a known or suspected violation of this Code by others will not be considered an act of disloyalty, but an action to safeguard the reputation and integrity of the Company and its employees.

If an employee knows of or suspects a violation of this Code, it is such employee's responsibility to immediately report the violation to the Compliance Officer, who will work with the employee to investigate his/her concern. All questions and reports of known or suspected violations of this Code will be treated with sensitivity and discretion. The Compliance Officer and the Company will protect the employee's confidentiality to the extent possible, consistent with the law and the Company's need to investigate the employee's concern.

It is the Company's policy that any employee who violates this Code will be subject to appropriate discipline, including termination of employment, based upon the facts and circumstances of each particular situation. An employee's conduct, if it does not comply with the law or with this Code, can result in serious consequences for both the employee and the Company.

The Company strictly prohibits retaliation against an employee who, in good faith, seeks help or reports known or suspected violations. An employee inflicting reprisal or retaliation against another employee for reporting a known or suspected violation will be subject to disciplinary action, including termination of employment.

**XV.** **WAIVERS OF THE CODE** 

Waivers of this Code will be granted on a case-by-case basis and only in extraordinary circumstances. Waivers of this Code may be made only by the Board, or the appropriate committee of the Board, and may be promptly disclosed to the public if so required by applicable laws and regulations and rules of the applicable stock exchange.

------

**XVI.** **CONCLUSION** 

This Code contains general guidelines for conducting the business of the Company consistent with the highest standards of business ethics. If employees have any questions about these guidelines, they should contact the Compliance Officer. We expect all employees to adhere to these standards. Each employee is separately responsible for his/her actions. Conduct that violates the law or this Code cannot be justified by claiming that it was ordered by a supervisor or someone in higher management positions. If an employee engages in conduct prohibited by the law or this Code, such employee will be deemed to have acted outside the scope of his/her employment. Such conduct will subject the employee to disciplinary action, including termination of employment.

**\* \* \* \* \* \* \* \* \* \* \* \* \***

## Exhibit 99.2

**Exhibit 99.2**![LOGO](g134595g1024102808113.jpg)

January 23, 2023

**TO: New Ruipeng Pet Group Inc.** 

11F, Building B, Kingkey Timemark

No.9289 Binhe Boulevard, Futian District

Shenzhen, Guangdong Province 518042

People's Republic of China

**Re: The Listing of New Ruipeng Pet Group Inc. (the "Company") on the Nasdaq Global Select Market** 

Ladies and Gentlemen:

We are qualified lawyers of the People's Republic of China (the "**PRC**", which, for the purpose of this opinion, does not include the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan) and as such are qualified to issue this legal opinion on the laws of the PRC. We have acted as legal counsel of the Company on the laws of the PRC (i) the proposed initial public offering (the "**Offering**") of certain number of American depositary shares (the "**ADSs"**, each representing certain number of Class A ordinary shares of the Company), by the Company as set forth in the Company's registration statement on Form F-1, including all amendments or supplements thereto (the "**Registration Statement**"), filed by the Company with the United States Securities and Exchange Commission (the "**SEC**") in relation to the Offering, and (ii) the proposed listing and trading of the Company's ADSs on the Nasdaq Global Select Market.

The following terms as used in this opinion are defined as follows:

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| | |
|:---|:---|
| "**Governmental Agency**" | means any national, provincial, municipal or local governmental authority, agency or body in the PRC having jurisdiction over any of the PRC Companies. |
| **"M&A Rules"** | means the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (《关于外国投资者并购境内企业的规定》), which was issued by six PRC regulatory agencies, namely, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission (the "**CSRC**") and the State Administration for Foreign Exchange, on August 8, 2006 and became effective on September 8, 2006, as amended by the Ministry of Commerce on June 22, 2009. |

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| | |
|:---|:---|
| **"PRC Companies"** | means collectively, the PRC-incorporated companies set forth in Schedule attached hereto. |
| **"PRC Laws"** | means any and all laws, regulations, statutes, rules, decrees, notices and supreme court's judicial interpretations currently in force and publicly available in the PRC as of the date hereof. |

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Capitalized terms used but not defined herein shall, unless otherwise provided in this opinion, have the meanings ascribed to them under the Underwriting Agreement.

For the purpose of giving this opinion, we have examined the originals or copies, certified or otherwise identified to our satisfaction of corporate records, agreements, documents and other instruments provided to us and such other documents or certificates issued or representations made by officials of governmental authorities and other public organizations and by officers and representatives of the Company as we have deemed necessary and appropriate as a basis for the opinions hereinafter set forth.

In such examination, we have assumed: (i) the genuineness of all signatures, the authenticity of all documents submitted to us as originals; (ii) the conformity to originals of all documents submitted to us as certified or reproduced copies; (iii) that all factual statements made in all documents are correct in all material respects; (iv) that all parties to the documents have full power and authority to enter into, and have duly executed and delivered, such documents; (v) that any documents submitted to us remains in full force and effect up to the date of this opinion and has not been amended, varied, cancelled or superseded by any other document, agreement or action; and (vi) that all the relevant information and materials that have been provided to us by the Company are true, accurate, complete and not misleading, and that the Company has not withheld anything that, if disclosed to us, would reasonably cause us to alter this opinion in whole or in part. Where important facts were not independently established to us, we have relied upon certificates issued by competent governmental authorities and appropriate representatives of the Company and/or other relevant entities and/or upon representations made by such persons.

We do not purport to be experts on and do not purport to be generally familiar with or qualified to express legal opinions on any laws other than the PRC Laws and accordingly express no legal opinion herein on any laws of any jurisdiction other than the PRC. For the purpose of this opinion, the laws of the PRC do not include the laws of Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan.

Based on the foregoing and subject to any matters not disclosed to us, we are of the following opinion:

(i) Except as disclosed in the Registration Statement and based on our understanding of the current PRC Laws, the
ownership structure of the PRC Companies, both currently and immediately after giving effect to the Offering, does not and will not violate applicable PRC Laws currently in effect.

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(ii) the M&A Rules, among other things, purport to require that an offshore special purpose vehicle controlled
directly or indirectly by PRC domestic companies or individuals and formed for purposes of overseas listing through acquisition of PRC domestic interests obtain the approval of the CSRC prior to the listing and trading of such special purpose
vehicle's securities on an overseas stock exchange. The CSRC has not issued any definitive rules or interpretations in force concerning whether offerings such as the Offering are subject to the CSRC approval procedures under the M&A Rules.
Based on our understanding of the PRC Laws, the Company is not required to obtain approval from the CSRC under the M&A Rules for listing and trading of the ADSs. However, uncertainties still exist as to how the M&A Rules will be interpreted
and implemented and our opinion stated above is subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules;

(iii) 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 PRC Civil Procedures Law based either on treaties between China and the jurisdiction where the judgment is made or on principles of reciprocity between
jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil
Procedures Law, courts in the PRC will not enforce a foreign judgment against a company or its directors and officers if they decide that the judgment violates the basic principles of PRC law 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 or the Cayman Islands;

(iv) To the best of our knowledge after due and reasonable inquiry, the statements set forth in the Registration
Statement under the captions "Prospectus Summary", "Risk Factors", "Dividend Policy", "Enforceability of Civil Liabilities", "Corporate History and Structure", "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Taxation – The PRC", "Business", "Regulations - PRC Regulations" and "Taxation – PRC Taxation", in each case insofar as such statements
purport to constitute summaries of the matters of the PRC Laws, fairly reflect the matters purported to be summarized and are true and correct in all material respects.

Although, except in respect of the PRC legal matters opined herein, we do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement.

The PRC Laws referred herein are laws of the PRC currently in force and there is no guarantee that any of such laws will not be changed, amended or replaced in the immediate future or in the longer term with or without retrospective effect.

------

This opinion is, in so far as it relates to the enforceability of a contract or agreement, subject to (a) any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting creditors' rights generally, (b) possible judicial or administrative actions, and (c) judicial discretion with respect to the availability of indemnification, remedies or defenses, the calculation of damages, the entitlement to attorneys fees and other costs, the waiver of immunity from jurisdiction of any court or from legal process.

This opinion is intended to be used in the context which is specifically referred to herein and each section should be looked at as a whole and no part should be extracted and referred to independently. It is delivered by us in our capacity as the Company's PRC legal counsel solely for the purpose of the Registration Statement publicly submitted to the SEC on the date of this opinion and may not be used for any other purpose without our prior written consent. We hereby consent to the use of this opinion in, and the filing hereof as an exhibit to, the Registration Statement, and to the reference to our name in such Registration Statement. We do not thereby admit that we fall within the category of the persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the regulations promulgated thereunder.

Yours faithfully,

/s/ Haiwen & Partners

Haiwen & Partners

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**SCHEDULE List of PRC Companies**

## Exhibit 99.3

**Exhibit 99.3** 

January 23, 2023

**New Ruipeng Pet Group Inc.** 

11F, Building B, Kingkey Timemark

No.9289 Binhe Boulevard, Futian District

Shenzhen, Guangdong Province 518042

People's Republic of China

**<u>Re: Consent of Frost & Sullivan</u>**

Ladies and Gentlemen,

Reference is made to the registration statement on Form F-1 (the "Registration Statement") filed by New Ruipeng Pet Group Inc. (the "Company") with the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended, in connection with its proposed initial public offering (the "Proposed IPO").

We hereby consent to the use of and references to our name and the inclusion of information, data and statements from our research reports and amendments thereto, including, without limitation, the industry report titled "China's Pet Market Independent Market Study" (collectively, the "Reports"), and any subsequent amendments to the Reports, as well as the citation of our Reports and amendments thereto, (i) in the Registration Statement and any amendments thereto, including, but not limited to, under the "Prospectus Summary", "Industry" and "Business" sections; (ii) in any written correspondence with the SEC, (iii) in any other future filings with the SEC by the Company, including, without limitation, filings on Form 20-F, Form 6-K and other SEC filings (collectively, the "SEC Filings"), (iv) on the websites or in the publicity materials of the Company and its subsidiaries and affiliates, (v) in institutional and retail roadshows and other activities in connection with the Proposed IPO, and (vi) in other publicity and marketing materials in connection with the Proposed IPO.

We further hereby consent to the filing of this consent letter as an exhibit to the Registration Statement and any amendments thereto and as an exhibit to any other SEC Filings by the Company for the use of our data and information cited for the above-mentioned purposes.

*[Signature page follows]* 

------

Yours faithfully,

For and on behalf of

**Frost & Sullivan Limited** 

---

| |
|:---|
| /s/ Charles Lau |
| Name: Charles Lau |
| Title: Consulting Director |

---

## Exhibit 99.4

**Exhibit 99.4** 

**New Ruipeng Pet Group Inc.** 

**11F, Building B, Kingkey Timemark** 

**No.9289 Binhe Boulevard, Futian District** 

**Shenzhen, Guangdong Province 518042** 

**People's Republic of China** 

**+86 755-8398-6686** 

January 23, 2023

**<u>VIA EDGAR</u>**

Division of Corporation Finance

Office of Chief Accountant

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

---

| | |
|:---|:---|
| **Re:** | **New Ruipeng Pet Group Inc.**  |

---

**Registration Statement on Form F-1** <br>

**(CIK Number: 0001841931)** <br>

**<u>Representations Made Pursuant to Instruction 2 to Item 8.A.4 of Form 20-F</u>** <br>

To whom it may concern:

New Ruipeng Pet Group Inc. is an exempted company incorporated under the laws of the Cayman Islands with limited liability (the "**Company**"). In connection with the proposed initial public offering of the Company's ordinary shares to be represented by American depositary shares (the "**Offering**"), the Company hereby respectfully makes the representations to the Securities and Exchange Commission (the "**Commission**") required by Instruction 2 to Item 8.A.4 of Form 20-F, which states that in the case of a company's initial public offering, a company may comply with only the 15-month requirement in Item 8.A.4 of Form 20-F if the company is able to make the representations specified by Instruction 2 to Item 8.A.4 of Form 20-F.

The Company's filing of the registration statement on Form F-1 (the "**Registration Statement**") on the date hereof contained audited financial statements prepared in accordance with accounting principles generally accepted in the United States of America for the year ended December 31, 2021 and unaudited financial statements for the nine months ended September 30, 2022.

------

In submitting the Registration Statement, the Company is complying with the 15-month requirement, rather than the 12-month requirement, with respect to the last year of audited financial statements. The Company is submitting this representation letter pursuant to Instruction 2 to Item 8.A.4 of Form 20-F, which provides that "[a] company may comply with only the 15-month requirement in this item if the company is able to represent that it is not required to comply with the 12-month requirement in any other jurisdiction outside the United States and that complying with the 12-month requirement is impracticable or involves undue hardship."

The Company hereby represents to the Commission that:

1. the Company is not required by any jurisdiction outside of the United States to issue audited financial
statements as of a date not older than 12 months at the time this document is submitted;

2. compliance with the 12-month requirement in Item 8.A.4 of Form 20-F is impracticable and involves undue hardship for the Company;

3. the Company does not anticipate that its audited financial statements for the year ended December 31, 2022
will be available until April or May 2023; and

4. in no event will the Company seek effectiveness of the Registration Statement if its audited financial
statements are older than 15 months at the time of the Offering.

The Company is submitting this letter as an exhibit to the Registration Statement pursuant to Instruction 2 to Item 8.A.4 of Form 20-F.

*\* \* \** 

------

Please do not hesitate to contact the undersigned at zhoucg@rp-pet.cn or the Company's counsel Haiping Li of Skadden, Arps, Slate, Meagher & Flom LLP at haiping.li@skadden.com if you have any questions regarding the foregoing.

---

| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| **New Ruipeng Pet Group Inc.** | **New Ruipeng Pet Group Inc.** |
|  By: | /s/ Chenguang Zhou |
| Name: | Chenguang Zhou |
| Title: | Chief Financial Officer |

---

cc: Haiping Li, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP

Yuting Wu, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP

Brian V. Breheny, Esq., Partner, Skadden, Arps, Slate, Meagher & Flom LLP

Daniel You, Partner, Ernst & Young Hua Ming LLP

## Ex-Filing

**Exhibit 107** 

**Calculation of Filing Fee Table** 

**Form F-1** 

(Form Type)

**New Ruipeng Pet Group Inc.** 

(Exact Name of Registrant as Specified in its Charter)

**Table 1: Newly Registered Securities** 

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Security<br>Type | Security Class<br>Title<sup>(1)(2)</sup> | Fee<br> Calculation<br> Rule | Amount<br> Registered | Proposed<br> Maximum<br> Offering<br> Price<br> Per Unit | Maximum Aggregate<br> Offering<br> Price<sup>(3)</sup> | Fee Rate | Amount of<br> Registration<br> Fee |
| &nbsp;&nbsp;&nbsp;**Fees to Be Paid** | Equity | Ordinary shares, par value US$0.000001 per share | Rule 457(o) |  |  | US$100,000,000.00 | US$110.20 per US$1,000,000 | US$11,020.00 |
|  | **Total Offering Amount** | **Total Offering Amount** | **Total Offering Amount** | **Total Offering Amount** |  | US$100,000,000.00 |  | US$11,020.00 |
|  | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  |  | N/A |
|  | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  |  | US$11,020.00 |

---

<u> </u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) American depositary shares issuable upon deposit of ordinary shares registered hereby will be registered under
a separate registration statement on Form F-6 (Registration No. 333-). Each American depositary share represents
 ordinary shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes ordinary shares that are issuable upon the exercise of the underwriters' over-allotment option.
Also includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this
registration statement and the date the shares are first bona fide offered to the public. These ordinary shares are not being registered for the purpose of sales outside the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o)
under the Securities Act of 1933.