REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one Class A ordinary share |
||||
nominal or US$0.0001 per share |
* |
Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares. |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. |
||||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |
☐ Yes ☒ |
|||
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
☐ Yes ☒ |
|||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |
☒ ☐ No |
|||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). |
☒ ☐ No |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. |
☒ |
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Emerging growth company |
† |
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Indicate by check mark which basis of accounting the registration has used to prepare the financial statements included in this filing: |
☒ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which consolidated financial statement item the registrant has elected to follow. |
☐ Item 17 ☐ Item 18 | |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). |
☐ Yes | |
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) |
||
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. |
☐ Yes ☐ No |
* |
Not for trading, but only in connection with the listing on the New York Stock Exchange of the American Depositary Shares |
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ITEM 1. |
1 |
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ITEM 2. |
1 |
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ITEM 3. |
1 |
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ITEM 4. |
69 |
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ITEM 4A. |
121 |
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ITEM 5. |
121 |
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ITEM 6. |
152 |
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ITEM 7. |
163 |
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ITEM 8. |
165 |
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ITEM 9. |
167 |
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ITEM 10. |
168 |
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ITEM 11. |
175 |
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ITEM 12. |
177 |
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179 |
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ITEM 13. |
179 |
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ITEM 14. |
179 |
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ITEM 15. |
179 |
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ITEM 16A. |
180 |
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ITEM 16B. |
180 |
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ITEM 16C. |
180 |
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ITEM 16D. |
181 |
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ITEM 16E. |
181 |
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ITEM 16F. |
181 |
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ITEM 16G. |
181 |
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ITEM 16H. |
182 |
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183 |
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ITEM 17. |
183 |
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ITEM 18. |
183 |
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ITEM 19. |
183 |
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188 |
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F-1 |
• | “active borrowers” are to borrowers who have drawn down credit in the specified period; |
• | “ADSs” are to our American depositary shares, each of which represents one Class A ordinary share, and “ADRs” are to the American depositary receipts that evidence our ADSs; |
• | “amount of transactions” are to the aggregate principal amount of credit drawdowns that are provided to borrowers in the specified period, which are comprised of (i) credit drawdowns that are facilitated under our loan book business and (ii) credit drawdowns that are facilitated under our transaction services business; |
• | “Ant Financial” are to Ant Small and Micro Financial Services Group Co., Ltd., a company organized under the laws of the PRC, and its affiliates; API (Hong Kong) Investment Limited, which is wholly owned by Ant Financial, is one of our principal shareholders; |
• | “China” and the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Taiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region; |
• | “D1 delinquency rate” are to the balance of the total amount of principal and financing service fees that became overdue as of a specified date, divided by the total amount of principal and financing services fees that was due for repayment as of such date, in each case with respect to our loan book business and transaction services business; |
• | “loan book business” are to our business of offering small credit products to consumers; the relevant transactions may be funded by our institutional funding partners or our own capital, and we undertake credit risk for such transactions; |
• | “M1+ delinquency coverage ratio” are to the balance of allowance for principal and financing service fee receivables at the end of a period, divided by the total balance of outstanding principal for on-balance sheet transactions for which any installment payment was more than 30 calendar days past due as of the end of such period; |
• | “M1+ delinquency rate by vintage” are to the total outstanding principal balance of the transactions of a vintage for which any repayment is overdue for more than 30 days, divided by the total initial principal of the transactions facilitated in such vintage; |
• | “new borrowers” are to borrowers who drew down credit for the first time from our platform; new borrowers who have made at least two drawdowns in the relevant period are also counted as repeat borrowers; |
• | “number of transactions” are to the number of credit drawdowns facilitated by us to borrowers, which are comprised of (i) credit drawdowns that are facilitated under our loan book business and (ii) credit drawdowns that are facilitated under our transaction services business; |
• | “off-balance sheet transactions” are to credit drawdowns under our loan book business that are not recorded on our balance sheets; we bear credit risk for such transactions; |
• | “on-balance sheet transactions” are to credit drawdowns under our loan book business that are recorded on our balance sheets; |
• | “outstanding borrowers” are to borrowers who have outstanding loans under either the loan book business or the transaction services business as of a specified date; |
• | “provision ratio” are to the amount of provision for loan principal and financing service fee receivables incurred during a period as a percentage of the total amount of on-balance sheet transactions facilitated during such period; |
• | “P2P platforms” are to financial information intermediaries that are engaged in lending information business and directly provide peers, which can be natural persons, legal persons or other organizations, with lending information services; |
• | “Qudian marketplace” are to our online marketplace where consumers purchase merchandise offered by third-party merchandise suppliers with our merchandise credit products. |
• | “registered users” are to individuals who have registered with us; |
• | “repeat borrowers” are to active borrowers in the specified period who have made at least two drawdowns since such borrowers’ registration with us until the end of the specified period; |
• | “RMB” or “Renminbi” are to the legal currency of China; |
• | “small credit products” are to cash or merchandise credit products that are less than RMB5,000 in amount; |
• | “transaction services business” are to our business of offering loan recommendation and referral services to third-party financial service providers; we assume no credit risk for the transactions facilitated under the transaction services business; |
• | “transactions” are to borrowers’ credit drawdowns from our platform; |
• | “Wanlimu” are to our online luxury fashion products platform; |
• | “US$,” “U.S. dollars,” or “dollars” are to the legal currency of the United States; |
• | “vintage” are to the on-balance sheet transactions and off-balance sheet transactions facilitated under the loan book business during a specified time period; and |
• | “we,” “us,” “our company” and “our” are to Qudian Inc., its subsidiaries, its consolidated VIEs and/or their respective subsidiaries, as the context requires. |
• | our goal and strategies; |
• | our expansion plans; |
• | our future business development, financial condition and results of operations; |
• | our expectations regarding demand for, and market acceptance of, our credit products and services; |
• | our expectations regarding keeping and strengthening our relationships with borrowers, institutional funding partners, merchandise suppliers and other parties we collaborate with; and |
• | general economic and business conditions. |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
A. |
Selected Financial Data |
Year Ended December 31 |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands, except for share and per share data) |
||||||||||||||||||||||||
Condensed Consolidated Statement of Operations Data: |
||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Financing income |
153,554 |
1,271,456 |
3,642,184 |
3,535,276 |
3,510,055 |
504,188 |
||||||||||||||||||
Sales commission fee |
62,182 |
126,693 |
797,167 |
307,492 |
356,812 |
51,253 |
||||||||||||||||||
Sales income |
— |
— |
26,083 |
2,174,789 |
431,946 |
62,045 |
||||||||||||||||||
Penalty fees |
19,271 |
22,943 |
7,922 |
28,013 |
44,354 |
6,371 |
||||||||||||||||||
Loan facilitation income and other related income |
— |
21,754 |
302,010 |
1,646,773 |
2,297,413 |
330,003 |
||||||||||||||||||
Transaction services fee and other related income |
— |
— |
— |
— |
2,199,464 |
315,933 |
||||||||||||||||||
Total revenues |
235,007 |
1,442,846 |
4,775,366 |
7,692,343 |
8,840,044 |
1,269,793 |
||||||||||||||||||
Cost of revenues |
||||||||||||||||||||||||
Cost of goods sold |
— |
— |
(23,895 |
) | (2,003,642 |
) | (366,015 |
) | (52,575 |
) | ||||||||||||||
Cost of other revenues |
(148,417 |
) | (267,862 |
) | (856,951 |
) | (731,786 |
) | (535,773 |
) | (76,959 |
) | ||||||||||||
Total cost of revenues |
(148,417 |
) |
(267,862 |
) |
(880,846 |
) |
(2,735,428 |
) |
(901,788 |
) |
(129,534 |
) |
Year Ended December 31 |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands, except for share and per share data) |
||||||||||||||||||||||||
Operating expenses(1) |
||||||||||||||||||||||||
Sales and marketing |
(192,603 |
) | (182,458 |
) | (431,749 |
) | (540,551 |
) | (280,616 |
) | (40,308 |
) | ||||||||||||
General and administrative |
(42,426 |
) | (108,786 |
) | (183,674 |
) | (255,867 |
) | (286,059 |
) | (41,090 |
) | ||||||||||||
Research and development |
(37,530 |
) | (52,275 |
) | (153,258 |
) | (199,560 |
) | (204,781 |
) | (29,415 |
) | ||||||||||||
Changes in guarantee liabilities and risk assurance liabilities |
— |
(861 |
) | (150,152 |
) | (116,593 |
) | (1,143,427 |
) | (164,242 |
) | |||||||||||||
Provision for receivables and other assets |
(45,111 |
) | (132,176 |
) | (605,164 |
) | (1,178,723 |
) | (2,283,126 |
) | (327,951 |
) | ||||||||||||
Total operating expenses |
(317,670 |
) |
(476,556 |
) |
(1,523,997 |
) |
(2,291,294 |
) |
(4,198,009 |
) | (603,006 |
) | ||||||||||||
Other operating income |
— |
14,646 |
50,703 |
23,748 |
108,508 |
15,586 |
||||||||||||||||||
Income/ (loss) from operations |
(231,078 |
) |
713,074 |
2,421,226 |
2,689,369 |
3,848,755 |
552,839 |
|||||||||||||||||
Interest and investment income, net |
2,889 |
1,857 |
4,211 |
35,740 |
20,872 |
2,998 |
||||||||||||||||||
Foreign exchange gain/(loss), net |
752 |
(9,651 |
) | (7,177 |
) | (90,771 |
) | 6,635 |
953 |
|||||||||||||||
Other income |
779 |
47 |
2,108 |
15,231 |
24,583 |
3,531 |
||||||||||||||||||
Other expenses |
(6,505 |
) | (1,834 |
) | (363 |
) | (522 |
) | (10,323 |
) | (1,483 |
) | ||||||||||||
Net income/ (loss) before income taxes |
(233,164 |
) |
703,493 |
2,420,005 |
2,649,047 |
3,890,522 |
558,838 |
|||||||||||||||||
Income tax expenses |
— |
(126,840 |
) | (255,546 |
) | (157,731 |
) | (626,234 |
) | (89,953 |
) | |||||||||||||
Net income /(loss) |
(233,164 |
) |
576,653 |
2,164,459 |
2,491,316 |
3,264,288 |
468,886 |
|||||||||||||||||
Net Income/(loss) attributable to Qudian Inc.’s shareholders |
(233,164 |
) |
576,653 |
2,164,459 |
2,491,316 |
3,264,288 |
468,886 |
|||||||||||||||||
Earnings/(loss) per share for Class A and Class B ordinary shares |
||||||||||||||||||||||||
— Basic |
(2.94 |
) | 7.27 |
17.13 |
7.82 |
11.72 |
1.68 |
|||||||||||||||||
Earnings/(loss) per share for Class A and Class B ordinary shares |
||||||||||||||||||||||||
— Diluted |
(2.94 |
) | 1.90 |
7.09 |
7.74 |
10.94 |
1.57 |
|||||||||||||||||
Earnings per ADS (1 Class A ordinary share equals 1 ADSs) |
||||||||||||||||||||||||
— Basic |
17.13 |
7.82 |
11.72 |
1.68 |
||||||||||||||||||||
Earnings per ADS (1 Class A ordinary share equals 1 ADSs) |
||||||||||||||||||||||||
— Diluted |
7.09 |
7.74 |
10.94 |
1.57 |
Year Ended December 31 |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands, except for share and per share data) |
||||||||||||||||||||||||
Weighted average number of Class A and Class B ordinary shares outstanding |
||||||||||||||||||||||||
— Basic |
79,305,191 |
79,305,191 |
126,390,196 |
318,685,836 |
278,531,382 |
278,531,382 |
||||||||||||||||||
Weighted average number of Class A and Class B ordinary shares outstanding |
||||||||||||||||||||||||
— Diluted |
79,305,191 |
303,778,745 |
305,221,444 |
321,955,142 |
300,457,711 |
300,457,711 |
||||||||||||||||||
Other comprehensive loss: |
||||||||||||||||||||||||
Foreign currency translation adjustment |
— |
— |
(77,947 |
) | 33,089 |
31,893 |
4,581 |
|||||||||||||||||
Total comprehensive income/(loss) |
(233,164 |
) |
576,653 |
2,086,512 |
2,524,405 |
3,296,181 |
473,467 |
|||||||||||||||||
Total comprehensive income/(loss) attributable to Qudian Inc.’s shareholders |
(233,164 |
) |
576,653 |
2,086,512 |
2,524,405 |
3,296,181 |
473,467 |
(1) | Share-based compensation expenses are allocated in operating expenses as follows: |
For the year ended December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Sales and marketing |
23,691 |
690 |
1,891 |
5,641 |
4,482 |
644 |
||||||||||||||||||
General and administrative |
11,425 |
18,986 |
42,849 |
38,587 |
74,312 |
10,674 |
||||||||||||||||||
Research and development |
20,492 |
2,457 |
19,316 |
13,753 |
8,505 |
1,222 |
||||||||||||||||||
Total share-based compensation expenses |
55,607 |
22,134 |
64,056 |
57,981 |
87,299 |
12,540 |
As of December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Summary Consolidated Balance Sheets: |
||||||||||||||||||||||||
Cash and cash equivalents |
210,114 |
785,770 |
6,832,306 |
2,501,188 |
2,860,938 |
410,948 |
||||||||||||||||||
Restricted cash |
— |
— |
2,252,646 |
339,827 |
1,257,649 |
180,650 |
||||||||||||||||||
Time deposits |
— |
— |
— |
— |
231,132 |
33,200 |
||||||||||||||||||
Short-term amounts due from related parties (1) |
34,930 |
585,906 |
551,215 |
2 |
— |
— |
||||||||||||||||||
Short-term loan principal and financing service fee receivables, net |
2,060,768 |
4,826,791 |
8,758,545 |
8,417,821 |
7,894,697 |
1,134,002 |
||||||||||||||||||
Short-term finance lease receivables, net |
— |
— |
8,508 |
508,647 |
398,256 |
57,206 |
||||||||||||||||||
Short-term contract assets |
— |
— |
— |
903,436 |
2,741,914 |
393,851 |
||||||||||||||||||
Long-term loan principal and financing service fee receivables |
177,582 |
87,822 |
— |
665,653 |
424 |
61 |
||||||||||||||||||
Long-term finance lease receivables, net |
— |
— |
17,900 |
649,243 |
239,697 |
34,430 |
||||||||||||||||||
Long-term contract assets |
— |
— |
— |
15,597 |
273,597 |
39,300 |
||||||||||||||||||
Total assets |
2,675,596 |
7,117,599 |
19,380,416 |
16,253,375 |
18,361,604 |
2,637,479 |
||||||||||||||||||
Short-term borrowings and interest payables |
1,562,883 |
4,183,231 |
7,979,415 |
3,860,441 |
1,049,570 |
150,761 |
||||||||||||||||||
Long-term borrowings and interest payables |
89,358 |
76,052 |
510,024 |
413,400 |
— |
— |
||||||||||||||||||
Total liabilities |
3,306,965 |
4,604,010 |
9,840,049 |
5,432,762 |
6,437,552 |
924,696 |
||||||||||||||||||
Total mezzanine equity |
5,943,978 |
5,943,978 |
— |
— |
— |
— |
||||||||||||||||||
Total shareholders’ equity / (deficit) |
(6,575,347 |
) | (3,430,389 |
) | 9,540,367 |
10,820,613 |
11,924,052 |
1,712,783 |
(1) | Includes RMB33.8 million, RMB404.6 million and RMB549.8 million deposited in our Alipay accounts as of December 31, 2015 and 2016, 2017. Such amount is unrestricted as to withdrawal and use and readily available to us on demand. |
For the year ended December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Adjusted net income/(loss) (1) |
(177,557 |
) | 598,787 |
2,228,515 |
2,549,297 |
3,351,587 |
481,426 |
(1) | Adjusted net income/(loss) is defined as net income/(loss) excluding share-based compensation expenses. |
For the year ended December 31, |
||||||||||||||||||||||||
2015 |
2016 |
2017 |
2018 |
2019 |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Net income/(loss) |
(233,164 |
) | 576,653 |
2,164,459 |
2,491,316 |
3,264,288 |
468,886 |
|||||||||||||||||
Add: share-based compensation expenses |
55,607 |
22,134 |
64,056 |
57,981 |
87,299 |
12,540 |
||||||||||||||||||
Adjusted net income/(loss) |
(177,557 |
) | 598,787 |
2,228,515 |
2,549,297 |
3,351,587 |
481,426 |
B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
• | offer personalized and competitive credit products; |
• | increase the utilization of our credit products by existing borrowers as well as new borrowers; |
• | offer attractive financing service fees while driving the growth and profitability of our business; |
• | maintain low delinquency rates of transactions facilitated by us; |
• | develop sufficient, diversified, cost-efficient and reputable institutional funding sources; |
• | maintain and enhance our relationships with our other business partners, including merchandise suppliers and financial service providers that participate on our open platform; |
• | continue to broaden our prospective borrower base; |
• | navigate a complex and evolving regulatory environment; |
• | improve our operational efficiency; |
• | attract, retain and motivate talented employees to support our business growth; |
• | enhance our technology infrastructure to support the growth of our business and maintain the security of our system and the confidentiality of the information provided and utilized across our system; |
• | navigate economic condition and fluctuation; and |
• | defend ourselves against legal and regulatory actions, such as actions involving intellectual property or privacy claims. |
• | maintain the effectiveness, quality and reliability of our systems; |
• | provide borrowers with a superior experience; |
• | engage a large number of quality borrowers with low delinquency rate; |
• | enhance and improve our credit assessment model and risk management system; |
• | enhance the quality of our funding sources; |
• | effectively manage and resolve borrower complaints; and |
• | effectively protect personal information and privacy of borrowers. |
• | our failure to predict market demand accurately and supply attractive and increasingly personalized credit products at appropriate pricing and amount that meet this demand in a timely fashion; |
• | borrowers may not like, find useful or agree with any changes made to our platform; |
• | our existing credit products may cease to be popular among current borrowers or prove to be less attractive to prospective borrowers; |
• | our failure to offer attractive merchandise on the Qudian marketplace that can be purchased by borrowers through merchandise credit products at competitive amount of financing service fees to meet consumer needs and preferences; |
• | our failure to assess risk associated with new products and to properly price new and existing products; |
• | negative publicity about our credit products, our platform or our mobile apps’ performance or effectiveness; |
• | views taken by regulatory authorities that the launch of new credit products and changes to our existing credit products do not comply with PRC laws, rules or regulations applicable to us; and |
• | the introduction or anticipated introduction of competing offerings by competitors. |
• | become delinquent in the payment of an outstanding obligation; |
• | defaulted on a pre-existing debt obligation; |
• | taken on additional debt; or |
• | sustained other adverse financial events. |
• | our ability to attract new borrowers and maintain relationships with existing borrowers; |
• | the amount of transactions; |
• | the mix of products we offer; |
• | delinquency rates of transactions we facilitate; |
• | the amount and timing of cost of revenues and operating expenses related to acquiring borrowers and the maintenance and expansion of our business, operations and infrastructure; |
• | our ability to establish relationship with additional institutional funding partners and maintain relationships with existing institutional funding partners; |
• | our ability to secure funding for credit we facilitate on reasonable terms; |
• | our emphasis on borrower experience instead of near-term growth; |
• | the timing of expenses related to the development or acquisition of technologies or businesses; |
• | network outages or security breaches; |
• | general economic, industry and market conditions; and |
• | changes in applicable laws and regulations. |
• | the growth of Internet, broadband, personal computer and mobile penetration and usage in China, and the rate of any such growth; |
• | the trust and confidence level of online retail and mobile commerce consumers, including our users, in China, as well as changes in borrower demographics and consumer tastes and preferences; |
• | the selection, price and popularity of merchandise that we and our competitors offer online; |
• | whether alternative retail channels or business models that better address the needs of consumers emerge in China; and |
• | the development of fulfillment, payment and other ancillary services associated with retail and mobile commerce purchases. |
• | difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; |
• | inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits including the failure to successfully further develop the acquired technology; |
• | difficulties in retaining, training, motivating and integrating key personnel; |
• | diversion of management’s time and resources from our normal daily operations and potential disruptions to our ongoing businesses; |
• | difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; |
• | difficulties in retaining relationships with borrowers, institutional funding partners, merchandise suppliers, employees and other partners of the acquired business; |
• | risks of entering markets in which we have limited or no prior experience; |
• | regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; |
• | assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; |
• | liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and |
• | unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions. |
• | revoking our business and operating licenses; |
• | levying fines on us; |
• | confiscating any of our income that they deem to be obtained through illegal operations; |
• | shutting down our services; |
• | discontinuing or restricting our operations in China; |
• | imposing conditions or requirements with which we may not be able to comply; |
• | requiring us to change our corporate structure and contractual arrangements; |
• | restricting or prohibiting our use of the proceeds from overseas offering to finance our PRC consolidated VIEs’ business and operations; and |
• | taking other regulatory or enforcement actions that could be harmful to our business. |
• | the composition of our board of directors and, through it, any determinations with respect to our operations, business direction and policies, including the appointment and removal of officers; |
• | any determinations with respect to mergers or other business combinations; |
• | our disposition of substantially all of our assets; and |
• | any change in control. |
• | regulatory developments affecting us or our industry; |
• | announcements of studies and reports relating to the quality of our credit offerings or those of our competitors; |
• | changes in the economic performance or market valuations of other consumer finance service providers; |
• | actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; |
• | changes in financial estimates by securities research analysts; |
• | conditions in the market for consumer finance services; |
• | announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; |
• | additions to or departures of our senior management; |
• | fluctuations of exchange rates between the Renminbi and the U.S. dollar; |
• | release or expiry of lock-up or other transfer restrictions on our outstanding shares or ADSs; and |
• | sales or perceived potential sales of additional Class A ordinary shares or ADSs. |
• | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
• | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
• | have a majority of the board be independent (although all of the members of the audit committee must be independent under the Exchange Act); |
• | have a compensation committee or a nominating and corporate governance committee consisting entirely of independent directors; or |
• | have regularly scheduled executive sessions with only independent directors each year. |
ITEM 4. |
INFORMATION ON THE COMPANY |
A. |
History and Development of the Company |
B. |
Business Overview |
• | Installments |
• | Durations |
• | Prepayments |
• | Penalty fee |
• | Repayment method |
• | Information Authentication |
• | Restricted List Search |
• | Admission Module |
• | Redline Module |
• | Enhanced Rule Module |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
On-balance sheet transactions: |
||||||||||||||||
Credit drawdowns that were funded by institutional funding partners |
47,247,820 |
17,786,502 |
6,827,311 |
980,682 |
||||||||||||
Credit drawdowns transferred to institutional funding partners |
22,430,109 |
1,664,062 |
477,200 |
68,545 |
||||||||||||
Credit drawdowns funded through trusts (1) |
24,817,711 |
16,122,440 |
6,350,111 |
912,136 |
||||||||||||
Credit drawdowns that were funded by our own capital |
31,225,916 |
19,249,864 |
15,933,116 |
2,288,649 |
||||||||||||
Total on-balance sheet transactions |
78,473,736 |
37,036,366 |
22,760,427 |
3,269,331 |
||||||||||||
Off-balance sheet transactions |
10,469,933 |
20,904,603 |
38,080,279 |
5,469,890 |
||||||||||||
Transactions under the loan book business |
88,943,669 |
57,940,969 |
60,840,706 |
8,739,221 |
||||||||||||
Transactions under the transaction services business |
— |
— |
23,683,642 |
3,401,942 |
||||||||||||
Total |
88,943,669 |
57,940,969 |
84,524,348 |
12,141,163 |
||||||||||||
(1) | Excludes credit drawdowns funded by our own capital through trusts. |
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
% |
||||||||||||
On-balance sheet transactions |
||||||||||||
Credit drawdowns that were funded by institutional funding partners |
53.1 |
30.7 |
8.1 |
|||||||||
Credit drawdowns transferred to institutional funding partners |
25.2 |
2.9 |
0.6 |
|||||||||
Credit drawdowns funded through trusts (1) |
27.9 |
27.8 |
7.5 |
|||||||||
Credit drawdowns that were funded by our own capital |
35.1 |
33.2 |
18.9 |
|||||||||
Total on-balance sheet transactions |
88.2 |
63.9 |
26.9 |
|||||||||
Off-balance sheet transactions |
11.8 |
36.1 |
45.1 |
|||||||||
Transactions under the loan book business |
100.0 |
100.0 |
72.0 |
|||||||||
Transactions under the transaction services business |
— |
— |
28.0 |
|||||||||
Total |
100.0 |
100.0 |
100.00 |
(1) | Excludes credit drawdowns funded by our own capital through trusts. |
• | Board representation |
• | Preemptive rights |
• | Right of first refusal |
• | Transfer restrictions |
• | Non-compete |
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Percentage of delinquent principal and services fees for on-balance sheet transactions recovered |
44.2 |
% | 79.4 |
% | 37.6 |
% |
• | maintaining and strengthening our proprietary data and analytics systems, including our decisioning engine, proprietary risk management system and fraud prevention system; and |
• | ensuring our technology system, including front-end and back-end management systems, collection systems, financial systems, security protocols and business continuity plans are well established, reviewed, tested and continuously strengthened. |
• | Financial systems. |
• | Transaction syndication and clearing system. same-day basis. The system adapts to new funding arrangements quickly. For example, it typically takes two days to complete the configuration for a new trust and two weeks to do so for a new off-balance sheet funding arrangement with a bank. The advanced and efficient |
system allows us to quickly match demand with institutional funding with appropriate risk appetite, thereby providing credit to consumer instantaneously. |
• | Liquidity forecast system. |
• | Security. |
• | Front-end systems. |
• | Back-end management systems. back-end systems include, among other things, our user credit and repayment management system, merchandise procurement system, merchandise management system and user information management system. |
• | Collection systems. |
• | The overall capital cost charged on a borrower, comprised of interests and fees, should be in compliance with the judicial interpretations by the Supreme People’s Court of the PRC regarding interest rates in private lending; according to the Private Lending Judicial Interpretations, if the annual interest rate of a private loan is higher than 36%, the excess will be void and will not be enforced by the courts; |
• | A provider of cash loan shall not deduct interests, service fees, management fees or deposits from the loan principal or set excessive overdue interest, late fee or penalty interest; |
• | A bank may not outsource its core business functions, such as credit assessment and risk management, to third parties; |
• | A bank participating in loan facilitation transactions may not accept credit enhancement services from a third party which has not obtained any license or approval to provide guarantees, including credit enhancement service in the form of a commitment to assume default risks; and |
• | A bank may not permit its service provider in cash loan business to collect interest or fees from borrowers. |
C. | Organizational Structure |
(1) | Includes 17 subsidiaries of Xiamen Financial Lease located in various cities across China. Xiamen Financial Lease and its subsidiaries were primarily involved in operating Dabai Auto, our budget auto financing business. We ceased offering auto financing products in the second quarter 2019, and we plan to wind down certain subsidiaries of Xiamen Financial Lease. |
(2) | Mr. Min Luo, our founder, chairman and chief executive officer, and Mr. Lianzhu Lv, our head of user experience department, respectively hold 99.0% and 1.0% of equity interests in Ganzhou Qudian. |
(3) | Mr. Min Luo and Mr. Hongjia He, our vice president, respectively hold 99.0% and 1.0% of equity interests in Hunan Qudian. |
(4) | The following table sets forth the shareholders of Beijing Happy Time, their respective equity interests in Beijing Happy Time and their respective relationships with shareholders of Qudian Inc. as of the date of this annual report. For further information as to the principal shareholders of Qudian Inc., see “Item 6. Directors, Senior Management and Employees — E. Share Ownership.” |
Shareholders |
Relationship with shareholders of Qudian Inc. |
Amount of Registered Capital |
Percentage of Equity Interests |
|||||||
RMB |
||||||||||
Mr. Min Luo |
Holds 100% equity interests in Qufenqi Holding Limited |
5,025,579 |
21.0 |
|||||||
Phoenix Auspicious Internet Investment L.P. and Shenzhen Guosheng Qianhai Investment Co., Ltd. |
Affiliates of Phoenix Auspicious FinTech Investment L.P. and Guosheng (Hong Kong) Investment Limited (formerly known as Wa Sung Investment Limited), or Guosheng HK, collectively referred to as Phoenix Entities |
4,596,670 |
19.2 |
|||||||
Beijing Kunlun Tech Co., Ltd. |
Affiliate of Kunlun Group Limited |
4,587,496 |
19.2 |
|||||||
Ningbo Yuanfeng Venture Capital L.P. |
Affiliate of Source Code Accelerate L.P. |
3,757,355 |
15.7 |
|||||||
Shanghai Yunxin Venture Capital Co., Ltd. |
Affiliate of API (Hong Kong) Investment Limited |
2,985,744 |
12.5 |
|||||||
Jiaxing Blue Run Quchuan Investment L.P. and Tianjin Blue Run Xinhe Investment Center L.P. |
Affiliates of Ever Bliss Fund, L.P. and Joyful Bliss Limited, collectively referred to as Zhu Entities |
1,681,366 |
7.0 |
|||||||
Tianjin Happy Share Asset Management L.P., referred to as Tianjin Happy Share(a) |
Not applicable |
1,251,742 |
5.2 |
(a) | Tianjin Happy Share was established in connection with the share incentive plan of Beijing Happy Time. For more information, see “Item 6. Directors, Senior Management and Employees — B. Compensation — 2015 Share Incentive Plan.” |
(5) | Mr. Min Luo, our founder, chairman and chief executive officer, and Mr. Long Xu, our director, respectively hold 99.9% and 0.1% of equity interests in Xiamen Qu Plus Plus Technology Development Co., Ltd. |
(6) | Includes Xiamen Qudian Commercial Factoring Co., Ltd., Jiangxi Chunmian Technology Development Co., Ltd., Ganzhou Qudian Commerce Development Co., Ltd., Xiamen Junda Network Technology Co., Ltd. and Xinjiang Qudian Technology Co., Ltd., which we expect to utilize to explore new business opportunities. |
(7) | Material subsidiaries of Beijing Happy Time include, Fuzhou Happy Time Technology Development Co., Ltd., Ganzhou Happy Fenqi Technology Development Co., Ltd., Tianjin Happy Time Technology Development Co., Ltd., Tianjin Qufenqi Technology Co., Ltd., Ganzhou Happy Fenqi Network Service Co., Ltd., Ganzhou Happy Life Network Microcredit Co., Ltd. and Fuzhou High-tech Zone Microcredit Co., Ltd. Bejing Happy Time currently operates our websites and mobile apps under the Laifenqi brand and Qudian brand. |
(8) | QuCampus is owned approximately 45.9% by us, 44.1% by Ant Financial and 10.0% by Ganzhou Happy Share, a limited partnership established in connection with the share incentive plan to be established by QuCampus. Mr. Min Luo, our founder, chairman and chief executive officer, is the general partner of Ganzhou Happy Share. We do not consolidate the financial results of QuCampus in our consolidated financial statements. |
(9) | Includes Xiamen Wanlimu Technology Co., Ltd., which operates our Wanlimu platform, and another subsidiary. |
• | exercise effective control over each of our consolidated VIEs and its subsidiaries; |
• | receive substantially all the economic benefits of each of our consolidated VIEs; and |
• | have an exclusive option to purchase all or part of the equity interests in the equity interest in or all or part of the assets of each of our consolidated VIEs when and to the extent permitted by PRC law. |
• | the ownership structures of Ganzhou Qufenqi, Xiamen Youxiang and our consolidated VIEs in China do not violate any applicable PRC law, regulation, or rule currently in effect; and |
• | the contractual arrangements among Ganzhou Qufenqi or Xiamen Youxiang, as applicable, each of our consolidated VIEs and its shareholders governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect, and will not violate any applicable PRC law, regulation, or rule currently in effect. |
D. | Facilities |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. |
Operating Results |
As of December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
(in thousands) |
||||||||||||
Registered users |
62,439 |
71,766 |
79,463 |
|||||||||
Outstanding borrowers |
5,832 |
5,260 |
6,116 |
|||||||||
Cumulative number of borrowers |
14,517 |
16,716 |
19,037 |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
On-balance sheet transactions |
78,473,736 |
37,036,366 |
22,760,427 |
3,269,331 |
||||||||||||
Off-balance sheet transactions |
10,469,933 |
20,904,603 |
38,080,279 |
5,469,890 |
||||||||||||
Transactions under the loan book business |
88,943,669 |
57,940,969 |
60,840,706 |
8,739,221 |
||||||||||||
Transactions under the transaction services business |
— |
— |
23,683,642 |
3,401,942 |
||||||||||||
Total |
88,943,669 |
57,940,969 |
84,524,348 |
12,141,163 |
||||||||||||
As December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
On-balance sheet transactions |
9,150,048 |
9,652,127 |
9,286,416 |
1,333,910 |
||||||||||||
Off-balance sheet transactions |
2,035,913 |
9,353,242 |
13,254,755 |
1,903,926 |
||||||||||||
Transactions under the loan book business |
11,185,961 |
19,005,369 |
22,541,171 |
3,237,837 |
||||||||||||
Transactions under the transaction services business |
— |
— |
15,594,775 |
2,240,049 |
||||||||||||
Total |
11,185,961 |
19,005,369 |
38,135,946 |
5,477,886 |
||||||||||||
Delinquent for |
||||||||||||||||||||||||
1-30 calendar days |
31-60 calendar days |
61-90 calendar days |
More than 90 calendar days |
Total |
||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
As of |
||||||||||||||||||||||||
December 31, 2017 |
401,975 |
124,457 |
98,289 |
181,194 |
805,915 |
123,867 |
||||||||||||||||||
December 31, 2018 |
153,188 |
108,535 |
104,483 |
298,091 |
664,297 |
96,618 |
||||||||||||||||||
December 31, 2019 |
314,330 |
212,627 |
185,994 |
629,975 |
1,342,926 |
192,899 |
Delinquent for |
||||||||||||||||||||
1-30 calendar days |
31-60 calendar days |
61-90 calendar days |
Total |
|||||||||||||||||
RMB |
RMB |
RMB |
RMB |
US$ |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
As of |
||||||||||||||||||||
December 31, 2017 |
11,111 |
5,410 |
5,376 |
21,897 |
3,366 |
|||||||||||||||
December 31, 2018 |
4,328 |
5,545 |
7,108 |
16,981 |
2,470 |
|||||||||||||||
December 31, 2019 |
6,233 |
8,118 |
10,669 |
25,019 |
3,594 |
(1) | Financing service fees are reversed post 90 calendar days. |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Amount recovered past due payments for principal |
361,354 |
500,936 |
461,822 |
66,337 |
||||||||||||
Amount recovered past due payments for financing service fees |
20,701 |
39,878 |
52,730 |
7,574 |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Amount charged off |
191,023 |
1,077,333 |
1,215,718 |
174,627 |
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
Provision ratio |
0.77 |
% | 3.09 |
% | 9.49 |
% |
As of December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
M1+ delinquency coverage ratio |
1.3x |
1.1x |
1.5x |
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
% |
||||||||||||
Charge-off ratio |
0.24 |
% | 2.91 |
% | 5.34 |
% |
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% of total revenues |
RMB |
% of total revenues |
RMB |
US$ |
% of total revenues |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||
Financing income |
3,642,184 |
76.3 |
3,535,276 |
46.0 |
3,510,055 |
504,188 |
39.7 |
|||||||||||||||||||||
Sales commission fee |
797,167 |
16.7 |
307,492 |
4.0 |
356,812 |
51,253 |
4.0 |
|||||||||||||||||||||
Sales income |
26,083 |
0.5 |
2,174,789 |
28.3 |
431,946 |
62,045 |
4.9 |
|||||||||||||||||||||
Penalty fees |
7,922 |
0.2 |
28,013 |
0.4 |
44,354 |
6,371 |
0.5 |
|||||||||||||||||||||
Loan facilitation income and other related income |
302,009 |
6.3 |
1,646,773 |
21.3 |
2,297,413 |
330,003 |
26.0 |
|||||||||||||||||||||
Transaction services fee and other related income |
— |
— |
— |
— |
2,199,464 |
315,933 |
24.9 |
|||||||||||||||||||||
Total revenues |
4,775,365 |
100.0 |
7,692,343 |
100.0 |
8,840,044 |
1,269,793 |
100.0 |
|||||||||||||||||||||
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Cost of revenues and operating expenses: |
||||||||||||||||||||||||||||
Cost of revenues |
880,846 |
18.4 |
2,735,428 |
35.6 |
901,788 |
129,534 |
10.2 |
|||||||||||||||||||||
Sales and marketing |
431,749 |
9.0 |
540,551 |
7.0 |
280,616 |
40,308 |
3.2 |
|||||||||||||||||||||
General and administrative |
183,674 |
3.8 |
255,867 |
3.3 |
286,059 |
41,090 |
3.2 |
|||||||||||||||||||||
Research and development |
153,258 |
3.2 |
199,560 |
2.6 |
204,781 |
29,415 |
2.3 |
|||||||||||||||||||||
Changes in guarantee liabilities and risk assurance liabilities |
150,152 |
3.1 |
116,593 |
1.5 |
1,143,427 |
164,242 |
12.9 |
|||||||||||||||||||||
Provision for receivables and other assets |
605,164 |
12.9 |
1,178,723 |
15.3 |
2,283,126 |
327,951 |
25.8 |
|||||||||||||||||||||
Total |
2,404,843 |
50.4 |
5,026,722 |
65.3 |
5,099,797 |
732,540 |
57.6 |
|||||||||||||||||||||
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Cost of revenues and operating expenses paid to related parties: |
||||||||||||||||
Cost of revenues (1) |
221,009 |
147,611 |
— |
— |
||||||||||||
Sales and marketing (2) |
238,115 |
32,542 |
— |
— |
||||||||||||
Total |
459,124 |
180,153 |
— |
— |
||||||||||||
(1) | Primarily includes (i) payment processing and settlement fees to Alipay, (ii) fees related to credit analysis information provided by Zhima Credit, (iii) fees related to cloud computing services provided by Alibaba Cloud Computing and (iv) interest expenses of borrowings from Guosheng Financial Holding Inc. and Guosheng Securities Asset Management Co., Ltd. in connection with their investments in several trusts. |
(2) | Includes borrower engagement fees to Alipay. |
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Cost of revenues: |
||||||||||||||||||||||||||||
Cost of goods sold |
23,895 |
0.5 |
2,003,642 |
26.1 |
366,015 |
52,575 |
4.1 |
|||||||||||||||||||||
Cost of other revenues |
856,951 |
17.9 |
731,786 |
9.5 |
535,773 |
76,959 |
6.1 |
|||||||||||||||||||||
Total |
880,846 |
18.4 |
2,735,428 |
35.6 |
901,787 |
129,534 |
10.2 |
|||||||||||||||||||||
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Provision for receivables and other assets |
605,164 |
12.7 |
1,178,723 |
15.3 |
2,283,126 |
327,951 |
25.8 |
Year Ended December 31, |
||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||
RMB |
% |
RMB |
% |
RMB |
US$ |
% |
||||||||||||||||||||||
(in thousands, except for percentages) |
||||||||||||||||||||||||||||
Sales and marketing |
1,891 |
0.0 |
5,641 |
0.1 |
4,482 |
644 |
0.1 |
|||||||||||||||||||||
General and administrative |
42,849 |
0.9 |
38,587 |
0.5 |
74,312 |
10,674 |
0.8 |
|||||||||||||||||||||
Research and development |
19,316 |
0.4 |
13,753 |
0.2 |
8,505 |
1,222 |
0.1 |
|||||||||||||||||||||
Total |
64,056 |
1.3 |
57,981 |
0.8 |
87,299 |
12,540 |
1.0 |
|||||||||||||||||||||
Year Ended December 31, |
||||||||
2016 |
2017 |
|||||||
Risk-free interest rate |
2.47% |
1.56%–2.33% |
||||||
Volatility |
49.8%–49.9% |
50.9%–52.4% |
||||||
Expected exercise multiple |
2.2–2.8 |
2.2–2.8 |
||||||
Dividend yield |
0% |
0% |
||||||
Expected term (in years) |
10 |
10 |
||||||
Exercise price (RMB) |
0.0 |
0.0 |
||||||
Fair value of share options (RMB) |
25.89–26.04 |
81.94–94.22 |
Date of Options Grant (1) |
Options Granted |
Exercise Price |
Intrinsic Value |
Fair Value of Option |
Fair Value of Ordinary Shares |
Discount for Lack of Marketability |
Discount Rate |
Type of Valuations |
||||||||||||||||||||||||
August 29, 2014 |
10,900,000 |
US$ | 0.00 |
US$ | 0.11 |
US$ | 0.11 |
US$ | 0.11 |
20.0 |
% | 25.5 |
% | Retrospective |
||||||||||||||||||
November 1, 2014 |
7,473,219 |
US$ | 0.00 |
US$ | 0.36 |
US$ | 0.36 |
US$ | 0.36 |
20.0 |
% | 25.0 |
% | Retrospective |
||||||||||||||||||
March 1, 2015 |
2,042,500 |
US$ | 0.00 |
US$ | 0.61 |
US$ | 0.61 |
US$ | 0.61 |
20.0 |
% | 24.5 |
% | Retrospective |
||||||||||||||||||
June 4, 2015 |
407,300 |
US$ | 0.00 |
US$ | 0.79 |
US$ | 0.79 |
US$ | 0.79 |
20.0 |
% | 23.0 |
% | Retrospective |
||||||||||||||||||
December 26, 2015 |
15,814,019 |
US$ | 0.00 |
US$ | 1.95 |
US$ | 1.95 |
US$ | 1.95 |
20.0 |
% | 21.0 |
% | Retrospective |
||||||||||||||||||
December 9, 2016 |
1,433,800 |
US$ | 0.00 |
US$ | 3.75 |
US$ | 3.75 |
US$ | 3.75 |
5.0 |
% | 20.5 |
% | Retrospective |
||||||||||||||||||
December 30, 2016 |
13,865,219 |
US$ | 0.00 |
US$ | 3.75 |
US$ | 3.75 |
US$ | 3.75 |
5.0 |
% | 20.5 |
% | Retrospective |
||||||||||||||||||
May 3, 2017 |
494,904 |
US$ | 0.00 |
US$ | 11.88 |
US$ | 11.88 |
US$ | 11.88 |
5.0 |
% | 20.0 |
% | Retrospective |
||||||||||||||||||
August 17, 2017 |
200,000 |
US$ | 0.00 |
US$ | 14.12 |
US$ | 14.12 |
US$ | 14.12 |
3.0 |
% | 20.0 |
% | Retrospective |
(1) | Include options that are issued close to the valuation dates indicated, and such options are valued at the nearest valuation date. |
• | Weighted average cost of capital, or WACC: The discount rates we listed in the table above were based on the WACCs determined based on a consideration of the factors, including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors. |
• | Comparable companies: In deriving the WACCs, which are used as the discount rates under the income approach, nine publicly traded companies were selected for reference as our guideline companies. The guideline companies were selected based on the following criteria: (i) online retail and mobile commerce companies or companies that provide financial lending services and (ii) China-based companies that are publicly listed in the United States, publicly listed companies in China and United States-based publicly listed companies. |
• | Discount for lack of marketability, or DLOM: DLOM was quantified by the Finnerty’s Average-Strike put options model. Under this option-pricing model, which assumed that the put option is struck at the average price of the stock before the privately held shares can be sold, the cost of the put option was considered as a basis to determine the DLOM. This option pricing model is one of the methods commonly used in estimating DLOM as it can take into consideration factors like timing of a liquidity event, such as an initial public offering, and estimated volatility of our shares. The farther the valuation date is from an expected liquidity event, the higher the put option value and thus the higher the implied DLOM. The lower DLOM is used for the valuation, the higher is the determined fair value of the ordinary shares. DLOM remained 20% in the period from inception to 2015. |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands, except for share and per share data) |
||||||||||||||||
Revenues: |
||||||||||||||||
Financing income |
3,642,184 |
3,535,276 |
3,510,055 |
504,188 |
||||||||||||
Sales commission fee |
797,167 |
307,492 |
356,812 |
51,253 |
||||||||||||
Sales income |
26,083 |
2,174,789 |
431,946 |
62,045 |
||||||||||||
Penalty fees |
7,922 |
28,013 |
44,354 |
6,371 |
||||||||||||
Loan facilitation income and other related income |
302,010 |
1,646,773 |
2,297,413 |
330,003 |
||||||||||||
Transaction services fee and other related income |
— |
— |
2,199,464 |
315,933 |
||||||||||||
Total revenues |
4,775,366 |
7,692,343 |
8,840,044 |
1,269,793 |
||||||||||||
Cost of revenues: |
||||||||||||||||
Cost of goods sold |
(23,895 |
) | (2,003,642 |
) | (366,015 |
) | (52,575 |
) | ||||||||
Cost of other revenues |
(856,951 |
) | (731,786 |
) | (535,773 |
) | (76,959 |
) | ||||||||
Total cost of revenues |
(880,846 |
) |
(2,735,428 |
) |
(901,788 |
) |
(129,534 |
) | ||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
(431,749 |
) | (540,551 |
) | (280,616 |
) | (40,308 |
) | ||||||||
General and administrative |
(183,674 |
) | (255,867 |
) | (286,059 |
) | (41,090 |
) | ||||||||
Research and development |
(153,258 |
) | (199,560 |
) | (204,781 |
) | (29,415 |
) | ||||||||
Changes in guarantee liabilities and risk assurance liabilities |
(150,152 |
) | (116,593 |
) | (1,143,427 |
) | (164,242 |
) | ||||||||
Provision for receivables and other assets |
(605,164 |
) | (1,178,723 |
) | (2,283,126 |
) | (327,951 |
) | ||||||||
Total operating expenses |
(1,523,997 |
) |
(2,291,294 |
) |
(4,198,009 |
) |
(603,006 |
) | ||||||||
Other operating income |
50,703 |
23,748 |
108,508 |
15,586 |
||||||||||||
Income from operations |
2,421,226 |
2,689,369 |
3,848,755 |
552,839 |
||||||||||||
Interest and investment income, net |
4,211 |
35,740 |
20,872 |
2,998 |
||||||||||||
Foreign exchange gain/(loss), net |
(7,177 |
) | (90,771 |
) | 6,635 |
953 |
||||||||||
Other income |
2,108 |
15,231 |
24,583 |
3,531 |
||||||||||||
Other expenses |
(363 |
) | (522 |
) | (10,323 |
) | (1,483 |
) | ||||||||
Net income before income taxes |
2,420,005 |
2,649,047 |
3,890,522 |
558,838 |
||||||||||||
Income tax expenses |
(255,546 |
) | (157,731 |
) | (626,234 |
) | (89,953 |
) | ||||||||
Net income |
2,164,459 |
2,491,316 |
3,264,288 |
468,886 |
||||||||||||
Year Ended December 31, |
||||||||||||
2017 |
2018 |
2019 |
||||||||||
% |
||||||||||||
Revenues: |
||||||||||||
Financing income |
76.3 |
46.0 |
39.7 |
|||||||||
Sales commission fee |
16.7 |
4.0 |
4.0 |
|||||||||
Sales income |
0.5 |
28.3 |
4.9 |
|||||||||
Penalty fees |
0.2 |
0.4 |
0.5 |
|||||||||
Loan facilitation income and others |
6.3 |
21.3 |
26.0 |
|||||||||
Transaction services fee and other related income |
— |
— |
24.9 |
|||||||||
Total revenues |
100.0 |
100.0 |
100.0 |
|||||||||
Cost of revenues and operating expenses: |
||||||||||||
Cost of goods sold |
(0.5 |
) | (26.1 |
) | (4.1 |
) | ||||||
Cost of other revenues |
(17.9 |
) | (9.5 |
) | (6.1 |
) | ||||||
Total cost of revenues |
(18.4 |
) |
(35.6 |
) |
(10.2 |
) | ||||||
Operating expenses: |
||||||||||||
Sales and marketing |
(9.0 |
) | (7.0 |
) | (3.2 |
) | ||||||
General and administrative |
(3.8 |
) | (3.3 |
) | (3.2 |
) | ||||||
Research and development |
(3.2 |
) | (2.6 |
) | (2.3 |
) | ||||||
Changes in guarantee liabilities and risk assurance liabilities |
(3.1 |
) | (1.5 |
) | (12.9 |
) | ||||||
Provision for receivables and other assets |
(12.9 |
) | (15.3 |
) | (25.8 |
) | ||||||
Total operating expenses |
(31.9 |
) |
(29.8 |
) |
(47.5 |
) | ||||||
Other operating income |
1.1 |
0.3 |
1.2 |
|||||||||
Income from operations |
50.7 |
35.0 |
43.5 |
|||||||||
Interest and investment income, net |
0.1 |
0.5 |
0.2 |
|||||||||
Foreign exchange gain/(loss), net |
(0.2 |
) | (1.2 |
) | 0.1 |
|||||||
Other income |
0.0 |
0.2 |
0.3 |
|||||||||
Other expenses |
(0.0 |
) | (0.0 |
) | (0.1 |
) | ||||||
Net income before income taxes |
50.7 |
34.5 |
44.0 |
|||||||||
Income tax expenses |
(5.4 |
) | (2.1 |
) | (7.1 |
) | ||||||
Net income |
45.3 |
32.4 |
36.9 |
|||||||||
• | Cost of revenues. |
Auto business and a decrease in funding costs associated with the on-balance sheet portion of our loan book business as a result of a decrease in on-balance sheet transactions. |
• | Sales and marketing expenses |
• | General and administrative expenses. |
• | Research and development expenses. |
• | Changes in guarantee liabilities and risk assurance liabilities off-balance sheet transactions that became overdue. |
• | Provision for receivables and other assets. on-balance sheet transactions that became overdue. |
B. |
Liquidity and Capital Resources |
As of December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Total assets |
19,380,416 |
16,253,375 |
18,361,604 |
2,637,479 |
||||||||||||
Total liabilities |
9,840,049 |
5,432,762 |
6,437,552 |
924,696 |
||||||||||||
Total net assets (1) |
9,540,367 |
10,820,613 |
11,924,052 |
1,712,783 |
(1) | Defined as total assets minus total liabilities. |
As of December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Short-term loan principal and financing service fee receivables |
8,758,545 |
8,417,821 |
7,894,697 |
1,134,002 |
||||||||||||
Long-term loan principal and financing service fee receivables |
— |
665,653 |
424 |
61 |
||||||||||||
Short-term borrowings and interest payables |
7,979,415 |
3,860,441 |
1,049,570 |
150,761 |
||||||||||||
Long-term borrowings and interest payables |
510,024 |
413,400 |
— |
— |
Year Ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands) |
||||||||||||||||
Summary Consolidated Cash Flow Data: |
||||||||||||||||
Net cash provided by operating activities |
2,797,809 |
3,332,319 |
5,503,389 |
790,512 |
||||||||||||
Net cash used in investing activities |
(4,422,319 |
) | (2,790,734 |
) | (929,559 |
) | (133,523 |
) | ||||||||
Net cash (used in)/provided by financing activities |
10,001,639 |
(6,727,839 |
) | (3,372,335 |
) | (484,406 |
) | |||||||||
Cash and cash equivalents, and restricted cash at beginning of period |
785,770 |
9,084,952 |
2,841,015 |
408,086 |
||||||||||||
Cash and cash equivalents, and restricted cash at end of period |
9,084,952 |
2,841,015 |
4,118,587 |
591,598 |
C. |
Research and Development |
D. |
Trend Information |
E. |
Off-Balance Sheet Arrangements |
F. |
Tabular Disclosure of Contractual Obligations |
Payment due by period |
||||||||||||||||||||||||
Total |
Less than 1 Year |
1-3 Years |
3-5 Years |
More than 5 Years |
||||||||||||||||||||
RMB |
US$ |
RMB |
||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Operating lease commitments |
47,141 |
6,771 |
23,907 |
23,234 |
— |
— |
||||||||||||||||||
Long-term borrowings and interest payable |
— |
— |
— |
— |
— |
— |
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. |
Directors and Senior Management |
Name |
Age |
Position/Title | ||||
Min Luo |
37 |
Chairman and Chief Executive Officer | ||||
Long Xu |
37 |
Director | ||||
Yingming Li |
42 |
Director | ||||
Shengwen Rong |
52 |
Independent Director | ||||
Yifan Li |
53 |
Independent Director | ||||
Rocky Ta-Chen Lee |
47 |
Independent Director | ||||
Yan Gao |
39 |
Vice President of Finance |
B. |
Compensation |
Name |
Position |
Ordinary Shares Underlying Options Awarded |
Option Exercise Price |
Grant Date |
Option Expiration Date |
|||||||||||||||
Lianzhu Lv (1) |
Director |
5,695,219 |
US$ | 0.0 |
December 30, 2016 |
December 8, 2026 |
||||||||||||||
500,000 |
US$ | 0.0 |
December 20, 2018 |
December 20, 2028 |
||||||||||||||||
460,000 |
US$ | 0.0 |
September 22, 2019 |
September 22, 2029 |
||||||||||||||||
330,000 |
US$ | 0.0 |
December 25, 2019 |
December 25, 2029 |
||||||||||||||||
Long Xu |
Director |
* |
US$ | 0.0 |
February 23, 2016 |
February 23, 2026 |
||||||||||||||
* |
US$ | 0.0 |
December 20, 2018 |
December 20, 2028 |
||||||||||||||||
* |
US$ | 0.0 |
September 22, 2019 |
September 22, 2029 |
||||||||||||||||
* |
US$ | 0.0 |
December 25, 2019 |
December 25, 2029 |
||||||||||||||||
Yifan Li |
Independent director |
* |
US$ | 0.0 |
October 17, 2017 |
December 8, 2026 |
||||||||||||||
* |
US$ | 0.0 |
June 14, 2019 |
June 14, 2029 |
||||||||||||||||
Rocky Ta-Chen Lee |
Independent director |
* |
US$ | 0.0 |
October 17, 2017 |
December 8, 2026 |
||||||||||||||
* |
US$ | 0.0 |
June 14, 2019 |
June 14, 2029 |
||||||||||||||||
Shengwen Rong |
Independent director |
* |
US$ | 0.0 |
November 30, 2018 |
November 30, 2028 |
||||||||||||||
* |
US$ | 0.0 |
June 14, 2019 |
June 14, 2029 |
||||||||||||||||
Yan Gao |
Vice President of Finance |
* |
US$ | 0.0 |
May 3, 2017 |
May 3, 2027 |
||||||||||||||
* |
US$ | 0.0 |
March 12, 2018 |
March 12, 2028 |
||||||||||||||||
* |
US$ | 0.0 |
December 20, 2018 |
December 20, 2028 |
||||||||||||||||
* |
US$ | 0.0 |
September 22, 2019 |
September 22, 2029 |
||||||||||||||||
* |
US$ | 0.0 |
December 25, 2019 |
December 25, 2029 |
* | Less than 1% of our outstanding shares, assuming conversion of our preferred shares into ordinary shares. |
(1) | Mr. Lianzhu Lv ceased to be a director of our company in November 2019. |
C. |
Board Practices |
• | selecting the independent auditor; |
• | pre-approving auditing and non-auditing services permitted to be performed by the independent auditor; |
• | annually reviewing the independent auditor’s report describing the auditing firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditor and our company; |
• | setting clear hiring policies for employees and former employees of the independent auditors; |
• | reviewing with the independent auditor any audit problems or difficulties and management’s response; |
• | reviewing and, if material, approving all related party transactions on an ongoing basis; |
• | reviewing and discussing the annual audited financial statements with management and the independent auditor; |
• | reviewing and discussing with management and the independent auditors major issues regarding accounting principles and financial statement presentations; |
• | reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; |
• | discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; |
• | reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our financial statements; |
• | discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; |
• | timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S. GAAP that have been discussed with management and all other material written communications between the independent auditor and management; |
• | establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; |
• | annually reviewing and reassessing the adequacy of our audit committee charter; |
• | such other matters that are specifically delegated to our audit committee by our board of directors from time to time; |
• | meeting separately, periodically, with management, internal auditors and the independent auditor; and |
• | reporting regularly to the full board of directors. |
• | reviewing, evaluating and, if necessary, revising our overall compensation policies; |
• | reviewing and evaluating the performance of our directors and senior officers and determining the compensation of our senior officers; |
• | reviewing and approving our senior officers’ employment agreements with us; |
• | setting performance targets for our senior officers with respect to our incentive compensation plan and equity-based compensation plans; |
• | administering our equity-based compensation plans in accordance with the terms thereof; and such other matters that are specifically delegated to the remuneration committee by our board of directors from time to time. |
• | selecting and recommending to the board nominees for election by the shareholders or appointment by the board; |
• | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
• | making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
• | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
• | conducting and managing the business of our company; |
• | representing our company in contracts and deals; |
• | appointing attorneys for our company; |
• | selecting senior management such as managing directors and executive directors; |
• | providing employee benefits and pension; |
• | managing our company’s finance and bank accounts; |
• | exercising the borrowing powers of our company and mortgaging the property of our company; and |
• | exercising any other powers conferred by the shareholders meetings or under our second amended and restated memorandum and articles of association. |
D. |
Employees |
Function |
Number of Employees |
% of Total |
||||||
Risk management |
163 |
17.2 |
||||||
Technology and product development |
269 |
28.5 |
||||||
Finance |
145 |
15.3 |
||||||
Operation management |
107 |
11.3 |
||||||
General administrative and others |
134 |
14.1 |
||||||
New businesses (1) |
3 |
0.3 |
||||||
Sales and marketing (2) |
52 |
5.5 |
||||||
Dabai Auto (3) |
74 |
7.8 |
||||||
Total |
947 |
100.0 |
||||||
(1) | The size of our new business team decreased from 103 as of December 31, 2018 to three as of December 31, 2019. The decrease was primarily due to changes in our new business projects. |
(2) | The size of our sales and marketing team decreased from 159 as of December 31, 2018 to 52 as of December 31, 2019. The decrease was primarily due to the winding-down of our Dabai Auto business. |
(3) | The size of our Dabai Auto team decreased from 184 as of December 31, 2018 to 74 as of December 31, 2019. The decrease was a result of the winding-down of our Dabai Auto business. |
E. |
Share Ownership |
• | each of our directors and executive officers; and |
• | each person known to us to own beneficially 5.0% or more of our ordinary shares. |
Ordinary Shares Beneficially Owned |
||||||||||||||||
Class A ordinary shares |
Class B ordinary shares |
Percentage of total ordinary shares |
Percentage of aggregate voting power** |
|||||||||||||
Directors and Executive Officers: |
||||||||||||||||
Min Luo (1) |
— |
63,491,172 |
25.0 |
76.9 |
||||||||||||
Lianzhu Lv |
* |
— |
* |
* |
||||||||||||
Long Xu |
* |
— |
* |
* |
||||||||||||
Yingming Li |
— |
— |
— |
— |
||||||||||||
Shengwen Rong |
* |
— |
* |
* |
||||||||||||
Yifan Li |
* |
— |
* |
* |
||||||||||||
Rocky Ta-Chen Lee |
* |
— |
* |
* |
||||||||||||
Yan Gao |
* |
— |
* |
* |
||||||||||||
Directors and Executive Officers as a Group |
2,813,580 |
63,491,172 |
26.1 |
77.3 |
||||||||||||
Principal Shareholders |
||||||||||||||||
Qufenqi Holding Limited |
— |
63,491,172 |
25.0 |
76.9 |
||||||||||||
Guosheng HK (2) |
12,770,000 |
4,125,698 |
6.7 |
6.5 |
* | Beneficially owns less than 1% of our outstanding shares. |
** | For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. In respect of all matters subject to a shareholders’ vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes, voting together as one class. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. |
(1) | Represents 63,491,172 Class B ordinary shares held by Qufenqi Holding Limited, a limited liability company established in the British Virgin Islands. Qufenqi Holding Limited is indirectly wholly owned by a trust of which Mr. Min Luo and his wife are the beneficiaries. Mr. Min Luo is our founder, chairman of the board and chief executive officer. The registered address of Qufenqi Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands. Pursuant to a proxy and |
power of attorney dated April 25, 2020, or the Guosheng proxy, Qufenqi Holding Limited appointed Guosheng HK as its proxy and attorney-in-fact with respect to 4,125,698 Class B ordinary shares held by Qufenqi Holding Limited. The Guosheng proxy provides Guosheng HK with the power to exercise the voting rights relating to the 4,125,698 Class B ordinary shares. Guosheng HK is further described in footnote 2 below. |
(2) | Represents (i) 12,770,000 Class A ordinary shares held by Guosheng HK and (ii) 4,125,698 Class B ordinary shares subject to the Guosheng proxy. The Guosheng proxy is further described in footnote 1 above. Information regarding beneficial ownership in Class A ordinary shares is reported as of December 31, 2019, based on the information contained in the Schedule 13G/A filed by Phoenix Entities on February 11, 2020. Guosheng HK is a limited liability company incorporated under the laws of Hong Kong and a subsidiary of Guosheng Financial Holding Inc., or Guosheng, a public company listed on the Shenzhen Stock Exchange. Based on Guosheng’s public filings, Mr. Li Du has control over Guosheng as of the date of this annual report. The registered address of Guosheng HK is Unit 606, 6th Floor, Alliance Building, 133 Connaught Road Central, Hong Kong. According to the relevant Schedule 13G/A filings made by the Phoenix Entities, Phoenix Auspicious Fintech Investment L.P. held 22,367,426 Class A ordinary shares as of December 31, 2018 and held no equity interest in our company as of December 31, 2019. |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. |
Major Shareholders |
B. |
Related Party Transactions |
C. |
Interests of Experts and Counsel |
ITEM 8. |
FINANCIAL INFORMATION |
A. |
Consolidated Statements and Other Financial Information |
B. |
Significant Changes |
ITEM 9. |
THE OFFER AND LISTING |
A. |
Offering and Listing Details |
B. |
Plan of Distribution |
C. |
Markets |
D. |
Selling Shareholders |
E. |
Dilution |
F. |
Expenses of the Issue |
ITEM 10. |
ADDITIONAL INFORMATION |
A. |
Share Capital |
B. |
Memorandum and Articles of Association |
C. |
Material Contracts |
D. |
Exchange Controls |
E. |
Taxation |
(1) | that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciations shall apply to us or our operations; and |
(2) | that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations or by way of the withholding in whole or in part of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (2011 Revision). |
• | an individual citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. |
• | a dealer in securities or currencies; |
• | a financial institution; |
• | a regulated investment company; |
• | a real estate investment trust; |
• | an insurance company; |
• | a tax-exempt organization; |
• | a person holding our ADSs or Class A ordinary shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle; |
• | a trader in securities that has elected the mark-to-market method of accounting for your securities; |
• | a person liable for alternative minimum tax; |
• | a person who owns or is deemed to own 10% or more of our stock (by vote or value); |
• | a person required to accelerate the recognition of any item of gross income with respect to our ADSs or Class A ordinary shares as a result of such income being recognized on an applicable financial statement; |
• | a partnership or other pass-through entity for United States federal income tax purposes; or |
• | a person whose “functional currency” is not the United States dollar. |
• | at least 75% of our gross income is passive income, or |
• | at least 50% of the value (determined based on a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. |
• | the excess distribution or gain will be allocated ratably over your holding period for the ADSs or Class A ordinary shares, |
• | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and |
• | the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
F. |
Dividends and Paying Agents |
G. |
Statement by Experts |
H. |
Documents on Display |
I. |
Subsidiary Information |
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
A. |
Debt Securities |
B. |
Warrants and Rights |
C. |
Other Securities |
D. |
American Depositary Shares |
Service |
Fees | |
• To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) |
• Up to US$0.05 per ADS issued | |
• Cancelation of ADSs, including the case of termination of the deposit agreement |
• Up to US$0.05 per ADS canceled | |
• Distribution of cash dividends |
• Up to US$0.05 per ADS held | |
• Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements |
• Up to US$0.05 per ADS held | |
• Distribution of ADSs pursuant to exercise of rights. |
• Up to US$0.05 per ADS held | |
• Distribution of securities other than ADSs or rights to purchase additional ADSs |
• Up to US$0.05 per ADS held | |
• Depositary services |
• Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary |
• | Fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares). |
• | Expenses incurred for converting foreign currency into U.S. dollars. |
• | Expenses for cable, telex and fax transmissions and for delivery of securities. |
• | Taxes and duties upon the transfer of securities, including any applicable stamp duties, any stock transfer charges or withholding taxes (i.e., when ordinary shares are deposited or withdrawn from deposit). |
• | Fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. |
• | Fees and expenses incurred in connection with complying with exchange control regulations and other regulatory requirements applicable to ordinary shares, deposited securities, ADSs and ADRs. |
• | Any applicable fees and penalties thereon. |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. |
CONTROLS AND PROCEDURES |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. |
CODE OF ETHICS |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
For the Year Ended December 31, |
||||||||
2018 |
2019 |
|||||||
(In thousands of RMB) |
||||||||
Audit Fees (1) |
13,000 |
17,630 |
||||||
Tax Fees (2) |
550 |
555 |
||||||
Total |
13,550 |
18,185 |
||||||
(1) | Audit fees include the aggregate fees billed in each of the fiscal period listed for professional services rendered by our independent public accountant for the audit and review of our financial statements and services related to our issuance of the convertible senior notes. |
(2) | Tax fees include the aggregated fees billed in each of the fiscal periods listed for professional services rendered by our independent public accountant for tax compliance, tax advice and tax planning. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Period |
Total Number of ADSs Purchased |
Average Price Paid per ADS (1) |
Total Number of ADSs Purchased as Part of Publicly Announced Plans or Programs (2) |
Approximate Dollar Value of ADSs that May Yet Be Purchased Under the Program (2) |
||||||||||||
November 21, 2017 through November 30, 2017 |
2,474,836 |
US$ | 14.06 |
2,474,836 |
US$ | 265.2 million |
||||||||||
December 2017 |
2,062,279 |
US$ | 13.92 |
2,062,279 |
US$ | 236.5 million |
||||||||||
June 2018 |
8,958,483 |
US$ | 9.58 |
8,958,483 |
US$ | 150.7 million |
||||||||||
August 2018 |
85,000 |
US$ | 6.00 |
85,000 |
US$ | 150.2 million |
||||||||||
September 2018 |
9,781,767 |
US$ | 5.27 |
9,781,767 |
US$ | 98.6 million |
||||||||||
October 2018 |
8,358,409 |
US$ | 4.68 |
8,358,409 |
US$ | 59.5 million |
||||||||||
November 2018 |
1,702,700 |
US$ | 5.12 |
1,702,700 |
US$ | 50.8 million |
||||||||||
December 2018 |
4,351,400 |
US$ | 5.34 |
4,351,400 |
US$ | 327.6 million |
||||||||||
April 2019 (3) |
18,173,885 |
US$ | 5.68 |
18,173,885 |
US$ | 224.4 million |
||||||||||
August 2019 |
26,169,241 |
US$ | 7.45 |
26,169,241 |
US$ | 29.4 million |
||||||||||
March 2020 |
513,990 |
US$ | 1.95 |
513,990 |
US$ | 499.0 million |
||||||||||
Total |
82,631,990 |
US$ | 6.92 |
82,631,990 |
US$ | 499.0 million |
||||||||||
(1) | Each of our ADSs represents one Class A ordinary share. The average price per ADS is calculated using the execution price for each repurchase excluding commissions paid to brokers. |
(2) | We announced a share repurchase program approved by our board of directors in November 2017, under which we may repurchase up to US$300 million worth of our outstanding ADSs over a period of twelve months. We further announced a share repurchase program in December 2018, under which we may repurchase up to US$300 million worth of our outstanding ADSs over a period of twelve months, in addition to any further repurchases that may be made under the program announced in November 2017. We further announced a share repurchase program in January 2020, under which we may repurchase up to US$500 million worth of our outstanding ADSs over a period of 30 months. The repurchases have been, and will be, through various means, including open market transactions, privately negotiated transactions, tender offers or any combination thereof. The repurchases have been, and will be, effected in compliance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and our insider trading policy. The number of ADSs repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, price, trading volume and general market conditions. |
(3) | On April 29, 2019, we purchased all 18,173,885 of our Class A ordinary shares then held by Kunlun at a price of US$5.678 per share, or an aggregate consideration of US$103.2 million. |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 17. |
FINANCIAL STATEMENTS |
ITEM 18. |
FINANCIAL STATEMENTS |
ITEM 19. |
EXHIBITS |
Exhibit Number |
Description of Document | |||
1.1 |
||||
2.1 |
||||
2.2 |
||||
2.3 |
||||
2.4* |
||||
4.1 |
||||
4.2 |
||||
4.3 |
||||
4.4 |
4.5 |
||||
4.6 |
||||
4.7 |
||||
4.8 |
||||
4.9 |
||||
4.10 |
||||
4.11 |
||||
4.12 |
||||
4.13 |
||||
4.14 |
4.15 |
||||
4.16 |
||||
4.17 |
||||
4.18 |
||||
4.19 |
||||
4.20 |
||||
4.21 |
||||
4.22 |
||||
4.23 |
||||
4.24 |
4.25 |
||||
4.26 |
||||
4.27 |
||||
4.28 |
||||
4.29 |
||||
4.30 |
||||
4.31 |
||||
4.32 |
||||
4.33 |
||||
4.34 |
||||
4.35 |
4.36 |
||||
4.37* |
||||
4.38* |
||||
4.39* |
||||
4.40* |
||||
4.41* |
||||
4.42* |
||||
4.43* |
||||
8.1* |
||||
11.1 |
||||
12.1* |
||||
12.2* |
||||
13.1** |
||||
13.2** |
||||
15.1* |
||||
15.2* |
||||
101.INS* |
Inline XBRL Instance Document | |||
101.SCH* |
Inline XBRL Taxonomy Extension Schema Document | |||
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Filed herewith |
** | Furnished herewith |
QUDIAN INC. | ||
By: |
/s/ Min Luo | |
Name: |
Min Luo | |
Title: |
Chairman and Chief Executive Officer |
QUDIAN INC. |
||||
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
||||
PAGE(S) |
||||
F-2 |
||||
F-8 |
||||
F-13 |
||||
F-15 |
||||
F-16 |
||||
F-18 |
Allowance for loan principal and financing service fee receivables | ||
Description of the Matter |
At December 31, 2019, the Company’s loan principal and finance service fee receivables and related allowance was RMB 9,424 million and RMB 1,529 million, respectively. As explained in Note 2 to the consolidated financial statements, the Company considers the loans to be homogeneous unsecured consumer loans of similar principal amounts. The allowance is calculated based on the Company’s historical loss experience with the entire loan portfolio, using a roll rate-based model and adjusted for various qualitative factors. These factors may include gross-domestic product rates, per capita disposable income, consumer price indexes, regulatory impact and other considerations. Auditing management’s allowance for loan principal and financing service fee receivables was complex due to the highly judgmental nature of the qualitative factors used to adjust the allowance calculated using the roll-rate based model. Quantifying the impact of the selected qualitative factors on the allowance was also complex and highly judgmental. These qualitative factors require management to make significant judgments which could significantly affect the amount of the allowance for loan principal and financing service fee receivables. | |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s allowance for loan principal and financing service fee receivables. For example, we tested controls over management’s review of the allowance calculations, the significant assumptions and data inputs. To test the Company’s allowance, we performed audit procedures that included, among others, evaluating the methodology used, management’s selection of qualitative factors and their impact on the allowance, including the underlying data used in the calculation. We assessed whether the selected qualitative factors were consistent with publicly available market information. We assessed the reasonableness of the loss rate used to calculate the Company’s allowance at December 31, 2019 by comparing management’s estimate to subsequent results. We also tested the completeness and accuracy of the underlying data used by the Company in the roll-rate based model and recalculated the allowance for loan principal financing service fee receivables. |
Estimation of variable consideration for loan facilitation income, transaction services fees and other related income | ||
Description of the Matter |
For the year ended December 31, 2019, the Company recognized RMB 4,497 million revenue related to loan facilitation income, transaction services fees and other related income. As explained in Note 2 to the consolidated financial statements, the transaction price of loan facilitation income, transaction services fees and other related income includes variable consideration which is contingent on the borrower making timely repayments. The amount of variable consideration is limited to the amount that is probable not to be reversed in future periods. Management estimated the variable consideration using the expected value method, based on historical defaults, current and forecasted borrower repayment trends and assessed whether variable consideration should be constrained. Auditing management’s estimation of variable consideration for loan facilitation income, transaction services fees and other related income was complex due to the highly judgmental nature of the qualitative factors used in the expected value method and quantifying the impact of the selected qualitative factors on the variable consideration. The estimation of variable consideration is also affected by future market and economic conditions. These factors combined have a significant effect on the amount of the estimated variable consideration for loan facilitation income, transaction services fees and other related income . | |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s estimation of variable consideration of loan facilitation income, transaction services fees and other related income. For example, we tested controls over management’s review of the variable consideration calculations, the significant assumptions and data inputs. To test the Company’s estimation of variable consideration for loan facilitation income, transaction services fees and other related income, we performed audit procedures that included, among others, evaluating the methodology used, management’s selection of the qualitative factors and their impact on the amount of variable consideration included in the transaction price, including the underlying data used. We assessed whether the qualitative factors are consistent with publicly available market information. We performed a hindsight analysis to assess whether there was any significant reversal in the cumulative revenue that was recognized during the reporting period. We also tested the completeness and accuracy of the underlying data used by the Company to estimate the variable consideration and recalculated the amount required to be constrained. |
Estimation of risk assurance liabilities | ||
Description of the Matter |
At December 31, 2019, the Company’s risk assurance liabilities totaled RMB 1,254 million. As explained in Note 2 to the consolidated financial statements, the Company provides risk assurance liabilities on the principal and accrued interest repayment of loans facilitated through the Company’s platform. The contingent loss arising from the obligation to make future payments is recognized when borrower default is probable and the amount of loss is estimable. The contingent loss is calculated based on the expected future payouts, adjusted for various qualitative factors. These factors may include gross-domestic product rates, per capita disposable income, consumer price indexes, regulatory impact and other considerations. Auditing management’s estimation of risk assurance liabilities was complex due to the highly judgmental nature of the qualitative factors used in the measurement process and quantifying the impact of the selected qualitative factors on the risk assurance liabilities. These qualitative factors require management to make significant judg ments which could significantly affect the amount of the estimation of risk assurance liabilities. | |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s estimation of risk assurance liabilities. For example, we tested controls over management’s review of the risk assurance liabilities calculations, the significant assumptions and data inputs. To test the Company’s estimation of risk assurance liabilities, we performed audit procedures that included, among others, evaluating the methodology used, management’s selection of the qualitative factors and their impact on the estimate. We assessed whether the selected qualitative factors are consistent with publicly available market information. We performed a hindsight analysis to assess whether there were significant differences between the estimated contingent loss amount of risk assurance liabilities and the historical payouts. We also tested the completeness and accuracy of the underlying data used by the Company to develop its estimate and recalculated the recorded amount. |
As of December 31, |
||||||||||||||||
Note s |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
ASSETS: |
||||||||||||||||
Current assets : , and RMB ( as of December 31, 2018 and 2019, respectively) US$ ) |
||||||||||||||||
Cash and cash equivalents |
||||||||||||||||
Restricted cash |
3 |
|||||||||||||||
Time deposits |
— |
|||||||||||||||
Short-term loan principal and financing service fee receivables (net of allowance of RMB (US$ |
4 |
|||||||||||||||
Short-term finance lease receivables (net of allowance of RMB i ncluding unearned revenue of RMB |
5 |
|||||||||||||||
Short-term contract asset s |
||||||||||||||||
Short-term amounts due from related parties |
19 |
— |
— |
|||||||||||||
Other current assets (net of allowance of RMB RMB |
6 |
|||||||||||||||
Total current assets |
||||||||||||||||
As of December 31, |
||||||||||||||||
Note s |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Non-current assets: (including amounts from the consolidated trusts of RMB |
||||||||||||||||
Long-term loan principal and financing service fee receivables (net of allowance of RMB and RMB (US$ as of December 31, 2018 and 2019, respectively) |
4 |
|||||||||||||||
Long-term finance lease receivables (net of allowance of RMB respectively) |
5 |
|||||||||||||||
Operating lease right-of-use assets |
— |
|||||||||||||||
Investment in equity method investee |
8 |
|||||||||||||||
Long-term investments |
9 |
|||||||||||||||
Property and equipment, net |
||||||||||||||||
Intangible assets , net |
||||||||||||||||
Land use right |
— |
— |
||||||||||||||
Long-term contract asset s |
||||||||||||||||
Deferred tax assets , net |
1 6 |
|||||||||||||||
Other non-current assets |
||||||||||||||||
Total non-current assets |
||||||||||||||||
TOTAL ASSETS |
||||||||||||||||
As of December 31, |
||||||||||||||||
Note s |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||
Current liabilities: ) as of December 31, 2018 and 2019, respectively) |
||||||||||||||||
Short-term borrowings and interest payables |
10 |
|
|
|
||||||||||||
Short-term lease liabilities |
7 |
— |
|
|
||||||||||||
Accrued expenses and other current liabilities |
11 |
|
|
|
||||||||||||
Guarantee liabilities and risk assurance liabilities (including amounts of guarantee liabilities of RMB ) |
12 |
|
|
|
||||||||||||
Income tax payable |
|
|
|
|||||||||||||
Total current liabilities |
|
|
|
As of December 31, |
||||||||||||||||
Note s |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Non-current liabilities: (including amounts of the consolidated VIEs without recourse to the Company of RMB ) as of December 31, 2018 and 2019, respectively) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings and interest payables |
10 |
|
— |
— |
||||||||||||
Convertible senior notes |
13 |
— |
|
|
||||||||||||
Deferred tax liabilities , net |
16 |
— |
|
|
||||||||||||
Long-term lease liabilities |
7 | — |
|
|
||||||||||||
Total non-current liabilities |
|
|
|
|||||||||||||
Total liabilities |
|
|
|
|||||||||||||
As of December 31, |
||||||||||||||||
Note s |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Commitments and contingencies |
21 |
|
|
|
||||||||||||
Shareholders’ equity: |
||||||||||||||||
Class A Ordinary shares (US$ shares issued and shares outstanding, as of December 31, 2019) |
22 |
|
|
|
||||||||||||
Class B Ordinary shares (US$ |
22 |
|
|
|
||||||||||||
Treasury shares |
23 |
( |
) | ( |
) | ( |
) | |||||||||
Additional paid-in capital |
|
|
|
|||||||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||||||
Retained earnings |
|
|
|
|||||||||||||
Total shareholders’ equity |
|
|
|
|||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||||||||||||
For the years ended December 31, |
||||||||||||||||||||
Note s |
2017 |
2018 |
2019 |
|||||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||
Revenues: |
||||||||||||||||||||
Financing income (including related party amounts of RMB , 2017 , 2018 and 2019 , respectively) |
|
|
|
|
||||||||||||||||
Sales commission fee |
|
|
|
|
||||||||||||||||
Sales income |
|
|
|
|
||||||||||||||||
Penalty fee |
|
|
|
|
||||||||||||||||
Loan facilitation income and other related income |
|
|
|
|
||||||||||||||||
Transaction services fee and other related income |
— |
— |
|
|
||||||||||||||||
Total revenues |
|
|
|
|
||||||||||||||||
Cost of revenues: |
||||||||||||||||||||
Cost of goods sold |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Cost of other revenues (including related party amounts of RMB ended December 31 , 2017 , 2018 and 2019 , respectively) |
14 |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||
Total cost of revenues |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Operating expenses: |
||||||||||||||||||||
Sales and marketing (including related party amounts of RMB ended December 31 , 2017 , 2018 and 2019 , respectively) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
General and administrative |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Research and development |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Changes in guarantee liabilities and risk assurance liabilities (including changes in guarantee liabilities amounts of RMB , RMB and RMB (US$ , change in risk assurance liabilities amounts of RMB , RMB and RMB (US$ for the year ended December 31, 2017 , 2018 and 2019 , respectively ) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Provision for receivables and other assets |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Total operating expenses |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Other operating income |
|
|
|
|
||||||||||||||||
Income from operations |
|
|
|
|
||||||||||||||||
Interest and investment income, net |
15 |
|
|
|
|
|||||||||||||||
Foreign exchange gain/( loss) , net |
( |
) |
( |
) |
|
|
||||||||||||||
Other income |
|
|
|
|
||||||||||||||||
Other expenses |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Net income before income taxes |
|
|
|
|
||||||||||||||||
Income tax expenses |
16 |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||
Net income |
|
|
|
|
||||||||||||||||
For the years ended December 31, |
||||||||||||||||||||
Note s |
2017 |
2018 |
2019 |
|||||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||
Net income attributable to Qudian Inc.’s shareholders |
||||||||||||||||||||
Earnings per share for Class A and Class B ordinary shares: |
||||||||||||||||||||
Basic |
17 |
|||||||||||||||||||
Diluted |
17 |
|||||||||||||||||||
Earnings per ADS (1 Class A ordinary share equals 1 ADSs): |
||||||||||||||||||||
Basic |
17 |
|||||||||||||||||||
Diluted |
17 |
|||||||||||||||||||
Weighted average number of Class A and Class B ordinary shares outstanding: |
||||||||||||||||||||
Basic |
17 |
|||||||||||||||||||
Diluted |
17 |
|||||||||||||||||||
Other comprehensive income/(loss) |
||||||||||||||||||||
Foreign currency translation adjustment |
( |
) | ||||||||||||||||||
Total comprehensive income |
||||||||||||||||||||
Total comprehensive income attributable to Qudian Inc.’s shareholders |
||||||||||||||||||||
Class A and B Ordinary shares |
Treasury shares |
Additional paid-in capital |
Accumulated other comprehensive loss/foreign currency translation adjustment |
Retained earnings/ (accumulated deficit) |
Total shareholders’ equity |
|||||||||||||||||||||||
Number of Shares Outstanding |
Amount |
|||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||||||
Balance at December 31, 2016 |
|
|
— |
|
— |
( |
) | ( |
) | |||||||||||||||||||
Issuance of ordinary shares |
||||||||||||||||||||||||||||
– Initial Public Offering (“IPO”) |
|
|
— |
|
— |
— |
|
|||||||||||||||||||||
Canceled Shares |
( |
) | ( |
) | — |
— |
— |
— |
( |
) | ||||||||||||||||||
Conversion of convertible preferred shares to ordinary shares |
|
|
— |
|
— |
|
|
|||||||||||||||||||||
Repurchase of ordinary shares |
( |
) | — |
( |
) | — |
— |
— |
( |
) | ||||||||||||||||||
Vesting of share options held by |
||||||||||||||||||||||||||||
Share Based Payment Trust |
|
|
— |
( |
) | — |
— |
— |
||||||||||||||||||||
Share-based compensation (Note 20 |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Other comprehensive loss |
— |
— |
— |
— |
( |
) | — |
( |
) | |||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
|
|
|||||||||||||||||||||
Balance at December 31, 2017 |
|
|
( |
) | |
( |
) | |
|
|||||||||||||||||||
Adjustments due to the adoption of Topic 606 |
— |
— |
— |
— |
— |
|
|
|||||||||||||||||||||
Repurchase of ordinary shares |
( |
) | — |
( |
) | — |
— |
— |
( |
) | ||||||||||||||||||
Canceled shares |
— |
( |
) | |
( |
) | — |
— |
— |
|||||||||||||||||||
Vesting of share options held by |
||||||||||||||||||||||||||||
Share Based Payment Trust |
|
|
— |
( |
) | — |
— |
— |
||||||||||||||||||||
Exercise of share options |
|
|
— |
|
— |
— |
|
|||||||||||||||||||||
Share-based compensation (Note 20 |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Other comprehensive income |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
|
|
|||||||||||||||||||||
Balance at December 31, 2018 |
|
|
( |
) | |
( |
) | |
|
|||||||||||||||||||
Repurchase of ordinary shares |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Canceled shares |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Vesting of share options held by |
||||||||||||||||||||||||||||
Share Based Payment Trust |
|
|
— |
( |
) | — |
— |
— |
||||||||||||||||||||
Exercise of share options |
|
|
— |
|
— |
— |
|
|||||||||||||||||||||
Share-based compensation (Note 20 |
— |
— |
— |
|
— |
— |
|
|||||||||||||||||||||
Purchase of capped call option |
— |
— |
— |
( |
) | — |
— |
( |
) | |||||||||||||||||||
Other comprehensive income |
— |
— |
— |
— |
|
— |
|
|||||||||||||||||||||
Net income |
— |
— |
— |
— |
— |
|
|
|||||||||||||||||||||
Balance at December 31, 2019 |
|
|
( |
) | |
( |
) | |
||||||||||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income |
||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
Provision for receivables and other assets |
||||||||||||||||
Depreciation and amortization |
||||||||||||||||
Amortization of lease right-of-use assets |
— |
— |
||||||||||||||
Loss on disposal of property and equipment |
— |
|||||||||||||||
Accrued interest of convertible senior notes |
— |
— |
||||||||||||||
Amortization of deferred origination costs |
— |
— |
— |
|||||||||||||
Share-based compensation expense |
||||||||||||||||
Share of loss from equity method investment |
||||||||||||||||
Investment income of short-term investments |
( |
) | ( |
) | ( |
) | ||||||||||
Foreign exchange (gain) / loss , net |
( |
) | ( |
) | ||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Financing service fee receivables |
( |
) | ||||||||||||||
Finance lease receivables |
— |
— |
||||||||||||||
Contract assets |
— |
( |
) | ( |
) | ( |
) | |||||||||
Receivables from related parties |
||||||||||||||||
Deferred tax assets and liabilities |
( |
) | ( |
) | ||||||||||||
Other current and non-current assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest payables |
( |
) | ( |
) | ( |
) | ||||||||||
Payables to related parties |
( |
) | ( |
) | — |
— |
||||||||||
Guarantee liabilities |
( |
) | ( |
) | ||||||||||||
Risk assurance liabilities |
— |
— |
||||||||||||||
Operating lease liabilities |
— |
— |
( |
) |
( |
) | ||||||||||
Other current and non-current liabilities |
||||||||||||||||
Net cash provided by operating activities |
||||||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Proceeds from redemption of short-term investments |
||||||||||||||||
Proceeds from collection of loan principal |
||||||||||||||||
Principal collection of finance lease receivables |
— |
— |
||||||||||||||
Proceeds from collection of loan principal due from related parties |
— |
— |
||||||||||||||
Proceeds from disposal of long-term assets |
— |
— |
||||||||||||||
Purchases of short-term investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Purchases of property and equipment, intangible assets and land use right |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Purchases of long-term investments |
— |
— |
( |
) | ( |
) | ||||||||||
Purchases of equity method investment |
— |
— |
( |
) | ( |
) | ||||||||||
Payments to originate loan principal |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Purchase of current assets held for lease |
( |
) | ( |
) | — |
— |
||||||||||
Net cash used in investing activities |
( |
) |
( |
) |
( |
) | ( |
) | ||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Cash flows from financing activities: |
||||||||||||||||
Proceeds from issuance of ordinary shares |
|
— |
— |
— |
||||||||||||
Proceeds from borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from convertible senior notes, net of issuance cost |
— |
— |
|
|
||||||||||||
Proceeds from related parties |
|
|
— |
— |
||||||||||||
Refund of guarantee deposits from Funding Partners |
|
|
— |
— |
||||||||||||
Proceeds from exercise of share options |
— |
|
|
|
||||||||||||
Payments to related parties |
( |
) | ( |
) | — |
— |
||||||||||
Repayment of borrowings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Repurchase of ordinary shares |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Payments for IPO expenditure |
( |
) | ( |
) | — |
— |
||||||||||
Purchase of capped call option |
— |
— |
( |
) | ( |
) | ||||||||||
Payments of deposits to funding |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Payments of guarantee deposits to Funding Partners |
( |
) | ( |
) | — |
— |
||||||||||
Net cash (used in)/provided by financing A ctivities |
|
( |
) |
( |
) |
( |
) | |||||||||
Effect of exchange rate changes |
( |
) | ( |
) | |
|
||||||||||
Net increase/(decrease) in cash and cash equivalents, and restricted cash |
|
( |
) | |
|
|||||||||||
Cash and cash equivalents, and restricted cash at beginning of the year |
|
|
|
|
||||||||||||
Cash and cash equivalents, and restricted cash at end of the year |
|
|
|
|||||||||||||
Reconciliation of cash and cash equivalents, and restricted cash to the consolidated balance sheet |
||||||||||||||||
Cash and cash equivalents |
|
|
|
|
||||||||||||
Restricted cash |
|
|
|
|
||||||||||||
Total cash and cash equivalents, and restricted cash |
|
|
|
|
||||||||||||
Supplemental disclosures of cash flow information: |
||||||||||||||||
Income taxes paid, net of refunds |
|
|
|
|
||||||||||||
Interest expense paid |
|
|
|
|
Entity |
Date of incorporation |
Place of incorporation |
Percentage of legal ownership by the Company |
Principal activities | ||||||
Subsidiaries |
||||||||||
QD Data Limited (“Qudian HK”) |
% | |||||||||
QD Technology Limited (“Qudian BVI”) |
% | |||||||||
Qufenqi (Ganzhou) Information Technology Co., Ltd. (“Qufenqi Ganzhou”) |
% | |||||||||
Qudian Inc. Equity Incentive Trust (“Share Based Payment Trust”) |
||||||||||
Qufenqi (HK) Limited (“Qufenqi HK”) |
% | |||||||||
Xiamen Qudian Financial Lease Ltd. (“Xiamen Financial Lease”) |
% | |||||||||
Tianjin Qudian Financial Lease Co., Ltd. (“Tianjin Financial Lease”) |
% | |||||||||
Xiamen Happy Time Technology Co., Ltd. (“Xiamen Happy Time”) |
% | |||||||||
Qu Plus Plus Inc. (“Qu Plus Plus”) |
% | |||||||||
Qu Plus Plus ( HK) Limited (“Qu Plus Plus HK”) |
% | |||||||||
Qu Plus Plus Limited (“Qu Plus Plus BVI”) |
% | |||||||||
Xiamen Youxiang Time Technology Service Co., Ltd. (“Xiamen Youxiang Time”) |
% | |||||||||
Xiamen Xincheng Youda Financing Guarantee Ltd. (“Xiamen Xincheng Youda”) |
% |
Entity |
Date of incorporation |
Place of incorporation |
Percentage of legal ownership by the Company |
Principal activities | ||||||
VIEs |
||||||||||
Beijing Happy Time Technology Development Co., Ltd. (“Beijing Happy Time”) |
||||||||||
Ganzhou Qudian Technology Co., Ltd. (“Ganzhou Qudian”) |
||||||||||
Hunan Qudian Technology Development Co., Ltd. (“Hunan Qudian”) |
||||||||||
Xiamen Qudian Technology Co., Ltd. (“Xiamen Qudian”) |
||||||||||
Xiamen Weipujia Technology Co., Ltd. (“Xiamen Weipujia”) |
||||||||||
Xiamen Qu Plus Plus Technology Co., Ltd. (“Xiamen Qu Plus Plus”) |
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Short-term loan principal and financing service fee receivables |
|
|
|
|||||||||
Other current assets |
|
|
|
|||||||||
Total current assets |
|
|
|
|||||||||
Total non-current assets |
|
|
|
|||||||||
Total assets |
|
|
|
|||||||||
Total current liabilities |
|
|
|
|||||||||
Total non-current liabilities |
|
|
|
|||||||||
Total liabilities |
|
|
|
|||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Revenues |
|
|
|
|
||||||||||||
Net income |
|
|
|
|
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Net cash provided by operating activities |
|
|
|
|
||||||||||||
Net cash used in investing activities |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net cash (used in)/provided by financing activities |
|
( |
) | ( |
) | ( |
) |
• | Identify the contract(s) with a customer; |
• | Identify the performance obligations in the contract; |
• | Determine the transaction price; |
• | Allocate the transaction price to the performance obligations in the contract; and |
• | Recognize revenue when (or as) the entity satisfies a performance obligation. |
Category |
Estimated Useful Life |
Estimated Residual |
||||
Office and electronic equipment |
||||||
Motor vehicles |
||||||
Leasehold improvements |
of leasehold improvements or the lease term |
• |
Level 1-Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets |
• |
Level 2-Include observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data |
• |
Level 3-Unobservable inputs which are supported by little or no market activity |
Balance as of December 31, 2018 |
Adjustments due to the adoption of ASC 842 |
Balance as of January 1, 2019 |
||||||||||
RMB |
RMB |
RMB |
||||||||||
Assets: |
||||||||||||
Other current assets |
|
( |
) | |
||||||||
Operating lease right-of-use assets |
— |
|
|
|||||||||
Land use right |
|
( |
) | — |
||||||||
Liabilities: |
||||||||||||
Short-term lease liabilities |
— |
|
|
|||||||||
Long-term lease liabilities |
— |
|
|
As reported |
Balance without the adoption of ASC 842 |
Effect of change Higher/(lower) |
||||||||||
RMB |
RMB |
RMB |
||||||||||
Assets: |
||||||||||||
Other current assets |
|
|
( |
) | ||||||||
Operating lease right-of-use assets |
|
— |
|
|||||||||
Land use right |
— |
|
( |
) | ||||||||
Liabilities: |
||||||||||||
Short-term lease liabilities |
|
— |
|
|||||||||
Long-term lease liabilities |
|
— |
|
As reported |
Amounts without the adoption of ASC 842 |
Effect of change Higher/(lower) |
||||||||||
RMB |
RMB |
RMB |
||||||||||
Operating activities |
|
|
|
|||||||||
Investing activities |
( |
) | ( |
) | ( |
) | ||||||
Financing activities |
( |
) | ( |
) | — |
|||||||
Effect of exchange rate changes |
|
|
— |
|||||||||
Net change in cash, cash equivalents, and restricted cash |
|
|
— |
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Short-term loan principal and financing service fee receivables: |
||||||||||||
Loan principal and financing service fee receivables |
|
|
|
|||||||||
Less: allowance for loan principal and financing service fee receivables |
( |
) | ( |
) | ( |
) | ||||||
Short-term loan principal and financing service fee receivables, net |
|
|
|
|||||||||
Long-term loan principal and financing service fee receivables: |
||||||||||||
Loan principal and financing service fee receivables |
|
|
|
|||||||||
Less: allowance for loan principal and financing service fee receivables |
( |
) | ( |
) | ( |
) | ||||||
Long-term loan principal and financing service fee receivables, net |
|
|
|
|||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Nonaccrual loan principal |
|
|
|
|||||||||
Less: allowance for nonaccrual loan principal |
( |
) | ( |
) | ( |
) | ||||||
Nonaccrual loan principal, net |
|
|
|
|||||||||
1-30 days |
31-60 days |
61-90 days |
91-120 days |
121-150 days |
151-180 days |
Total |
Current |
Total |
||||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
||||||||||||||||||||||||||||
Domestic consumer loans |
||||||||||||||||||||||||||||||||||||
– Loan principal |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
– Financing service fee receivables |
|
|
|
— |
— |
— |
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
1-30 days |
31-60 days |
61-90 days |
91-120 days |
121-150 days |
151-180 days |
Total past due |
Current |
Total |
Total |
||||||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||||||||||||||
Domestic consumer loans (uncollateralized) |
||||||||||||||||||||||||||||||||||||||||
– Loan principal |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
– Financing service fee receivables |
|
|
|
— |
— |
— |
|
|
|
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
As of December 31, |
||||||||||||||||||||||||||||
2018 |
2019 |
|||||||||||||||||||||||||||
Loan principal |
Financing service fee receivables |
Total |
Loan principal |
Financing service fee receivables |
Total |
|||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
||||||||||||||||||||||
Balance at the beginning of the year |
|
|
|
|
|
|
|
|||||||||||||||||||||
Additions/ ( everser ) |
|
|
|
|
|
|
|
|||||||||||||||||||||
Charge-offs |
( |
) | — |
( |
) | ( |
) | — |
( |
) | ( |
) | ||||||||||||||||
Balance at the end of the year |
|
|
|
|
|
|
|
|||||||||||||||||||||
Evaluated for impairment on a portfolio basis |
|
|
|
|
|
|
|
|||||||||||||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Gross investment in finance lease receivables |
|
|
|
|||||||||
Less: unearned income |
( |
) | ( |
) | ( |
) | ||||||
Net investment in finance lease receivables |
|
|
|
|||||||||
Less: allowance for finance lease receivables |
( |
) | ( |
) | ( |
) | ||||||
Finance lease receivables, net |
|
|
|
|||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Nonaccrual finance lease receivables |
|
|
|
|||||||||
Less: allowance for nonaccrual financial lease receivables |
( |
) | ( |
) | ( |
) | ||||||
Nonaccrual finance lease receivables, net |
|
|
|
|||||||||
1-30 days |
31-60 days |
61-90 days |
90-1 20 days |
120-150 days |
150-180 days |
Total past due |
Current |
Total |
||||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
||||||||||||||||||||||||||||
Finance lease receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
1-30 days |
31-60 days |
61-90 days |
90- 120 days |
120-150 days |
150-180 days |
Total past due |
Current |
Total |
Total |
|||||||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
|||||||||||||||||||||||||||||||
Finance lease receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Less than 1 year |
1 – 2 years |
2 – 3 years |
3 – 4 years |
4 – 5 years |
Total |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
As of December 31, 2018 |
||||||||||||||||||||||||
Finance lease receivables |
|
|
|
|
— |
|
||||||||||||||||||
Less than 1 year |
1 – 2 years |
2 – 3 years |
3 – 4 years |
4 – 5 years |
Total |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
As of December 31, 2019 |
||||||||||||||||||||||||
Finance lease receivables |
|
|
|
|
— |
|
||||||||||||||||||
Less than 1 year |
1 – 2 years |
2 – 3 years |
3 – 4 years |
4 – 5 years |
Total |
|||||||||||||||||||
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|||||||||||||||||||
As of December 31, 2019 |
||||||||||||||||||||||||
Finance lease receivables |
|
|
|
|
— |
|
||||||||||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Balance at the beginning of the year |
|
— |
|
|
|
|
||||||
Additions/ ( reverse) |
|
|
|
|
|
|
||||||
Charge-offs |
|
( |
) | |
( |
) | ( |
) | ||||
Balance at the end of the year |
|
|
|
|
|
|
||||||
Evaluated for impairment on a portfolio basis |
|
|
|
|
|
|
||||||
As of December 31, |
||||||||||||||||
2018 |
2019 |
|||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Prepaid expenses |
|
|
|
|||||||||||||
Prepayments for vehicles |
|
|
— |
— |
||||||||||||
Inventory |
|
|
|
|||||||||||||
Deposits in trust protection fund |
6.1 |
|
|
|
||||||||||||
Guarantee deposits held by Funding Partners |
|
|
|
|||||||||||||
Receivables from third party payment service providers |
6.2 |
|
|
|
||||||||||||
Receivables from service providers |
|
|
|
|||||||||||||
Other receivables from customers |
— |
|
|
|||||||||||||
Others |
|
|
|
|||||||||||||
Total |
|
|
|
|||||||||||||
Less: Allowance for other current assets |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
||||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Financing income |
|
|
|
|
||||||||||||
Sales income |
|
|
|
|
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Year ending December 31, |
||||||||||||
1 year (Including 1 year) |
|
|
|
|||||||||
1 year to 2 years (Including 2 years) |
|
|
|
|||||||||
2 years to 3 years (Including 3 years) |
|
|
|
|||||||||
Over 3 years |
|
— |
— |
|||||||||
Total lease payment |
|
|
|
|||||||||
Less: imputed interest |
|
|
||||||||||
Present value of lease liabilities |
|
|
||||||||||
For the years ended December 31, |
||||||||
2019 |
||||||||
RMB |
US$ |
|||||||
Operating cash flows used in operating leases |
|
|
||||||
ROU assets obtained in exchange for new operating lease liabilities |
|
|
As of December 31, |
||||||||||||||||
Funding Partners |
Fixed annual rate (%) |
Term* |
2018 |
2019 |
||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Other institutions |
- |
|
|
— |
— |
|||||||||||
Trust beneficiaries |
- |
|
|
|
|
|||||||||||
Bank |
- |
days |
|
|
|
|||||||||||
|
|
|
|
|||||||||||||
* | Includes current portion of borrowings greater than 1 year. |
As of December 31, |
||||||||||||||||
Funding Partners |
Fixed annual rate (%) |
Term |
2018 |
2019 |
||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Trust beneficiaries |
|
|
|
— |
— |
|||||||||||
|
— |
— |
||||||||||||||
Payment due by period |
||||||||||||||||
Less than 1 year |
1 – 2 years |
Greater than 2 years |
Total |
|||||||||||||
As of December 31, 2018 Long-term borrowings and interest payables (RMB) |
|
|
|
|
||||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Accrued payroll |
|
|
|
|||||||||
Tax payables |
|
|
|
|||||||||
Payable to suppliers |
|
|
|
|||||||||
Payable to external service providers |
|
|
|
|||||||||
Payable to funding partner |
|
|
|
|||||||||
Others |
|
|
|
|||||||||
|
|
|
||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Balance at beginning of the year |
|
|
|
|||||||||
Fair value of guarantee liabilities upon the inception of new loans |
|
|
|
|||||||||
Performed guarantee |
( |
) | ( |
) | ( |
) | ||||||
Change in fair value of guarantee liabilities |
|
|
|
|||||||||
Balance at end of the year |
|
|
|
|||||||||
As of December 31, |
||||||||
2019 |
||||||||
RMB |
US$ |
|||||||
Balance at the beginning of the year |
||||||||
Fair value of risk assurance liabilities upon the inception of new loans |
||||||||
Payouts |
( |
) | ( |
) | ||||
Changes in risk assurance liabilities |
||||||||
Balance at end of the year |
||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Interest expenses of borrowings |
||||||||||||||||
Other lending related costs |
||||||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Share of loss from equity method investment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Investment income of short-term investments |
||||||||||||||||
Interest income |
||||||||||||||||
Interest expense of convertible senior notes |
— |
— |
( |
) | ( |
) | ||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Current income tax expenses |
||||||||||||||||
Deferred income tax expenses |
( |
) | ( |
) | ||||||||||||
Total income tax expenses |
||||||||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Non-current deferred tax assets |
||||||||||||
Allowance for loan principal and financing service fee receivables |
||||||||||||
Allowance for finance lease receivable |
||||||||||||
Allowance for other current assets |
||||||||||||
Guarantee liabilities |
||||||||||||
Risk assurance liabilities |
— |
|||||||||||
Share-based compensation |
||||||||||||
Investment loss under equity method |
||||||||||||
Deferred revenue |
— |
— |
||||||||||
Net operating loss carry forwards |
||||||||||||
Less: valuation allowance |
( |
) |
( |
) |
( |
) | ||||||
Total non-current deferred tax assets net of valuation allowance |
||||||||||||
Net non-current deferred tax assets |
||||||||||||
Non-current deferred tax liabilities |
||||||||||||
Contract assets |
— |
( |
) |
( |
) | |||||||
Uncollected revenue |
— |
( |
) |
( |
) | |||||||
Total non-current deferred tax liabilities |
— |
( |
) |
( |
) | |||||||
Net non-current deferred tax liabilities |
— |
(178,984,764 |
) | (25,709,553 |
) | |||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Profit before income tax |
||||||||||||||||
PRC statutory income tax rate |
% | % | % |
% | ||||||||||||
Income tax at statutory tax rate |
||||||||||||||||
Effect of different tax rates |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Exempt income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Expenses not deductible for tax purposes |
||||||||||||||||
Adjustment on current income tax of the previous periods |
— |
( |
) | |||||||||||||
Financial subsidy |
( |
) | ( |
) | — |
— |
||||||||||
Deferred only adjustment |
— |
— |
||||||||||||||
Research and development super-deduction |
— | — | ( |
) | ( |
) | ||||||||||
Tax rate change |
— |
( |
) | ( |
) | |||||||||||
Changes in valuation allowance |
||||||||||||||||
Income tax expenses |
||||||||||||||||
For the years ended December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Balance at beginning of the year |
|
|
|
|||||||||
Additions |
|
|
|
|||||||||
Decreases |
( |
) | ( |
) | ( |
) | ||||||
Balance at end of the year |
|
|
|
|||||||||
For the years ended December 31, |
||||||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
RMB |
US$ |
|||||||||||||||||||||||||
Class A |
Class B |
Class A |
Class B |
Class A |
Class A |
Class B |
Class B |
|||||||||||||||||||||||||
Earnings per share – basic: |
||||||||||||||||||||||||||||||||
Numerator: |
||||||||||||||||||||||||||||||||
Allocation of net income attributable to Qudian Inc. for basic computation |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Millions of Shares (denominator): |
||||||||||||||||||||||||||||||||
Weighted average number of ordinary share outstanding – basic |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Denominator used for basic earnings per share |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Earnings per share – basic |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
For the years ended December 31, |
||||||||||||||||||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
US$ |
RMB |
US$ |
|||||||||||||||||||||||||
Class A |
Class B |
Class A |
Class B |
Class A |
Class A |
Class B |
Class B |
|||||||||||||||||||||||||
Earnings per share – diluted: |
||||||||||||||||||||||||||||||||
Numerator: |
||||||||||||||||||||||||||||||||
Interest charges applicable to the Convertible Senior Notes |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Allocation of net income attributable to Qudian Inc. for diluted computation |
||||||||||||||||||||||||||||||||
Reallocation of net income attributable to Qudian Inc. as a result of conversion of Class B to Class A shares |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Allocation of net income attributable to Qudian Inc |
||||||||||||||||||||||||||||||||
Millions of Shares (denominator): |
||||||||||||||||||||||||||||||||
Weighted average number of ordinary share outstanding– basic |
||||||||||||||||||||||||||||||||
Dilutive effect of preferred shares |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||
Conversion of Class B to Class A ordinary shares |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Adjustments for dilutive share options |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Conversion of the Convertible Senior Notes to Class A ordinary share |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||
Denominator used for diluted earnings per share |
||||||||||||||||||||||||||||||||
Earnings per share – diluted |
||||||||||||||||||||||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Class A |
Class A |
Class A |
Class A |
|||||||||||||
Earnings per share – ADS: |
||||||||||||||||
Denominator used for earnings per ADS – basic |
||||||||||||||||
Denominator used for earnings per ADS – diluted |
||||||||||||||||
Earnings per ADS – basic |
||||||||||||||||
Earnings per ADS – diluted |
||||||||||||||||
As of December 31, 2018 |
||||||||||||||||
Active market (Level 1) |
Observable input (Level 2) |
Non-observable input (Level 3) |
Total |
|||||||||||||
RMB |
RMB |
RMB |
RMB |
|||||||||||||
Liabilities: |
||||||||||||||||
Guarantee liabilities |
— |
— |
||||||||||||||
As of December 31, 2019 |
||||||||||||||||
Active market (Level 1) |
Observable input (Level 2) |
Non-observable input (Level 3) |
Total |
|||||||||||||
RMB |
RMB |
RMB |
RMB |
|||||||||||||
Liabilities: |
||||||||||||||||
Guarantee liabilities |
— |
— |
||||||||||||||
As of December 31, 2019 |
||||||||||||||||
Active market (Level 1) |
Observable input (Level 2) |
Non-observable input (Level 3) |
Total |
|||||||||||||
US$ |
US$ |
US$ |
US$ |
|||||||||||||
Liabilities: |
||||||||||||||||
Guarantee liabilities |
— |
— |
|
|||||||||||||
Range of Inputs Weighted - Average As of December 31, |
||||||||||
Financial Liabilities |
Unobservable Input |
2018 |
2019 |
|||||||
Guarantee liabilities |
Discount rates |
|
|
|||||||
Expected delinquency rates |
|
|
Name of related parties |
Relationship with the Company | |
Luo Min |
| |
Qufenqi Inc. |
| |
Alipay.com Co., Ltd. |
December 8, 2018 | |
Ganzhou QuCampus |
| |
Ganzhou Happy Share Capital Management LLP |
| |
Zhima Credit Management Co., Ltd. |
December 8, 2018 | |
Chongqing Alibaba Small Loan Co., Ltd. |
December 8, 2018 | |
Ant Zhixin (Hangzhou) Information Technology Co., Ltd. |
December 8, 2018 | |
Guosheng Financial Holding Inc. |
| |
Guosheng Securities Asset Management Co., Ltd. |
| |
Alibaba Cloud Computing Co., Ltd. |
| |
Key management and their immediate families |
|
As of December 31, |
||||||||||||||||
|
2018 |
2019 |
||||||||||||||
RMB |
RMB |
US$ |
||||||||||||||
Short-term amounts due from related parties |
||||||||||||||||
Ganzhou Happy Share Capital Management LLP |
|
— |
— |
|||||||||||||
Total short-term amounts due from related parties |
|
— |
— |
|||||||||||||
Total amounts due from related parties |
|
— |
— |
|||||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Balance at beginning of the year |
|
— |
— |
|||||||||
Payments |
( |
) | — |
— |
||||||||
Balance at end of the year |
|
— |
— |
|||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Service income |
||||||||||||||||
Key management and their immediate families |
|
— |
— |
— |
||||||||||||
Cost of revenues |
||||||||||||||||
Alipay.com Co., Ltd. |
|
|
— |
— |
||||||||||||
Zhima Credit Management Co., Ltd. |
|
|
— |
— |
||||||||||||
Alibaba Cloud Computing Co., Ltd. |
|
|
— |
— |
||||||||||||
Chongqing Alibaba Small Loan Co., Ltd. |
|
— |
— |
— |
||||||||||||
Ant Zhixin (Hangzhou) Information Technology Co., Ltd. |
— |
|
— |
— |
||||||||||||
Guosheng Financial Holding Inc. |
|
|
— |
— |
||||||||||||
Guosheng Securities Asset Management Co., Ltd. |
|
|
— |
— |
||||||||||||
|
|
— |
— |
|||||||||||||
Sales and marketing |
||||||||||||||||
Zhima Credit Management Co., Ltd. |
|
— |
— |
— |
||||||||||||
Alipay.com Co., Ltd. |
|
|
— |
— |
||||||||||||
|
|
— |
— |
|||||||||||||
For the year ended December 31, |
||||
2017 |
||||
Risk-free interest rate (%) |
|
|||
Volatility (%) |
|
|||
Expected exercise multiple |
|
|||
Dividend yield |
|
|||
Expected life (in years) |
|
|||
Exercise price |
|
|||
Fair value of ordinary shares (RMB) |
|
Number of shares |
Weighted average exercise price |
Weighted average grant date fair value |
Weighted average remaining contractual term |
Aggregated intrinsic value |
||||||||||||||||
RMB |
RMB |
Years |
RMB |
|||||||||||||||||
Balance, December 31, 2017 |
|
— |
|
|
|
|||||||||||||||
Granted |
|
— |
|
|||||||||||||||||
Exercised |
( |
) | — |
|
||||||||||||||||
Forfeited |
( |
) | — |
|
||||||||||||||||
Balance, December 31, 2018 |
|
— |
|
|
|
|||||||||||||||
Granted |
|
— |
|
|||||||||||||||||
Exercised |
( |
) | — |
|
||||||||||||||||
Forfeited |
( |
) | — |
|
||||||||||||||||
Balance, December 31, 2019 |
|
— |
|
|
|
|||||||||||||||
Vested and expected to vest as of December 31, 2019 |
|
— |
|
|
|
|||||||||||||||
Exercisable, December 31, 2019 |
|
— |
|
|
|
|||||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Sales and marketing |
|
|
|
|
||||||||||||
General and administrative |
|
|
|
|
||||||||||||
Research and development |
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Revenues: |
||||||||||||||||
Installment credit services |
|
|
|
|
||||||||||||
– Financing income |
|
|
|
|
||||||||||||
– Sales commission fee |
|
|
|
|
||||||||||||
– Penalty fee |
|
|
|
|
||||||||||||
– Sales income |
|
|
|
|
||||||||||||
– Loan facilitation income |
|
|
|
|
||||||||||||
– Post-origination services fee |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
| |
Transaction services |
— |
— |
|
|
||||||||||||
– Transaction services fee |
— |
— |
|
|
||||||||||||
– Post-origination services fee |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Total consolidated revenues |
|
|
|
|
||||||||||||
Income from operations: |
||||||||||||||||
Installment credit services |
|
|
|
|
||||||||||||
Transaction services |
— |
— |
|
|
||||||||||||
Total segment income from operations |
|
|
|
|
||||||||||||
Unallocated expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total consolidated income from operations |
|
|
|
|
||||||||||||
Total other expense, net |
( |
) | ( |
) | |
|
||||||||||
Net income before income taxes |
|
|
|
|
||||||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
ASSETS: |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
|
|
|
|||||||||
Short-term amounts due from related parties |
|
|
|
|||||||||
Other current assets |
|
|
|
|||||||||
Total current assets |
|
|
|
|||||||||
As of December 31, |
||||||||||||
2018 |
2019 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
Non-current assets: |
||||||||||||
Investments in subsidiaries, VIEs and VIEs’ subsidiaries |
|
|
|
|||||||||
Total non-current assets |
|
|
|
|||||||||
TOTAL ASSETS |
|
|
|
|||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
||||||||||||
Current liabilities: |
||||||||||||
Accrued expenses and other current liabilities |
|
|
|
|||||||||
Short-term amounts due to related parties |
|
|
|
|||||||||
Total current liabilities |
|
|
|
|||||||||
Non-current liabilities |
|
|
|
|||||||||
Convertible senior notes |
— |
|
|
|||||||||
Total non-current liabilities |
— |
|
|
|||||||||
TOTAL LIABILITIES |
|
|
|
|||||||||
Commitments and contingencies |
||||||||||||
Shareholders’ equity |
||||||||||||
Class A Ordinary shares (US$ |
|
|
|
|||||||||
Class B Ordinary shares (US$ |
|
|
|
|||||||||
Treasury shares |
( |
) | ( |
) | ( |
) | ||||||
Additional paid-in capital |
|
|
|
|||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Retained earnings |
|
|
|
|||||||||
Total shareholders’ equity |
|
|
|
|||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Share-based compensation expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
General and administrative |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest and investment income, net |
|
|
( |
) | ( |
) | ||||||||||
Other non-interest income |
— |
|
|
|
||||||||||||
Foreign exchange loss, net |
— |
( |
) | |
|
|||||||||||
Share of profit in subsidiaries, VIEs and VIEs’ subsidiaries |
|
|
|
|
||||||||||||
Net income before income taxes |
|
|
|
|
||||||||||||
Income tax expense |
— |
— |
— |
— |
||||||||||||
Net income |
|
|
|
|
||||||||||||
Other comprehensive income |
|
|
|
|
||||||||||||
Foreign currency translation adjustment |
( |
) | |
|
|
|||||||||||
Total comprehensive income |
|
|
|
|
||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income |
|
|
|
|
||||||||||||
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||||||||||
Share of profit in subsidiaries, VIEs and VIEs’ subsidiaries |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Share-based compensation expense |
|
|
|
|
||||||||||||
Amortization of convertible senior notes |
— |
— |
|
|
||||||||||||
Foreign exchange (income)/loss net |
— |
|
( |
) | ( |
) | ||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Receivables from related party |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Payable to employees |
— |
— |
( |
) | ( |
) | ||||||||||
Other current receivables |
( |
) | |
|
|
|||||||||||
Other current payables |
|
|
|
|
||||||||||||
For the years ended December 31, |
||||||||||||||||
2017 |
2018 |
2019 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
Net cash used in operating activities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Net cash provided by /(used in) investing activities |
( |
) |
( |
) |
||||||||||||
Net cash provided by/(used in) financing activities |
( |
) |
||||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) | ||||||||||||||
Net increase/(decrease) in cash and cash equivalents |
( |
) |
||||||||||||||
Cash and cash equivalents at beginning of the year |
— |
|||||||||||||||
Cash and cash equivalents at end of the year |
||||||||||||||||
Exhibit 2.4
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (the Exchange Act)
As of December 31, 2019, Qudian Inc. (Qudian, the Company, we, us, and our) had the following series of securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class |
Trading Symbol(s) |
Name of exchange on which registered | ||
American Depositary Shares (each representing one Class A ordinary share of Qudian) |
QD | New York Stock Exchange | ||
Class A ordinary shares of US$0.0001 each (the Qudian Class A ordinary shares) |
N/A | New York Stock Exchange* |
* | Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares. |
Description of Ordinary Shares (Items 9.A.3, 9.A.5, 9.A.6, 9.A.7, 10.B.3, 10.B.4, 10.B.6, 10.B.7, 10.B.8, 10.B.9 and 10.B.10 of Form 20-F)
General
We are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and articles of association, the Companies Law, Cap. 22 (Law 3 of 1961, as consolidated and revised), as amended, of the Cayman Islands, which is referred to as the Companies Law below, and the common law of the Cayman Islands.
Our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. Each Class A ordinary share and Class B ordinary share of our company has par value of US$0.0001 per share. The respective number of Class A ordinary shares and Class B ordinary shares that had been issued as of December 31, 2019 is provided on the cover of our annual report on Form 20-F for the year ended December 31, 2019.
Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. All of our outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary shares.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Our second amended and restated articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits which our board of directors determine is no longer needed. Dividends may also be declared and paid out of share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Law. Holders of Class A ordinary shares and Class B ordinary shares will be entitled to the same amount of dividends, if declared.
Voting Rights
In respect of all matters subject to a shareholders vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes, voting together as one class. 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 or more shareholders who together hold not less than 10% of the nominal value of the total issued voting shares of our company present in person or by proxy or, in the case of a shareholder being a corporation, by its duly authorized representative. 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 no less than two-thirds of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our second amended and restated memorandum and articles of association.
Any shareholder entitled to attend and vote at a general meeting of our company shall be entitled to appoint another person as his proxy to attend and vote instead of him. A shareholder who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of our company or at a class meeting. A proxy need not be a shareholder of our company and shall be entitled to exercise the same powers on behalf of a shareholder which such proxy represents as such shareholder could exercise. No instrument appointing a proxy shall be valid after the expiration of twelve (12) months from the date named in it as the date of its execution, except at an adjourned meeting or on a poll demanded at a meeting or an adjourned meeting in cases where the meeting was originally held within twelve (12) months from such date. Delivery of an instrument appointing a proxy shall not preclude a shareholder from attending and voting in person at the meeting convened and in such event, the instrument appointing a proxy shall be deemed to be revoked. Votes may be given either personally (or, in the case of a member being a corporation, by its duly authorized representative) or by proxy.
Conversion.
Each Class B ordinary share is convertible into one Class A ordinary share at any time at the option of the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person or entity which is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equivalent number of Class A ordinary shares.
Transfer of Ordinary Shares.
Subject to the restrictions contained in our second amended and restated articles of association, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:
| the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
| the instrument of transfer is in respect of only one class of ordinary shares; |
| the instrument of transfer is properly stamped, if required; |
| in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and |
| a fee of such maximum sum as the NYSE may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
If our directors refuse to register a transfer, they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of the NYSE, be suspended and the register of members closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register of members closed for more than 30 days in any year as our board may determine.
Liquidation.
On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available for distribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately. Any distribution of assets or capital to a holder of a Class A ordinary share and a holder of a Class B ordinary share will be the same in any liquidation event.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares.
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption of Ordinary Shares.
The Companies Law and our second amended and restated articles of association permit us to purchase our own shares. In accordance with our second amended and restated articles of association and provided the necessary shareholders or board approval have been obtained, we may issue shares on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner, including out of capital, as may be determined by our board of directors.
Variations of Rights of Shares.
All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, be varied with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued 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 with such existing class of shares.
General Meetings of Shareholders
Shareholders meetings may be convened by a majority of our board of directors or our chairman. Advance notice of at least ten clear days is required for the convening of our annual general shareholders meeting and any other general meeting of our shareholders. A quorum required for and throughout a meeting of shareholders consists of at least one shareholder entitled to vote and present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorized representative representing not less than one-third of all voting power of our share capital in issue.
Inspection of Books and Records
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, we will in our articles provide our shareholders with the right to inspect our list of shareholders and to receive annual audited financial statements. See Where You Can Find More Information.
Changes in Capital
We may from time to time by ordinary resolution:
| increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe; |
| consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; |
| sub-divide our existing shares, or any of them into shares of a smaller amount; or |
| cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so canceled. |
However, no alteration contemplated above, or otherwise, may be made to the par value of the Class A ordinary shares or Class B ordinary shares unless an identical alteration is made to the par value of the Class B ordinary shares and Class A ordinary shares, as the case may be.
We may by special resolution, subject to any confirmation or consent required by the Companies Law, reduce our share capital or any capital redemption reserve in any manner permitted by law.
Exempted Company
We are an exempted company with limited liability incorporated under the Companies Law. The Companies Law in the Cayman Islands 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 for the exemptions and privileges listed below:
| an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies; |
| an exempted companys register of members is not open to inspection; |
| an exempted company does not have to hold an annual general meeting; |
| an exempted company may issue no par value shares; |
| an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
| an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| an exempted company may register as a limited duration company; and |
| an exempted company 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. We are subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. We comply with the NYSE rules in lieu of following home country practice. The NYSE rules require that every company listed on the NYSE hold an annual general meeting of shareholders. In addition, our second amended and restated articles of association allow directors to call special meeting of shareholders pursuant to the procedures set forth in our articles.
Differences in Corporate Law
The Companies Law is modeled after that of England and Wales but does not follow recent statutory enactments in England. In addition, the Companies Law differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Law applicable to us and the laws applicable to companies incorporated in the State of Delaware.
Mergers and Similar Arrangements
A merger of two or more constituent companies under Cayman Islands law requires a plan of merger or consolidation to be approved by the directors of each constituent company and authorization by a special resolution of the members of each constituent company.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders. For this purpose a subsidiary is a company of which at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.
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 circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| the statutory provisions as to the required majority vote have been met; |
| the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law. |
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 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, the 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, there are exceptions to the foregoing principle, including when:
| a company acts or proposes to act illegally or ultra vires; |
| the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
| those who control the company are perpetrating a fraud on the minority. |
Indemnification of Directors and Executive Officers and Limitation of Liability
Cayman Islands law does not limit the extent to which a companys 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 second amended and restated memorandum and articles of association permit indemnification of officers and directors for actions, costs, charges, losses, damages and expenses incurred in their capacities as such unless such losses, actions, costs, charges, expenses or damages arise from dishonesty or fraud which may attach to such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into indemnification agreements with our directors and senior executive officers that will provide such persons with additional indemnification beyond that provided in our second amended and restated 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.
Anti-Takeover Provisions in the Memorandum and Articles of Association
Some provisions of our second amended and restated memorandum and articles of association may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to 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.
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our second amended and restated memorandum and articles of association, as amended and restated from time to time, for what they believe in good faith to be in the best interests of our company.
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 act 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 interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a 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 owes the following duties to the company a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty not to put himself 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. 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. Our second amended and restated articles of association provide that shareholders may not 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.
Neither Cayman Islands law nor our second amended and restated articles of association allow our shareholders to requisition a shareholders meeting. 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 corporations 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 shareholders voting power with respect to electing such director. As permitted under Cayman Islands law, our second amended and restated 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 second amended and restated articles of association, directors may be removed by an ordinary resolution of shareholders.
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 targets outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the targets 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 for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding Up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporations 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 Law and our second amended and restated articles of association, our company may be dissolved, liquidated or wound up by the vote of holders of two-thirds of our shares voting at a meeting
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 second amended and restated 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 only with the sanction of a special 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 corporations 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 second amended and restated memorandum and articles of association may only be amended by a special resolution of shareholders.
Rights of Non-Resident or Foreign Shareholders
There are no limitations imposed by our amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our second amended and restated memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
Directors Power to Issue Shares
Subject to applicable law, our board of directors is empowered to issue or allot shares or grant options and warrants with or without preferred, deferred, qualified or other special rights or restrictions.
Description of Debt Securities, Warrants and Rights and Other Securities (Items 12.A, 12.B and 12.C of Form 20-F)
Not applicable.
Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
Deutsche Bank Trust Company Americas, as depositary, will register and deliver the ADSs. Each ADS will represent ownership of one Class A ordinary share, deposited with Deutsche Bank AG, Hong Kong Branch, as custodian for the depositary. Each ADS will also represent ownership of any other securities, cash or other property which may be held by the depositary. The depositarys corporate trust office at which the ADSs will be administered is located at 60 Wall Street, New York, NY 10005, USA. The principal executive office of the depositary is located at 60 Wall Street, New York, NY 10005, USA.
Our ADSs are governed by the depositary agreement, a form of which has been attached to the Registration Statement on Form F-6 (File No. 333-220779), as amended, filed with the SEC on October 13, 2017.
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of American Depositary Receipt. For directions on how to obtain copies of those documents, see Where You Can Find More Information.
Holding the ADSs
How will you hold your ADSs?
You may hold ADSs either (1) directly (a) by having an American Depositary Receipt, or ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (b) by holding ADSs in DRS, or (2) indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. ADSs will be issued through DRS, unless you specifically request certificated ADRs. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares?
The depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent as of the record date (which will be as close as practicable to the record date for our ordinary shares) set by the depositary with respect to the ADSs.
| Cash. The depositary will convert or cause to be converted any cash dividend or other cash distribution we pay on the ordinary shares or any net proceeds from the sale of any ordinary shares, rights, securities or other entitlements under the terms of the deposit agreement into U.S. dollars if it can do so on a practicable basis, and can transfer the U.S. dollars to the United States and will distribute promptly the amount thus received. If the depositary shall determine in its judgment that such conversions or transfers are not possible or lawful or if any government approval or license is needed and cannot be obtained at a reasonable cost within a reasonable period or otherwise sought, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold or cause the custodian to hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid and such funds will be held for the respective accounts of the ADS holders. It will not invest the foreign currency and it will not be liable for any interest for the respective accounts of the ADS holders. |
| Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary, that must be paid, will be deducted. See Taxation. It will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution. |
| Shares. For any ordinary shares we distribute as a dividend or free distribution, either (1) the depositary will distribute additional ADSs representing such ordinary shares or (2) existing ADSs as of the applicable record date will represent rights and interests in the additional ordinary shares distributed, to the extent reasonably practicable and permissible under law, in either case, net of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary will only distribute whole ADSs. It will try to sell ordinary shares which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may sell a portion of the distributed ordinary shares sufficient to pay its fees and expenses, and any taxes and governmental charges, in connection with that distribution. |
| Elective Distributions in Cash or Shares. If we offer holders of our ordinary shares the option to receive dividends in either cash or shares, the depositary, after consultation with us and having received timely notice as described in the deposit agreement of such elective distribution by us, has discretion to determine to what extent such elective distribution will be made available to you as a holder of the ADSs. We must timely first instruct the depositary to make such elective distribution available to you and furnish it with satisfactory evidence that it is legal to do so. The depositary could decide it is not legal or reasonably practicable to make such elective distribution available to you. In such case, the depositary shall, on the basis of the same determination as is made in respect of the ordinary shares for which no election is made, distribute either cash in the same way as it does in a cash distribution, or additional ADSs representing ordinary shares in the same way as it does in a share distribution. The depositary is not obligated to make available to you a method to receive the elective dividend in shares rather than in ADSs. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of ordinary shares. |
| Rights to Purchase Additional Shares. If we offer holders of our ordinary shares any rights to subscribe for additional shares, the depositary shall having received timely notice as described in the deposit agreement of such distribution by us, consult with us, and we must determine whether it is lawful and reasonably practicable to make these rights available to you. We must first instruct the depositary to make such rights available to you and furnish the depositary with satisfactory evidence that it is legal to do so. If the depositary decides it is not legal or reasonably practicable to make the rights available but that it is lawful and reasonably practicable to sell the rights, the depositary will endeavor to sell the rights and in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper, distribute the net proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. |
If the depositary makes rights available to you, it will establish procedures to distribute such rights and enable you to exercise the rights upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. The depositary shall not be obliged to make available to you a method to exercise such rights to subscribe for ordinary shares (rather than ADSs).
U.S. securities laws may restrict transfers and cancelation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.
There can be no assurance that you will be given the opportunity to exercise rights on the same terms and conditions as the holders of ordinary shares or be able to exercise such rights.
| Other Distributions. Subject to receipt of timely notice, as described in the deposit agreement, from us with the request to make any such distribution available to you, and provided the depositary has determined such distribution is lawful and reasonably practicable and feasible and in accordance with the terms of the deposit agreement, the depositary will distribute to you anything else we distribute on deposited securities by any means it may deem practicable, upon your payment of applicable fees, charges and expenses incurred by the depositary and taxes and/or other governmental charges. If any of the conditions above are not met, the depositary will endeavor to sell, or cause to be sold, what we distributed and distribute the net proceeds in the same way as it does with cash; or, if it is unable to sell such property, the depositary may dispose of such property in any way it deems reasonably practicable under the circumstances for nominal or no consideration, such that you may have no rights to or arising from such property. |
The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distributions we make on our shares or any value for them if we and/or the depositary determines that it is illegal or not practicable for us or the depositary to make them available to you.
Deposit, Withdrawal and Cancelation
How are ADSs issued?
The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons entitled thereto.
How do ADS holders cancel an American Depositary Share?
You may turn in your ADSs at the depositarys corporate trust office or by providing appropriate instructions to your broker. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the ordinary shares and any other deposited securities underlying the ADSs to you or a person you designate at the office of the custodian. Or, at your request, risk and expense, the depositary will deliver the deposited securities at its corporate trust office, to the extent permitted by law.
How do ADS holders interchange between Certificated ADSs and Uncertificated ADSs?
You may surrender your ADR to the depositary for the purpose of exchanging your ADR for uncertificated ADSs. The depositary will cancel that ADR and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to you an ADR evidencing those ADSs.
Voting Rights
How do you vote?
You may instruct the depositary to vote the ordinary shares or other deposited securities underlying your ADSs at any meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our second amended and restated memorandum and articles of association, and the provisions of or governing the deposited securities. Otherwise, you could exercise your right to vote directly if you withdraw the ordinary shares. However, you may not know about the meeting sufficiently enough in advance to withdraw the ordinary shares.
If we ask for your instructions and upon timely notice from us by regular, ordinary mail delivery, or by electronic transmission, as described in the deposit agreement, the depositary will notify you of the upcoming meeting at which you are entitled to vote pursuant to any applicable law, the provisions of our second amended and restated memorandum and articles of association, and the provisions of or governing the deposited securities, and arrange to deliver our voting materials to you. The materials will include or reproduce (a) such notice of meeting or solicitation of consents or proxies; (b) a statement that the ADS holders at the close of business on the ADS record date will be entitled, subject to any applicable law, the provisions of our second amended and restated memorandum and articles of association, and the provisions of or governing the deposited securities, to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the ordinary shares or other deposited securities represented by such holders ADSs; and (c) a brief statement as to the manner in which such instructions may be given or deemed given in accordance with the second to last sentence of this paragraph if no instruction is received, to the depositary to give a discretionary proxy to a person designated by us. Voting instructions may be given only in respect of a number of ADSs representing an integral number of ordinary shares or other deposited securities. For instructions to be valid, the depositary must receive them in writing on or before the date specified. The depositary will try, as far as practical, subject to applicable law and the provisions of our second amended and restated memorandum and articles of association, to vote or to have its agents vote the ordinary shares or other deposited securities (in person or by proxy) as you instruct. The depositary will only vote or attempt to vote as you instruct. If we timely requested the depositary to solicit your instructions but no instructions are received by the depositary from an owner with respect to any of the deposited securities represented by the ADSs of that owner on or before the date established by the depositary for such purpose, the depositary shall deem that owner to have instructed the depositary to give a discretionary proxy to a person designated by us with respect to such deposited securities, and the depositary shall give a discretionary proxy to a person designated by us to vote such deposited securities. However, no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter if we inform the depositary we do not wish such proxy given, substantial opposition exists or the matter materially and adversely affects the rights of holders of the ordinary shares.
We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary shares underlying your ADSs. In addition, there can be no assurance that ADS holders and beneficial owners generally, or any holder or beneficial owner in particular, will be given the opportunity to vote or cause the custodian to vote on the same terms and conditions as the holders of our ordinary shares.
The depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if the ordinary shares underlying your ADSs are not voted as you requested.
In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will give the depositary notice of any such meeting and details concerning the matters to be voted at least 30 business days in advance of the meeting date.
Compliance with Regulations
Information Requests
Each ADS holder and beneficial owner shall (a) provide such information as we or the depositary may request pursuant to law, including, without limitation, relevant Cayman Islands law, any applicable law of the United States of America, our second amended and restated memorandum and articles of association, any resolutions of our Board of Directors adopted pursuant to our second amended and restated memorandum and articles of association, the requirements of the NYSE, or to any requirements of the DRS, regarding the capacity in which they own or owned ADRs, the identity of any other persons then or previously interested in such ADRs and the nature of such interest, and any other applicable matters, and (b) be bound by and subject to applicable provisions of the laws of the Cayman Islands, our second amended and restated memorandum and articles of association, and the requirements of the NYSE, or pursuant to any requirements of the DRS, to the same extent as if such ADS holder or beneficial owner held ordinary shares directly, in each case irrespective of whether or not they are ADS holders or beneficial owners at the time such request is made.
Disclosure of Interests
Each ADS holder and beneficial owner shall comply with our requests pursuant to Cayman Islands law, the rules and requirements of the NYSE or our second amended and restated memorandum and articles of association, which requests are made to provide information, inter alia, as to the capacity in which such ADS holder or beneficial owner owns ADS and regarding the identity of any other person interested in such ADS and the nature of such interest and various other matters, whether or not they are ADS holders or beneficial owners at the time of such requests.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable, or which become payable, on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register or transfer your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any net proceeds, or send to you any property, remaining after it has paid the taxes. You agree to indemnify us, the depositary, the custodian and each of our and their respective agents, directors, employees and affiliates for, and hold each of them harmless from, any claims with respect to taxes (including applicable interest and penalties thereon) arising from any refund of taxes, reduced rate of withholding at source or other tax benefit obtained for you. Your obligations under this paragraph shall survive any transfer of ADRs, any surrender of ADRs and withdrawal of deposited securities or the termination of the deposit agreement.
Reclassifications, Recapitalizations and Mergers
If we: |
Then: | |
Change the nominal or par value of our ordinary shares |
The cash, shares or other securities received by the depositary will become deposited securities. | |
Reclassify, split up or consolidate any of the deposited securities |
Each ADS will automatically represent its equal share of the new deposited securities. | |
Distribute securities on the ordinary shares that are not distributed to you, or Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action |
The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the form of ADR without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, including expenses incurred in connection with foreign exchange control regulations and other charges specifically payable by ADS holders under the deposit agreement, or materially prejudices a substantial existing right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended. If any new laws are adopted which would require the deposit agreement to be amended in order to comply therewith, we and the depositary may amend the deposit agreement in accordance with such laws and such amendment may become effective before notice thereof is given to ADS holders.
How may the deposit agreement be terminated?
The depositary will terminate the deposit agreement if we ask it to do so, in which case the depositary will give notice to you at least 90 days prior to termination. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign, or if we have removed the depositary, and in either case we have not appointed a new depositary within 90 days. In either such case, the depositary must notify you at least 30 days before termination.
After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property and deliver ordinary shares and other deposited securities upon cancelation of ADSs after payment of any fees, charges, taxes or other governmental charges. Six months or more after the date of termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement, for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. After such sale, the depositarys only obligations will be to account for the money and other cash. After termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary thereunder.
Books of Depositary
The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to us, the ADRs and the deposit agreement.
The depositary will maintain facilities in the Borough of Manhattan, The City of New York to record and process the issuance, cancelation, combination, split-up and transfer of ADRs.
These facilities may be closed at any time or from time to time when such action is deemed necessary or advisable by the depositary in connection with the performance of its duties under the deposit agreement or at our reasonable written request.
Limitations on Obligations and Liability
Limits on our Obligations and the Obligations of the Depositary and the Custodian; Limits on Liability to Holders of ADSs
The deposit agreement expressly limits our obligations and the obligations of the depositary and the custodian. It also limits our liability and the liability of the depositary. The depositary and the custodian:
| are only obligated to take the actions specifically set forth in the deposit agreement without gross negligence or willful misconduct; |
| are not liable if any of us or our respective controlling persons or agents are prevented or forbidden from, or subjected to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement and any ADR, by reason of any provision of any present or future law or regulation of the United States or any state thereof, the Cayman Islands or any other country, or of any other governmental authority or regulatory authority or stock exchange, or on account of the possible criminal or civil penalties or restraint, or by reason of any provision, present or future, of our second amended and restated memorandum and articles of association or any provision of or governing any deposited securities, or by reason of any act of God or war or other circumstances beyond its control (including, without limitation, nationalization, expropriation, currency restrictions, work stoppage, strikes, civil unrest, revolutions, rebellions, explosions and computer failure); |
| are not liable by reason of any exercise of, or failure to exercise, any discretion provided for in the deposit agreement or in our second amended and restated memorandum and articles of association or provisions of or governing deposited securities; |
| are not liable for any action or inaction of the depositary, the custodian or us or their or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, any person presenting ordinary shares for deposit or any other person believed by it in good faith to be competent to give such advice or information; |
| are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement; |
| are not liable for any special, consequential, indirect or punitive damages for any breach of the terms of the deposit agreement, or otherwise; |
| may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party; |
| disclaim any liability for any action or inaction or inaction of any of us or our respective controlling persons or agents in reliance upon the advice of or information from legal counsel, accountants, any person presenting ordinary shares for deposit, holders and beneficial owners (or authorized representatives) of ADSs, or any person believed in good faith to be competent to give such advice or information; and |
| disclaim any liability for inability of any holder to benefit from any distribution, offering, right or other benefit made available to holders of deposited securities but not made available to holders of ADS. |
The depositary and any of its agents also disclaim any liability (i) for any failure to carry out any instructions to vote, the manner in which any vote is cast or the effect of any vote or failure to determine that any distribution or action may be lawful or reasonably practicable or for allowing any rights to lapse in accordance with the provisions of the deposit agreement, (ii) the failure or timeliness of any notice from us, the content of any information submitted to it by us for distribution to you or for any inaccuracy of any translation thereof, (iii) any investment risk associated with the acquisition of an interest in the deposited securities, the validity or worth of the deposited securities, the credit-worthiness of any third party, (iv) for any tax consequences that may result from ownership of ADSs, ordinary shares or deposited securities, or (v) 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, provided that in connection with the issue out of which such potential liability arises the depositary performed its obligations without gross negligence or willful misconduct while it acted as depositary.
In addition, the deposit agreement provides that each party to the deposit agreement (including each holder, beneficial owner and holder of interests in the ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any lawsuit or proceeding against the depositary or our company related to our shares, the ADSs or the deposit agreement.
In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances.
Requirements for Depositary Actions
Before the depositary will issue, deliver or register a transfer of an ADS, split-up, subdivide or combine ADSs, make a distribution on an ADS, or permit withdrawal of ordinary shares, the depositary may require:
| payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any ordinary shares or other deposited securities and payment of the applicable fees, expenses and charges of the depositary; |
| satisfactory proof of the identity and genuineness of any signature or any other matters contemplated in the deposit agreement; and |
| compliance with (A) any laws or governmental regulations relating to the execution and delivery of ADRs or ADSs or to the withdrawal or delivery of deposited securities and (B) such reasonable regulations and procedures as the depositary may establish, from time to time, consistent with the deposit agreement and applicable laws, including presentation of transfer documents. |
The depositary may refuse to issue and deliver ADSs or register transfers of ADSs generally when the register of the depositary or our transfer books are closed or at any time if the depositary or we determine that it is necessary or advisable to do so.
Your Right to Receive the Shares Underlying Your ADSs
You have the right to cancel your ADSs and withdraw the underlying ordinary shares at any time except:
| when temporary delays arise because: (1) the depositary has closed its transfer books or we have closed our transfer books; (2) the transfer of ordinary shares is blocked to permit voting at a shareholders meeting; or (3) we are paying a dividend on our ordinary shares; |
| when you owe money to pay fees, taxes and similar charges; |
| when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities; |
| other circumstances specifically contemplated by Section I.A.(l) of the General Instructions to Form F-6 (as such General Instructions may be amended from time to time); or |
| for any other reason if the depositary or we determine, in good faith, that it is necessary or advisable to prohibit withdrawals. |
The depositary shall not knowingly accept for deposit under the deposit agreement any ordinary shares or other deposited securities required to be registered under the provisions of the Securities Act, unless a registration statement is in effect as to such ordinary shares.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Direct Registration System
In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements issued by the depositary to the ADS holders entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of an ADS holder, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register such transfer.
In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not verify, determine or otherwise ascertain that the DTC participant claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code).
Exhibit 4.37
[English Translation]
EQUITY INTEREST PLEDGE AGREEMENT
This Equity Interest Pledge Agreement (this Agreement) is entered into in Xiamen, the Peoples Republic of China (the PRC or China) on July 1, 2019 by and among:
Party A: | Xiamen Youxiang Times Technology Co., Ltd., a wholly foreign-owned limited liability company established and existing under the laws of the PRC, with its registered address at E3, Unit 03, 8th Floor, Building D, Xiamen International Modernization Center, Xiamen Area, No. 97 Xiangyu Road, Chinas (Fujian) Pilot Free Trade Zone (the Pledgee). | |
Party B: | Min Luo, a PRC citizen, with his identity card number of 362527198302280018;. | |
Long Xu, a PRC citizen, with his/her identity card number of 610402198310287516. | ||
(Min Luo and Long Xu are referred to collectively as the Pledgors.) | ||
Party C: | Xiamen Qu Plus Plus Technology Development Co., Ltd., a limited liability company established and existing under the laws of the PRC, with its registered address at No. 2999, Xi Zhou Road, Tongan District, Xiamen. |
In this Agreement, the Pledgee, the Pledgors and Party C may be hereinafter referred to individually as a Party and collectively as the Parties.
WHEREAS:
1. | Party C is a limited liability company registered in Xiamen, Fujian Province, the PRC. The Pledgors are shareholders of Party C, and the total amount of their capital contribution is RMB 10,000,000. Party C acknowledges the respective rights and obligations of the Pledgors and the Pledgee hereunder and agrees to provide any necessary assistance to register the Pledge Right. |
2. | The Pledgee is a wholly foreign-owned enterprise registered in Ganzhou, Jiangxi Province, the PRC. The Pledgee and Party C entered into the Exclusive Business Cooperation Agreement on July 1, 2019 (the Exclusive Business Cooperation Agreement), the Pledgee, the Pledgors and Party C entered into the Exclusive Call Option Agreement on July 1, 2019 (the Exclusive Call Option Agreement), and the Pledgors executed the Power of Attorney Agreement to authorize the Pledgee on July 1, 2019 (the Power of Attorney Agreement; together with the Exclusive Business Cooperation Agreement, the Exclusive Call Option Agreement and this Agreement, the Control Agreements). |
3. | To guarantee the collection by the Pledgee from Party C of all amounts due and payable by Party C, including, without limitation, consulting and service fees, and guarantee the performance by Party C and the Pledgors of other obligations under the Exclusive Business Cooperation Agreement, the Exclusive Call Option Agreement, the Power of Attorney Agreement and this Agreement, the Pledgors pledge all of their Equity Interest in Party C as security for the obligations under the Exclusive Business Cooperation Agreement, the Exclusive Call Option Agreement, the Power of Attorney Agreement and this |
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4. | Agreement. |
NOW, THEREFORE, through mutual consultation, the Parties agree as follows:
1. | Definitions |
Unless otherwise provided by this Agreement, the following terms shall have the following meanings:
1.1 | Pledge Right means the security interest granted by the Pledgors to the Pledgee in accordance with Article 2 hereof, i.e. the right of the Pledgee to be repaid in priority out of the proceeds from the conversion, auction or sale of the Equity Interest. |
1.2 | Equity or Equity Interest means all equity interest in Party C lawfully held now and acquired hereafter by the Pledgors as set forth in Article 2.1 hereof. |
1.3 | Pledge Term means the term set forth in Article 3 hereof. |
1.4 | Contractual Obligations shall mean all obligations of the Pledgors and Party C under the Exclusive Business Cooperation Agreement, the Exclusive Call Option Agreement, the Power of Attorney Agreement and this Agreement (including, without limitation, the obligation to pay consulting and service fees to the Pledgee when they fall due and payable (whether on the specified due date, by early repayment or otherwise) in accordance with the Exclusive Business Cooperation Agreement). |
1.5 | Secured Indebtedness shall mean all direct, indirect and consequential losses and loss of foreseeable profits suffered by the Pledgee due to any Event of Default of the Pledgors and/or Party C. The basis for the amounts of such losses includes, but is not limited to, reasonable business plans and profit forecasts of the Pledgee, and all costs incurred by the Pledgee in connection with its enforcement of the Contractual Obligations against the Pledgors and/or Party C. |
1.6 | Event of Default means any of the circumstances set forth in Article 7 hereof. |
1.7 | Notice of Default means the notice given by the Pledgee in accordance with this Agreement to declare an Event of Default. |
2. | Pledge Right |
2.1 | As security for the prompt and full performance of the Contractual Obligations and the repayment of the Secured Indebtedness by the Pledgors and Party C, the Pledgors hereby pledge their Equity Interest in Party C (including the registered capital of (amount of capital contribution to) Party C currently owned by the Pledgors and all Equity Interest relating thereto, and other registered capital of (amount of capital contribution to) Party C likely to be acquired by the Pledgors hereafter and all Equity Interest relating thereto) (Equity or Equity Interest) to the Pledgee by means of first priority pledge. As of the date hereof, the Equity Interest used by Party B for pledge is 100% Equity Interest in Party C held by Party B, representing 100% of the registered capital of Party C, i.e. RMB 10,000,000. Min Luo holds 99.9% equity interest in Party C, representing 99.9% of the registered capital of Party C, i.e. RMB9,990,000; Long Xu holds 0.1% equity interest in Party C, representing 0.1% registered capital of Party C, i.e. RMB10,000. |
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2.2 | The Parties understand and agree that the monetary valuation arising from or relating to the Secured Indebtedness shall be a variable and floating valuation until the Settlement Date (as defined below). |
2.3 | If any of the following events (each an Event of Settlement) occurs, the value of the Secured Indebtedness shall be determined based on the total amount of the Secured Indebtedness that are due, outstanding and payable to the Pledgee immediately prior to or on the date of occurrence of the Event of Settlement (the Determined Indebtedness): |
(a) | any other Control Agreement is terminated in accordance with its relevant provisions; |
(b) | the Event of Default set forth in Article 7 hereof occurs and fails to be resolved, as a result of which the Pledgee gives a Notice of Default to the relevant Pledgors in accordance with Article 7.3; |
(c) | upon due inquiry, the Pledgee reasonably determines that the Pledgors and/or Party C is insolvent or could potentially be made insolvent; or |
(d) | any other event that requires the determination of the Secured Indebtedness in accordance with relevant laws of the PRC. |
2.4 | For the avoidance of doubt, the date on which an Event of Settlement occurs shall be the settlement date (the Settlement Date). The Pledgee shall have the right, at its option, to realize the Pledge Right in accordance with Article 8 on or after the Settlement Date. |
2.5 | During the Pledge Term, the Pledgee shall have the right to receive dividends or bonuses with respect to the Equity Interest. The Pledgors may receive dividends or bonuses with respect to the Equity Interest only with the prior written consent of the Pledgee. After the deduction of individual income tax payable by the Pledgors, dividends or bonuses received by the Pledgors with respect to the Equity Interest shall be, as requested by the Pledgee, (1) deposited into an account designated by the Pledgee, placed under the custody of the Pledgee, used to provide security for the Contractual Obligations and first applied towards the satisfaction of the Secured Indebtedness; or (2) unconditionally donated to the Pledgee or the person designated by the Pledgee subject to the laws of the PRC. |
2.6 | The Pledgors may increase the capital of Party C only with the prior written consent of the Pledgee. Any increase in the capital contributed by the Pledgors to the registered capital of Party C as a result of any capital increase shall also be deemed as the Equity Interest pledged hereunder. |
2.7 | If Party C is required to be dissolved or liquidated in accordance with the mandatory provisions of the laws of the PRC, after Party C completes dissolution or liquidation procedures in accordance with law, any interests distributed to the Pledgors by Party C in accordance with law shall be, as requested by the Pledgee, (1) deposited into an account designated by the Pledgee, placed under the custody of the Pledgee, used to provide security for the Contractual Obligations and first applied towards the satisfaction of the Secured Indebtedness; or (2) unconditionally donated to the Pledgee or the person designated by the Pledgee subject to the laws of the PRC. |
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3. | Pledge Term |
3.1 | The Pledge Right shall become effective as of the date on which it is registered with the administrative authority for industry and commerce (the Registration Authority) in the locality of Party C, and the term of the Pledge Right (the Pledge Term) shall terminate until the Contractual Obligations and the Secured Indebtedness, for which the Pledge Right provides security, have been fully performed or repaid. The Parties agree that after the execution of this Agreement, the Pledgors and Party A shall promptly submit an application for the creation and registration of Equity Interest Pledge to the Registration Authority in accordance with the Measures for the Registration of Equity Pledge with the Administrative Authorities for Industry and Commerce. The Parties further agree to complete all Equity pledge registration formalities and obtain the registration notice issued by the Registration Authority within fifteen (15) days from the date on which the Registration Authority formally accepts the application for registration of Equity pledge. The Parties jointly acknowledge that, for the purpose of completing Equity pledge registration formalities, the Parties shall submit this Agreement or an Equity pledge contract which is executed in the form requested by the administrative authority for industry and commerce in the locality of Party C and truly reflects the information regarding the Pledge Right hereunder (the Pledge Agreement for Industrial and Commercial Registration) to the administrative authority for industry and commerce. This Agreement shall apply to the matters not mentioned in the Pledge Agreement for Industrial and Commercial Registration. The Pledgors and Party C shall submit all necessary documents and complete all necessary formalities in accordance with the laws and regulations of the PRC and various requirements of the competent administrative authority for industry and commerce to ensure the Pledge Right is registered as soon as practicable after the submission of application. |
3.2 | During the Pledge Term, if Party C fails to perform the Contractual Obligations or repay the Secured Indebtedness in accordance with provisions, the Pledgee shall have the right, but not the obligation, to dispose of the Pledge Right in accordance with this Agreement. |
4. | Custody of Equity Records subject to the Pledge Right |
4.1 | During the Pledge Term set forth herein, the Pledgors shall deliver the original investment certificate and the original shareholder register recording the Pledge Right (and other documents reasonably requested by the Pledgee, including, without limitation, the Pledge Right registration notice issued by the administrative authority for industry and commerce) to the Pledgee for custody within one week from the date on which the Pledge Right is registered and created. The Pledgee shall keep custody of such documents during the entire Pledge Term set forth herein. |
5. | Representations and Warranties of the Pledgors and Party C |
The Pledgors represent and warrant to the Pledgee as follows:
5.1 | The Pledgors are the sole legal and beneficial owners of the Equity Interest and shall have lawful, good and full ownership of the Equity Interest, unless subject to the agreements otherwise entered into by the Pledgors and the Pledgee. |
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5.2 | The Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with this Agreement. |
5.3 | Except for the Pledge Right, the Pledgors have created no security interest or other encumbrance on the Equity Interest, there is no dispute with respect to the ownership of the Equity Interest, the Equity Interest is not subject to attachment or other legal proceedings, and no similar action is threatened. The Equity Interest may be used for pledge and transfer in accordance with applicable laws. |
5.4 | The Pledgors execution of this Agreement and exercise of their rights hereunder or performance of their obligations hereunder will not violate any laws or regulations, any agreements or contracts to which the Pledgors are a party, or any covenants made by the Pledgors to any third party. |
5.5 | All documents, information, statements and certificates provided by the Pledgors to the Pledgee are accurate, true, complete and valid. |
Party C represents and warrants to the Pledgee as follows:
5.6 | Party C is a limited liability company registered, incorporated and lawfully existing under the laws of the PRC with independent legal person status; it has full and independent legal status and capacity to execute, deliver and perform this Agreement. |
5.7 | Upon due execution by Party C, this Agreement constitutes its legal, valid and binding obligations. |
5.8 | Party C has full internal right and authority to execute and deliver this Agreement and all other documents relating to the transactions contemplated hereby, and has full right and authority to consummate the transactions contemplated hereby. |
5.9 | There is no material security interest or other encumbrance (including, without limitation, transfer of any intellectual property of Party C or any assets of Party C with value of more than RMB100,000, or encumbrance on any property right or use right of such assets) on the assets owned by Party C, which may affect the rights and interests of the Pledgee in the Equity Interest. |
5.10 | There are no pending or, to the knowledge of Party C, threatened litigation, arbitration or other legal proceedings before any court or arbitral tribunal with respect to the Equity Interest, Party C or its assets, nor are there pending or, to the knowledge of Party C, threatened administrative procedures or penalty before any governmental or administrative authority with respect to the Equity Interest, Party C or its assets, which will have material or adverse effect on the economic condition of Party C or the Pledgors ability to perform their obligations and guarantee liability hereunder. |
5.11 | Party C hereby agrees to bear joint and several liability to the Pledgee for the representations and warranties made by the Pledgors hereunder. |
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5.12 | Party C hereby warrants to the Pledgee that the foregoing representations and warranties will remain true and correct and be fully complied with under any circumstances at any time prior to full performance of the Contractual Obligations or full satisfaction of the Secured Indebtedness. |
6. | Covenants and Further Agreements of the Pledgors and Party C |
The Pledgors covenant and further agree as follows:
6.1 | During the validity term hereof, the Pledgors hereby covenant to the Pledgee that: |
6.1.1 | except for the performance of the Exclusive Call Option Agreement entered into by the Pledgors, the Pledgee and Party C on July 1, 2019, without the prior written consent of the Pledgee, the Pledgors shall not transfer, or agree to others transfer of, all or any part of the Equity Interest, create or permit to be created any security interest or other encumbrance which may affect the rights and interests of the Pledgee in the Equity Interest; |
6.1.2 | the Pledgors shall comply with all laws and regulations applicable to the pledge of rights, show any notice, order or recommendation issued or prepared by relevant competent authorities (or any other relevant authority) in connection with the Pledge Right to the Pledgee within 5 days after the receipt of the same, and observe such notice, order or recommendation or make objections and statements with respect to such matters as reasonably requested by the Pledgee or upon approval of the Pledgee; |
6.1.3 | the Pledgors shall promptly notify the Pledgee of any event or notice received by the Pledgors which may have effect on the Pledgees rights in the Equity Interest or any part thereof, together with any event or notice received by the Pledgors which may have effect on any warranty and other obligations of the Pledgors arising out of this Agreement. |
6.2 | The Pledgors agree that the Pledge Right acquired by the Pledgee in accordance with this Agreement shall not be suspended or prejudiced by the Pledgors or any of their successors or representatives or any other person through legal proceedings. |
6.3 | To protect or perfect the security interest granted hereunder, the Pledgors hereby covenant to execute in good faith and cause other parties who have interest in the Pledge Right to execute all certificates, agreements, deeds and/or covenants requested by the Pledgee. The Pledgors also covenant to do and cause other parties who have interest in the Pledge Right to do acts requested by the Pledgee, facilitate the exercise by the Pledgee of the rights and authority granted to it by this Agreement, and enter into all relevant documents regarding the ownership of the Equity Interest with the Pledgee or its designees (natural persons/legal persons). The Pledgors covenant to provide the Pledgee with all notices, orders and decisions requested by the Pledgee in connection with the Pledge Right during a reasonable period. |
6.4 | The Pledgors hereby covenant to the Pledgee that they will comply with and perform all warranties, covenants, agreements, representations and conditions hereunder. In the event of failure to perform or partial performance of their warranties, covenants, agreements, representations and conditions, the Pledgors shall indemnify the Pledgee for all losses caused thereby. |
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6.5 | If any compulsory measures are imposed on the Equity Interest pledged hereunder by court or other governmental authorities due to any reason, the Pledgors shall use all endeavors, including, without limitation, provision of other warranties to the court or adoption of other measures, to release such compulsory measures taken by court or other authorities with respect to the Equity Interest. |
6.6 | If any possible decrease in the value of the Equity Interest is enough to prejudice the rights of the Pledgee, the Pledgee may request the Pledgors to provide additional mortgage or security; if the Pledgors fail to provide the same, the Pledgee may auction or sell the Equity Interest at any time and use the proceeds from such auction or sale for early satisfaction of the Secured Indebtedness or deposit; any costs arising therefrom shall be fully borne by the Pledgors. |
6.7 | Without the prior written consent of the Pledgee, the Pledgors and/or Party C shall not (or assist others to) increase, decrease or transfer the registered capital of Party C (or amount of capital contribution to Party C) or create any encumbrance thereon (including the Equity Interest). Subject to the foregoing, the Equity Interest in Party C registered and acquired by the Pledgors after the date hereof shall be referred to as the Additional Equity. Immediately after the Pledgors acquire the Additional Equity, the Pledgors and Party C shall enter into a supplementary Equity pledge agreement with the Pledgee with respect to the Additional Equity, cause the board of directors and the shareholders meeting of Party C to approve such supplementary Equity pledge agreement and deliver to the Pledgee all documents required by the supplementary Equity pledge agreement, including, without limitation, (a) the original investment certificate issued by Party C in connection with the Additional Equity; and (b) a certified copy of the capital verification report on the Additional Equity issued by a certified public accountant of the PRC. The Pledgors and Party C shall create and register the pledge of the Additional Equity in accordance with Article 3.1 hereof. |
6.8 | Unless the Pledgee gives prior written instructions to the contrary, the Pledgors and/or Party C agrees that if all or any part of the shares are transferred (split or inherited) between the Pledgors and any third Party (the Share Transferee) in violation of this Agreement, the Pledgors and/or Party C shall ensure that the Share Transferee shall unconditionally acknowledge the Pledge Right and complete necessary pledge change registration formalities (including, without limitation, execution of relevant documents) to procure the existence of the Pledge Right. |
6.9 | If the Pledgee provides any loan to Party C, the Pledgors and/or Party C agrees to pledge the Equity Interest to grant the Pledge Right to the Pledgee so as to provide security for such further loan and complete relevant formalities as soon as practicable in accordance with requirements of laws, regulations or local practices (if any), including, without limitation, execution of relevant documents and completion of relevant pledge creation (or change) registration formalities. |
Party C covenants and further agrees as follows:
6.10 | If the execution and performance of this Agreement and the Equity pledge hereunder require consent, permit, waiver or authorization of any third party or approval, permit or exemption of any governmental authority or completion of registration or filing formalities with any governmental authority (if required by law), Party C will endeavor to assist in obtaining and keeping them fully valid during the validity term hereof. |
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6.11 | Without the prior written consent of the Pledgee, Party C shall not assist or permit the Pledgors to create any new pledge or grant any other security interest on the Equity Interest, nor shall it assist or permit the Pledgors to transfer the Equity Interest. |
6.12 | Party C agrees that it and the Pledgors shall jointly and strictly comply with the obligations under Articles 6.7, 6.8 and 6.9 hereof. |
6.13 | Without the prior written consent of the Pledgee, Party C shall not transfer its assets, create or permit to be created any security interest or other encumbrance (including, without limitation, transfer of any intellectual property of Party C or any assets of Party C with value of more than RMB100,000, or encumbrance on any property right or use right of such assets) on its assets which may affect the rights and interests of the Pledgee in the Equity Interest. |
6.14 | If there is any lawsuit, arbitration or other claims likely to have adverse effect on Party C, the Equity Interest or the interests of the Pledgee under the Control Agreements, Party C warrants that it will notify the Pledgee in writing as soon as possible without delay and take all necessary measures as reasonably requested by the Pledgee to ensure the Pledgees pledge interests in the Equity Interest. |
6.15 | Party C will not do or permit to be done any act or action likely to have adverse effect on the interests of the Pledgee under the Control Agreements or the Equity Interest. |
6.16 | During the first month of each calendar quarter, Party C will provide the Pledgee with the financial statements of Party C for the preceding calendar quarter, including, without limitation, balance sheet, income statement and cash flow statement. |
6.17 | Party C warrants that it will take all necessary measures and execute all necessary documents as reasonably requested by the Pledgee to ensure the Pledgees pledge interests in the Equity Interest together with the exercise and realization by the Pledgee of such interests. |
6.18 | If the exercise of the Pledge Right hereunder results in the transfer of any Equity Interest, Party C warrants that it will take all measures to complete such transfer. |
6.19 | Party B shall ensure and cause the other shareholders of Party C to ensure that Party C will complete the operation term extension registration formalities within three (3) months prior to the expiration of its operation term so that the validity of this Agreement shall be maintained. |
7. | Events of Default |
7.1 | The following circumstances shall be deemed as Events of Default: |
7.1.1 | Party C fails to fully pay consulting and service fees payable under the Exclusive Business Cooperation Agreement or fails to repay loan or violates any obligations of Party C under the Control Agreements; |
7.1.2 | any representation or warranty made by the Pledgors in Article 5 hereof contains material misrepresentations or errors, and/or the Pledgors violate any warranty contained in Article 5 hereof; |
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7.1.3 | the Pledgors and Party C fail to complete Equity pledge registration with the Registration Authority in accordance with Article 3.1; |
7.1.4 | the Pledgors and Party C violate any provision of this Agreement; |
7.1.5 | unless specified by Article 6.1.1, the Pledgors transfer or intend to transfer or waive the pledged Equity or convey the pledged Equity without the written consent of the Pledgee; |
7.1.6 | loans, warranties, damages, covenants or other debts and liabilities owed by the Pledgors to any third party (1) are required to be early repaid or performed due to breach by the Pledgors; or (2) have become due but cannot be repaid or performed on schedule; |
7.1.7 | any approval, license, permit or authorization of the governmental authority that makes this Agreement enforceable, legal and valid is revoked, suspended, invalid or materially changed; |
7.1.8 | the promulgation of applicable laws makes this Agreement illegal or the Pledgors unable to continue the performance of their obligations hereunder; |
7.1.9 | adverse change in the property owned by the Pledgors causes the Pledgee to determine that the ability of the Pledgors to perform their obligations hereunder has been affected; |
7.1.10 | the successor or trustee of Party C can only perform the payment liability in part or refuses to perform the payment liability under the Exclusive Business Cooperation Agreement; and |
7.1.11 | any other circumstance under which the Pledgee cannot or may be unable to exercise the Pledge Right, including, without limitation, the circumstances under which the Pledgors are dead or lose civil capacity. |
7.2 | Upon knowledge or discovery of any circumstance set forth in Article 7.1 or the occurrence of any event that may lead to such circumstance, the Pledgors shall promptly notify the Pledgee in writing accordingly. |
7.3 | Unless the Events of Default set forth in Article 7.1 have been successfully resolved to the satisfaction of the Pledgee within thirty (30) days after the date of notice from the Pledgee, the Pledgee may give a Notice of Default to the Pledgors when an Event of Default occurs or at any time after the occurrence of an Event of Default, requesting the Pledgors to promptly pay all outstanding amounts due and payable under the Control Agreements and all other amounts due and payable to the Pledgee and/or repay loan and/or dispose of the Pledge Right in accordance with Article 8 hereof. |
8. | Exercise of the Pledge Right |
8.1 | Without the written consent of the Pledgee, the Pledgors shall not transfer their Equity Interest in Party C. |
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8.2 | When the Pledgee exercises the Pledge Right, it may give a Notice of Default to the Pledgors. |
8.3 | Subject to the provisions of Article 7.3, the Pledgee may exercise the right to enforce the Pledge Right when it gives a Notice of Default or at any time after it gives a Notice of Default in accordance with Article 7.2. Once the Pledgee elects to enforce the Pledge Right, the Pledgors shall have no rights or interests in the Equity Interest. |
8.4 | In the event of default, to the extent permitted, and in accordance with applicable laws, the Pledgee shall have the right to dispose of the pledged Equity and exercise all of its remedies and rights for breach of contract in accordance with law, including, without limitation, the right to be repaid in priority out of the proceeds from the conversion, auction or sale of the pledged Equity. After all proceeds received by the Pledgee from the exercise of the Pledge Right are used to satisfy the Secured Indebtedness, any remaining amount shall be paid to the Pledgors or the persons entitled to it (without any interest accrued thereon). The Pledgee shall not be liable for any loss caused by its reasonable exercise of its remedies and rights for breach of contract. The Pledgee shall have the right, at its option, to exercise any of its remedies for breach of contract simultaneously or successively. The Pledgee shall not be required to exercise other remedies for breach of contract before its exercise of the right to be repaid in priority out of the proceeds from the conversion, auction or sale of the pledged Equity hereunder. |
8.5 | When the Pledgee disposes of the Pledge Right in accordance with this Agreement, the Pledgors and Party C shall provide necessary assistance so that the Pledgee can enforce the Pledge Right in accordance with this Agreement. |
8.6 | All out-of-pocket expenses, taxes and all legal costs relating to the creation of the Equity pledge and the realization of the Pledgees rights hereunder shall be borne by the Pledgors, except for those borne by the Pledgee in accordance with laws. The Pledgee shall have the right to fully deduct reasonable costs incurred by it in connection with its exercise of any or all of its foregoing rights and powers from the proceeds obtained as a result of its exercise of such rights and powers. |
8.7 | The Parties acknowledge that the Investor Shareholders shall be liable only for their own breach of contract and shall bear no joint and several liability for breach by any other Party hereto. |
9. | Assignment |
9.1 | Without the prior written consent of the Pledgee, the Pledgors shall have no right to assign or delegate their rights and obligations hereunder. |
9.2 | This Agreement shall be binding upon the Pledgors and their successors and permitted assignees and shall be valid with respect to the Pledgee and each of its successors and assignees. |
9.3 | At any time, the Pledgee may assign any and all of its rights and obligations under the Exclusive Business Cooperation Agreement to its designees (natural persons/legal persons), in which case the assignees shall have the rights and obligations of the Pledgee hereunder, as if they were the original Parties hereto. When the Pledgee assigns its rights and obligations under the Exclusive Business Cooperation Agreement, upon request by the Pledgee, the Pledgors shall execute relevant agreements or other documents in connection with such assignment. |
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9.4 | In the event of change of the Pledgee due to assignment, upon request by the Pledgee, the Pledgors shall enter into a new pledge contract with the new Pledgee on the same terms and conditions as those of this Agreement. |
9.5 | The Pledgors shall strictly comply with the provisions of this Agreement and other contracts jointly or severally executed by the Parties hereto or any of them, including the Exclusive Call Option Agreement and the Power of Attorney Agreement to authorize the Pledgee, perform the obligations hereunder and thereunder and refrain from any act/omission that may affect the validity and enforceability hereof and thereof. The Pledgors shall not exercise any remaining rights in the Equity Interest pledged hereunder unless in accordance with the written instructions given by the Pledgee. |
10. | Termination |
After the Exclusive Business Cooperation Agreement has been fully performed, the consulting and service fees thereunder have been fully paid and the obligations of Party C under the other Control Agreements have been terminated, this Agreement shall terminate and the Pledgee shall cancel or terminate this Agreement as soon as reasonably practicable.
Unless otherwise provided by laws, in no event shall the Pledgors or Party C have the right to terminate or rescind this Agreement.
11. | Handling Fee and Other Expenses |
All fees and out-of-pocket expenses relating to this Agreement, including, without limitation, attorneys fee, costs of production, stamp duty and any other tax and fee, shall be borne by Party C. If the Pledgee is required to bear relevant taxes and fees by applicable laws, the Pledgors shall cause Party C to fully reimburse all taxes and fees already paid by the Pledgee.
12. | Confidentiality Liability |
The Parties acknowledge that any oral or written information exchanged in connection with this Agreement shall be considered as confidential information. Each Party shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of the other Parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Partys disclosure to the public); (b) is required to be disclosed in accordance with applicable laws or rules or provisions of any stock exchange; or (c) is required to be disclosed by any Party to its legal counsels or financial advisors in connection with the transactions contemplated hereby, provided, however, that such legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this article. If the staff or agencies engaged by any Party disclose any confidential information, such Party shall be deemed to have disclosed such confidential information and shall bear legal liability for breach of this Agreement. This article shall survive the termination of this Agreement for any reason.
Equity Interest Pledge Agreement
- 11 -
13. | Governing Law and Dispute Resolution |
13.1 | The execution, effectiveness, interpretation and performance of this Agreement and resolution of disputes arising hereunder shall be governed by officially promulgated and publicly available laws of the PRC. Any matters not covered by officially promulgated and publicly available laws of the PRC shall be governed by international legal principles and practices. |
13.2 | Any dispute arising from the interpretation and performance of the provisions of this Agreement shall be resolved by the Parties through consultation in good faith. If the Parties fail to agree upon the resolution of a dispute within 30 days after any Party requests to resolve such dispute through consultation, any Party may submit the dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the Commissions arbitration rules then in effect. The arbitration shall be held in Beijing and conducted in the Chinese language. The arbitral award shall be final and binding upon the Parties. |
13.3 | In the event of any dispute arising out of the interpretation and performance of this Agreement or during the pending arbitration of any dispute, except for the matters in dispute, the Parties hereto shall continue to exercise their respective rights hereunder and perform their respective obligations hereunder. |
14. | Notices |
14.1 | All notices and other communications required or permitted to be given in accordance with this Agreement shall be personally delivered or sent by registered mail, postage prepaid, commercial courier service or facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which such notices shall be deemed to have been effectively given shall be determined as follows: |
14.1.1 | Notices given by personal delivery, courier service or registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the mailing address specified for notices. |
14.1.2 | Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission). |
14.2 | For the purpose of notices, the addresses of the Parties are as follows: |
Party A: | ||
Xiamen Youxiang Times Technology Co., Ltd. | ||
Address: | E3, Unit 03, 8th Floor, Building D, Xiamen International Modernization Center, Xiamen Area, No. 97 Xiangyu Road, Chinas (Fujian) Pilot Free Trade Zone | |
Attention: | Zhentao Liu | |
Telephone: | 86-17310632963 |
Equity Interest Pledge Agreement
- 12 -
Party B: | ||
Min Luo | ||
Address: | 39th Floor, AVIC Zijin Plaza, Huan Dao Dong Road 1801, Siming District, Xiamen | |
Attention: | Min Luo | |
Telephone: | 86-17602141092 | |
Long Xu | ||
Address: | 39th Floor, AVIC Zijin Plaza, Huan Dao Dong Road 1801, Siming District, Xiamen | |
Attention: | Long Xu | |
Telephone: | 86-17602141092 | |
Party C: | ||
Xiamen Qu Plus Plus Technology Development Co., Ltd., | ||
Address: | No. 2999, Xi Zhou Road, Tongan District, Xiamen | |
Attention: | Long Xu | |
Telephone: | 86-17602141092 |
14.3 | Any Party may change its mailing address for notices at any time by giving a notice to the other Parties in accordance with this article. |
15. | Severability |
If one or more provisions of this Agreement are held to be invalid, illegal or unenforceable in any respect in accordance with any law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or prejudiced in any respect. The Parties shall strive through consultation in good faith to replace such invalid, illegal or unenforceable provisions with valid provisions to the greatest extent permitted by laws and expected by the Parties, and the economic effect of such valid provisions shall be as close as possible to the economic effect of such invalid, illegal or unenforceable provisions.
16. | Appendix |
The appendix hereto shall constitute an integral part of this Agreement.
17. | Effectiveness |
17.1 | Any amendment, modification and supplement to this Agreement shall be made in writing and become effective after the Parties affix their signatures or seals and complete governmental registration procedures, if applicable. |
17.2 | This Agreement is made in five (5) counterparts. Each of the Pledgors, Party C and the Pledgees, Min Luo and Long Xu, shall hold one (1) copy. One (1) copy shall be submitted to the Registration Authority. Each copy of this Agreement shall have the same effect. |
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Equity Interest Pledge Agreement
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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Agreement as of the date first written above.
Party A: Xiamen Youxiang Times Technology Co., Ltd. (Affix Company Seal)
(Seal)
By: |
| |
Name: | Zhentao Liu |
Equity Interest Pledge Agreement
Party B: Min Luo
By: | /s/ Min Luo | |
Name: | Min Luo |
Equity Interest Pledge Agreement
Party B: Long Xu
By: | /s/ Long Xu | |
Name: | Long Xu |
Equity Interest Pledge Agreement
Party C: Xiamen Qu Plus Plus Technology Development Co., Ltd., (Affix Company Seal)
(Seal)
By: |
| |
Name: | Long Xu |
Equity Interest Pledge Agreement
Exhibit 4.38
[English Translation]
Power of Attorney Agreement
Date: July 1, 2019
I, Min Luo, a citizen of the Peoples Republic of China (the PRC), with identity card number of 362527198302280018, holds 99.9% of the entire registered capital (My Equity Interest) of Xiamen Qu Plus Plus Technology Development Co., Ltd., (the Domestic Company). I hereby issue this Power of Attorney Agreement to specify the following matters concerning My Equity Interest:
1. I irrevocably authorize Xiamen Youxiang Times Technology Co., Ltd. (the WFOE) to exercise the following rights during the term of this Power of Attorney Agreement:
The WFOE is hereby authorized to act as my sole agent and authorized representative to act on my behalf with respect to all matters relating to My Equity Interest, including, without limitation: (1) to propose, convene and attend the shareholders meeting of the Domestic Company; (2) to exercise all shareholder rights and voting rights available to me under the laws of the PRC and the articles of association of the Domestic Company, including, without limitation, the right to sell, transfer, pledge or dispose of all or a part of My Equity Interest; and (3) to nominate and appoint the legal representative (chairman of the board of directors), directors, supervisors, chief executive officer (or manager) and other senior officers of the Domestic Company on my behalf.
2. Without limiting the generality of the power granted hereunder, the WFOE shall have the right and authority hereunder to enter into the relevant transfer contract set forth in the Exclusive Call Option Agreement on my behalf to the extent that I am required to be a party thereto, and perform the terms of the Equity Interest Pledge Agreement and the Exclusive Call Option Agreement, dated even date herewith, to which I am a party or execute any documents required to be executed thereunder.
3. Without limiting the generality of the power granted hereunder, I irrevocably acknowledge, agree and authorize that the WFOE may decide, at its sole and absolute discretion and on an exclusive basis, the disposal of My Equity Interest, including, without limitation, sale, transfer, grant, offer, pledge, creation of encumbrance over, exchange or other disposal of My Equity Interest to a third party designated by the WFOE (similarly hereinafter), as required in specific circumstances and based on the ordinary resolutions of its board of directors, and such decisions made by the WFOE pursuant to the power hereunder shall be legally binding upon me and My Equity Interest. For this purpose, I acknowledge and agree that the WFOE shall: (1) enter into documents required for the disposal of My Equity Interest decided by the WFOE, including, without limitation, sale agreements, transfer agreements, and resolutions of the Domestic Company, (2) cause such members of the board of directors and authorized representatives to the shareholders meeting as recommended or appointed by me to cast affirmative votes at the meetings of the board of directors and/or shareholders meeting of the Domestic Company relating to the disposal of My Equity Interest decided by the WFOE, or to execute and adopt the relevant resolutions of the board of directors or shareholders meeting of the Domestic Company; (3) be hereby irrevocably authorized as my agent to execute all such necessary documents on my behalf, in which case such documents executed by the WFOE on my behalf shall be legally binding upon me; (4) take all other steps necessary or advisable for the disposal of My Equity Interest decided by the WFOE, including, without limitation, to issue, execute, deliver and/or submit to governmental authorities or third parties documents, agreements, certificates or statements, to assist the Domestic Company, the WFOE and third parties to obtain all governmental approvals, permissions, licenses, registrations and filings required for the implementation of such disposal of My Equity Interest, and to provide other cooperation and convenience, in order for such disposal to be promptly and validly implemented to the extent that it involves the rights and obligations of the parties.
4. The WFOE shall have the right to delegate or assign, at its own discretion, its rights relating to the matters above to any other individual or entity without the prior notice to or the prior consent of me.
5. As long as I am a shareholder of the Domestic Shareholder, this Power of Attorney Agreement shall be irrevocable and continue in force as from the date hereof, unless the contrary is indicated by the WFOE in writing. Once the WFOE notifies me in writing to terminate this Power of Attorney Agreement in whole or in part, I shall immediately withdraw all mandates and authorities hereby granted to the WFOE above, and immediately execute a power of attorney agreement in the same form as this Power of Attorney Agreement to grant to another person nominated by the WFOE the same authorities and mandates as granted hereunder.
6. This Power of Attorney Agreement shall be binding upon my successors and assignees, and I shall cause my successors or assignees, if applicable, to execute similar power of attorney agreement.
7. I hereby waive, and shall not exercise, all rights granted to the WFOE relating to My Equity Interest hereunder during the term of this Power of Attorney Agreement.
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[Signature Page to Power of Attorney Agreement]
Principal: Min Luo | ||
By: | /s/ Min Luo | |
Name: | Min Luo |
Agent: Xiamen Youxiang Times Technology (Affix Company Seal) | ||
(Seal) | ||
By: |
| |
Name: | Zhentao Liu |
Exhibit 4.39
[English Translation]
Power Of Attorney Agreement
Date: July 1, 2019
I, Long Xu, a citizen of the Peoples Republic of China (the PRC), with identity card number of 610402198310287516, holds 0.1% of the entire registered capital (My Equity Interest) of Xiamen Qu Plus Plus Technology Development Co., Ltd., (the Domestic Company). I hereby issue this Power of Attorney Agreement to specify the following matters concerning My Equity Interest:
1. I irrevocably authorize Xiamen Youxiang Times Technology Co., Ltd. (the WFOE) to exercise the following rights during the term of this Power of Attorney Agreement:
The WFOE is hereby authorized to act as my sole agent and authorized representative to act on my behalf with respect to all matters relating to My Equity Interest, including, without limitation: (1) to propose, convene and attend the shareholders meeting of the Domestic Company; (2) to exercise all shareholder rights and voting rights available to me under the laws of the PRC and the articles of association of the Domestic Company, including, without limitation, the right to sell, transfer, pledge or dispose of all or a part of My Equity Interest; and (3) to nominate and appoint the legal representative (chairman of the board of directors), directors, supervisors, chief executive officer (or manager) and other senior officers of the Domestic Company on my behalf .
2. Without limiting the generality of the power granted hereunder, the WFOE shall have the right and authority hereunder to enter into the relevant transfer contract set forth in the Exclusive Call Option Agreement on my behalf to the extent that I am required to be a party thereto, and perform the terms of the Equity Interest Pledge Agreement and the Exclusive Call Option Agreement, dated even date herewith, to which I am a party or execute any documents required to be executed thereunder.
3. Without limiting the generality of the power granted hereunder, I irrevocably acknowledge, agree and authorize that the WFOE may decide, at its sole and absolute discretion and on an exclusive basis, the disposal of My Equity Interest, including, without limitation, sale, transfer, grant, offer, pledge, creation of encumbrance over, exchange or other disposal of My Equity Interest to a third party designated by the WFOE (similarly hereinafter), as required in specific circumstances and based on the ordinary resolutions of its board of directors, and such decisions made by the WFOE pursuant to the power hereunder shall be legally binding upon me and My Equity Interest. For this purpose, I acknowledge and agree that the WFOE shall: (1) enter into documents required for the disposal of My Equity Interest decided by the WFOE, including, without limitation, sale agreements, transfer agreements, and resolutions of the Domestic Company, (2) cause such members of the board of directors and authorized representatives to the shareholders meeting as recommended or appointed by me to cast affirmative votes at the meetings of the board of directors and/or shareholders meeting of the Domestic Company relating to the disposal of My Equity Interest decided by the WFOE, or to execute and adopt the relevant resolutions of the board of directors or shareholders meeting of the Domestic Company; (3) be Ehereby irrevocably authorized as my agent to execute all such necessary documents on my behalf, in which case such documents executed by the WFOE on my behalf shall be legally binding upon me; (4) take all other steps necessary or advisable for the disposal of My Equity Interest decided by the WFOE, including, without limitation, to issue, execute, deliver and/or submit to governmental authorities or third parties documents, agreements, certificates or statements, to assist the Domestic Company, the WFOE and third parties to obtain all governmental approvals, permissions, licenses, registrations and filings required for the implementation of such disposal of My Equity Interest, and to provide other cooperation and convenience, in order for such disposal to be promptly and validly implemented to the extent that it involves the rights and obligations of the parties.
4. The WFOE shall have the right to delegate or assign, at its own discretion, its rights relating to the matters above to any other individual or entity without the prior notice to or the prior consent of me.
5. As long as I am a shareholder of the Domestic Shareholder, this Power of Attorney Agreement shall be irrevocable and continue in force as from the date hereof, unless the contrary is indicated by the WFOE in writing. Once the WFOE notifies me in writing to terminate this Power of Attorney Agreement in whole or in part, I shall immediately withdraw all mandates and authorities hereby granted to the WFOE above, and immediately execute a power of attorney agreement in the same form as this Power of Attorney Agreement to grant to another person nominated by the WFOE the same authorities and mandates as granted hereunder.
6. This Power of Attorney Agreement shall be binding upon my successors and assignees, and I shall cause my successors or assignees, if applicable, to execute similar power of attorney agreement.
7. I hereby waive, and shall not exercise, all rights granted to the WFOE relating to My Equity Interest hereunder during the term of this Power of Attorney Agreement.
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[Signature Page to Power of Attorney Agreement]
Principal: Long Xu | ||
By: | /s/ Long Xu | |
Name: | Long Xu |
Agent: Xiamen Youxiang Times Technology (Affix Company Seal) | ||
(Seal) | ||
By: |
| |
Name: | Zhentao Liu |
Exhibit 4.40
[English Translation]
EXCLUSIVE BUSINESS COOPERATION AGREEMENT
This Exclusive Business Cooperation Agreement (this Agreement) is entered into in Xiamen, the Peoples Republic of China (the PRC or China) on July 1, 2019 by and between:
Party A: | Xiamen Youxiang Times Technology Co., Ltd. | |
Address: | A wholly foreign-owned limited liability company duly incorporated under the law of PRC. The registered address is E3, Unit 03, 8th Floor, Building D, Xiamen International Modernization Center, Xiamen Area, No. 97 Xiangyu Road, Chinas (Fujian) Pilot Free Trade Zone. | |
Party B: | Xiamen Qu Plus Plus Technology Development Co., Ltd., | |
Address: | No. 2999, Xi Zhou Road, Tongan District, Xiamen. |
Party A and Party B are hereinafter referred to individually as a Party and collectively as the Parties.
WHEREAS:
1. | Party A is a wholly foreign-owned company registered in China possessing necessary resources in computer software and hardware, network technology, communication technology, technology transfer, technology service and technology consulting; |
2. | Party B is a domestic limited liability company registered in China; |
3. | Party A agrees to utilize its human resource, technology and information advantages to exclusively provide Party B with technology service, technology consulting and other services relating to the production and development of computer software (as further detailed below) during the term hereof, and Party B agrees to accept such service from Party A or its designees in accordance with this Agreement. |
NOW, THEREFORE, through mutual consultation, Party A and Party B agree as follows:
1. | Provision of Service By Party A |
1.1 | In accordance with the terms and conditions of this Agreement, Party B hereby appoints Party A as the exclusive service provider of Party B during the term hereof to provide Party B with overall business support, technology service and consulting service, including all or part of services within the business scope of Party B as decided by Party A from time to time, including, without limitation, research and development and design of computer software and hardware, development of network technology and communication technology; technology transfer, technology consulting, technology service and technology training (Services). |
1.2 | Party B agrees to accept consulting and the Services provided by Party A. Party B further agrees that it shall not accept any consulting and/or services from, or cooperate with, any third party in relation to the matters specified hereunder during the term hereof, unless with the prior written consent of |
1.3 | Party A. Party A may designate a third party (such designee may enter into certain agreements described in Article 1.3 hereof with Party B) to provide consulting and/or the Services to Party B hereunder. |
1.4 | Manner of Provision of Services |
1.4.1 | Party A and Party B agree that they may enter into other technology service agreements and consulting service agreements directly or through their respective affiliates during the term hereof to provide for the details, manner of provision, personnel and fees of specific technology service and consulting service. |
1.4.2 | In order to perform this Agreement, Party A and Party B agree that they may enter into an agreement for licensing intellectual property, including, without limitation, software, trademarks, patents and technical know-how, directly or through their respective affiliates during the term hereof to allow Party Bs use of Party As relevant intellectual property in accordance with Party Bs business requirements. |
1.4.3 | In order to perform this Agreement, Party A and Party B agree that they may enter into an equipment or plant lease directly or through their respective affiliates during the term hereof to allow Party Bs use of Party As relevant equipment or plant in accordance with Party Bs business requirements. |
1.4.4 | Party A may subcontract, at its own discretion, part of the Services for Party B hereunder to a third party. |
1.4.5 | Party B hereby grants Party A an irrevocable and exclusive call option whereby Party A may acquire, at its own discretion, from Party B all or any part of assets and business to the extent permitted by the laws and regulations of the PRC for the lowest possible price permitted by the laws of the PRC. In such case, the Parties may separately enter into an asset or business transfer agreement to provide for the terms and conditions of such asset transfer. |
2. | Calculation and Payment of Service Fee, Financial Statements, Audit and Taxes |
2.1 | The Parties agree that with respect to the Services provided by Party A, Party B shall pay to Party A service fee in an amount equivalent to 100% of its net income (Service Fee). The Service Fee shall be paid on a monthly basis. During the term hereof, Party A shall have the right to adjust such Service Fee at its sole discretion without the consent of Party B. Party B shall (a) submit to Party A its management accounts and operational information for each month specifying the net income of Party B for such month (Monthly Net Income); (b) pay to Party A 100% of its net income (Monthly Payment) within 30 days from the last date of such month. Party A shall issue an invoice for technology service fee to Party B within seven (7) business days from its receipt of such management accounts and operational information. Party B shall pay the invoiced amount within seven (7) business days from its receipt of the invoice. All payments shall be credited to a bank account designated by Party A by remittance or other means acceptable to the Parties. The Parties agree that Party A may change such payment instructions by notice to Party B from time to time. |
Exclusive Business Cooperation Agreement
- 2 -
2.2 | Party B shall, within 90 days from the end of each financial year, (a) submit to Party A its audited financial statements for such financial year which shall be audited and certified by an independent certified public accountant approved by Party A; (b) pay to Party A any deficiency in the total amount of the Monthly Payments paid by Party B to Party A for such financial year as indicated by the audited financial statements. |
2.3 | Party B shall prepare financial statements consistent with the requirements of Party A in accordance with laws and business practices. |
2.4 | Party B shall allow Party A and/or its designated auditor to audit Party Bs relevant books and records and make copies of such part of books and records as is deemed necessary at the main premises of Party B upon a notice from Party A five (5) business days in advance, so as to verify the accuracy of the amount of income and statements of Party B. |
2.5 | Each of the Parties hereto shall bear any tax liabilites arising from its performance of this Agreement. |
3. | Intellectual Property, Confidentiality and Non-competition |
3.1 | Party A shall have exclusive and ownership rights and interests in and to all rights, titles, interests and intellectual property rights arising from or created in the performance of this Agreement, including, without limitation, copyrights, patent rights, patent applications, trademarks, software, technical know-how, trade secrets or otherwise, whether developed by Party A or by Party B. |
3.2 | The Parties acknowledge that any oral or written information exchanged in connection with this Agreement shall be considered as confidential information. Each Party shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of the other Party, except for the information that: (a) is or will be in the public domain (other than through the receiving Partys disclosure to the public); (b) is required to be disclosed in accordance with applicable laws or rules or provisions of any stock exchange; or (c) is required to be disclosed by any Party to its legal counsels or financial advisors in connection with the transactions contemplated hereby, provided, however, that such legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this article. If the staff or agencies engaged by any Party disclose any confidential information, such Party shall be deemed to have disclosed such confidential information and shall bear legal liability for breach of this Agreement. This article shall survive the termination of this Agreement for any reason. |
Exclusive Business Cooperation Agreement
- 3 -
3.3 | Party B shall not, directly or indirectly, engage in any business other than those permitted by its business license and operating permit or any business competitive with those of Party A within the PRC, including investing in any entity engaging in any business competitive with those of Party A, nor shall it engage in any business other than those consented to by Party A in writing. |
3.4 | The Parties agree that this article shall continue in effect regardless of whether this Agreement is modified, rescinded or terminated or not. |
4. | Representations and Warranties |
4.1 | Party A represents and warrants that: |
4.1.1 | It is a company duly registered and validly existing under the laws of the PRC. |
4.1.2 | It enters and performs this Agreement within the scope of its legal personality and business operations; it has taken requisite corporate actions and been granted appropriate authorization and obtained the consents and approvals of third parties and governmental authorities, and will not violate laws or other restrictions binding upon or affecting it. |
4.1.3 | This Agreement constitutes its legal, valid and binding obligations, enforceable against it in accordance with its terms. |
4.2 | Party B represents and warrants that: |
4.2.1 | Each entity of Party B is a company duly registered and validly existing under the laws of the PRC. |
4.2.2 | Each entity of Party B enters and performs this Agreement within the scope of its legal personality and business operations; each of them has taken requisite corporate actions and been granted appropriate authorization and obtained the consents and approvals of third parties and governmental authorities, and will not violate laws or other restrictions binding upon or affecting it. |
4.2.3 | This Agreement constitutes their respective legal, valid and binding obligations, enforceable against them in accordance with its terms. |
5. | Effectiveness and Term |
5.1 | This Agreement has been entered into as of the date first written above and shall come into force as from such date. This Agreement shall be perpetually valid unless early terminated upon written decision of Party A in accordance with this Agreement or otherwise required in the laws of the PRC. |
Exclusive Business Cooperation Agreement
- 4 -
6. | Termination |
6.1 | If any Partys term of operation expires within the term hereof, such Party shall promptly extend its term of operation to the greatest extent permitted by the laws of the PRC in order for this Agreement to continue to be valid and performed. If a Partys application for extension of term of operation is not approved or consented to by any competent authority, this Agreement shall terminate on the date when such Partys term of operation expires. |
6.2 | The rights and obligations of the Parties under Articles 3, 7 and 8 shall survive the termination of this Agreement. |
6.3 | Any early termination of this Agreement for any reason shall not release any Party from any obligations hereunder to make payment due prior to such termination, including, without limitation, the Service Fee, or any liability for breach of contract arising prior to such termination. Any payable Service Fee incurred prior to the termination of this Agreement shall be paid to Party A within fifteen (15) business days from such termination. |
7. | Governing Law, Dispute Resolution and Change of Laws |
7.1 | The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and resolution of disputes arising hereunder shall be governed by the laws of the PRC. |
7.2 | Any dispute arising from the interpretation and performance of this Agreement shall be resolved by the Parties through good-faith consultation. If the Parties fail to agree upon the resolution of a dispute within 30 days from the date of any Partys request for the resolution of such dispute through consultation, any Party may submit the dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the Commissions arbitration rules then in effect. The arbitration shall be held in Beijing and conducted in the Chinese language. The arbitral award shall be final and binding upon the Parties. |
7.3 | If any dispute arises from the interpretation and performance of this Agreement or any dispute is under arbitration, the Parties shall continue to exercise their respective rights and perform their respective obligations under this Agreement save for the disputed matters. |
8. | Liability for Breach of Contract and Indemnification |
8.1 | If Party B materially breaches any covenant hereunder, Party A shall have the right to terminate this Agreement and/or seek damages from Party B; this Article 8.1 shall not preclude any other rights of Party A hereunder. |
8.2 | Party B shall in no event have the right to terminate or rescind this Agreement unless otherwise provided for in the laws of the PRC. |
8.3 | Party B shall indemnify and hold harmless Party A from and against any losses, damages, liabilities or costs incurred due to any litigations, claims or other demands against Party A arising or resulting from its provision of consulting and the Services upon the request of Party B, unless incurred due to any willful misconduct of Party A. |
Exclusive Business Cooperation Agreement
- 5 -
9. | Notices |
9.1 | All notices and other communications required or permitted to be given in accordance with this Agreement shall be personally delivered or sent by registered mail, postage prepaid, commercial courier service or facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which such notices shall be deemed to have been effectively given shall be determined as follows: |
9.1.1 | Notices given by personal delivery, courier service or registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the mailing address specified for notices. |
9.1.2 | Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission). |
9.2 | For the purpose of notices, the addresses of the Parties are as follows: |
Party A:
Xiamen Youxiang Times Technology Co., Ltd. | ||
Address: | E3, Unit 03, 8th Floor, Building D, Xiamen International Modernization Center, Xiamen Area, No. 97 Xiangyu Road, Chinas (Fujian) Pilot Free Trade Zone | |
Attention: | Zhentao Liu | |
Telephone: | 86-17310632963 |
Party B:
Xiamen Qu Plus Plus Technology Development Co., Ltd. | ||
Address: | No. 2999, Xi Zhou Road, Tongan District, Xiamen | |
Attention: | Long Xu | |
Telephone: | 86-17602141092 |
9.3 | Any Party may change its mailing address for notices at any time by giving a notice to the other Party in accordance with this article. |
10. | Assignment |
10.1 | Party B shall not assign its rights and obligations hereunder to any third party without the prior written consent of Party A. |
10.2 | Party B agrees that Party A may assign its rights and obligations hereunder to any third party by prior written notice to Party B and without obtaining the consent of Party B. |
Exclusive Business Cooperation Agreement
- 6 -
11. | Severability |
If one or more provisions of this Agreement are held to be invalid, illegal or unenforceable in any respect in accordance with any law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or prejudiced in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with valid provisions to the greatest extent permitted by law and expected by the Parties, and the economic effect of such valid provisions shall be as close as possible to the economic effect of such invalid, illegal or unenforceable provisions.
12. | Amendment and Supplement |
Any amendment and supplement to this Agreement shall be in writing. Any amendment agreement and supplementary agreement entered into by the Parties relating to this Agreement shall be an integral part of this Agreement and shall have the same force and effect as this Agreement.
13. | Language and Counterparts |
This Agreement is executed in two counterparts, with each Party holding one counterpart, all of which shall have equal legal force.
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Exclusive Business Cooperation Agreement
- 7 -
IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Business Cooperation Agreement as of the date first written above.
Party A: Xiamen Youxiang Times Technology Co., Ltd. (Affix Company Seal)
(Seal)
By: |
| |
Name: | Zhentao Liu |
Exclusive Business Cooperation Agreement - Signature Page
IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Exclusive Business Cooperation Agreement as of the date first written above.
Party B: Xiamen Qu Plus Plus Technology Development Co., Ltd., (Affix Company Seal)
(Seal)
By: |
| |
Name: | Long Xu |
Exclusive Business Cooperation Agreement - Signature Page
Exhibit 4.41
[English Translation]
EXCLUSIVE CALL OPTION AGREEMENT
This Exclusive Call Option Agreement (this Agreement) is entered into in Xiamen, the Peoples Republic of China (the PRC or China) on July 1, 2019 by and among:
Party A: | Xiamen Youxiang Times Technology Co., Ltd., a wholly foreign-owned limited liability company established and existing under the laws of the PRC, with its registered address at E3, Unit 03, 8th Floor, Building D, Xiamen International Modernization Center, Xiamen Area, No. 97 Xiangyu Road, Chinas (Fujian) Pilot Free Trade Zone. | |
Party B: | Min Luo, a PRC citizen, with his identity card number of 362527198302280018; Long Xu, a PRC citizen, with his/her identity card number of 610402198310287516. | |
Party C: | Xiamen Qu Plus Plus Technology Development Co., Ltd., a limited liability company established and existing under the laws of the PRC, with its registered address at No. 2999, Xi Zhou Road, Tongan District, Xiamen. |
In this Agreement, Party A, Party B and Party C may be hereinafter referred to individually as a Party and collectively as the Parties.
WHEREAS:
1. | The Persons of Party B are all the currently registered shareholders of Party C. Min Luo holds 99.9% and Long Xu holds 0.1%. The two jointly hold 100% equity of Party C; |
2. | Subject to the laws of the PRC, Party B intends to transfer to Party A and/or any other entity or individual designated by it, and Party A intends to accept such transfer of, all the equity interest in Party C held by Party B; |
3. | Subject to the laws of the PRC, Party C intends to transfer to Party A and/or any other entity or individual designated by it, and Party A intends to accept such transfer of, the assets owned by Party C; |
4. | In order to consummate the aforesaid equity or asset transfer, Party B and Party C agree to grant, on an exclusive basis, respectively to Party A irrevocable Equity Call Option (as defined below) and Asset Purchase Option (as defined below), Party C agrees that Party B grants the Equity Call Option to Party A in accordance with this Agreement, and Party B agrees that Party C grants the Asset Purchase Option to Party A in accordance with this Agreement. |
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NOW, THEREFORE, through mutual consultation, the Parties agree as follows:
1. | Equity Call Option and Asset Purchase Option |
1.1 | Grant of Options |
Party B hereby irrevocably grants to Party A an irrevocable and exclusive option to purchase, or cause one or more designated Persons (each, a Designee, subject to approval by the board of directors of Party A) to purchase, all or any part of equity interest in Party C held by Party B now or hereafter from such Person at any time, one or more times, at the price set forth in Article 1.3 hereof according to the steps for exercise as determined by Party A in its sole discretion (the Equity Call Option). No third Person other than Party A and the Designees shall have the right to purchase equity interest in Party C held by Party B or other rights related to equity interest in Party C held by Party B. Party C hereby agrees that Party B grants the Equity Call Option to Party A in accordance with this Agreement. Person referred to in this article and this Agreement means individual, company, joint venture, partnership, enterprise, trust or unincorporated organization.
Party C hereby irrevocably grants to Party A an irrevocable and exclusive option to purchase, or cause the Designee(s) to purchase, all or any part of assets owned by Party C now or hereafter from Party C at any time, one or more times, at the price set forth in Article 1.3 hereof according to the steps for exercise as determined by Party A in its sole discretion (the Asset Purchase Option). No third Person other than Party A and the Designees shall have the right to purchase assets of Party C or other rights related to assets of Party C. Party B hereby agrees that Party C grants the Asset Purchase Option to Party A in accordance with this Agreement.
Party A agrees to accept the aforesaid Equity Call Option and the Asset Purchase Option. For the avoidance of doubt, Party A may exercise any rights hereunder, including the Equity Call Option and/or the Asset Purchase Option, at any time after the execution and effectiveness of this Agreement. To the fullest extent permitted by the laws of the PRC, Party A shall have the right to exercise the rights hereunder, including the Equity Call Option and/or the Asset Purchase Option, against Party B or its successor or successor entity and Party C and its successor entity in accordance with the terms of this Agreement.
1.2 | Steps for Exercise |
1.2.1 | Subject to the terms and conditions of this Agreement, to the extent permitted by the laws of the PRC, Party A shall determine the timing, method and times of its exercise of the Equity Call Option and the Asset Purchase Option in its absolute and sole discretion and shall have the right to request at any time Party B to transfer all or any part of its equity interest in Party C, or Party C to transfer all or any part of its assets, to it or the Designee(s). |
1.2.2 | With respect to the Equity Call Option, Party A shall have the right to determine in its sole discretion the amount of equity interest to be transferred by Party B to Party A and/or the Designee(s) in each exercise, and Party B shall transfer such amount of the Purchased Equity (as defined below) as requested by Party A to Party A and/or the Designee(s). Party A and/or the Designee(s) shall pay the transfer price to the transferring Person of Party B for the Purchased Equity acquired in each exercise. |
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1.2.3 | With respect to the Asset Purchase Option, Party A shall have the right to determine the specific assets of Party C to be transferred by Party C to Party A and/or the Designee(s) in each exercise, and Party C shall transfer the Purchased Assets (as defined below) as requested by Party A to Party A and/or the Designee(s). Party A and/or the Designee(s) shall pay the transfer price to Party C for the Purchased Assets acquired in each exercise. |
1.2.4 | When Party A exercises the Equity Call Option or the Asset Purchase Option, it shall give a written notice (the Equity Purchase Notice or the Asset Purchase Notice) to Party B, specifying (a) decision made by Party A or the Designee(s) on exercise of the Equity Call Option/the Asset Purchase Option; (b) the percentage of equity interest proposed to be purchased by Party A or the Designee(s) from Party B (the Purchased Equity), or the specific assets proposed to be purchased from Party C (the Purchased Assets); and (c) the purchase date/transfer date of the purchased equity or assets. After the receipt of such notice, Party B or Party C shall, pursuant to such notice, promptly transfer the Purchased Equity or the Purchased Assets to Party A and/or the Designee(s) in such way as described in this Agreement. |
1.3 | Transfer Price |
1.3.1 | With respect to the Equity Call Option hereunder, the transfer price corresponding to the Purchased Equity in each exercise by Party A shall be the lowest price permitted by the laws of the PRC applicable at the time of exercise; with respect to the Asset Purchase Option hereunder, the transfer price corresponding to the Purchased Assets in each exercise by Party A shall be the net book value of the Purchased Assets; if the lowest price permitted by the then applicable laws of the PRC is higher than the net book value of the Purchased Assets, the transfer price shall be the lowest price permitted by the laws of the PRC. |
1.3.2 | The Parties hereby agree that, after Party A exercises the Equity Call Option and/or the Asset Purchase Option, Party B and/or Party C shall pay all the transfer price collected thereby to Party A or another party designated by it without compensation. |
1.4 | Transfer of the Purchased Equity/the Purchased Assets |
When Party A exercises the Equity Call Option and/or the Asset Purchase Option each time,
1.4.1 | Party C shall, and Party B shall cause Party C to, promptly hold a shareholders meeting, at which a resolution shall be adopted on the approval of the transfer of the Purchased Equity by Party B, or the transfer of the Purchased Assets by Party C, to Party A and/or the Designee(s); |
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1.4.2 | Party B shall obtain consent from its shareholders meeting, board of directors or other internal decision-making bodies having similar functions in connection with its transfer of the Purchased Equity to Party A and/or the Designee(s); |
1.4.3 | with respect to the transfer of the Purchased Equity to Party A and/or the Designee(s), Party B shall obtain a written statement from the other shareholders of Party C, in which they approve such transfer and waive the right of first refusal; |
1.4.4 | Party B shall enter into an equity transfer contract for each equity transfer with Party A and/or the Designee(s) (as applicable) in accordance with this Agreement and the Equity Purchase Notice, in the form and substance satisfactory to Party A; Party C shall enter into an asset transfer contract for each asset transfer with Party A and/or the Designee(s) (as applicable) in accordance with this Agreement and the Asset Purchase Notice, in the form and substance satisfactory to Party A; |
1.4.5 | the relevant Parties shall execute all other necessary contracts, agreements or documents (including, without limitation, amendment to the articles of association), obtain all necessary governmental licenses and permits (including, without limitation, business license) and take all necessary actions to transfer the valid title to the Purchased Equity and/or the Purchased Assets to Party A and/or the Designee(s), free and clear of any Security Interest, and cause Party A and/or the Designee(s) to become the registered owner(s) of the Purchased Equity and/or the Purchased Assets, if applicable. For the purpose of this article and this Agreement, Security Interest includes security, mortgage, third party rights or interests, any call option, right to acquire, right of first refusal, right of set-off, ownership detainment or other security arrangements, for the sake of clarity, excluding any Security Interest created under this Agreement, the Equity Interest Pledge Agreement of Party B and the Power of Attorney Agreement of Party B. The Equity Interest Pledge Agreement of Party B referred to in this article and this Agreement means the Equity Interest Pledge Agreement entered into by Party A, Party B and Party C on the date hereof (in the form and substance set forth in Appendix I hereto), as amended, modified or restated; the Power of Attorney Agreement of Party B referred to in this article and this Agreement means the Power of Attorney Agreement executed by Party B to authorize Party A on the date hereof (in the form and substance set forth in Appendix II hereto), as amended, modified or restated. |
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2. | Covenants |
2.1 | Covenants Concerning Party C |
Party B (as the shareholders of Party C) and Party C hereby covenant that:
2.1.1 | without the prior written consent of Party A, they shall not supplement, modify or amend the articles of association or bylaws of Party C in any form, increase or decrease its registered capital or otherwise change its registered capital structure; |
2.1.2 | they shall maintain the corporate existence of Party C according to good financial and business standards and practices, conduct its business and transact its affairs prudently and effectively and cause Party C to perform its obligations under the Exclusive Business Cooperation Agreement executed by it on the date hereof; |
2.1.3 | without the prior written consent of Party A, they shall not sell, transfer, mortgage or otherwise dispose of lawful or beneficial interest in any assets, business or income of Party C or permit the encumbrance thereon of any Security Interest at any time from the date hereof; |
2.1.4 | after the statutory liquidation described in Article 3.6, Party B will fully pay Party A any remaining residual value collected on the basis of non-bidirectional payment or procure such payment; if such payment is prohibited by the laws of the PRC, Party B will pay such income to Party A or the party designated by Party A to the extent permitted by the laws of the PRC; |
2.1.5 | without the prior written consent of Party A, they shall not incur, inherit, guarantee or permit the existence of any debts, except for (i) debts incurred in the ordinary course of business other than through loans; and (ii) debts disclosed to and approved by Party A in writing; |
2.1.6 | they shall always conduct all the business of Party C in the ordinary course of business to maintain the asset value of Party C and refrain from any act/omission that may affect the operation status and asset value of Party C; |
2.1.7 | without the prior written consent of Party A, they shall not cause Party C to enter into any material contract, except for the contracts entered into in the ordinary course of business (for the purpose of this paragraph, a contract shall be deemed as a material contract if its value exceeds RMB100,000); |
2.1.8 | without the prior written consent of Party A, they shall not cause Party C to provide any Person with loan or credit or any form of security; |
2.1.9 | upon request by Party A, they shall provide Party A with all information regarding the operation and financial status of Party C; |
2.1.10 | if requested by Party A, they shall procure and maintain insurance on assets and business of Party C, the amounts and types of which shall be consistent with those of the companies operating similar business, with an insurer acceptable to Party A; |
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2.1.11 | without the prior written consent of Party A, they shall not cause or allow Party C to merge or consolidate with any Person or acquire or invest in any Person, or cause or allow Party C to sell its assets with value of more than RMB100,000; |
2.1.12 | they shall promptly notify Party A of any litigation, arbitration or administrative proceeding initiated or threatened in relation to the assets, business or income of Party C; |
2.1.13 | to retain Party Cs title to all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or make necessary and appropriate defenses against all claims; |
2.1.14 | without the prior written consent of Party A, they shall ensure that Party C shall not distribute dividends to its shareholders in any form; provided, however, that Party C shall promptly distribute all distributable profits to its shareholders upon written request by Party A; |
2.1.15 | upon request by Party A, they shall appoint any Person designated by Party A as the director of Party C and/or remove the incumbent director of Party C; and |
2.1.16 | without the written consent of Party A, Party C shall not be dissolved or liquidated, unless mandatorily required by the laws of the PRC. |
2.2 | Acknowledgements and Covenants of Party B |
Party B hereby acknowledges that:
2.2.1 | to the fullest extent permitted by the laws of the PRC, any equity interest in Party C held by Party B now or hereafter shall not belong to community property of Party B (in the event that Party B is a natural Person) or hereditament and shall not be divided or inherited, nor shall Party B use its equity interest in Party C to assume debt repayment liability or security liability. If, due to any reason, such equity interest is divided, transferred or inherited, successor(s) or transferee(s) shall execute all documents requested by Party A (including, without limitation, this Agreement, the Equity Interest Pledge Agreement of Party B and the Power of Attorney Agreement of Party B). |
Party B hereby covenants that:
2.2.2 | without the prior written consent of Party A, it shall not sell, transfer, mortgage or otherwise dispose of any lawful or beneficial interest in its equity interest in Party C or permit the encumbrance thereon of any Security Interest, other than the pledge created on such equity interest in accordance with the Equity Interest Pledge Agreement of Party B; |
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2.2.3 | it shall not request Party C to distribute dividends or make other forms of profit distribution in connection with its equity interest in Party C, propose a resolution thereon to the shareholders meeting or vote in favor of such resolution at the shareholders meeting. In any event, if Party B receives any proceeds, profit distribution or dividends from Party C, to the extent permitted by the laws of the PRC, Party B shall promptly pay or transfer such proceeds, profit distribution or dividends to Party A or the party designated by Party A for the benefit of Party C as the service fee payable by Party C to Party A under the Exclusive Business Cooperation Agreement; |
2.2.4 | it shall cause the shareholders meeting and/or the board of directors of Party C not to approve the sale, transfer, mortgage or other disposal of any lawful or beneficial interest in its equity interest in Party C or permit the encumbrance thereon of any Security Interest without the prior written consent of Party A, other than the pledge created on such equity interest in accordance with the Equity Interest Pledge Agreement of Party B; |
2.2.5 | it shall cause the shareholders meeting or the board of directors of Party C not to approve merger or consolidation with any Person or acquisition of or investment in any Person without the prior written consent of Party A; |
2.2.6 | it shall promptly notify Party A of any litigation, arbitration or administrative proceeding initiated or threatened in relation to its equity interest in Party C; |
2.2.7 | it shall cause the shareholders meeting or the board of directors of Party C to approve the transfer of the Purchased Equity hereunder and take any and all other actions that Party A may request; |
2.2.8 | to retain its ownership of its equity interest in Party C, it shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or make necessary and appropriate defenses against all claims; |
2.2.9 | upon request by Party A, it shall appoint any Person designated by Party A as the director of Party C; |
2.2.10 | upon request by Party A at any time, it shall promptly and unconditionally transfer its equity interest in Party C to the Designee(s) of Party A based on the Equity Call Option hereunder, and Party B hereby waives the right of first refusal, if any, with respect to the equity transfer by another existing shareholder of Party C; and |
2.2.11 | it shall strictly comply with this Agreement and other contracts entered into by Party B, Party C and Party A jointly or severally, perform its obligations hereunder and thereunder and refrain from any act/omission that may affect the validity and enforceability hereof and thereof. If Party B has any remaining rights with respect to the equity interest under this Agreement or the Equity Interest Pledge Agreement among the Parties hereto or the Power of Attorney Agreement granted in favor of Party A, Party B shall not exercise such rights, unless according to the written instructions given by Party A. |
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2.3 | Covenants of Party C |
Party C hereby covenants that:
2.3.1 | if the execution and performance of this Agreement and the grant of the Equity Call Option or the Asset Purchase Option hereunder require consent, permit, waiver or authorization of any third party or approval, permit or exemption of any governmental authority or completion of registration or filing procedures with any governmental authority (if required in accordance with law), Party C will use its best efforts to assist the satisfaction of such conditions; |
2.3.2 | without the prior written consent of Party A, Party C will not assist or permit Party B to transfer or otherwise dispose of, or create any Security Interest or other third party rights on, any equity interest in Party C held by Party B; |
2.3.3 | without the prior written consent of Party A, Party C will not transfer or otherwise dispose of any material assets of Party C, or create any Security Interest or other third party rights on any assets of Party C; |
2.3.4 | Party C will not do or permit to be done any act or action likely to have adverse effect on the interests of Party A hereunder; and |
2.3.5 | Party C covenants that upon issuance of the Asset Purchase Notice by Party A for the exercise of the Asset Purchase Option: Party C shall immediately cause Party B to hold a shareholders meeting and adopt a resolution of the shareholders meeting and take all other necessary actions to approve the transfer by Party C of the Purchased Assets to Party A and/or the Designee(s) at the transfer price set forth herein; it shall immediately execute an asset transfer agreement with Party A and/or the Designee(s) to transfer all the Purchased Assets to Party A and/or the Designee(s) at the transfer price set forth herein, and shall cause shareholders of Party C to provide necessary supports to Party A in accordance with requirements of Party A, laws and regulations (including provision and execution of all relevant legal documents, completion of all governmental approval and registration formalities and assumption of all relevant obligations), such that Party A and/or the Designee(s) shall obtain the ownership of the Purchased Assets, free and clear of any legal defects and any Security Interest, third party rights or any other restrictions. |
3. | Representations and Warranties |
3.1 | Each Person of Party B hereby severally but not jointly represents and warrants that, as of the date hereof and each transfer date of the Purchased Equity: |
3.1.1 | with respect to a natural Person, he is a PRC citizen with full capacity to act, has full and independent legal status and capacity to execute, deliver and perform this Agreement and may sue or be sued as an independent party. With respect to a Person other than a natural Person, it is a legal entity validly established and lawfully existing under the laws of the PRC, has full and independent legal status and capacity to execute, deliver and perform this Agreement and may sue or be sued as an independent party. |
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3.1.2 | he or it has full power and authority to execute, deliver and perform this Agreement and all other documents to be executed by him or it in connection with the transactions contemplated hereby, and has full power and authority to consummate the transactions contemplated hereby. |
3.1.3 | this Agreement has been lawfully and duly executed and delivered by him or it. This Agreement constitutes his or its legal and binding obligations enforceable against him or it in accordance with the terms hereof. |
3.1.4 | he or it is the registered shareholder of the Purchased Equity; other than the pledge right created under the Equity Interest Pledge Agreement of Party B and the proxy rights created under the Power of Attorney Agreement of Party B, the Purchased Equity held by him or it is free and clear of any lien, pledge right, claim right and other Security Interest and third party rights. In accordance with this Agreement, Party A and/or the Designee(s) may, upon exercise of option, obtain good title to the Purchased Equity, free and clear of any lien, pledge right, claim right and other Security Interest or third party rights. |
3.2 | Party C hereby represents and warrants as follows: |
3.2.1 | It is a limited liability company duly registered and lawfully existing under the laws of the PRC with independent legal person status. It has full and independent legal status and capacity to execute, deliver and perform this Agreement and may sue or be sued as an independent party. |
3.2.2 | It has full internal power and authority to execute, deliver and perform this Agreement and all other documents to be executed by it in connection with the transactions contemplated hereby, and has full power and authority to consummate the transactions contemplated hereby. |
3.2.3 | This Agreement has been lawfully and duly executed and delivered by it. This Agreement constitutes its legal and binding obligations. |
3.2.4 | The assets of Party C are free and clear of any lien, mortgage right, claim right and other Security Interest and third party rights. In accordance with this Agreement, Party A and/or the Designee(s) may, upon exercise of option, obtain good title to the assets of Party C, free and clear of any lien, mortgage right, claim right and other Security Interest or third party rights. |
3.3 | Party A represents and warrants as follows: |
3.3.1 | It is a wholly foreign-owned enterprise duly registered and lawfully existing under the laws of the PRC with independent legal person status. It has full and independent legal status and capacity to execute, deliver and perform this Agreement and may sue or be sued as an independent party. |
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3.3.2 | It has full internal power and authority to execute, deliver and perform this Agreement and all other documents to be executed by it in connection with the transactions contemplated hereby, and has full power and authority to consummate the transactions contemplated hereby. |
3.3.3 | This Agreement has been lawfully and duly executed and delivered by it. This Agreement constitutes its legal and binding obligations. |
4. | Effective Date |
This Agreement shall become effective from the date on which it is duly executed by the Parties. This Agreement shall be terminated after all assets of Party C and all equity interest in Party C held by Party B have been lawfully transferred to Party A and/or another Person designated by it in accordance with the provisions hereof.
5. | Governing Law and Dispute Resolution |
5.1 | Governing Law |
The execution, effectiveness, interpretation, performance, modification and termination of this Agreement and resolution of disputes arising hereunder shall be governed by officially promulgated and publicly available laws of the PRC.
5.2 | Dispute Resolution |
Any dispute arising from the interpretation and performance of this Agreement shall be first resolved by the Parties through friendly consultation. If the Parties fail to agree upon the resolution of a dispute within 30 days after any Party requests the other Parties to resolve such dispute through consultation, any Party may submit the dispute to the China International Economic and Trade Arbitration Commission for arbitration in accordance with the Commissions arbitration rules then in effect. The arbitration shall be held in Beijing and conducted in the Chinese language. The arbitral award shall be final and binding upon the Parties.
6. | Taxes and Expenses |
Each Party shall pay any and all transfer and registration taxes, costs and expenses incurred by it or levied on it in connection with the preparation and execution of this Agreement and the relevant transfer contract and consummation of the transactions contemplated hereby and thereby in accordance with the laws of the PRC.
7. | Notices |
7.1 | All notices and other communications required or permitted to be given in accordance with this Agreement shall be personally delivered or sent by registered mail, postage prepaid, commercial courier service or facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which such notices shall be deemed to have been effectively given shall be determined as follows: |
7.1.1 | Notices given by personal delivery, courier service or registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the mailing address specified for notices. |
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7.1.2 | Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission). |
7.2 | For the purpose of notices, the addresses of the Parties are as follows: |
Party A: | ||
Xiamen Youxiang Times Technology Co., Ltd. | ||
Address: | E3, Unit 03, 8th Floor, Building D, Xiamen International Modernization Center, Xiamen Area, No. 97 Xiangyu Road, Chinas (Fujian) Pilot Free Trade Zone | |
Attention: | Zhentao Liu | |
Telephone: | 86-17310632963 | |
Party B: | ||
Min Luo | ||
Address: | 39th Floor, AVIC Zijin Plaza, Huan Dao Dong Road 1801, Siming District, Xiamen | |
Attention: | Min Luo | |
Telephone: | 86-17602141092 | |
Long Xu | ||
Address: | 39th Floor, AVIC Zijin Plaza, Huan Dao Dong Road 1801, Siming District, Xiamen | |
Attention: | Long Xu | |
Telephone: | 86-17602141092 | |
Party C: | ||
Xiamen Qu Plus Plus Technology Development Co., Ltd., | ||
Address: | No. 2999, Xi Zhou Road, Tongan District, Xiamen. | |
Attention: | Long Xu | |
Telephone: | 86-17602141092 |
7.3 | Any Party may change its mailing address for notices at any time by giving a notice to the other Parties in accordance with this article. |
8. | Confidentiality Liability |
The Parties acknowledge that any oral or written information exchanged in connection with this Agreement shall be considered as confidential information. Each Party shall keep all such information confidential and shall not disclose any relevant information to any third party without the written consent of the other Parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Partys disclosure to the public); (b) is required to be disclosed in accordance with applicable laws or rules or provisions of any stock exchange; or (c) is required to be disclosed by any Party to its legal counsels or financial advisors in connection with the transactions contemplated hereby, provided, however, that such legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this article. If the staff or agencies engaged by any Party disclose any confidential information, such Party shall be deemed to have disclosed such confidential information and shall bear legal liability for breach of this Agreement. This article shall survive the termination of this Agreement for any reason.
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9. | Further Assurance |
The Parties agree to promptly execute such documents and take such further actions as reasonably necessary or desirable in connection with the implementation of various provisions and purpose of this Agreement.
10. | Liabilities for Breach of Contract |
10.1 | If Party B or Party C materially violates any provision of this Agreement, Party A shall have the right to terminate this Agreement and/or claim damages against Party B or Party C; this Article 10 shall not prejudice any other rights of Party A hereunder. |
10.2 | Unless otherwise provided by laws, in no event shall Party B or Party C have the right to terminate or rescind this Agreement. |
11 | Miscellaneous |
11.1 | Amendment, Modification and Supplement |
This Agreement may not be amended, modified or supplemented except by an agreement in writing signed by all the Parties.
11.2 | Entire Contract |
Unless as amended, supplemented or modified in writing after the execution of this Agreement, this Agreement shall constitute the entire agreement of the Parties hereto with respect to the subject matter hereof and supersede all prior negotiations, statements and contracts, both oral and written, with respect to the subject matter hereof.
11.3 | Headings |
The headings in this Agreement are inserted for the convenience of reference only and shall not be used for the interpretation or construction of, or otherwise affect, the meanings of provisions hereof.
11.4 | Language and Counterparts |
This Agreement is written in the Chinese language in four (4) counterparts with Party A, Party C, Min Luo and Long Xu of Party B holding one (1) copy. They have the same legal effect.
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11.5 | Severability |
If one or more provisions of this Agreement are held to be invalid, illegal or unenforceable in any respect in accordance with any law or regulation, the validity, legality or enforceability of the remaining provisions hereof shall not be affected or prejudiced in any respect. The Parties shall strive through consultation in good faith to replace such invalid, illegal or unenforceable provisions with valid provisions to the greatest extent permitted by laws and expected by the Parties, and the economic effect of such valid provisions shall be as close as possible to the economic effect of such invalid, illegal or unenforceable provisions.
11.6 | Successor |
This Agreement shall be binding upon and inure to the benefit of the Parties respective successors/heirs and permitted assignees.
11.7 | Survival |
11.7.1 | Any obligations accrued or due hereunder prior to the expiration or early termination of this Agreement shall continue in force and effect after the expiration or early termination of this Agreement. |
11.7.2 | Articles 5, 7 and 8 and this Article 11.7 shall survive the termination of this Agreement. |
11.8 | Waiver |
Any Party may waive the terms and conditions hereof, provided, however, that such waiver must be made in writing and signed by the Parties. No waiver by any Party under certain circumstance with respect to a breach by the other Parties shall operate as a waiver by such Party with respect to similar breach under other circumstances.
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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Agreement as of the date first written above.
Party A: Xiamen Youxiang Times Technology Co., Ltd. (Affix Company Seal)
(Seal)
By: |
| |
Name: | Zhentao Liu |
Party B: Min Luo
By: | /s/ Min Luo | |
Name: | Min Luo |
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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Agreement as of the date first written above.
Party B: Long Xu
By: | /s/ Long Xu | |
Name: | Long Xu |
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Party C: Xiamen Qu Plus Plus Technology Development Co., Ltd., (Affix Company Seal)
(Seal)
By: |
| |
Name: | Long Xu |
Exhibit 4.42
July 1, 2019
To: Xiamen Qu Plus Plus Technology Development Co., Ltd. (the VIE Entity)
To Whom It May Concern:
To ensure the cash flow requirements of the VIE Entitys operations are met and/or to set off any loss accrued during such operations, the undersigned, Qudian Inc. (the Company), is obligated and hereby undertakes to provide unlimited financial support to the VIE Entity, to the extent permissible under the applicable laws and regulations of the PRC and the Cayman Islands, whether or not any such operational loss is actually incurred. The form of financial support shall include, but not limited to, extension of cash, entrusted loans and borrowings. The Company will not request repayment of the loans or borrowings if the VIE Entity or its shareholders do not have sufficient funds or are unable to repay.
The undersigned agrees and acknowledges such undertaking shall be irrevocable and continuously valid from the date hereof until the date on which all of the equity interests of the VIE Entity have been acquired directly or indirectly by the Company or its designated representative (individual or legal person).
Please confirm receipt of this letter by returning a signed copy of this letter to the undersigned.
Qudian Inc. |
/s/ Min Luo |
Name: Min Luo |
Title: Authorized Signatory |
Exhibit 4.43
EXECUTION VERSION
Qudian Inc.
and
Deutsche Bank Trust Company Americas, as Trustee
INDENTURE
dated as of July 1, 2019
1.00% CONVERTIBLE SENIOR NOTES DUE 2026
i
TABLE OF CONTENTS
PAGE | ||||||
ARTICLE 1 |
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DEFINITIONS |
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Section 1.01 |
Definitions |
1 | ||||
Section 1.02 |
References to Interest |
12 | ||||
ARTICLE 2 |
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ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES |
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Section 2.01 |
Designation and Amount |
12 | ||||
Section 2.02 |
Form of Notes |
12 | ||||
Section 2.03 |
Date and Denomination of Notes; Payments of Interest and Defaulted Amounts |
13 | ||||
Section 2.04 |
Execution, Authentication and Delivery of Notes |
15 | ||||
Section 2.05 |
Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary |
16 | ||||
Section 2.06 |
Mutilated, Destroyed, Lost or Stolen Notes |
24 | ||||
Section 2.07 |
Temporary Notes |
25 | ||||
Section 2.08 |
Cancellation of Notes Paid, Converted, Etc. |
25 | ||||
Section 2.09 |
CUSIP Numbers |
25 | ||||
Section 2.10 |
Additional Notes; Repurchases |
26 | ||||
ARTICLE 3 |
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SATISFACTION AND DISCHARGE |
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Section 3.01 |
Satisfaction and Discharge |
26 | ||||
ARTICLE 4 |
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PARTICULAR COVENANTS OF THE COMPANY |
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Section 4.01 |
Payment of Principal and Interest |
26 | ||||
Section 4.02 |
Maintenance of Office or Agency |
27 | ||||
Section 4.03 |
Appointments to Fill Vacancies in Trustees Office |
27 | ||||
Section 4.04 |
Provisions as to Paying Agent |
27 | ||||
Section 4.05 |
Existence |
29 |
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Section 4.06 |
Rule 144A Information Requirement and Annual Reports |
29 | ||
Section 4.07 |
Additional Amounts |
31 | ||
Section 4.08 |
Stay, Extension and Usury Laws |
34 | ||
Section 4.09 |
Compliance Certificate; Statements as to Defaults |
35 | ||
Section 4.10 |
Further Instruments and Acts |
35 | ||
ARTICLE 5 | ||||
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE | ||||
Section 5.01 |
Lists of Holders |
35 | ||
Section 5.02 |
Preservation and Disclosure of Lists |
35 | ||
ARTICLE 6 | ||||
DEFAULTS AND REMEDIES | ||||
Section 6.01 |
Events of Default |
36 | ||
Section 6.02 |
Acceleration; Rescission and Annulment |
37 | ||
Section 6.03 |
Additional Interest |
38 | ||
Section 6.04 |
Payments of Notes on Default; Suit Therefor |
39 | ||
Section 6.05 |
Application of Monies Collected by Trustee |
40 | ||
Section 6.06 |
Proceedings by Holders |
41 | ||
Section 6.07 |
Proceedings by Trustee |
42 | ||
Section 6.08 |
Remedies Cumulative and Continuing |
42 | ||
Section 6.09 |
Direction of Proceedings and Waiver of Defaults by Majority of Holders |
43 | ||
Section 6.10 |
Notice of Defaults and Events of Default |
43 | ||
Section 6.11 |
Undertaking to Pay Costs |
44 | ||
ARTICLE 7 | ||||
CONCERNING THE TRUSTEE | ||||
Section 7.01 |
Duties and Responsibilities of Trustee |
44 | ||
Section 7.02 |
Reliance on Documents, Opinions, Etc. |
47 |
iii
Section 7.03 | No Responsibility for Recitals, Etc. The recitals, statements, warranties and representations contained herein and in the Notes (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the accuracy or correctness of the same or for any failure by the Company or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information, or the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture. Notwithstanding the generality of the foregoing, each Holder shall be solely responsible for making its own independent appraisal of, and investigation into, the financial condition, creditworthiness, condition, affairs, status and nature of the Company, and the Trustee shall not at any time have any responsibility for the same and each Holder shall not rely on the Trustee in respect thereof. | 48 | ||||
Section 7.04 | Trustee, Paying Agents, Conversion Agents or Note Registrar May Own Notes | 48 | ||||
Section 7.05 | Monies to Be Held in Trust | 49 | ||||
Section 7.06 | Compensation and Expenses of Trustee | 49 | ||||
Section 7.07 | [Reserved.] | 50 | ||||
Section 7.08 | Eligibility of Trustee | 50 | ||||
Section 7.09 | There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least US$50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. | 50 | ||||
Section 7.09 | Resignation or Removal of Trustee | 50 | ||||
Section 7.10 | Acceptance by Successor Trustee | 51 | ||||
Section 7.11 | Succession by Merger, Etc. | 52 | ||||
Section 7.12 | Trustees Application for Instructions from the Company | 52 |
iv
ARTICLE 8 | ||||||
CONCERNING THE HOLDERS | ||||||
Section 8.01 |
Action by Holders |
53 | ||||
Section 8.02 |
Proof of Execution by Holders |
53 | ||||
Section 8.03 |
Who Are Deemed Absolute Owners |
53 | ||||
Section 8.04 |
Company-Owned Notes Disregarded |
54 | ||||
Section 8.05 |
Revocation of Consents; Future Holders Bound |
54 | ||||
ARTICLE 9 | ||||||
HOLDERS MEETINGS | ||||||
Section 9.01 |
Purpose of Meetings |
54 | ||||
Section 9.02 |
Call of Meetings by Trustee |
55 | ||||
Section 9.03 |
Call of Meetings by Company or Holders |
55 | ||||
Section 9.04 |
Qualifications for Voting |
55 | ||||
Section 9.05 |
Regulations |
55 | ||||
Section 9.06 |
Voting |
56 | ||||
Section 9.07 |
No Delay of Rights by Meeting |
56 | ||||
ARTICLE 10 SUPPLEMENTAL INDENTURES | ||||||
Section 10.01 |
Supplemental Indentures Without Consent of Holders |
57 | ||||
Section 10.02 |
Supplemental Indentures with Consent of Holders |
58 | ||||
Section 10.03 |
Effect of Supplemental Indentures |
59 | ||||
Section 10.04 |
Notation on Notes |
59 | ||||
Section 10.05 |
Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee |
59 | ||||
ARTICLE 11 | ||||||
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE | ||||||
Section 11.01 |
Company May Consolidate, Etc. on Certain Terms |
60 | ||||
Section 11.02 |
Successor Corporation to Be Substituted |
61 | ||||
Section 11.03 |
Opinion of Counsel to Be Given to Trustee |
61 | ||||
ARTICLE 12 | ||||||
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS |
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Section 12.01 |
Indenture and Notes Solely Corporate Obligations |
62 |
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ARTICLE 13 |
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INTENTIONALLY OMITTED | ||||||
ARTICLE 14 |
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CONVERSION OF NOTES | ||||||
Section 14.01 |
Conversion Privilege |
62 | ||||
Section 14.02 |
Conversion Procedure; Settlement Upon Conversion |
62 | ||||
Section 14.03 |
Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Change |
65 | ||||
Section 14.04 |
Adjustment of Conversion Rate |
68 | ||||
Section 14.05 |
Adjustments of Prices |
77 | ||||
Section 14.06 |
Ordinary Shares to Be Fully Paid |
77 | ||||
Section 14.07 |
Effect of Recapitalizations, Reclassifications and Changes of the Ordinary Shares |
77 | ||||
Section 14.08 |
Certain Covenants |
79 | ||||
Section 14.09 |
Responsibility of Trustee |
80 | ||||
Section 14.10 |
Notice to Holders Prior to Certain Actions |
80 | ||||
Section 14.11 |
Stockholder Rights Plans |
81 | ||||
Section 14.12 |
Termination of Depositary Receipt Program |
81 | ||||
ARTICLE 15 |
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REPURCHASE OF NOTES AT OPTION OF HOLDERS | ||||||
Section 15.01 |
Repurchase at Option of Holders |
81 | ||||
Section 15.02 |
Repurchase at Option of Holders Upon a Fundamental Change |
83 | ||||
Section 15.03 |
Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice |
86 | ||||
Section 15.04 |
Deposit of Repurchase Price or Fundamental Change Repurchase Price |
87 | ||||
Section 15.05 |
Covenant to Comply with Applicable Laws Upon Repurchase of Notes |
87 | ||||
ARTICLE 16 |
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OPTIONAL REDEMPTION | ||||||
Section 16.01 |
Optional Redemption for Changes in the Tax Law of the Relevant Taxing Jurisdiction |
88 | ||||
ARTICLE 17 |
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MISCELLANEOUS PROVISIONS | ||||||
Section 17.01 |
Provisions Binding on Companys Successors |
90 |
vi
Section 17.02 |
Official Acts by Successor Corporation |
90 | ||||
Section 17.03 |
Addresses for Notices, Etc. |
90 | ||||
Section 17.04 |
Governing Law; Jurisdiction |
91 | ||||
Section 17.05 |
Service of Process |
92 | ||||
Section 17.06 |
Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee |
92 | ||||
Section 17.07 |
Legal Holidays |
93 | ||||
Section 17.08 |
No Security Interest Created |
93 | ||||
Section 17.09 |
Benefits of Indenture |
93 | ||||
Section 17.10 |
Table of Contents, Headings, Etc. |
93 | ||||
Section 17.11 |
Execution in Counterparts |
93 | ||||
Section 17.12 |
Severability |
93 | ||||
Section 17.13 |
Waiver of Jury Trial |
93 | ||||
Section 17.14 |
Force Majeure |
94 | ||||
Section 17.15 |
Calculations |
94 | ||||
Section 17.16 |
U.S.A. Patriot Act |
94 | ||||
EXHIBIT |
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Exhibit A |
Form of Note |
A-1 | ||||
Exhibit B |
Form of Authorization Certificate |
B-1 |
vii
INDENTURE dated as of July 1, 2019 between QUDIAN INC., a Cayman Islands exempted company, as issuer (the Company, as more fully set forth in Section 1.01) and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as trustee (the Trustee, as more fully set forth in Section 1.01).
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 1.00% Convertible Senior Notes due 2026 (the Notes), initially in an aggregate principal amount not to exceed US$345,000,000, subject to Section 2.10, and in order to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, the Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice, the Form of Repurchase Notice and the Form of Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and
WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee, as in this Indenture provided, the valid, binding and legal obligations of the Company, and this Indenture a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issuance hereunder of the Notes have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes (except as otherwise provided below), as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. The words herein, hereof, hereunder, and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular.
Additional ADSs shall have the meaning specified in Section 14.03(a).
Additional Amounts shall have the meaning specified in Section 4.07(a).
Additional Interest means all amounts, if any, payable pursuant to Section 4.06(d), Section 4.06(e) and Section 6.03, as applicable.
1
ADS means an American Depositary Share, issued pursuant to the Deposit Agreement or Restricted Deposit Agreement, as applicable, representing one Ordinary Share of the Company as of the date of this Indenture, and deposited with the ADS Custodian.
ADS Custodian means Deutsche Bank AG, Hong Kong Branch, with respect to the ADSs delivered pursuant to the Deposit Agreement or the Restricted Deposit Agreement, as applicable, or any successor entity thereto.
ADS Depositary means Deutsche Bank Trust Company Americas, as depositary for the ADSs, or any successor entity thereto.
ADS Price shall have the meaning specified in Section 14.03(b).
Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control, when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing.
Agents means the Paying Agent, the Note Registrar and the Conversion Agent.
Applicable PRC Rate means (i) in the case of deduction or withholding of Peoples Republic of China income tax, 10%, (ii) in the case of deduction or withholding of, or reduction for, Peoples Republic of China value added tax (including any related local levies), 6.72%, or (iii) in the case of deduction or withholding of, or reduction for, both Peoples Republic of China income tax and Peoples Republic of China value added tax (including any related local levies), 16.72%.
applicable taxes shall have the meaning specified in Section 4.07(a).
Board of Directors means the board of directors of the Company or a committee of such board duly authorized to act for it hereunder.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, and to be in full force and effect on the date of such certification, and delivered to the Trustee.
Business Day means, with respect to any Note, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
Capital Stock means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.
Change in Tax Law shall have the meaning specified in Section 16.01.
2
Clause A Distribution shall have the meaning specified in Section 14.04(c).
Clause B Distribution shall have the meaning specified in Section 14.04(c).
Clause C Distribution shall have the meaning specified in Section 14.04(c).
close of business means 5:00 p.m. (New York City time).
Code means the U.S. Internal Revenue Code of 1986, as amended.
Commission means the U.S. Securities and Exchange Commission.
Common Equity of any Person means ordinary share capital or common stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.
Company shall have the meaning specified in the first paragraph of this Indenture, and subject to the provisions of Article 11, shall include its successors and assigns.
Company Notice shall have the meaning specified in Section 15.01(a).
Company Order means a written order of the Company, signed by an Officer of the Company and delivered to the Trustee.
Consolidated Variable Interest Entities means, with respect to any Person, any corporation, association or other entity which is or is required to be consolidated with such Person under Accounting Standards Codification subtopic 810-10, Consolidation: Overall (including any changes, amendments or supplements thereto) or, if such person prepares its financial statements in accordance with accounting principles other than the accounting principles generally accepted in the United States of America, the equivalent of Accounting Standards Codification subtopic 810-10, Consolidation: Overall under such accounting principles.
Conversion Agent shall have the meaning specified in Section 4.02.
Conversion Date shall have the meaning specified in Section 14.02(c).
Conversion Obligation shall have the meaning specified in Section 14.01.
Conversion Rate shall have the meaning specified in Section 14.01.
Corporate Trust Office means the designated corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date hereof is located at (i) for purposes of surrender, transfer or exchange of any Note, Deutsche Bank Trust Company Americas, c/o DB Services Americas, Inc., 5022 Gate Parkway, Suite 200, Jacksonville, FL 32256, Attn: Transfer Department and (ii) for all other purposes, Deutsche Bank Trust Company Americas, Trust and Agency Services, 60 Wall St., 24th Floor, MS NYC 60-2407, New York, NY 10005, USA, Attention: Corporate Team/Qudian Inc., or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Company).
3
Default means any event that is, or after notice or passage of time, or both, would be, an Event of Default.
Defaulted Amounts means any amounts on any Note (including, without limitation, the Redemption Price, the Repurchase Price, the Fundamental Change Repurchase Price, principal and interest) that are payable but are not punctually paid or duly provided for.
Deposit Agreement means the deposit agreement dated as of October 17, 2017, by and among the Company, the ADS Depositary and the holders and beneficial owners of the ADSs delivered thereunder or, if amended or supplemented as provided therein, as so amended or supplemented.
Depositary means, with respect to each Global Note, the Person specified in Section 2.05(c) and Section 2.05(e) as the Depositary with respect to such Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, Depositary shall mean or include such successor.
Distributed Property shall have the meaning specified in Section 14.04(c).
Effective Date shall have the meaning specified in Section 14.03(c).
Event of Default shall have the meaning specified in Section 6.01.
Ex-Dividend Date means the first date on which the ADSs trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of the ADSs on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Existing Principal Shareholder means Mr. Min Luo, together with any other person or group subject to aggregation or attribution of the Common Equity of the Company (including Common Equity held in the form of ADSs) under Section 13(d) of the Exchange Act.
Expiring Rights means any rights, options or warrants to purchase Ordinary Shares or ADSs that expire on or prior to the Maturity Date.
FATCA shall have the meaning specified in Section 4.07(a)(i)(D).
Form of Assignment and Transfer shall mean the Form of Assignment and Transfer attached as Attachment 4 to the Form of Note attached hereto as Exhibit A.
4
Form of Fundamental Change Repurchase Notice shall mean the Form of Fundamental Change Repurchase Notice attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.
Form of Notice of Conversion shall mean the Form of Notice of Conversion attached as Attachment 1 to the Form of Note attached hereto as Exhibit A.
Form of Repurchase Notice shall mean the Form of Repurchase Notice attached as Attachment 3 to the Form of Note attached hereto as Exhibit A.
Fractional ADS shall have the meaning specified in Section 14.02(a).
Fundamental Change shall be deemed to have occurred at the time after the Notes are originally issued if any of the following occurs:
(a) (A) A person or group within the meaning of Section 13(d) of the Exchange Act, other than the Company, its Subsidiaries, the employee benefit plans of the Company and its Subsidiaries and the Existing Principal Shareholder, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect beneficial owner, as defined in Rule 13d-3 under the Exchange Act, of: (i) the Companys Common Equity (including Common Equity held in the form of ADSs) representing more than 50% of the voting power of the Companys Common Equity, or (ii) Ordinary Shares representing more than 50% of the outstanding Ordinary Shares (including Ordinary Shares held in the form of ADSs), or (B) the Existing Principal Shareholder has become the direct or indirect beneficial owner of the Companys Common Equity (including Common Equity held in the form of ADSs) representing more than 85% of the voting power of the Companys Common Equity, based on any Schedule TO or any schedule, form or report under the Exchange Act disclosing the same filed by the Existing Principal Shareholder (or any other person or group subject to aggregation or attribution of the Common Equity of the Company under Section 13(d) of the Exchange Act);
(b) the consummation of (A) any recapitalization, reclassification or change of the Ordinary Shares or the ADSs (other than changes resulting from a subdivision or combination) as a result of which the Ordinary Shares or the ADSs would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Company pursuant to which the Ordinary Shares or the ADSs will be converted into cash, securities or other property; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries and Consolidated Variable Interest Entities, taken as a whole, to any Person other than one of the Companys wholly-owned Subsidiaries; provided, however, that a transaction described in clause (B) in which the holders of all classes of the Companys Common Equity (including Common Equity held in the form of ADSs) immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions vis-a-vis each other as such ownership immediately prior to such transaction shall not be a Fundamental Change pursuant to this clause (b);
5
(c) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;
(d) the ADSs (or other Common Equity or ADSs in respect of Common Equity underlying the Notes) cease to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors); or
(e) any change in or amendment to the laws, regulations and rules of the Peoples Republic of China or the official interpretation or official application thereof (a Change in Law) that results in (x) the Company, its Subsidiaries and its Consolidated Variable Interest Entities (collectively, the Company Group) (as in existence immediately subsequent to such Change in Law), as a whole, being legally prohibited from operating substantially all of the business operations conducted by the Company Group (as in existence immediately prior to such Change in Law) as of the last date of the period described in the Companys consolidated financial statements for the most recent fiscal quarter and (y) the Companys being unable to continue to derive substantially all of the economic benefits from the business operations conducted by the Company Group (as in existence immediately prior to such Change in Law) in the same manner as reflected in the Companys consolidated financial statements for the most recent fiscal quarter; provided that the Company has not furnished to the Trustee on or before the 20th calendar day after the date of such Change in Law an opinion from an independent financial advisor or an independent legal counsel stating either (x) that the Company is able to continue to derive substantially all of the economic benefits from the business operations conducted by the Company Group (as in existence immediately prior to such Change in Law), taken as a whole, as reflected in the Companys consolidated financial statements for the most recent fiscal quarter (including after giving effect to any corporate restructuring or reorganization plan of the Company Group) or (y) that such Change in Law would not materially adversely affect the Companys ability to make principal and interest payments on the Notes when due or to effect the conversion of the Notes in accordance herewith,
provided, however, that a transaction or event described in clause (b) above shall not constitute a Fundamental Change, if at least 90% of the consideration received or to be received by holders of the ADSs, excluding cash payments for Fractional ADSs, in connection with such transaction or event consists of shares of Common Equity or ADSs in respect of Common Equity that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or event that would otherwise constitute a Fundamental Change under clause (b) of the definition thereof and as a result of such transaction or event, the Notes become convertible into such consideration, excluding cash payments for Fractional ADSs, provided further that an event that is not considered a Fundamental Change pursuant to this proviso shall not be a Fundamental Change solely because such event could also be considered a Fundamental Change pursuant to clause (a) of this definition.
6
Fundamental Change Company Notice shall have the meaning specified in Section 15.02(c).
Fundamental Change Repurchase Date shall have the meaning specified in Section 15.02(a).
Fundamental Change Repurchase Notice shall have the meaning specified in Section 15.02(b)(i).
Fundamental Change Repurchase Price shall have the meaning specified in Section 15.02(a).
Global Note shall have the meaning specified in Section 2.05(b).
Holder, as applied to any Note, or other similar terms (but excluding the term beneficial holder), shall mean any Person in whose name at the time a particular Note is registered on the Note Register.
Indenture means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.
Initial Purchasers means Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Citigroup Global Markets Inc., as representatives of the several initial purchasers named in the Purchase Agreement.
Interest Payment Date means each July 1 and January 1 of each year or, if the relevant date is not a Business Day, the immediately following Business Day, beginning on January 1, 2020.
Last Reported Sale Price of the ADSs on any date means the closing sale price per ADS (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the ADSs are traded. If the ADSs are not listed for trading on a U.S. national or regional securities exchange on the relevant date, the Last Reported Sale Price shall be the last quoted bid price for the ADSs in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the ADSs are not so quoted, the Last Reported Sale Price shall be the average of the mid-point of the last bid and ask prices for the ADSs on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.
Make-Whole Fundamental Change means any transaction or event described in clause (a), (b), (d) or (e) of the definition of Fundamental Change (determined after giving effect to any exceptions to or exclusions from such definition, including in the proviso immediately succeeding clause (e) of the definition thereof, but without regard to the proviso in clause (b) of the definition thereof).
7
Maturity Date means July 1, 2026.
Merger Event shall have the meaning specified in Section 14.07(a).
Note or Notes shall have the meaning specified in the first paragraph of the recitals of this Indenture.
Notes Fungibility Date means the date, if any, following the Resale Restriction Termination Date on which all of the Rule 144A Notes and (if any) all of the Regulation S Notes are no longer Restricted Securities, do not bear the restrictive legend required by Section 2.05(c), are fungible for U.S. securities law purposes and are assigned an identical, unrestricted CUSIP number.
Note Register shall have the meaning specified in Section 2.05(a).
Note Registrar shall have the meaning specified in Section 2.05(a).
Notice of Conversion shall have the meaning specified in Section 14.02(b).
Offering Memorandum means the preliminary offering memorandum dated June 25, 2019, as supplemented by the pricing term sheet dated June 26, 2019, 2019, relating to the offering and sale of the Notes.
Officer means, with respect to the Company, the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Treasurer.
Officers Certificate, when used with respect to the Company, means a certificate that is delivered to the Trustee and that is signed by two Officers of the Company. Each such certificate shall include the statements provided for in Section 17.06 if and to the extent required by the provisions of such Section. One of the Officers giving an Officers Certificate pursuant to Section 4.09 shall be the principal executive, financial or accounting officer of the Company.
open of business means 9:00 a.m. (New York City time).
Opinion of Counsel means an opinion in writing signed by legal counsel and in a form reasonably acceptable to the Trustee, who may be counsel to the Company, or other counsel acceptable to the Trustee, that is delivered to the Trustee. Each such opinion shall include the statements provided for in Section 17.06 if and to the extent required by the provisions of such Section 17.06.
Ordinary Shares means Class A ordinary shares of the Company, par value US$0.0001 per share, at the date of this Indenture, subject to Section 14.07.
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outstanding, when used with reference to Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore cancelled by the Trustee or accepted by the Trustee for cancellation;
(b) Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent);
(c) Notes that have been paid pursuant to Section 2.06 or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.06 unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;
(d) Notes converted pursuant to Article 14 and required to be cancelled pursuant to Section 2.08;
(e) Notes redeemed pursuant to Article 16; and
(f) Notes repurchased by the Company pursuant to the third sentence of Section 2.10.
Paying Agent shall have the meaning specified in Section 4.02.
Person means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.
Physical Notes means permanent certificated Notes in registered form issued in denominations of US$1,000 principal amount and multiples thereof.
Predecessor Note of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.06 in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.
Purchase Agreement means that certain Purchase Agreement, dated as of June 26, 2019, among the Company and the Initial Purchasers.
Record Date means, with respect to any dividend, distribution or other transaction or event in which the holders of ADSs (or other applicable security) have the right to receive any cash, securities or other property or in which ADSs (or other applicable security) are exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of security holders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, statute, contract or otherwise).
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Redemption Date shall have the meaning specified in Section 16.01.
Redemption Reference Date shall have the meaning specified in Section 14.03(g).
Redemption Reference Price shall have the meaning specified in Section 16.01.
Redemption Price shall have the meaning specified in Section 16.01.
Reference Property shall have the meaning specified in Section 14.07(a).
Regular Record Date, with respect to any Interest Payment Date, shall mean the June 15 or December 15 (whether or not such day is a Business Day) immediately preceding the applicable July 1 or January 1 Interest Payment Date, respectively.
Regulation S means Regulation S under the Securities Act or any successor to such regulation.
Regulation S Notes means the Notes, if any, initially offered and sold outside the United States pursuant to Regulation S.
Relevant Taxing Jurisdiction shall have the meaning specified in Section 4.07(a).
Repurchase Date shall have the meaning specified in Section 15.01(a).
Repurchase Expiration Time shall have the meaning specified in Section 15.01(a).
Repurchase Notice shall have the meaning specified in Section 15.01(a).
Repurchase Price shall have the meaning specified in Section 15.01(a).
Resale Restriction Termination Date shall have the meaning specified in Section 2.05(c).
Responsible Officer means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Persons knowledge of and familiarity with the particular subject and, in any case, who shall have direct responsibility for the administration of this Indenture.
Restricted Deposit Agreement means the amended and restated deposit agreement for restricted securities dated as of July 1, 2019 by and among the Company, the ADS Depositary and the holders and beneficial owners of the restricted ADSs delivered thereunder or, if amended or supplemented as provided therein, as so amended or supplemented.
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Restricted Securities shall have the meaning specified in Section 2.05(c).
Rule 144 means Rule 144 as promulgated under the Securities Act.
Rule 144A means Rule 144A as promulgated under the Securities Act.
Rule 144A Notes means the notes initially offered and sold pursuant to Rule 144A.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Scheduled Trading Day means a day that is scheduled to be a Trading Day.
Significant Subsidiary means a Subsidiary of the Company that meets the definition of significant subsidiary in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act. Each of the Companys Consolidated Variable Interest Entities will be deemed to be a subsidiary for purposes of the definition of significant subsidiary in Article 1, Rule 1-02 of Regulation S-X.
Spin-Off shall have the meaning specified in Section 14.04(c).
Subsidiary means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
Successor Company shall have the meaning specified in Section 11.01(a).
Trading Day means a day on which (i) trading in the ADSs (or other security for which a closing sale price must be determined) generally occurs on The New York Stock Exchange or, if the ADSs (or such other security) are not then listed on The New York Stock Exchange, on the principal other U.S. national or regional securities exchange on which the ADSs (or such other security) are then listed or, if the ADSs (or such other security) are not then listed on a U.S. national or regional securities exchange, on the principal other market on which the ADSs (or such other security) are then traded and (ii) a Last Reported Sale Price for the ADSs (or closing sale price for such other security) is available on such securities exchange or market; provided that if the ADSs (or such other security) are not so listed or traded, Trading Day means a Business Day.
transfer shall have the meaning specified in Section 2.05(c) and Section 2.05(e), as applicable.
Trigger Event shall have the meaning specified in Section 14.04(c).
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Trust Indenture Act means the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after the date hereof, the term Trust Indenture Act shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended.
Trustee means the Person named as the Trustee in the first paragraph of this Indenture until a successor trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee hereunder.
unit of Reference Property shall have the meaning specified in Section 14.07(a).
U.S. Person shall have the meaning as such term is defined under Regulation S.
Valuation Period shall have the meaning specified in Section 14.04(c).
Section 1.02 References to Interest. Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in this Indenture shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of Section 4.06(d), Section 4.06(e) and Section 6.03. Unless the context otherwise requires, any express mention of Additional Interest in any provision hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01 Designation and Amount. The Notes shall be designated as the 1.00% Convertible Senior Notes due 2026. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is initially limited to US$345,000,000, subject to Section 2.10 and except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to Section 2.05, Section 2.06, Section 2.07, Section 10.04, Section 14.02 and Section 15.04.
Section 2.02 Form of Notes. The Notes and the Trustees certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of this Indenture. To the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.
Any Global Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Depositary, or as may be required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or designated for issuance or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.
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Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as the Officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject.
Each Global Note shall represent such principal amount of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect redemptions, repurchases, cancellations, conversions, transfers or exchanges permitted hereby. Any endorsement of the Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Registrar in such manner and upon instructions given by the Holder of such Notes in accordance with this Indenture. Payment of principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Global Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.
Section 2.03 Date and Denomination of Notes; Payments of Interest and Defaulted Amounts. (a) The Notes shall be issuable in registered form without coupons in denominations of US$1,000 principal amount and integral multiples thereof. Each Note shall be dated the date of its authentication and shall bear interest from, and including, the date specified on the face of such Note. Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of actual days elapsed over a 30-day month.
(b) The Person in whose name any Note (or its Predecessor Note) is registered on the Note Register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date. Interest shall be payable at the office or agency of the Company maintained by the Company for such purposes in the Borough of Manhattan, The City of New York, which shall initially be the Corporate Trust Office, or, if any Note is a Global Note, in accordance with the procedures of the Depositary. The Company shall pay or cause the Paying Agent to pay interest (i) on any Physical Notes (A) to Holders holding Physical Notes having an aggregate principal amount of US$5,000,000 or less, by check mailed (at the Companys expense) to the Holders of these Notes at their address as it appears in the Note Register and (B) to Holders holding Physical Notes having an aggregate principal amount of more than US$5,000,000, either by check mailed (at the Companys expense) to such Holders or, upon application by such Holder to the Paying Agent not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holders account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Paying Agent to the contrary or (ii) on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee.
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(c) Any Defaulted Amounts shall forthwith cease to be payable to the Holder on the relevant payment date but shall accrue interest per annum at the rate per annum borne by the Notes plus one percent, subject to the enforceability thereof under applicable law, from, and including, such relevant payment date, and such Defaulted Amounts together with such interest thereon shall be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Amounts to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee in its sole discretion shall consent to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Amounts or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Amounts as in this clause provided. Thereupon the Company shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company shall promptly notify the Trustee in writing of such special record date and the Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be mailed, first-class postage prepaid (at the Companys expense), to each Holder at its address as it appears in the Note Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so mailed, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause (ii) of this Section 2.03(c).
(ii) The Company may make payment of any Defaulted Amounts in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
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Section 2.04 Execution, Authentication and Delivery of Notes. The Notes shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chief Executive Officer,, Chief Financial Officer, Treasurer, Secretary or any of its Executive or Senior Vice Presidents. With the delivery of this Indenture, the Company is furnishing, and from time to time thereafter may furnish, a certificate substantially in the form of Exhibit B (an Authorization Certificate) identifying and certifying the incumbency and specimen (and/or facsimile) signatures of its active authorized Officers. Until the Trustee receives a subsequent Authorization Certificate, the Trustee shall be entitled to conclusively rely on the last Authorization Certificate delivered to it for purposes of determining the relevant authorized Officers. Typographical and other minor errors or defects in any signature shall not affect the validity or enforceability of any Note which has been duly authenticated and delivered by the Trustee.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Opinion of Counsel contemplated in the immediately following paragraph, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes, without any further action by the Company hereunder. The Company Order shall specify the amount of Notes to be authenticated (including the initial amount of Rule 144A Notes and the initial amount of Regulation S Notes), the applicable rate at which interest will accrue on such Notes, the date on which the original issuance of such Notes is to be authenticated, the date from which interest will begin to accrue, the date or dates on which interest on such Notes will be payable and the date on which the principal of such Notes will be payable and other terms relating to such Notes. The Trustee shall thereupon authenticate and deliver said Notes to or upon the written order of the Company (as set forth in such Company Order).
The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section (a) unless and until it receives from the Company a Company Order instructing it to so authenticate and deliver such Notes and, if requested by the Trustee, an Officers Certificate and an Opinion of Counsel in accordance with Section 17.06 hereof, and including a statement that the Notes, when authenticated and delivered by the Trustee, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to customary exceptions; (b) if the Trustee determines that such action may not lawfully be taken; or (c) if the Trustee determines that such action would expose to Trustee to personal liability, unless indemnity and/or security and/or pre-funding reasonably satisfactory to the Trustee against such liability is provided to the Trustee and the Note Registrar.
Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on the form of Note attached as Exhibit A hereto, executed manually by an authorized officer of the Trustee, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.
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In case any Officer of the Company who shall have signed any of the Notes shall cease to be such Officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Notes had not ceased to be such Officer of the Company; and any Note may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Note, shall be the Officers of the Company, although at the date of the execution of this Indenture any such Person was not such an Officer.
Section 2.05 Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary. (a) The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office or in any other office or agency of the Company designated pursuant to Section 4.02, the Note Register) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. Deutsche Bank Trust Company Americas is hereby initially appointed the Note Registrar and Trustee for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more co-Note Registrars in accordance with Section 4.02.
Prior to the Notes Fungibility Date, upon surrender for registration of transfer of any Rule 144A Note or Regulation S Note, as the case may be, to the Trustee, the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Rule 144A Notes or Regulation S Notes, as the case may be, of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture. Following the Notes Fungibility Date, upon surrender for registration of transfer of any Note to the Trustee, the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and not bearing the restrictive legends required by Section 2.05(c).
Prior to the Notes Fungibility Date, Rule 144A Notes and Regulation S Notes, as the case may be, may be exchanged for other Rule 144A Notes or Regulation S Notes, as the case may be, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Rule 144A Notes or Regulation S Notes, as the case may be, to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02. Whenever any Rule 144A Notes or Regulation S Notes, as the case may be, are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Rule 144A Notes or Regulation S Notes, as the case may be, that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding. Following the Notes Fungibility Date, Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount but not bearing the restrictive legend required by Section 2.05(c), upon surrender of the Notes to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding.
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All Notes presented or surrendered for registration of transfer or for exchange, repurchase or conversion shall (if so required by the Company, the Trustee, the Note Registrar or any co-Note Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and duly executed, by the Holder thereof or its attorney-in-fact duly authorized in writing.
No service charge shall be imposed by the Company, the Note Registrar, any co-Note Registrar or the Paying Agent for any exchange or registration of transfer of Notes, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp, issue, transfer or similar tax required in connection therewith as a result of the name of the Holder of new Notes issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer. The Company shall pay the ADS Depositarys fees for issuance of the ADSs.
None of the Company, the Trustee, the Note Registrar or any co-Note Registrar shall be required to exchange or register a transfer of (i) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion, (ii) any Notes, or a portion of any Note, surrendered for repurchase (and not withdrawn) in accordance with Article 15 or (iii) any Notes selected for redemption in accordance with Article 16.
All Notes issued upon any registration of transfer or exchange of Notes in accordance with this Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.
The Trustee shall have no responsibility or obligation to any direct or indirect participant or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any direct or indirect participant or other Person (other than the Depositary and any other registered Holder of Notes) of any notice (including any notice of redemption pursuant to Article 16) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the customary procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its direct or indirect participants.
Neither the Trustee nor the Note Registrar shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among direct or indirect participants in any Global Note) other than to require delivery of such certificates as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
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(b) So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, subject to the fourth paragraph from the end of Section 2.05(c) all Notes shall be represented by one or more Notes in global form (each, a Global Note) registered in the name of the Depositary or the nominee of the Depositary. The transfer and exchange of beneficial interests in a Global Note that does not involve the issuance of a Physical Note shall be effected through the Depositary in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor. Prior to the Notes Fungibility Date, the Rule 144A Notes shall be represented by one or more Global Notes and the Regulation S Notes shall be represented by one or more separate Global Notes. Following the Notes Fungibility Date, the Rule 144A Notes and the Regulation S Notes may be represented by one or more of the same Global Notes.
(c) Every Note that bears or is required under this Section 2.05(c) to bear the legend set forth in this Section 2.05(c) (together with any ADSs (including the Ordinary Shares represented thereby) delivered upon conversion of the Notes that are required to bear the legend set forth in Section 2.05(d), collectively, the Restricted Securities) shall be subject to the restrictions on transfer set forth in this Section 2.05(c) (including the legend set forth below), unless such restrictions on transfer shall be eliminated or otherwise waived by written consent of the Company, and the Holder of each such Restricted Security, by such Holders acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this Section 2.05(c) and Section 2.05(d), the term transfer encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security.
Until the date (the Resale Restriction Termination Date) that is the later of (1) the date that is one year after the last date of original issuance of the Notes, or such shorter period of time as permitted by Rule 144 under the Securities Act or any successor provision thereto, and (2) such later date, if any, as may be required by applicable law, any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than ADSs (including the Ordinary Shares represented thereby) issued upon conversion thereof, which shall bear the legend set forth in Section 2.05(d), if applicable) shall bear a legend in substantially the following form (unless such Notes have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 under the Securities Act or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company in writing, with notice thereof to the Trustee):
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THIS SECURITY, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION OF THIS SECURITY AND THE CLASS A ORDINARY SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULES 144 UNDER THE SECURITIES ACT OR CONTRACTUALLY RESTRICTED SECURITIES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH
THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND LOCATED OUTSIDE THE UNITED STATES (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT, AND HAS NOT BEEN FOR THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF QUDIAN INC. (THE COMPANY), AND
(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) TO A NON-U.S. PERSON LOCATED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY, THE DEPOSITARY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE, OTHERWISE ACQUIRE OR OWN THIS NOTE, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION HEREOF AND THE CLASS A ORDINARY SHARES REPRESENTED THEREBY, OR A BENEFICIAL INTEREST HEREIN.
No transfer of any Note prior to the Resale Restriction Termination Date will be registered by the Note Registrar unless the applicable box on the Form of Assignment and Transfer has been checked.
Any Note (or security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms may, upon surrender of such Note for exchange to the Note Registrar in accordance with the provisions of this Section 2.05, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the restrictive legend required by this Section 2.05(c) and shall not be assigned a restricted CUSIP number. The Company shall be entitled to instruct the Trustee, as custodian for Cede & Co., in writing to so surrender any Global Note as to which such restrictions on transfer shall have expired in accordance with their terms for exchange, and, upon such instruction, the Trustee shall so surrender such Global Note for exchange; and any new Global Note so exchanged therefor shall not bear the restrictive legend specified in this Section 2.05(c) and shall not be assigned a restricted CUSIP number. The Company shall promptly notify the Trustee in writing upon the occurrence of the Resale Restriction Termination Date and after a registration statement, if any, with respect to the Notes or the ADSs (including the Ordinary Shares represented thereby) issued upon conversion of the Notes has been declared effective under the Securities Act.
Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this Section 2.05(c)), a Global Note may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for transfers of portions of a Global Note in certificated form made upon request of a member of, or a participant in, the Depositary (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures of the Depositary and in compliance with this Section 2.05(c).
The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to each Global Note. Initially, each Global Note shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with Deutsche Bank Trust Company Americas as custodian for Cede & Co.
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If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days or (iii) an Event of Default with respect to the Notes has occurred and is continuing and a beneficial owner of any Note requests that its beneficial interest therein be issued as a Physical Note, the Company shall execute, and the Trustee, upon receipt of the Opinion of Counsel contemplated by Section 2.04 and a Company Order for the authentication and delivery of Notes, shall authenticate and deliver (x) in the case of clause (iii), a Physical Note to such beneficial owner in a principal amount equal to the principal amount of such Note corresponding to such beneficial owners beneficial interest and (y) in the case of clause (i) or (ii), Physical Notes to each beneficial owner of the related Global Notes (or a portion thereof) in an aggregate principal amount equal to the aggregate principal amount of such Global Notes in exchange for such Global Notes, and upon delivery of the Global Notes to the Note Registrar such Global Notes shall be cancelled.
Physical Notes issued in exchange for all or a part of the Global Note pursuant to this Section 2.05(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Note Registrar in writing. Upon execution and authentication, the Note Registrar shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered.
At such time as all interests in a Global Note have been converted, cancelled, repurchased, redeemed or transferred, such Global Note shall be, upon receipt thereof, cancelled by the Note Registrar in accordance with standing procedures and existing instructions of the Depositary. At any time prior to such cancellation, if any interest in a Global Note is exchanged for Physical Notes, converted, cancelled, repurchased, redeemed or transferred to a transferee who receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of such Global Note, the principal amount of such Global Note shall, in accordance with the standing procedures and existing instructions of the Depositary, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on such Global Note, by the Note Registrar, to reflect such reduction or increase.
None of the Company, the Trustee, the Paying Agent, any agent of the Company or any agent of the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
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(d) Until the Resale Restriction Termination Date, any certificate representing ADSs (including the Ordinary Shares represented thereby) issued upon conversion of such Note shall bear a legend in substantially the following form (unless the Note or such ADSs (including the Ordinary Shares represented thereby) has been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or such ADS or the Ordinary Shares represented thereby have been issued upon conversion of Notes that have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 under the Securities Act or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company with written notice thereof to the Note Registrar and any transfer agent for the ADSs):
THE AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY AND THE CLASS A ORDINARY SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT OR CONTRACTUALLY RESTRICTED SECURITIES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND LOCATED OUTSIDE THE UNITED STATES (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT AN AFFILIATE OF QUDIAN INC. (THE COMPANY), AND
(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE OF THE SERIES OF NOTES UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
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(D) TO A NON-U.S. PERSON LOCATED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY, THE DEPOSITARY AND THE TRANSFER AGENT FOR THE COMPANYS AMERICAN DEPOSITARY SHARES RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE, OTHERWISE ACQUIRE OR OWN THE AMERICAN DEPOSITARY SHARES EVIDENCED HEREBY OR A BENEFICIAL INTEREST THEREIN.
Any such ADSs as to which such restrictions on transfer shall have expired in accordance with their terms may, upon surrender of the certificates representing such ADSs for exchange in accordance with the procedures of the transfer agent for the ADSs and the Restricted Deposit Agreement, as applicable, be exchanged for a new certificate or certificates for a like aggregate number of ADSs, which shall not bear the restrictive legend required by this Section 2.05(d).
(e) Any Note or ADS delivered upon the conversion or exchange of any Note that is repurchased or owned by any Affiliate of the Company may not be resold by such Affiliate unless registered under the Securities Act or resold pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act in a transaction that results in such Note or ADS, as the case may be, no longer being a restricted security (as defined under Rule 144 under the Securities Act). The Company shall cause any Note that is repurchased or owned by it to be surrendered to the Note Registrar for cancellation in accordance with Section 2.08.
(f) Until the Resale Restriction Termination Date, prior to any sale of Regulation S Notes, the ADSs deliverable upon conversion thereof or the Ordinary Shares represented thereby, to a qualified institutional buyer in compliance with Rule 144A, the Holder thereof shall deliver to the Company, the Trustee and/or Depositary, as the case may be, written confirmation that the prospective purchaser is a Person such Holder reasonably believes is a qualified institutional buyer (within the meaning of Rule 144A) that is purchasing for its own account or for the account of another qualified institutional buyer and to whom notice is given that the transfer is being made in reliance on Rule 144A.
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Section 2.06 Mutilated, Destroyed, Lost or Stolen Notes. In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon receipt of a Company Order and the Opinion of Counsel contemplated in Section 2.04, the Trustee shall authenticate and deliver, a new Note, bearing a registration number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company and to the Trustee such security and/or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.
The Trustee may authenticate any such substituted Note and deliver the same upon the receipt of such security and/or indemnity as the Trustee and the Company may require. No service charge shall be imposed by the Company, the Note Registrar, any co-Note Registrar or the Paying Agent upon the issuance of any substitute Note, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp, issue, transfer or similar tax required in connection therewith as a result of the name of the Holder of the new substitute Note being different from the name of the Holder of the old Note that became mutilated or was destroyed, lost or stolen. In case any Note that has matured or is about to mature or has been surrendered for repurchase (and not withdrawn) in accordance with Article 15 or has been selected for redemption in accordance with Article 16 or is about to be converted in accordance with Article 14 shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company and to the Trustee such security and/or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, evidence satisfactory to the Company, and the Trustee evidence of their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section 2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement, payment, redemption, conversion or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement, payment, redemption, conversion or repurchase of negotiable instruments or other securities without their surrender.
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Section 2.07 Temporary Notes. Pending the preparation of Physical Notes, the Company may execute and the Trustee shall, upon receipt of a Company Order and Opinion of Counsel contemplated in Section 2.04, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Physical Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the Physical Notes. Without unreasonable delay, the Company shall execute and deliver to the Trustee Physical Notes (other than any Global Note) and thereupon any or all temporary Notes (other than any Global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.02 and the Trustee shall upon receipt of a Company Order authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of Physical Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Physical Notes authenticated and delivered hereunder.
Section 2.08 Cancellation of Notes Paid, Converted, Etc. The Company shall cause all Notes surrendered for the purpose of payment, repurchase, redemption, registration of transfer or exchange or conversion, if surrendered to any Person other than the Trustee (including any of the Companys agents, Subsidiaries or Affiliates), to be delivered and surrendered to the Trustee for cancellation. All Notes delivered to the Trustee shall be cancelled promptly by it, and no Notes shall be authenticated in exchange thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of cancelled Notes in accordance with its customary procedures and, after such disposition, shall deliver a certificate of such cancellation and disposition to the Company, at the Companys written request in a Company Order.
Section 2.09 CUSIP Numbers. The Company in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in all notices issued to Holders as a convenience to such Holders; provided that the Trustee shall have no liability for any defect in CUSIP numbers as they appear on any Note or notice and any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or on such notice and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee in writing of any change in the CUSIP numbers. Prior to the Notes Fungibility Date, the Rule 144A Notes and the Regulation S Notes shall have different CUSIP numbers. Following the Notes Fungibility Date, the Rule 144A Notes and the Regulation S Notes shall have the same CUSIP number.
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Section 2.10 Additional Notes; Repurchases. The Company may, without the consent of the Holders and notwithstanding Section 2.01, reopen this Indenture and issue additional Notes hereunder with the same terms as the Notes initially issued hereunder (except for any differences in the issue price, the issue date and interest accrued, if any, and, if applicable, restrictions on transfer in respect of such additional Notes) in an unlimited aggregate principal amount; provided that if any such additional Notes are not fungible with the Notes initially issued hereunder for U.S. federal income tax or securities law purposes, such additional Notes
shall have a separate CUSIP number from both the Rule 144A Notes and the Regulation S Notes. Prior to the issuance of any such additional Notes, the Company shall deliver to the Trustee a Company Order, an Officers Certificate and an Opinion of Counsel, such Officers Certificate and Opinion of Counsel to cover such matters, in addition to those required by Sections 17.06 and 2.04, as the Trustee shall reasonably request. In addition, the Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or through its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements. The Company shall cause any Notes so repurchased to be surrendered to the Trustee for cancellation in accordance with Section 2.08 and upon receipt of a Company Order, the Trustee shall cancel all Notes so surrendered and such Notes shall no longer be considered outstanding under this Indenture upon their repurchase. The Company may also enter into cash-settled swaps or other derivatives with respect to the Notes. For the avoidance of doubt, any Notes underlying such cash-settled swaps or other derivatives shall not be required to be surrendered to the Trustee for cancellation in accordance with Section 2.08 and will continue to be considered outstanding for purposes of this Indenture, subject to the provisions of Section 8.04.
ARTICLE 3
SATISFACTION AND DISCHARGE
Section 3.01 Satisfaction and Discharge. This Indenture shall upon request of the Company contained in an Officers Certificate cease to be of further effect, and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) (i) all Notes theretofore authenticated and delivered (other than (x) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.06 and (y) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.04(d)) have been delivered to the Trustee for cancellation; or (ii) the Company has deposited with the Trustee or delivered to Holders, as applicable, after the Notes have become due and payable, whether on the Maturity Date, a Redemption Date, the Repurchase Date, any Fundamental Change Repurchase Date, upon conversion or otherwise, cash and/or (solely to satisfy the Companys Conversion Obligation, if applicable) ADSs sufficient to pay all of (or satisfy such Conversion Obligation in respect of) the outstanding Notes and all other sums due and payable under this Indenture by the Company; and (b) the Company has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.06 shall survive.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01 Payment of Principal and Interest. The Company covenants and agrees that it will cause to be paid the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.
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Section 4.02 Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency (which will be the Corporate Trust Office initially) where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or repurchase (Paying Agent) or for conversion (Conversion Agent). The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.
The Company may also from time to time designate as co-Note Registrars one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The terms Paying Agent and Conversion Agent include any such additional or other offices or agencies, as applicable.
The Company hereby initially designates Deutsche Bank Trust Company Americas as the Paying Agent, Note Registrar and Conversion Agent and the Corporate Trust Office and the office or agency of Deutsche Bank Trust Company Americas in the Borough of Manhattan, The City of New York, each shall be considered as one such office or agency of the Company for each of the aforesaid purposes.
Section 4.03 Appointments to Fill Vacancies in Trustees Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.09, a trustee, so that there shall at all times be a trustee hereunder.
Section 4.04 Provisions as to Paying Agent. (a) If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.04:
(i) that it will hold all sums held by it as such agent for the payment of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes for the benefit of the Holders of the Notes;
(ii) that it will give the Trustee prompt notice of any failure by the Company to make any payment of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes when the same shall be due and payable; and
(iii) that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held.
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The Company shall, on or before each due date of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes, deposit with the Paying Agent a sum sufficient to pay such principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) or accrued and unpaid interest and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action; provided that such deposit must be received by the Paying Agent by 10:00 a.m., New York City time, one Business Day prior to the relevant due date. The Paying Agent shall not be bound to make any payment until it has received, in immediately available and cleared funds, an amount which shall be sufficient to pay, as applicable, the aggregate amount of principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes when such principal or interest shall become due and payable. The Paying Agent shall not be responsible or liable for any delay in making the payment if it does not receive funds before 10:00 a.m. one Business Day prior to the payment date. The Company shall use reasonable efforts to procure that, before 10:00 a.m., New York City time, on the second Business Day before each payment date, the bank effecting payment for it has confirmed by email or facsimile to the Paying Agent the payment instructions relating to such payment.
(b) If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) and accrued and unpaid interest so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes when the same shall become due and payable. Upon an Event of Default under Section 6.01(i) or Section 6.01(j) hereof, the Trustee shall automatically become the Paying Agent.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay, cause to be paid or deliver to the Trustee all sums or amounts held by the Company in trust or by any Paying Agent as required by this Section 4.04, such sums or amounts to be held by the Trustee upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts.
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(d) Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, any Note and remaining unclaimed for two years after such principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) or interest has become due and payable shall be paid or delivered, as the case may be, to the Company on request of the Company contained in an Officers Certificate, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment or delivery, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid or delivered to the Company.
Section 4.05 Existence. Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. The Company shall promptly provide the Trustee with written notice of any change to its name, jurisdiction of incorporation or change to its corporate organization.
Section 4.06 Rule 144A Information Requirement and Annual Reports. (a) At any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall, so long as any of the Notes, any ADSs deliverable upon conversion thereof or any Ordinary Shares underlying ADSs deliverable upon conversion thereof shall, at such time, constitute restricted securities within the meaning of Rule 144(a)(3) under the Securities Act, promptly provide to the Trustee and shall, upon written request, provide to any Holder, beneficial owner or prospective purchaser of such Notes or the ADSs deliverable upon conversion of such Notes, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such Notes or ADSs pursuant to Rule 144A. The Company shall take such further action as any Holder or beneficial owner of such Notes or such ADSs may reasonably request to the extent from time to time required to enable such Holder or beneficial owner to sell such Notes or ADSs in accordance with Rule 144A, as such rule may be amended from time to time.
(b) The Company shall provide to the Trustee within 15 days after the same are required to be filed with the Commission, copies of any documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (giving effect to any applicable grace period provided by Rule 12b-25 under the Exchange Act). Any such document or report that the Company files with the Commission via the Commissions EDGAR system (or any successor thereto) shall be deemed to be provided to the Trustee for purposes of this Section 4.06(b) at the time such documents are filed via the EDGAR system (or any successor thereto). The Trustee shall have no obligation to determine if and when the Companys statements or reports are publically available and/or accessible electronically.
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(c) Delivery of the reports and documents described in subsection (b) above to the Trustee is for informational purposes only, and the Trustees receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Companys compliance with any of its covenants hereunder (as to which the Trustee is entitled to conclusively rely on an Officers Certificate).
(d) If, at any time during the six-month period beginning on, and including, the date that is six months after the last date of original issuance of the Notes, the Company fails to timely file any document or report that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after (i) giving effect to all applicable grace periods thereunder and (ii) other than reports on Form 6-K to the extent such reports are not required to satisfy the current public information requirement of Rule 144), or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Companys Affiliates or Holders that were the Companys Affiliates at any time during the three months immediately preceding (as a result of restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes), the Company shall pay or cause the Paying Agent (on behalf of the Company and subject to receipt of funds from the Company pursuant to the last paragraph in Section 4.04(a)) to pay Additional Interest on the Notes. Such Additional Interest shall accrue on the Notes at the rate of 0.50% per annum of the principal amount of the Notes outstanding for each day during such period for which the Companys failure to file has occurred and is continuing or the period during which the Notes are not freely tradable, as the case may be, by Holders other than Affiliates of the Company (or Holders that were Affiliates of the Company during the three months immediately preceding). As used in this Section 4.06(d), documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act does not include documents or reports that the Company furnishes to the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
(e) If, and for so long as, the restrictive legend on the Notes specified in Section 2.05(c) has not been removed, the Notes are assigned a restricted CUSIP or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Companys Affiliates or Holders that were the Companys Affiliates at any time during the three months immediately preceding (without restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes) as of the 370th day after the last date of original issuance of the Notes, the Company shall pay or cause the Paying Agent (on behalf of the Company and subject to receipt of funds from the Company pursuant to the last paragraph in Section 4.04(a)) to pay Additional Interest on the Notes at a rate equal to 0.50% per annum of the principal amount of Notes outstanding until the restrictive legend on the Notes has been removed in accordance with Section 2.05(c), the Notes have been assigned an unrestricted CUSIP and the Notes are freely tradable by Holders other than the Companys Affiliates or Holders that were the Companys Affiliates at any time during the three months immediately preceding (without restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes).
(f) Additional Interest will be payable in arrears on each Interest Payment Date following accrual in the same manner as regular interest on the Notes.
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(g) The Additional Interest that is payable in accordance with Section 4.06(d) or Section 4.06(e) shall be in addition to, and not in lieu of, any Additional Interest that may be payable as a result of the Companys election pursuant to Section 6.03. In no event shall Additional Interest accrue on any day under the terms of this Indenture (taking any Additional Interest payable pursuant to Section 4.06(d) and Section 4.06(e) together with any Additional Interest payable pursuant to Section 6.03) at an annual rate in excess of 0.50%, in the aggregate, for any violation or Default caused by the Companys failure to be current in respect of its Exchange Act reporting obligations.
(h) If Additional Interest is payable by the Company pursuant to Section 4.06(d) or Section 4.06(e), the Company shall deliver to the Trustee an Officers Certificate to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume without inquiry that no such Additional Interest is payable. If the Company has paid such Additional Interest directly to the Persons entitled to it, the Company shall deliver to the Trustee an Officers Certificate setting forth the particulars of such payment.
Section 4.07 Additional Amounts. (a) All payments and deliveries made by, or on behalf of, the Company or any successor to the Company under or with respect to this Indenture and the Notes, including, but not limited to, payments of principal (including, if applicable, the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price), premium, if any, payments of interest, including any Additional Interest, and deliveries of ADSs or any other consideration due on conversion of a Note (together with payments of cash for any Fractional ADS or other consideration), shall be made without withholding, deduction or reduction for any other collection at source for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied (including any penalties and interest related thereto) (applicable taxes) unless such withholding, deduction or reduction is required by law or by regulation or governmental policy having the force of law. In the event that any such withholding, deduction or reduction is so required by or within (1) the Cayman Islands or the Peoples Republic of China, (2) any jurisdiction in which the Company or any successor are, for tax purposes, incorporated, organized or resident or doing business or (3) any jurisdiction from or through which payment is made or deemed made (each of (1), (2) and (3), and in each case, any political subdivision or taxing authority thereof or therein, as applicable, a Relevant Taxing Jurisdiction), the Company or any successor to the Company shall pay or deliver to each Holder such additional amounts of cash, ADSs or other consideration, as applicable (Additional Amounts) as may be necessary to ensure that the net amount received by the beneficial owner of the Notes after such withholding, deduction or reduction (and after deducting any taxes on the Additional Amounts) shall equal the amounts that would have been received by such beneficial owner had no such withholding, deduction or reduction been required; provided that no Additional Amounts shall be payable:
(1) for or on account of:
(A) any applicable taxes that would not have been imposed but for:
(i) the existence of any present or former connection between the relevant Holder or beneficial owner of such Note and the Relevant Taxing Jurisdiction, other than merely acquiring or holding such Note, receiving ADSs (together with payment of cash for any Fractional ADS) or other consideration upon conversion of such Note or the receipt of payments or the exercise or enforcement of rights thereunder, including, without limitation, such Holder or beneficial owner being or having been a national, domiciliary or resident of such Relevant Taxing Jurisdiction or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having had a permanent establishment therein;
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(ii) the presentation of such Note (in cases in which presentation is required) more than 30 days after the later of the date on which the payment of the principal of (including the Redemption Price, the Repurchase Price and Fundamental Change Repurchase Price, if applicable) and interest on such Note or the delivery of ADSs (together with payment of cash for any Fractional ADS) upon conversion of such Note became due and payable pursuant to the terms thereof or was made or duly provided for (except to the extent that the Holder or beneficial owner would have been entitled to additional amounts had the Note been presented on the last day of such 30 day period); or
(iii) the failure of the Holder or beneficial owner to comply with a timely written request from the Company or any successor of the Company, addressed to the Holder, to the extent such Holder or beneficial owner is legally entitled, to provide certification, information, documents or other evidence concerning such Holders or beneficial owners nationality, residence, identity or connection with the Relevant Taxing Jurisdiction, or to make any declaration or satisfy any other reporting requirement relating to such matters, if and to the extent that due and timely compliance with such request is required by statute, regulation or administrative practice of the Relevant Taxing Jurisdiction in order to reduce or eliminate any withholding or deduction as to which Additional Amounts would have otherwise been payable to such Holder or beneficial owner; provided that, in the case of applicable taxes imposed by the Peoples Republic of China, the provision of any certification, information, documents, or other evidence described in this clause (1)(A)(iii) would not be materially more onerous, in form, in procedure, or in the substance of information disclosed, to a Holder or beneficial owner than comparable information or other reporting requirements imposed under U.S. tax law, regulations and administrative practice (such as U.S. Internal Revenue Service Forms W-8BEN, W-8BEN-E and W-9, or any successor forms), and reasonable procedure for the collection of such documentation has been implemented and is in effect at the time that such written request is received;
(B) any estate, inheritance, gift, sale, transfer, personal property or similar applicable tax or excise tax imposed on transfer of the Notes;
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(C) any applicable tax that is payable otherwise than by withholding, deduction or any other collection at source from payments or deliveries under or with respect to the Notes;
(D) any applicable tax required to be withheld or deducted under Sections 1471 to 1474 of the Code (or any amended or successor versions of such Sections that is substantively comparable and not materially more onerous to comply with) (FATCA), any regulations or other official guidance thereunder, any intergovernmental agreement or agreement pursuant to Section 1471(b)(1) of the Code entered into in connection with FATCA, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement; or
(E) any combination of applicable taxes referred to in the preceding clauses (A), (B), (C) or (D); or
(2) with respect to any payment of the principal of (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable), premium, if any, or interest, including any Additional Interest, on, such Note or the delivery of ADSs (together with payment of cash for any Fractional ADS) upon conversion of such Note to a Holder, if the Holder is a fiduciary, partnership or person other than the sole beneficial owner of that payment or delivery to the extent that such payment or delivery would be required to be included in the income under the laws of the Relevant Taxing Jurisdiction, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, a partner or member of that partnership or a beneficial owner who would not have been entitled to such Additional Amounts had that beneficiary, settlor, partner, member or beneficial owner been the Holder thereof.
(b) The Company or its successor shall pay and indemnify each Holder and beneficial owner for any present or future stamp, issue, registration, value added, court or documentary taxes, or any other excise or property taxes, charges or similar levies or taxes (including penalties, interest and any other reasonable expenses related thereto) which are levied by any Relevant Taxing Jurisdiction (and in the case of enforcement, any jurisdiction) on the execution, delivery, registration or enforcement of any of the Notes, this Indenture or any other document or instrument referred to therein or the receipt of payments with respect thereto (including the receipt of ADSs (together with payment of cash for any fractional ADS) or other consideration due upon conversion).
(c) If the Company or its successor becomes obligated to pay Additional Amounts with respect to any payment or delivery under or with respect to the Notes, the Company or its successor shall deliver to the Trustee and the Paying Agent, if other than the Trustee, on a date that is at least 30 days prior to the date of that payment or delivery (unless the obligation to pay Additional Amounts arises after the 30th day prior to that payment or delivery date, in which case the Company or its successor shall notify the Trustee and the Paying Agent promptly thereafter) an Officers Certificate stating the fact that Additional Amounts will be payable and the amount estimated to be so payable. The Officers Certificate must also set forth any other information reasonably necessary to enable the Paying Agent or the Trustee, as the case may be, (on behalf of the Company and subject to receipt of funds from the Company pursuant to the last paragraph in Section 4.04(a)) to pay Additional Amounts to Holders on the relevant payment or delivery date. The Trustee and the Paying Agent shall be entitled to rely solely on such Officers Certificate as conclusive proof that payments are necessary and that the estimate of such Additional Amounts set forth in such Officers Certificate is accurate. The Company or its successor shall provide the Trustee and the Paying Agent with documentation reasonably satisfactory to the Trustee evidencing the payment of Additional Amounts.
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(d) The Company or its successor shall make all withholdings and deductions required by law and shall remit the full amount deducted or withheld to the relevant tax authority in accordance with applicable law. The Company or its successor shall provide to the Trustee a certified copy of an official receipt or, if official receipts are not obtainable, other documents reasonably satisfactory to the Trustee evidencing the payment of any applicable taxes so deducted or withheld. The Company or its successor will attach to each certified copy or other document a certificate stating the amount of such applicable taxes paid per $1,000 principal amount of the Notes then outstanding. Upon request, copies of those receipts or other documentation, as the case may be, shall be made available by the Trustee to the Holders of the Notes upon written request.
(e) Any reference in this Indenture or the Notes in any context to the delivery of ADSs (together with payment of cash for any Fractional ADS) or other consideration upon conversion of any Note or the payment of principal of (including the Redemption Price, the Repurchase Price and Fundamental Change Repurchase Price, if applicable) and any premium or interest (including any Additional Interest) on any Note or any other amount payable with respect to such Note, shall be deemed to include payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable with respect to that amount pursuant to this Section 4.07.
(f) The foregoing obligations shall survive termination, defeasance or discharge of this Indenture or any transfer by a Holder or beneficial owner of its Notes and will apply mutatis mutandis to any jurisdiction in which any successor to the Company is then, for tax purposes, incorporated, organized or resident or doing business (or any political subdivision or taxing authority thereof or therein) or any jurisdiction from or through which payment under or with respect to the Notes is made or deemed made by or on behalf of such successor (or any political subdivision or taxing authority thereof or therein).
Section 4.08 Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
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Section 4.09 Compliance Certificate; Statements as to Defaults. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2019) an Officers Certificate stating that a review has been conducted of the Companys activities under this Indenture and the Company has fulfilled its obligations hereunder, and whether the authorized Officers thereof have knowledge of any Default by the Company that occurred and is continuing and, if so, specifying each such Default and the nature thereof.
In addition, the Company shall deliver to the Trustee, as soon as possible, and in any event within 30 days after the Company becomes aware of the occurrence of any Default, an Officers Certificate setting forth the details of such Default, its status and the action that the Company is taking or proposing to take in respect thereof. The Trustee shall have no responsibility to take any steps to ascertain whether any Event of Default or Default has occurred, and until (i) a Responsible Officer of the Trustee has received an Officers Certificate regarding such an occurrence, or (ii) the Trustee has received written notice at the Corporate Trust Office from the Holders of at least 25% in aggregate principal amount of the Notes then outstanding regarding such an occurrence, the Trustee is entitled to assume, without liability, that no Event of Default or Default has occurred.
Section 4.10 Further Instruments and Acts. The Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.
ARTICLE 5
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 5.01 Lists of Holders. The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semi-annually, not more than 15 days after each May 15 and November 15 in each year beginning with November 15, 2019, and at such other times as the Trustee may request in writing, within 30 days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the Holders as of a date not more than 15 days (or such other date as the Trustee may reasonably request in order to so provide any such notices) prior to the time such information is furnished, except that no such list need be furnished so long as the Deutsche Bank Trust Company Americas is acting as Note Registrar.
Section 5.02 Preservation and Disclosure of Lists. The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 5.01 or maintained by the Trustee in its capacity as Note Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01 Events of Default. The following events shall be Events of Default with respect to the Notes:
(a) default in any payment of interest or Additional Amounts, if any, on any Note when due and payable and the default continues for a period of 30 days;
(b) default in the payment of principal of any Note when due and payable on the Maturity Date, upon redemption, upon any required repurchase, upon declaration of acceleration or otherwise;
(c) failure by the Company to comply with its obligation to convert the Notes in accordance with this Indenture upon exercise of a Holders conversion right and such failure continues for a period of three Business Days;
(d) failure by the Company to issue notices in connection with redemption in respect of a Change in Tax Law in accordance with Section 16.01 or Section 14.03(g), a Company Notice in accordance with Section 15.01(a), a Fundamental Change Company Notice in accordance with Section 15.02(c) or a notice of a Make-Whole Fundamental Change in accordance with Section 14.03(a), in each case, when due and such failure continues for a period of five Business Days;
(e) failure by the Company to comply with its obligations under Article 11;
(f) failure by the Company for 60 days after written notice from the Trustee or by the Trustee at the request of the Holders of at least 25% in aggregate principal amount of the Notes then outstanding has been received by the Company to comply with any of its other agreements contained in the Notes or this Indenture;
(g) default by the Company or any Significant Subsidiary of the Company with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of US$25 million (or the foreign currency equivalent thereof) in the aggregate of the Company and/or any such Significant Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise;
(h) a final judgment for the payment of US$25 million (or the foreign currency equivalent thereof) or more (excluding any amounts covered by insurance) rendered against the Company or any Significant Subsidiary of the Company, which judgment is not paid, bonded or otherwise discharged or stayed within 60 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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(i) the Company or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or any such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any such Significant Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or
(j) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 30 consecutive days.
Section 6.02 Acceleration; Rescission and Annulment. If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 6.01(i) or Section 6.01(j) with respect to the Company or any of its Significant Subsidiaries), unless the principal of all of the Notes shall have already become due and payable, the Trustee may by notice in writing to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.04, by notice in writing to the Company and to the Trustee may, and the Trustee at the written request of such Holders shall (subject to being indemnified and/or secured and/or pre-funded to its reasonable satisfaction), declare 100% of the principal of, and accrued and unpaid interest on, all the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, notwithstanding anything contained in this Indenture or in the Notes to the contrary. If an Event of Default specified in Section 6.01(i) or Section 6.01(j) with respect to the Company or any of its Significant Subsidiaries occurs and is continuing, 100% of the principal of, and accrued and unpaid interest on, all Notes shall become and shall automatically be immediately due and payable without any action on the part of the Trustee and the Holders. If an Event of Default occurs and is continuing, all agents of the Company appointed under this Indenture will be required to act on the direction of the Trustee.
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The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest to the extent that payment of such interest is enforceable under applicable law, and on such principal at the rate per annum borne by the Notes plus one percent) and amounts due to the Trustee pursuant to Section 7.06, and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all existing Events of Default under this Indenture, other than the nonpayment of the principal of and accrued and unpaid interest on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.09, then and in every such case (except as provided in the immediately succeeding sentence) the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon. Notwithstanding anything to the contrary herein, no such waiver or rescission and annulment shall extend to or shall affect any Default or Event of Default resulting from (i) the nonpayment of the principal of, or accrued and unpaid interest on, any Notes, (ii) a failure to repurchase any Notes when required or (iii) a failure to pay or deliver, as the case may be, the consideration due upon conversion of the Notes.
Section 6.03 Additional Interest. Notwithstanding anything in this Indenture or in the Notes to the contrary, to the extent the Company elects, the sole remedy for Event of Default relating to the Companys failure to comply with its obligations as set forth in Section 4.06(b) shall after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the Notes at a rate equal to:
(a) 0.25% per annum of the principal amount of the Notes outstanding for each day during the period beginning on, and including, the date on which such an Event of Default first occurs and ending on the earlier of (i) the date on which such Event of Default is cured or validly waived and (ii) the 180th day immediately following, and including, the date on which such Event of Default first occurred; and
(b) if such Event of Default has not been cured or validly waived prior to the 181st day immediately following, and including, the date on which such Event of Default first occurred, 0.50% per annum of the principal amount of the Notes outstanding for each day during the period beginning on, and including, the 181st day immediately following, and including, the date on which such an Event of Default first occurred and ending on the earlier of (i) the date on which such Event of Default is cured or validly waived and (ii) the 271st day immediately following, and including, the date on which such Event of Default first occurred.
Interest payable pursuant to this Section 6.03 shall be in addition to, not in lieu of, any Additional Interest payable pursuant to Section 4.06(d) or Section 4.06(e). In no event shall Additional Interest accrue on the Notes on any day under this Indenture (taking any Additional Interest payable pursuant to this Section 6.03 together with any Additional Interest payable pursuant to Section 4.06(d) and Section 4.06(e)) at an annual rate accruing in excess of 0.50%, in the aggregate, for any violation or Default caused by the Companys failure to be current in respect of its Exchange Act reporting obligations. If the Company so elects, such Additional Interest shall be payable in the same manner and on the same dates as regular interest on the Notes. On the 271st day after such Event of Default (if the Event of Default with respect to the Companys obligations under Section 4.06(b) is not cured or waived prior to such 271st day), the Notes will be subject to acceleration as provided in Section 6.02. In the event the Company does not elect to pay Additional Interest following an Event of Default in accordance with this Section 6.03 or the Company elected to make such payment but does not pay the Additional Interest when due, the Notes shall be subject to acceleration as provided in Section 6.02.
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In order to elect to pay Additional Interest as the sole remedy during the first 180 days after the occurrence of any Event of Default described in the immediately preceding paragraph, the Company must notify in writing all Holders of the Notes, the Trustee and the Paying Agent of such election prior to the beginning of such 180-day period. Upon the failure to timely give such notice, the Notes shall be immediately subject to acceleration as provided in Section 6.02.
Section 6.04 Payments of Notes on Default; Suit Therefor. If an Event of Default described in clause (a) or (b) of Section 6.01 shall have occurred, the Company shall, upon demand of the Trustee acting in its own discretion or at the request of Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.04 and subject to indemnity and/or security and/or pre-funding reasonably satisfactory to the Trustee, pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal and interest, if any, with interest on any overdue principal and interest, if any, at the rate per annum borne by the Notes at such time plus one percent, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 7.06. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.
In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the event of any other judicial proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.04, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and accrued and unpaid interest, if any, in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents and to take such other actions as it may deem necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, properly incurred expenses, properly incurred disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due to the Trustee under Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Holders to make such payments to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for compensation, properly incurred expenses, advances and properly incurred disbursements, including agents and counsel fees and expenses, and including any other amounts due to the Trustee under Section 7.06, incurred by it up to the date of such distribution. To the extent that such payment of compensation, properly incurred expenses, advances and properly incurred disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.
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Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting such Holder or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name or as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the compensation, properly incurred expenses, properly incurred disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings.
In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of any waiver pursuant to Section 6.09 or any rescission and annulment pursuant to Section 6.02 or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Holders, and the Trustee shall, subject to any determination in such proceeding, be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Holders, and the Trustee shall continue as though no such proceeding had been instituted.
Section 6.05 Application of Monies Collected by Trustee. Any monies collected by the Trustee pursuant to this Article 6 with respect to the Notes shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:
First, to the payment of all amounts due to the Trustee, including to its agents and counsel, hereunder and any payments due to the Paying Agent, the Conversion Agent and the Note Registrar;
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Second, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on, the Notes in default in the order of the date due of the payments of such interest, with interest (to the extent that such interest has been collected by the Trustee) upon such overdue payments at the rate per annum borne by the Notes at such time (including, without duplication, any additional interest on such overdue payments pursuant to Section 6.04), such payments to be made ratably to the Persons entitled thereto;
Third, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount (including, if applicable, the payment of the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price and any cash due upon conversion) then owing and unpaid upon the Notes for principal and interest, if any, with interest on the overdue principal and, to the extent that such interest has been collected by the Trustee, upon overdue installments of interest at the rate per annum borne by the Notes at such time plus one percent, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal (including, if applicable, the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price and the cash due upon conversion) and interest without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal (including, if applicable, the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price) and accrued and unpaid interest; and
Fourth, to the payment of the remainder, if any, to the Company.
Section 6.06 Proceedings by Holders. Except to enforce the right to receive payment of principal (including, if applicable, the Redemption Price, the Repurchase Price or Fundamental Change Repurchase Price) or interest when due, or the right to receive payment or delivery of the consideration due upon conversion, no Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless:
(a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as herein provided;
(b) Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder;
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(c) such Holders shall have offered to the Trustee such security and/or indemnity and/or pre-funding reasonably satisfactory to it against any loss, liability or expense to be incurred therein or thereby;
(d) the Trustee for 60 days after its receipt of such notice, request and offer of security and/or indemnity and/or pre-funding, shall have neglected or refused to institute any such action, suit or proceeding; and
(e) no written direction that, in the opinion of the Trustee, is inconsistent with such written request shall have been given to the Trustee by the Holders of a majority of the aggregate principal amount of the Notes then outstanding within such 60-day period pursuant to Section 6.09, it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders (except as otherwise provided herein), it being understood that the Trustee shall have no obligation to determine whether any action or inaction would prejudice the rights of any Holder. For the protection and enforcement of this Section 6.06, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of any Note, the right of any Holder to receive payment or delivery, as the case may be, of (x) the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, (y) accrued and unpaid interest on, and (z) the consideration due upon conversion of, such Note, on or after the respective due dates expressed or provided for in such Note or in this Indenture, or to institute suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates against the Company shall not be impaired or affected without the consent of such Holder.
Section 6.07 Proceedings by Trustee. In case of an Event of Default, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.
Section 6.08 Remedies Cumulative and Continuing. Except as provided in the last paragraph of Section 2.06, all powers and remedies given by this Article 6 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and, subject to the provisions of Section 6.06, every power and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.
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Section 6.09 Direction of Proceedings and Waiver of Defaults by Majority of Holders. The Holders of a majority of the aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to Notes; provided, however, that (a) such direction shall not be in conflict with any rule of law or with this Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. The Trustee may refuse to follow any direction that would involve the Trustee in personal liability, or if it is not provided with security and/or indemnity and/or pre-funding to its reasonable satisfaction, or that the Trustee determines is unduly prejudicial to the rights of any other Holder. In addition, the Trustee will not be required to expend its own funds under any circumstances. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of accrued and unpaid interest on, or the principal (including, if applicable, the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.02, (ii) a failure by the Company to pay or deliver, or cause to be delivered, as the case may be, the consideration due upon conversion of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.09, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
Section 6.10 Notice of Defaults and Events of Default. If a Default or Event of Default occurs and is continuing and is notified in writing to the Trustee, the Trustee shall, within 90 days after the occurrence and continuance of such Default or Event of Default or, if later, within 15 days after written notice thereof is provided to the Trustee, mail to all Holders (at the Companys expense) as the names and addresses of such Holders appear upon the Note Register, notice of all Defaults so notified in writing, unless such Defaults shall have been cured or waived before the giving of such notice; provided that the Trustee shall not be deemed to have knowledge of any occurrence of a Default or Event of Default unless it has received written notice thereof, with a reference to this Indenture. Except in the case of a Default in the payment of the principal of (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable), or accrued and unpaid interest on, any of the Notes or a Default in the payment or delivery of the consideration due upon conversion, the Trustee shall be protected in withholding such notice if and so long as the Trustee (in its sole discretion) in good faith determines that the withholding of such notice is in the interests of the Holders.
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Section 6.11 Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess costs, including attorneys fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 6.11 (to the extent permitted by law) shall not apply to any suit instituted by or against the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.04, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or accrued and unpaid interest on any Note (including, but not limited to, the Redemption Price and the Repurchase Price and Fundamental Change Repurchase Price with respect to the Notes being repurchased as provided in this Indenture) on or after the due date expressed or provided for in such Note or to any suit for the enforcement of the right to convert any Note in accordance with the provisions of Article 14.
ARTICLE 7
CONCERNING THE TRUSTEE
Section 7.01 Duties and Responsibilities of Trustee. The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations will be read into the Indenture against the Trustee. In case an Event of Default, of which the Trustee has actual written notice, has occurred that has not been cured or waived the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such persons own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity and/or security and/or pre-funding reasonably satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request or direction. The Trustee shall not be deemed to have knowledge of any Event of Default unless it has received an actual written notice thereof.
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No provision of this Indenture shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred:
(i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of gross negligence and willful misconduct on the part of the Trustee, as proven in a non-appealable decision of a court of competent jurisdiction, the Trustee may conclusively and without liability rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of any mathematical calculations or other facts, statements, opinions or conclusions stated therein);
(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved in a non-appealable decision in a court of competent jurisdiction that the Trustee was grossly negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority of the aggregate principal amount of the Notes at the time outstanding determined as provided in Section 8.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;
(d) whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section;
(e) the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any Paying Agent or any records maintained by any co-Note Registrar with respect to the Notes;
(f) if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively and without liability rely on its failure to receive such notice as reason to act as if no such event occurred;
(g) [RESERVED];
(h) in the event that the Trustee is also acting as Note Registrar, Paying Agent or Conversion Agent hereunder, the rights, immunities, privileges, disclaimers from liability and protections (including the right to compensation and indemnity) afforded to the Trustee pursuant to this Article 7 shall also be afforded to such Note Registrar, Paying Agent or Conversion Agent;
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(i) the Trustee shall have no duty to inquire, no duty to determine and no duty to monitor as to the performance of the Companys covenants in this Indenture or the financial performance of the Company; the Trustee shall be entitled to assume, until it has received written notice in accordance with this Indenture, that the Company is properly performing its duties hereunder;
(j) [RESERVED];
(k) the Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity and/or security and/or pre-funding reasonably satisfactory to it against any costs, expenses and liabilities that might be incurred by it in compliance with such requests or direction.
(l) before the Trustee acts or refrains from acting, it may require an Officers Certificate or an Opinion of Counsel prepared and delivered at the cost of the Company conforming to Section 17.06 and the Trustee and the Agents may rely conclusively on such certificate or opinion and will not be liable for any action it takes or omits to take in good faith in reliance on such Officers Certificate or Opinion of Counsel;
(m) in connection with the exercise by it of its trusts, powers, authorities or discretions (including, without limitation, any modification, waiver, authorization or determination), the Trustee shall have regard to the general interests of the Holders as a class but shall not have regard to any interests arising from circumstances particular to individual Holders (whatever their number) and in particular, but without limitation, shall not have regard to the consequences of the exercise of its trusts, powers, authorities or discretions for individual Holders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any country, state or territory; and
(n) the Trustee is not obliged to do or omit to do anything which in its reasonable opinion, would or may be illegal or would constitute a breach of any fiduciary duty or duty of confidentiality, or any law, rule, regulation, or any decree, order or judgment of any court, or practice, request, direction, notice, announcement or similar action (whether or not having the force of law) of any relevant government, government agency, regulatory authority, stock exchange or self-regulatory organization to which the Trustee is subject. The Trustee may without liability do anything which is, in its reasonable opinion, necessary to comply with any such law, directive or regulations.
None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.
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Section 7.02 Reliance on Documents, Opinions, Etc. Except as otherwise provided in Section 7.01:
(a) the Trustee may conclusively and without liability rely and shall be fully protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, Note, coupon or other paper or document (whether in its original or facsimile form) believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and require an Opinion of Counsel and any advice of such counsel or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation;
(e) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, delegates, custodians, nominees or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, delegate, representative, custodian, nominee or attorney appointed by it with due care hereunder;
(f) the permissive rights of the Trustee enumerated herein shall not be construed as duties;
(g) under no circumstances and notwithstanding any contrary provision included herein, neither the Trustee, the Paying Agent, the Conversion Agent nor the Note Registrar shall be responsible or liable for special, indirect, punitive, or consequential damages or loss of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether any of them have been advised of the likelihood of such loss or damage and regardless of the form of action; this provision shall remain in full force and effect notwithstanding the discharge of the Notes, the termination of this Indenture or the resignation, replacement or removal of the Trustee, the Paying Agent, the Conversion Agent and the Note Registrar;
(h) the Trustee, the Paying Agent, the Conversion Agent and the Note Registrar may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction or, to the extent applicable, of New York; furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or New York or if, in its opinion based on such legal advice, it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that jurisdiction or in New York or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power;
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(i) the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;
(j) the Trustee may request that the Company deliver Officers Certificates setting forth the names of individuals and their titles and specimen signatures of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers Certificates may be signed by any Person authorized to sign an Officers Certificate, as the case may be, including any Person specified as so authorized in any such certificate previously delivered and not superseded;
(k) the Trustee shall not be responsible or liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers;
(l) the Trustee shall not be responsible for any inaccuracy in the information obtained from the Company or for any inaccuracy or omission in the records which may result from such information or any failure by the Trustee to perform its duties as set forth herein as a result of any inaccuracy or incompleteness of such information; and
(m) neither the Trustee nor any agent thereof shall have any responsibility or liability for any actions taken or not taken by the Depositary.
Section 7.03 No Responsibility for Recitals, Etc. The recitals, statements, warranties and representations contained herein and in the Notes (except in the Trustees certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the accuracy or correctness of the same or for any failure by the Company or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information, or the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture. Notwithstanding the generality of the foregoing, each Holder shall be solely responsible for making its own independent appraisal of, and investigation into, the financial condition, creditworthiness, condition, affairs, status and nature of the Company, and the Trustee shall not at any time have any responsibility for the same and each Holder shall not rely on the Trustee in respect thereof.
Section 7.04 Trustee, Paying Agents, Conversion Agents or Note Registrar May Own Notes. The Trustee, any Paying Agent, any Conversion Agent or Note Registrar, in its individual or any other capacity, may engage in business and contractual relationships with the Company or its Affiliates and may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee, Paying Agent, Conversion Agent or Note Registrar, and nothing herein shall obligate any of them to account for any profits earned from any business or transactional relationship.
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Section 7.05 Monies to Be Held in Trust. All monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money held by the Trustee in trust or by the Paying Agent hereunder need not be segregated from other funds except to the extent required by law. Neither the Trustee nor the Paying Agent shall be under any liability for interest on any money received by it hereunder.
Section 7.06 Compensation and Expenses of Trustee. (a) The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to in writing between the Trustee and the Company (which sum shall be paid free and clear of deduction and withholding on account of taxation, set-off and counterclaim), and the Company will pay or reimburse the Trustee upon its request for all expenses, disbursements and advances properly incurred or made by the Trustee in accordance with any of the provisions of this Indenture in any capacity thereunder (including the compensation and the properly incurred expenses and disbursements of its agents and counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as shall have been caused by its gross negligence or willful misconduct as proven in a non-appealable decision in a court of competent jurisdiction. The Company also covenants to indemnify the Trustee (which for the purposes of this Section 7.06 shall be deemed to include its officers, directors, agents, counsel and employees) in any capacity under this Indenture (including without limitation as Note Registrar, Conversion Agent and Paying Agent) and any other document or transaction entered into in connection herewith, and to hold it harmless against, any loss, claim, damage, liability or expense (whether arising from third party claims or claims by or against the Company) incurred without gross negligence or willful misconduct on the part of the Trustee, its officers, directors, agents, counsel or employees, as the case may be, as proven in a non-appealable decision of a court of competent jurisdiction, and arising out of or in connection with the acceptance or administration of this Indenture or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the process of enforcing this indemnity. The obligations of the Company under this Section 7.06 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall be secured by a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by the Trustee, except, subject to the effect of Section 6.05, funds held in trust herewith for the benefit of the Holders of particular Notes. The Trustees right to receive payment of any amounts due under this Section 7.06 shall not be subordinate to any other liability or indebtedness of the Company. The indemnity under this Section 7.06(a) is payable upon demand by the Trustee. The obligation of the Company under this Section 7.06(a) shall survive the satisfaction and discharge of the Notes, the termination or discharge of this Indenture and the resignation, replacement or removal or the Trustee. The indemnification provided in this Section 7.06(a) shall extend to the officers, directors, agents, counsel and employees of the Trustee. Subject to Section 7.02(e), any gross negligence or willful misconduct of any agent, delegate, attorney or representative, in each case, of the Trustee, shall not affect indemnification of the Trustee.
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Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee and its agents incur expenses or render services after an Event of Default specified in Section 6.01(i) or Section 6.01(j) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws. If a Default or Event of Default shall have occurred or if the Trustee finds it expedient or necessary or is requested by the Company and/or the Holders to undertake duties which are of an exceptional nature or otherwise outside the scope of the Trustees normal duties under this Indenture, the Company will pay such additional remuneration as the Company and the Trustee may separately agree in writing.
The obligations of the Company under this paragraph (a) shall survive the payment of the Notes, the termination or discharge of the Indenture and the resignation, replacement or removal of the Trustee, the Paying Agent, the Conversion Agent and the Note Registrar.
(b) The Paying Agent, the Conversion Agent and the Note Registrar shall be entitled to the compensation to be agreed upon in writing with the Company for all services rendered by it under this Indenture, and the Company agrees promptly to pay such compensation and to reimburse the Paying Agent, the Conversion Agent and the Note Registrar for its out-of-pocket expenses (including fees and expenses of counsel) properly incurred by it in connection with the services rendered by it under this Indenture.
Section 7.07 [Reserved.]
Section 7.08 Eligibility of Trustee. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least US$50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 7.09 Resignation or Removal of Trustee. (a) The Trustee may at any time resign by giving 30 days written notice of such resignation to the Company and by mailing notice thereof to the Holders at their addresses as they shall appear on the Note Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation to the Holders, the resigning Trustee may at the expense of the Company petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide holder of a Note or Notes for at least six months may, subject to the provisions of Section 6.11, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
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(b) In case at any time any of the following shall occur:
(i) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.08 and shall fail to resign after written request therefor by the Company or by any such Holder, or
(ii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in either case, the Company may by a Board Resolution remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.11, any Holder who has been a bona fide holder of a Note or Notes for at least six months may, on behalf of himself or herself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, as determined in accordance with Section 8.04, may at any time remove the Trustee and nominate a successor trustee that shall be deemed appointed as successor trustee unless within ten days after notice to the Company of such nomination the Company objects thereto, in which case the Trustee so removed or any Holder, upon the terms and conditions and otherwise as in Section 7.09(a) provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 7.09 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.10.
Section 7.10 Acceptance by Successor Trustee. Any successor trustee appointed as provided in Section 7.09 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of Section 7.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a senior claim to which the Notes are hereby made subordinate on all money or property held or collected by such trustee as such, except for funds held in trust for the benefit of Holders of particular Notes, to secure any amounts then due to it pursuant to the provisions of Section 7.06.
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No successor trustee shall accept appointment as provided in this Section 7.10 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 7.08.
Upon acceptance of appointment by a successor trustee as provided in this Section 7.10, each of the Company and the successor trustee, at the written direction and at the expense of the Company shall mail or cause to be mailed notice of the succession of such trustee hereunder to the Holders at their addresses as they shall appear on the Note Register. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company.
Section 7.11 Succession by Merger, Etc. Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee (including the administration of this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided that in the case of any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee such corporation or other entity shall be eligible under the provisions of Section 7.08.
In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor trustee hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Notes in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.
Section 7.12 Trustees Application for Instructions from the Company. Any application by the Trustee for written instructions from the Company (other than with regard to any action proposed to be taken or omitted to be taken by the Trustee that affects the rights of the Holders of the Notes under this Indenture) may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer that the Company has indicated to the Trustee should receive such application actually receives such application, unless any such officer shall have consented in writing to any earlier date), unless, prior to taking any such action (or the effective date in the case of any omission), the Trustee shall have received written instructions in accordance with this Indenture in response to such application specifying the action to be taken or omitted.
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ARTICLE 8
CONCERNING THE HOLDERS
Section 8.01 Action by Holders. Whenever in this Indenture it is provided that the Holders of a specified percentage of the aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by Holders in person or by agent or proxy appointed in writing, or (b) by the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Article 9, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Holders. Whenever the Company or the Trustee solicits the taking of any action by the Holders of the Notes, the Company or the Trustee may fix, but shall not be required to, in advance of such solicitation, a date as the record date for determining Holders entitled to take such action. The record date if one is selected shall be not more than fifteen days prior to the date of commencement of solicitation of such action.
Section 8.02 Proof of Execution by Holders. Subject to the provisions of Section 7.01, Section 7.02 and Section 9.05, proof of the execution of any instrument by a Holder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note Register or by a certificate of the Note Registrar. The record of any Holders meeting shall be proved in the manner provided in Section 9.06.
Section 8.03 Who Are Deemed Absolute Owners. The Company, the Trustee, any Paying Agent, any Conversion Agent and any Note Registrar may deem the Person in whose name a Note shall be registered upon the Note Register to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal of and (subject to Section 2.03) accrued and unpaid interest on such Note, for the purpose of conversion of such Note and for all other purposes; and neither the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor any Note Registrar shall be affected by any notice to the contrary. All such payments or deliveries so made to any Holder for the time being, or upon its order, shall be valid, and, to the extent of the sums or ADSs so paid or delivered, effectual to satisfy and discharge the liability for monies payable or ADSs deliverable upon any such Note.
Notwithstanding anything to the contrary in this Indenture or the Notes following an Event of Default, any Holder of a beneficial interest in a Global Note may directly enforce against the Company, without the consent, solicitation, proxy, authorization or any other action of the Depositary or any other Person, such Holders right to exchange such beneficial interest for a Note in certificated form in accordance with the provisions of this Indenture.
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Section 8.04 Company-Owned Notes Disregarded. In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Indenture, Notes that are owned by the Company, by any Subsidiary or Consolidated Variable Interest Entity thereof or by any Affiliate of the Company or any Subsidiary or Consolidated Variable Interest Entity thereof shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action only Notes in respect of which a Responsible Officer is notified in writing shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.04 if the pledgee shall establish its right to so act with respect to such Notes and that the pledgee is not the Company, a Subsidiary or Consolidated Variable Interest Entity thereof or an Affiliate of the Company or a Subsidiary or Consolidated Variable Interest Entity thereof. Within five days of acquisition of the Notes by any of the above described persons or entities or at the request of the Trustee, the Company shall furnish to the Trustee promptly an Officers Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and, subject to Section 7.01, the Trustee shall be entitled to accept such Officers Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.
Section 8.05 Revocation of Consents; Future Holders Bound. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the Holders of the percentage of the aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note that is shown by the evidence to be included in the Notes the Holders of which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Note. Except as aforesaid, any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor or upon registration of transfer thereof, irrespective of whether any notation in regard thereto is made upon such Note or any Note issued in exchange or substitution therefor or upon registration of transfer thereof.
ARTICLE 9
HOLDERS MEETINGS
Section 9.01 Purpose of Meetings. A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article 9 for any of the following purposes:
(a) to give any notice to the Company or to the Trustee or to give any directions to the Trustee permitted under this Indenture, or to consent to the waiving of any Default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article 6;
(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article 7;
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(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 10.02; or
(d) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture or under applicable law.
Section 9.02 Call of Meetings by Trustee. The Trustee may (in its sole discretion and without obligation) at any time call a meeting of Holders to take any action specified in Section 9.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to Section 8.01, shall be mailed to Holders of such Notes at their addresses as they shall appear on the Note Register. Such notice shall also be mailed to the Company. Such notices shall be mailed not less than 20 nor more than 90 days prior to the date fixed for the meeting.
Any meeting of Holders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the Holders of all Notes then outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.
Section 9.03 Call of Meetings by Company or Holders. In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% of the aggregate principal amount of the Notes then outstanding, shall have requested the Company to call a meeting of Holders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Company shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Trustee or such Holders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 9.01, by mailing notice thereof as provided in Section 9.02.
Section 9.04 Qualifications for Voting. To be entitled to vote at any meeting of Holders a Person shall (a) be a Holder of one or more Notes on the record date pertaining to such meeting or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more Notes on the record date pertaining to such meeting. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.
Section 9.05 Regulations. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.
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The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 9.03, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Notes represented at the meeting and entitled to vote at the meeting.
Subject to the provisions of Section 8.04, at any meeting of Holders each Holder or proxyholder shall be entitled to one vote for each US$1,000 principal amount of Notes held or represented by him or her; provided, however, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by it or instruments in writing as aforesaid duly designating it as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 9.02 or Section 9.03 may be adjourned from time to time by the Holders of a majority of the aggregate principal amount of Notes represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.
Minutes shall be made of all resolutions and proceedings at every meeting and, if purporting to be signed by the chairman of that meeting or of the next succeeding meeting of Holders of the Notes, shall be conclusive evidence of the matters in them. Until the contrary is proved every meeting for which minutes have been so made and signed shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted at it to have been duly passed and transacted.
Section 9.06 Voting. The vote upon any resolution submitted to any meeting of Holders shall be by written ballot on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the outstanding principal amount of the Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 9.02. The record shall show the principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters therein stated.
Section 9.07 No Delay of Rights by Meeting. Nothing contained in this Article 9 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Notes.
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ARTICLE 10
SUPPLEMENTAL INDENTURES
Section 10.01 Supplemental Indentures Without Consent of Holders. The Company, when authorized by the resolutions of the Board of Directors, and the Trustee, at the Companys expense and direction, may from time to time and at any time amend or supplement this Indenture or the Notes for one or more of the following purposes:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to provide for the assumption by a Successor Company of the obligations of the Company under this Indenture and the Notes pursuant to Article 11;
(c) to add guarantees or any credit enhancements of similar nature with respect to the Notes;
(d) to secure the Notes;
(e) to add to the covenants or Events of Defaults of the Company for the benefit of the Holders or surrender any right or power conferred upon the Company;
(f) upon the occurrence of any transaction or event described in Section 14.07(a), to (i) provide that the Notes are convertible into Reference Property, subject to Section 14.02, and (ii) effect the related changes to the terms of the Notes described under Section 14.07(a), in each case, in accordance with Section 14.07;
(g) to make any change that does not adversely affect the rights of any Holder;
(h) to comply with the rules of the Depositary, including the DTC;
(i) to evidence and provide for the acceptance of the appointment of a successor trustee in accordance with this Indenture; or
(j) to conform the provisions of this Indenture or the Notes to the Description of the Notes section of the Offering Memorandum.
Upon the written request of the Company, the Trustee is hereby authorized to join with the Company in the execution of any such amendment or supplement to this Indenture or the Notes, to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustees own rights, duties or immunities under this Indenture or otherwise. The Trustee shall seek an Officers Certificate and an Opinion of Counsel, at the Companys expense, that any such amendment or supplement to this Indenture or the Notes is authorized and permitted by the terms of this Indenture, that all conditions precedent hereto have been satisfied, and that such supplemental Indenture or amendment is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
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Any amendment or supplement to this Indenture or the Notes authorized by the provisions of this Section 10.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 10.02.
Section 10.02 Supplemental Indentures with Consent of Holders. With the consent (evidenced as provided in Article 8) of the Holders of at least a majority of the aggregate principal amount of the Notes then outstanding (determined in accordance with Article 8 and including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, Notes), the Company, when authorized by the resolutions of the Board of Directors, and the Trustee, at the Companys expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or any supplemental indenture or of modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder of an outstanding Note affected, no such supplemental indenture shall:
(a) reduce the amount of Notes whose Holders must consent to an amendment or waiver;
(b) alter the manner of calculation or rate of accrual of interest on any Note or change the time of payment of any instalment of interest on any Note;
(c) reduce the principal of or change the Maturity Date of any Note;
(d) make any change that adversely affects the conversion rights of any Notes;
(e) reduce the Repurchase Price payable on the Repurchase Date, the Fundamental Change Repurchase Price or the Redemption Price of any Note or amend or modify in any manner adverse to the Holders the Companys obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;
(f) make any Note payable in a currency other than U.S. dollars or change any Notes place of payment;
(g) change the ranking of the Notes;
(h) impair the right of any Holder to receive payment of principal and interest on such Holders Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holders Note;
(i) change the Companys obligation to pay Additional Amounts on any Note; or
(j) modify provisions with respect to modification, amendment or waiver (including waiver of events of default), except to increase the percentage required for modification, amendment or waiver or to provide for consent of each affected Holder of Notes.
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Upon the written request of the Company, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid and subject to Section 10.05, the Trustee shall join with the Company in the execution of such supplemental indenture unless (i) the Trustee has not received an Officers Certificate and an Opinion of Counsel that such supplemental indenture is authorized and permitted by the terms of this Indenture and not contrary to law or (ii) such supplemental indenture affects the Trustees own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.
Holders do not need under this Section 10.02 to approve the particular form of any proposed supplemental indenture. It shall be sufficient if such Holders approve the substance thereof. After any supplemental indenture becomes effective under Section 10.01 or Section 10.02, the Company shall mail to the Holders a notice briefly describing such supplemental indenture. However, the failure to give such notice to all the Holders, or any defect in the notice, will not impair or affect the validity of the supplemental indenture.
Section 10.03 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Article 10, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 10.04 Notation on Notes. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 10 may, at the Companys expense, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may, at the Companys expense, be prepared and executed by the Company, authenticated by the Trustee upon receipt of a Company Order and the Opinion of Counsel contemplated in Section 2.04 and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding.
Section 10.05 Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee. In addition to the documents required by Section 17.06, the Trustee shall receive an Officers Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article 10, is permitted or authorized by this Indenture, is the valid and binding obligation of the Company and enforceable against it in accordance with its terms, and is not contrary to law.
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ARTICLE 11
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 11.01 Company May Consolidate, Etc. on Certain Terms. Subject to the provisions of Section 11.02, the Company shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of the consolidated assets of the Company, its Subsidiaries and its Consolidated Variable Interest Entities, taken as a whole, to another Person, unless:
(a) the resulting, surviving or transferee Person (the Successor Company), if not the Company, shall be a corporation organized and existing under the laws of the United States, any State thereof, the District of Columbia, the Cayman Islands, the British Virgin Islands or Bermuda and the Successor Company (if not the Company) shall expressly assume, by supplemental indenture, all of the obligations of the Company under the Notes and this Indenture (including, for the avoidance of doubt, the obligation to pay Additional Amounts pursuant to Section 4.07);
(b) if the Company will not be the Successor Company, the Company shall have, at or prior to the effective date of such transaction, delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that the execution and delivery of the supplemental indenture do not conflict with the requirements set forth in the Indenture and that all conditions precedent to the execution and delivery of such supplemental indenture have been satisfied and such opinion of counsel also stating that the Notes and this Indenture are the legal, valid, binding and enforceable obligations of the Successor Company;
(c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture with respect to the Notes;
(d) the Company shall have undertaken commercially reasonable efforts to restructure the Notes so that, after giving effect to such transaction, any conversion of the Notes will be exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(9) thereof;
(e) if, upon the occurrence of any such transaction, (x) the Notes would become convertible pursuant to the terms of this Indenture into securities issued by an issuer other than the Successor Company, and (y) such Successor Company is a wholly owned subsidiary of the issuer of such securities into which the Notes have become convertible, such other issuer shall fully and unconditionally guarantee on a senior basis the Successor Companys obligations under the Notes; and
(f) other conditions specified in this Indenture are met.
For purposes of this Section 11.01, the sale, conveyance, transfer or lease of all or substantially all of the assets of one or more Subsidiaries or Consolidated Variable Interest Entities of the Company to another Person, which properties and assets, if held by the Company instead of such Subsidiaries or Consolidated Variable Interest Entities, would constitute all or substantially all of the assets of the Company on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the consolidated assets of the Company to another Person.
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Section 11.02 Successor Corporation to Be Substituted. In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and accrued and unpaid interest on all of the Notes (including, for the avoidance of doubt, any Additional Amounts), the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes (including, for the avoidance of doubt, any Additional Amounts) and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such Successor Company (if not the Company) shall succeed to and, except in the case of a lease of all or substantially all of the Companys properties and assets, shall be substituted for the Company, with the same effect as if it had been named herein as the party of the first part. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the Officers of the Company to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Article 11 the Person named as the Company in the first paragraph of this Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture and the Notes.
In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.
Section 11.03 Opinion of Counsel to Be Given to Trustee. No consolidation, merger, sale, conveyance, transfer or lease shall be effective unless the Trustee shall receive an Officers Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the provisions of this Article 11, that all conditions precedent thereto have been satisfied and that the Notes and such supplemental indenture are the legal, valid and binding obligations of the Successor Company, enforceable against it in accordance with its terms, subject to customary assumptions, qualifications, and exceptions.
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ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 12.01 Indenture and Notes Solely Corporate Obligations. No recourse for the payment of the principal of or accrued and unpaid interest on any Note, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Note, nor because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, Officer or director or Subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE 13
INTENTIONALLY OMITTED
ARTICLE 14
CONVERSION OF NOTES
Section 14.01 Conversion Privilege. Subject to and upon compliance with the provisions of this Article 14, each Holder of a Note shall have the right, at such Holders option, to convert all or any portion (if the portion to be converted is US$1,000 principal amount or an integral multiple thereof) of such Note at any time prior to the close of business on the second Scheduled Trading Day immediately preceding the Maturity Date into ADSs at an initial conversion rate of 106.2756 ADSs (subject to adjustment as provided in this Article 14, the Conversion Rate) per US$1,000 principal amount of Notes (subject to the settlement provisions of Section 14.02, the Conversion Obligation).
Section 14.02 Conversion Procedure; Settlement Upon Conversion.
(a) Upon conversion of any Note, the Company shall cause to be delivered to the converting Holder, in respect of each US$1,000 principal amount of Notes being converted, a number of ADSs equal to the Conversion Rate in effect immediately prior to the close of business on the relevant Conversion Date, together with a cash payment, if applicable, in lieu of any fractional ADSs (Fractional ADSs) (assuming delivery of the maximum number of ADSs due upon conversion that do not represent a fractional ADS) in accordance with subsection (j) of this Section 14.02, on the third Business Day immediately following the relevant Conversion Date; provided that, if a Conversion Date occurs (i) following the Regular Record Date immediately preceding the Maturity Date, subject to clause (ii) below, the Company shall cause such delivery (and payment, if applicable) to be made on the Maturity Date or (ii) after the Ordinary Shares have been replaced by the Reference Property consisting solely of cash in accordance with Section 14.07, the Company shall cause the consideration due in respect of the conversion to be paid to the converting Holder on the tenth Business Day immediately following the related Conversion Date. For the avoidance of doubt, neither the Trustee nor any Agent shall have any responsibility to deliver ADSs upon conversion of any Note to any person or deal with cash payments in relation to conversions.
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(b) Subject to Section 14.02(e), before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time and, if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.02(h), and complete, manually sign and deliver a duly completed irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a Notice of Conversion) and (ii) in the case of a Physical Note (1) complete, manually sign and deliver a duly completed irrevocable Notice of Conversion to the Conversion Agent at the specified office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any ADSs to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the specified office of the Conversion Agent and the Trustee, (3) if required, furnish appropriate endorsements and transfer documents and (4) if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.02(h). The Trustee (and if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this Article 14 on the Conversion Date for such conversion. No Notice of Conversion with respect to any Notes may be delivered and no Notes may be surrendered by a Holder for conversion thereof if such Holder has also delivered a Repurchase Notice or Fundamental Change Repurchase Notice to the Company in respect of such Notes and not validly withdrawn such Repurchase Notice or Fundamental Change Repurchase Notice in accordance with Section 15.03. A Notice of Conversion shall be deposited at the office of any Conversion Agent on any Business Day from 9:00 a.m. to 3:00 p.m. at the location of the Conversion Agent to which such Notice of Conversion is delivered. Any Notice of Conversion and any Physical Note (if issued) deposited outside the hours specified or on a day that is not a Business Day at the location of the Conversion Agent shall for all purposes be deemed to have been deposited with that Conversion Agent between 9:00 a.m. and 3:00 p.m. on the next Business Day.
If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered. None of the Agents of the Trustee shall have any responsibility whatsoever with respect to the issuance and delivery of the ADSs to the converting Holder.
(c) A Note shall be deemed to have been converted immediately prior to the close of business on the date (the Conversion Date) that the Holder has complied with the requirements set forth in subsection (b) above. The Company shall issue or cause to be issued, and deliver or cause to be delivered to such Holder, or such Holders nominee or nominees, certificates or a book-entry transfer through the Depositary for the full number of ADSs to which such Holder shall be entitled in satisfaction of the Companys Conversion Obligation.
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(d) In case any Note shall be surrendered for partial conversion, the Company shall execute and instruct the Trustee who shall authenticate and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.
(e) If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp, issue, transfer or similar tax due on the delivery of the ADSs upon conversion of the Notes (or the issuance of the underlying Ordinary Shares), unless the tax is due because the Holder requests any ADSs (or such Ordinary Shares) to be issued in a name other than the Holders name, in which case the Holder shall pay that tax. The Company may refuse to deliver the certificates representing the ADSs (or the Ordinary Shares) being issued in a name other than the Holders name until the Company receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence. The Company shall pay and/or indemnify each Holder and beneficial owners of Notes and/or ADSs issuable upon conversion of the Notes for applicable fees and expenses payable to, or withheld by, the ADS Depositary (including, for the avoidance of doubt, by means of a reduction in any amounts or property payable or deliverable in respect of any ADSs or in the value of deposited amounts or property represented by any ADSs) for the issuance of all ADSs deliverable upon conversion (including, with respect to any ADSs subject to restricted CUSIP and/or restrictive legends upon issuance, any of the foregoing with respect to the removal of any such restrictions from such ADSs).
(f) Except as provided in Section 14.04, no adjustment shall be made for dividends on any ADSs delivered upon the conversion of any Note as provided in this Article 14.
(g) Upon the conversion of an interest in a Global Note, the Trustee shall make a notation on such Global Note as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.
(h) Upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest, if any, except as set forth below. The Companys settlement of the Conversion Obligation shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but not including, the relevant Conversion Date. As a result, accrued and unpaid interest, if any, to, but not including, the relevant Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited. Notwithstanding the foregoing, if Notes are converted after the close of business on a Regular Record Date, Holders of such Notes as of the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. Notes surrendered for conversion during the period from the close of business on any Regular Record Date to the open of business on the immediately following Interest Payment Date must be accompanied by funds equal to the amount of interest payable on the Notes so converted; provided that no such payment shall be required (1) for conversions following the Regular Record Date immediately preceding the Maturity Date; (2) if the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the second Business Day immediately succeeding the corresponding Interest Payment Date; (3) if the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the second Business Day immediately succeeding the corresponding Interest Payment Date; or (4) to the extent of any Defaulted Amounts, if any Defaulted Amounts exist at the time of conversion with respect to such Note. Therefore, for the avoidance of doubt, all Holders of record as of the close of business on the Regular Record Date immediately preceding the Maturity Date shall receive the full interest payment due on the Maturity Date in cash regardless of whether their Notes have been converted following such Regular Record Date.
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(i) The Person in whose name the certificate for any ADSs delivered upon conversion is registered shall be treated as a holder of record of such ADSs as of the close of business on the relevant Conversion Date. Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.
(j) The Company shall not issue any Fractional ADS upon conversion of the Notes and shall instead pay cash in lieu of any Fractional ADS deliverable upon conversion based on the Last Reported Sale Price of the ADSs on the relevant Conversion Date (or if such Conversion Date is not a Trading Day, the immediately preceding Trading Day).
(k) In accordance with the Deposit Agreement or the Restricted Deposit Agreement, as applicable, the Company shall issue to the ADS Custodian such Ordinary Shares required for the issuance of the ADSs upon conversion of the Notes, plus written delivery instructions (if requested by the ADS Depositary or the ADS Custodian) for such ADSs, and any other information or documentation and shall comply with the Deposit Agreement and the Restricted Deposit Agreement (as the case may be), in each case, as required by the ADS Depositary or the ADS Custodian in connection with each issue of Ordinary Shares and issuance and delivery of ADSs.
Section 14.03 Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Change. (a) If a Make-Whole Fundamental Change occurs prior to the Maturity Date and a Holder elects to convert its Notes in connection with such Make-Whole Fundamental Change, the Company shall, under the circumstances described below, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional ADSs (the Additional ADSs), as described below. A conversion of Notes shall be deemed for these purposes to be in connection with such Make-Whole Fundamental Change if the relevant Notice of Conversion is received by the Conversion Agent from, and including, the Effective Date of the Make-Whole Fundamental Change up to, and including, the Business Day immediately prior to the related Fundamental Change Repurchase Date (or, in the case of a Make-Whole Fundamental Change that would have been a Fundamental Change but for the proviso in clause (b) of the definition thereof, the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental Change). The Company shall provide written notification to Holders and the Trustee (and the Conversion Agent, if other than the Trustee) of the Effective Date of any Make-Whole Fundamental Change and issue a press release announcing such Effective Date no later than five Business Days after such Effective Date.
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(b) Upon surrender of Notes for conversion in connection with a Make-Whole Fundamental Change, the Company shall cause to be delivered ADSs, including the Additional ADSs, in accordance with Section 14.02; provided, however, that if, at the effective time of a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Reference Property following such Make-Whole Fundamental Change is composed entirely of cash, for any conversion of Notes following the Effective Date of such Make-Whole Fundamental Change, the Conversion Obligation shall be calculated based solely on the ADS Price for the transaction and shall be deemed to be an amount of cash per US$1,000 principal amount of converted Notes equal to the Conversion Rate (including any adjustment for Additional ADSs), multiplied by such ADS Price.
(c) The number of Additional ADSs, if any, by which the Conversion Rate shall be increased shall be determined by reference to the table below, based on the date on which the Make-Whole Fundamental Change occurs or becomes effective (the Effective Date) and the price (the ADS Price) paid (or deemed to be paid) per ADS in the Make-Whole Fundamental Change. If the holders of the ADSs receive in exchange for their ADSs only cash in a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the ADS Price shall be the cash amount paid per ADS. Otherwise, the ADS Price shall be the average of the Last Reported Sale Prices of the ADSs over the five Trading Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the Make-Whole Fundamental Change.
(d) The ADS Prices set forth in the column headings of the table below shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise adjusted. The adjusted ADS Prices shall equal the ADS Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment giving rise to the ADS Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional ADSs set forth in the table below shall be adjusted in the same manner and at the same time as the Conversion Rate as set forth in Section 14.04.
(e) The following table sets forth the number of Additional ADSs to be received per US$1,000 principal amount of Notes pursuant to this Section 14.03 for each ADS Price and Effective Date set forth below:
ADS Price | ||||||||||||||||||||||||||||||||||||||||||||||||
Effective Date |
$7.38 | $8.00 | $8.50 | $9.00 | $9.41 | $10.00 | $12.50 | $15.00 | $20.00 | $25.00 | $30.00 | $35.00 | ||||||||||||||||||||||||||||||||||||
July 1, 2019 |
29.2257 | 24.5400 | 21.4388 | 18.8178 | 16.9628 | 14.6790 | 8.3624 | 5.0513 | 2.0115 | 0.8036 | 0.2743 | 0.0511 | ||||||||||||||||||||||||||||||||||||
July 1, 2020 |
29.2257 | 24.5400 | 21.4388 | 18.8178 | 16.9628 | 14.5580 | 7.9312 | 4.6420 | 1.7640 | 0.6700 | 0.2100 | 0.0306 | ||||||||||||||||||||||||||||||||||||
July 1, 2021 |
29.2257 | 24.5400 | 21.4388 | 18.2444 | 16.0691 | 13.4960 | 7.0352 | 4.0247 | 1.4650 | 0.5176 | 0.1377 | 0.0086 | ||||||||||||||||||||||||||||||||||||
July 1, 2022 |
29.2257 | 19.7875 | 17.1447 | 14.9156 | 13.3422 | 11.4100 | 6.1392 | 3.4693 | 1.1720 | 0.3648 | 0.0707 | 0.0000 | ||||||||||||||||||||||||||||||||||||
July 1, 2023 |
29.2257 | 19.7875 | 17.1447 | 14.8944 | 13.1456 | 11.0270 | 5.4712 | 2.8620 | 0.8280 | 0.2040 | 0.0167 | 0.0000 | ||||||||||||||||||||||||||||||||||||
July 1, 2024 |
29.2257 | 19.7875 | 17.1400 | 14.2767 | 12.3146 | 9.9900 | 4.3064 | 1.9773 | 0.4435 | 0.0664 | 0.0000 | 0.0000 | ||||||||||||||||||||||||||||||||||||
July 1, 2025 |
29.2257 | 19.7875 | 15.7212 | 12.3100 | 10.0680 | 7.5500 | 2.3736 | 0.8473 | 0.1195 | 0.0024 | 0.0000 | 0.0000 | ||||||||||||||||||||||||||||||||||||
July 1, 2026 |
29.2257 | 18.7250 | 11.3718 | 4.8356 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 |
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The exact ADS Prices and Effective Dates may not be set forth in the table above, in which case:
(i) if the ADS Price is between two ADS Prices in the table above or the Effective Date is between two Effective Dates in the table, the number of Additional ADSs shall be determined by a straight-line interpolation between the number of Additional ADSs set forth for the higher and lower ADS Prices and the earlier and later Effective Dates, as applicable, based on a 365-day year;
(ii) if the ADS Price is greater than US$35.00 per ADS (subject to adjustment in the same manner as the ADS Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional ADSs shall be added to the Conversion Rate; and
(iii) if the ADS Price is less than US$7.38 per ADS (subject to adjustment in the same manner as the ADS Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional ADSs shall be added to the Conversion Rate.
Notwithstanding the foregoing, in no event shall the Conversion Rate per US$1,000 principal amount of Notes exceed 135.5013 ADSs, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.04.
(f) Nothing in this Section 14.03 shall prevent an adjustment to the Conversion Rate pursuant to Section 14.04.
(g) If the Holder elects to convert its Notes in connection with the Companys election to redeem the Notes in respect of a Change in Tax Law pursuant to Section 16.01, the Conversion Rate shall be increased by a number of additional ADSs determined pursuant to this Section 14.03(g). The Company shall settle conversions of Notes as described in Section 14.02 and, for the avoidance of doubt, pay Additional Amounts, if any, with respect to any such conversion.
A conversion shall be deemed to be in connection with the Companys election to redeem the Notes in respect of a Change in Tax Law if such conversion occurs during the period from, and including, the date the Company provides the related notice of redemption to Holders until the close of business on the Business Day immediately preceding the Redemption Date (or, if the Company fails to pay the Redemption Price, such later date on which the Company pays the Redemption Price).
Simultaneously with providing such notice of redemption, the Company shall publish a notice containing this information in a newspaper of general circulation in The City of New York or publish the information on the Companys website or through such other public medium as the Company may use at that time.
The number of additional ADSs by which the Conversion Rate will be increased in the event the Company elects to redeem the Notes in respect of a Change in Tax Law will be determined by reference to the table in clause (e) above based on the Redemption Reference Date and the Redemption Reference Price (each as defined below), but determined for purposes of this Section 14.03(g) as if (x) the Holder had elected to convert its Notes in connection with a Make-Whole Fundamental Change, (y) the applicable Redemption Reference Date were the Effective Date as specified in clause (c) above and (z) the applicable Redemption Reference Price were the ADS price as specified in clause (c) above (and subject, for the avoidance of doubt, to the two paragraphs immediately following such table). For this purpose, the date on which the Company delivers notice of redemption is the Redemption Reference Date and the average of the Last Reported Sale Prices of the ADSs over the five Trading Day period immediately preceding the date the Company delivers such notice of redemption is the Redemption Reference Price.
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Section 14.04 Adjustment of Conversion Rate. If the number of Ordinary Shares represented by the ADSs is changed, after the date of this Indenture, for any reason other than one or more of the events described in this Section 14.04, the Company shall make an appropriate adjustment to the Conversion Rate such that the number of Ordinary Shares represented by the ADSs upon which conversion of the Notes is based remains the same.
Notwithstanding the adjustment provisions described in this Section 14.04, if the Company distributes to holders of the Ordinary Shares any cash, rights, options, warrants, shares of Capital Stock or similar equity interest, evidences of indebtedness or other assets or property of the Company (but excluding Expiring Rights) and a corresponding distribution is not made to holders of the ADSs, but, instead, the ADSs shall represent, in addition to Ordinary Shares, such cash, rights, options, warrants, shares of Capital Stock or similar equity interest, evidences of indebtedness or other assets or property of the Company, then an adjustment to the Conversion Rate described in this Section 14.04 shall not be made until and unless a corresponding distribution (if any) is made to holders of the ADSs, and such adjustment to the Conversion Rate shall be based on the distribution made to the holders of the ADSs and not on the distribution made to the holders of the Ordinary Shares. However, in the event that the Company issues or distributes to all holders of the Ordinary Shares any Expiring Rights, notwithstanding the immediately preceding sentence, the Company shall adjust the Conversion Rate pursuant to Section 14.04(b) (in the case of Expiring Rights entitling holders of the Ordinary Shares for a period of not more than 45 calendar days after the announcement date of such issuance to subscribe for or purchase Ordinary Shares or ADSs) or Section 14.04(c) (in the case of all other Expiring Rights).
For the avoidance of doubt, if any event described in this Section 14.04 results in a change to the number of Ordinary Shares represented by the ADSs, then such a change shall be deemed to satisfy the Companys obligation to effect the relevant adjustment to the Conversion Rate on account of such an event to the extent such change reflects what a corresponding change to the Conversion Rate would have been on account of such event.
The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the ADSs and solely as a result of holding the Notes, in any of the transactions described in this Section 14.04, without having to convert their Notes, as if they held a number of ADSs equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder. Neither the Trustee nor the Conversion Agent shall have any responsibility to monitor the accuracy of any calculation of any adjustment to the Conversion Rate and the same shall be conclusive and binding on the Holders, absent manifest error. Notice of such adjustment to the Conversion Rate shall be given by the Company promptly to the Holders, the Trustee, the Paying Agent and the Conversion Agent and shall be conclusive and binding on the Holders, absent manifest error.
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(a) If the Company exclusively issues Ordinary Shares as a dividend or distribution on the Ordinary Shares, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:
CR1 | = CR0 x | OS1
| ||
OS0 |
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for the ADSs for such dividend or distribution, or immediately prior to the open of business on the effective date of such share split or share combination, as applicable; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on such Record Date or immediately after the open of business on such effective date, as applicable; | ||
OS0 | = | the number of Ordinary Shares outstanding immediately prior to the close of business on such Record Date or immediately prior to the open of business on such effective date, as applicable; and | ||
OS1 | = | the number of Ordinary Shares outstanding immediately after giving effect to such dividend, distribution, share split or share combination. |
Any adjustment made under this Section 14.04(a) shall become effective immediately after the close of business on the Record Date for the ADSs for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this Section 14.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
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(b) If the Company issues to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs) any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase Ordinary Shares (directly or in the form of ADSs) at a price per Ordinary Share that is less than the average of the Last Reported Sale Prices of the Ordinary Shares or the ADSs, as the case may be (divided by, in the case of the ADSs, the number of Ordinary Shares then represented by one ADS), for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula:
CR1 |
= CR0 x |
OS0 + X
| ||
OS0 + Y |
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for the ADSs for such issuance; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on such Record Date; | ||
OS0 | = | the number of Ordinary Shares outstanding immediately prior to the close of business on such Record Date; | ||
X | = | the total number of Ordinary Shares (directly or in the form of ADSs) deliverable pursuant to such rights, options or warrants; and | ||
Y | = | the number of Ordinary Shares equal to (i) the aggregate price payable to exercise such rights, options or warrants, divided by (ii) the quotient of (a) the average of the Last Reported Sale Prices of the ADSs over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants divided by (b) the number of Ordinary Shares then represented by one ADS. |
Any increase made under this Section 14.04(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the close of business on the Record Date for the ADSs for such issuance. To the extent that Ordinary Shares or ADSs are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of Ordinary Shares actually delivered (directly or in the form of ADSs). If such rights, options or warrants are not so issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such the Record Date for the ADSs for such issuance had not occurred.
For purposes of this Section 14.04(b), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase Ordinary Shares (directly or in the form of ADSs) at a price per Ordinary Share that is less than such average of the Last Reported Sale Prices of the Ordinary Shares or the ADSs, as the case may be (divided by, in the case of the ADSs, the number of Ordinary Shares then represented by one ADS), for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, and in determining the aggregate offering price of such Ordinary Shares or ADSs, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.
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(c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs), excluding (i) dividends, distributions or issuances as to which an adjustment was effected pursuant to Section 14.04(a) or Section 14.04(b), (ii) dividends or distributions paid exclusively in cash as to which an adjustment was effected pursuant to Section 14.04(d), and (iii) Spin-Offs as to which the provisions set forth below in this Section 14.04(c) shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities of the Company, the Distributed Property), then the Conversion Rate shall be increased based on the following formula:
CR1 |
= CR0 x |
SP0
| ||
SP0 FMV |
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for the ADSs for such distribution; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on such Record Date; | ||
SP0 | = | the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and | ||
FMV | = | the fair market value (as determined by the Board of Directors) of the Distributed Property with respect to each outstanding Ordinary Share (directly or in the form of ADSs) on the Record Date for the ADSs for such distribution. |
Any increase made under the foregoing portion of this Section 14.04(c) above shall become effective immediately after the close of business on the Record Date for the ADSs for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such distribution had not been declared. Notwithstanding the foregoing, if FMV (as defined above) is equal to or greater than SP0 (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each US$1,000 principal amount thereof, at the same time and upon the same terms as holders of the ADSs receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of ADSs equal to the Conversion Rate in effect on the Record Date for the ADSs for the distribution.
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With respect to an adjustment pursuant to this Section 14.04(c) where there has been a payment of a dividend or other distribution on the Ordinary Shares (directly or in the form of ADSs) of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a Spin-Off), the Conversion Rate shall be increased based on the following formula:
CR1 |
= CR0 x |
FMV0 + MP0
| ||
MP0 |
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the last Trading Day of the Valuation Period; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on the last Trading Day of the Valuation Period; | ||
FMV0 | = | the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Ordinary Shares (directly or in the form of ADSs) applicable to one Ordinary Share (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.01 as if references therein to the ADSs were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the Valuation Period); and | ||
MP0 | = | the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the Valuation Period. |
The adjustment to the Conversion Rate under the preceding paragraph shall occur immediately after the close of business on the last Trading Day of the Valuation Period; provided that in respect of any conversion during the Valuation Period, references in the portion of this Section 14.04(c) related to Spin-Offs to 10 Trading Days shall be deemed to be replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date of such Spin-Off to, and including, the Conversion Date in determining the Conversion Rate.
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For purposes of this Section 14.04(c) (and subject in all respect to Section 14.11), rights, options or warrants distributed by the Company to all holders of the Ordinary Shares (directly or in the form of ADSs) entitling them to subscribe for or purchase shares of the Companys Capital Stock, including Ordinary Shares (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (Trigger Event): (i) are deemed to be transferred with such Ordinary Shares (directly or in the form of ADSs); (ii) are not exercisable; and (iii) are also issued in respect of future issuances of the Ordinary Shares (directly or in the form of ADSs), shall be deemed not to have been distributed for purposes of this Section 14.04(c) (and no adjustment to the Conversion Rate under this Section 14.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 14.04(c). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 14.04(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per Ordinary Share redemption or purchase price received by a holder or holders of Ordinary Shares (directly or in the form of ADSs) with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Ordinary Shares (directly or in the form of ADSs) as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.
For purposes of Section 14.04(a), Section 14.04(b) and this Section 14.04(c), if any dividend or distribution to which this Section 14.04(c) is applicable also includes one or both of:
(A) a dividend or distribution of Ordinary Shares (directly or in the form of ADSs) to which Section 14.04(a) is applicable (the Clause A Distribution); or
(B) a dividend or distribution of rights, options or warrants to which Section 14.04(b) is applicable (the Clause B Distribution),
then (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14.04(c) is applicable (the Clause C Distribution) and any Conversion Rate adjustment required by this Section 14.04(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 14.04(a) and Section 14.04(b) with respect thereto shall then be made, except that, if determined by the Company (I) the Record Date of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Record Date of the Clause C Distribution and (II) any Ordinary Shares (directly or in the form of ADSs) included in the Clause A Distribution or Clause B Distribution shall be deemed not to be outstanding immediately prior to the close of business on such Record Date or immediately after the open of business on such effective date, as applicable within the meaning of Section 14.04(a) or outstanding immediately prior to the close of business on such Record Date within the meaning of Section 14.04(b).
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(d) If any cash dividend or distribution is made to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs), the Conversion Rate shall be adjusted based on the following formula:
CR1 |
= CR0 x |
SP0
| ||
SP0 C |
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the Record Date for the ADSs for such dividend or distribution; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on such Record Date; | ||
SP0 | = | the Last Reported Sale Price of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and | ||
C | = | the amount in cash per Ordinary Share the Company distributes to all or substantially all holders of the Ordinary Shares (directly or in the form of ADSs). |
Any increase pursuant to this Section 14.04(d) shall become effective immediately after the close of business on the Record Date for the ADSs for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if C (as defined above) is equal to or greater than SP0 (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each US$1,000 principal amount of Notes, at the same time and upon the same terms as holders of the ADSs, the amount of cash that such Holder would have received if such Holder owned a number of ADSs equal to the Conversion Rate on the Record Date for the ADSs for such cash dividend or distribution.
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(e) If the Company or any of its Subsidiaries or Consolidated Variable Interest Entities makes a payment in respect of a tender or exchange offer for the Ordinary Shares (directly or in the form of ADSs), to the extent that the cash and value of any other consideration included in the payment per Ordinary Share exceeds the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires, the Conversion Rate shall be increased based on the following formula:
CR1 |
= CR0 x |
AC + (SP1 x OS1)
| ||
OS0 x SP1 |
where,
CR0 | = | the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; | ||
CR1 | = | the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; | ||
AC | = | the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for Ordinary Shares or ADSs, as the case may be, purchased in such tender or exchange offer; | ||
OS0 | = | the number of Ordinary Shares outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer); | ||
OS1 | = | the number of Ordinary Shares outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all Ordinary Shares or ADSs, as the case may be, accepted for purchase or exchange in such tender or exchange offer); and | ||
SP1 | = | the average of the Last Reported Sale Prices of the ADSs (divided by the number of Ordinary Shares then represented by one ADS) over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires. |
The adjustment to the Conversion Rate under this Section 14.04(e) shall occur at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; provided that in respect of any conversion within the 10 Trading Days immediately following, and including, the Trading Day next succeeding the expiration date of any tender or exchange offer, references in this Section 14.04(e) with respect to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the expiration date of such tender or exchange offer to, and including, the Conversion Date in determining the Conversion Rate. For the avoidance of doubt, no adjustment to the Conversion Rate under this Section 14.04(e) shall be made if such adjustment would result in a decrease in the Conversion Rate.
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(f) [RESERVED]
(g) Except as stated herein, the Company shall not adjust the Conversion Rate for the issuance of Ordinary Shares or ADSs or any securities convertible into or exchangeable for Ordinary Shares or ADSs or the right to purchase Ordinary Shares or ADSs or such convertible or exchangeable securities.
(h) In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this Section 14.04, and to the extent permitted by applicable law and subject to the applicable rules of The New York Stock Exchange and any other securities exchange on which any of the Companys securities are then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Companys best interest, and the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of the Ordinary Shares or the ADSs or rights to purchase Ordinary Shares or ADSs in connection with a dividend or distribution of Ordinary Shares or ADSs (or rights to acquire Ordinary Shares or ADSs) or similar event.
(i) Notwithstanding anything to the contrary in this Article 14, the Conversion Rate shall not be adjusted:
(i) upon the issuance of any Ordinary Shares or ADSs pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Companys securities and the investment of additional optional amounts in Ordinary Shares or ADSs under any plan;
(ii) upon the issuance of any Ordinary Shares or ADSs or options or rights to purchase those Ordinary Shares or ADSs pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Companys Subsidiaries or Consolidated Variable Interest Entities;
(iii) upon the issuance of any Ordinary Shares or ADSs pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection and outstanding as of the date the Notes were first issued;
(iv) solely for a change in the par value of the Ordinary Shares; or
(v) for accrued and unpaid interest, if any.
(j) All calculations and other determinations under this Article 14 shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000) of an ADS.
(k) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee (and the Conversion Agent if not the Trustee) an Officers Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officers Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to each Holder at its last address appearing on the Note Register of this Indenture. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.
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(l) For purposes of this Section 14.04, the number of Ordinary Shares at any time outstanding shall not include Ordinary Shares held in the treasury of the Company (directly or in the form of ADSs) so long as the Company does not pay any dividend or make any distribution on Ordinary Shares held in the treasury of the Company (directly or in the form of ADSs), but shall include Ordinary Shares issuable in respect of scrip certificates issued in lieu of fractions of Ordinary Shares.
(m) For purposes of this Section 14.04, the effective date means the first date on which the ADSs trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.
Section 14.05 Adjustments of Prices. Whenever any provision of this Indenture requires the Company to calculate the Last Reported Sale Prices, the ADS Price for purposes of a Make-Whole Fundamental Change or the Redemption Reference Price for purposes of a redemption of the Notes in connection with a Change in Tax Law over a span of multiple days, the Board of Directors shall make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective pursuant to Section 14.04, or any event requiring an adjustment to the Conversion Rate pursuant to Section 14.04 where the Record Date, effective date or expiration date, as the case may be, of the event occurs, at any time during the period when such Last Reported Sale Prices or ADS Prices are to be calculated.
Section 14.06 Ordinary Shares to Be Fully Paid. The Company shall provide, free from preemptive rights, out of its authorized but unissued Ordinary Shares or Ordinary Shares held in treasury, a sufficient number of Ordinary Shares that corresponds to the number of ADSs due upon conversion of the Notes from time to time as such Notes are presented for conversion (assuming that at the time of computation of such number of Ordinary Shares, all such Notes would be converted by a single Holder).
Section 14.07 Effect of Recapitalizations, Reclassifications and Changes of the Ordinary Shares.
(a) In the case of:
(i) any recapitalization, reclassification or change of the Ordinary Shares (other than changes resulting from a subdivision or combination),
(ii) any consolidation, merger, combination or similar transaction involving the Company,
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(iii) any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Companys Subsidiaries and Consolidated Variable Interest Entities substantially as an entirety or
(iv) any statutory share exchange,
in each case, as a result of which the Ordinary Shares would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a Merger Event), then, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 10.01(f) providing that, at and after the effective time of such Merger Event, the right to convert each US$1,000 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of ADSs equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the Reference Property, with each unit of Reference Property meaning the kind and amount of Reference Property that a holder of one ADS is entitled to receive) upon such Merger Event; provided, however, that at and after the effective time of the Merger Event the number of ADSs otherwise deliverable upon conversion of the Notes in accordance with Section 14.02 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of ADSs would have been entitled to receive in such Merger Event.
If the Merger Event causes the Ordinary Shares to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of holder election), then (i) the Reference Property into which the Notes will be convertible shall be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of the ADSs and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one ADS. The Company shall provide written notice to Holders, the Trustee and the Conversion Agent (if other than the Trustee) of such weighted average as soon as practicable after such determination is made.
Such supplemental indenture described in the second immediately preceding paragraph shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is practicable to the adjustments provided for in this Article 14. If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the Company or the successor or purchasing Person, as the case may be, in such Merger Event, then such other Person shall also execute such supplemental indenture, and such supplemental indenture shall contain such additional provisions to protect the interests of the Holders of the Notes, including the right of Holders to require the Company to repurchase their Notes upon a Fundamental Change pursuant to Section 15.02 and the right of Holders to require the Company to repurchase their Notes on the Repurchase Date pursuant to Section 15.01, as the Board of Directors shall reasonably consider necessary by reason of the foregoing.
(b) [RESERVED]
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(c) The Company shall not become a party to any Merger Event unless its terms are consistent with this Section 14.07. None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into ADSs as set forth in Section 14.01 and Section 14.02 prior to the effective date of such Merger Event.
(d) The above provisions of this Section shall similarly apply to successive Merger Events.
Section 14.08 Certain Covenants. (a) The Company covenants that all ADSs delivered upon conversion of Notes, and all Ordinary Shares represented by such ADSs, will be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.
(b) The Company covenants that, if any ADSs to be provided for the purpose of conversion of Notes hereunder, or any Ordinary Shares represented by such ADSs, require registration with or approval of any governmental authority under any federal or state law before such ADSs may be validly issued upon conversion, the Company will, to the extent then permitted by the rules and interpretations of the Commission, secure such registration or approval, as the case may be.
(c) The Company further covenants that if at any time the ADSs shall be listed on any national securities exchange or automated quotation system the Company will list and keep listed, so long as the ADSs shall be so listed on such exchange or automated quotation system, any ADSs deliverable upon conversion of the Notes.
(d) The Company further covenants to take all actions and obtain all approvals and registrations as are necessary or appropriate with respect to the conversion of the Notes into ADSs and the issuance, and deposit into the ADS facility, of the Ordinary Shares represented by such ADSs. The Company also undertakes to maintain at all times, for the benefit of the Holders, a number of ADSs available for issuance under a registration statement on Form F-6 equal to at least the maximum number of ADSs potentially required to satisfy conversions of the Notes from time to time as Notes are presented for conversion (with such maximum number of ADSs determined for such purpose assuming the maximum number of additional ADSs have been added to the applicable Conversion Rate pursuant to Section 14.02 hereof). In addition, the Company further covenants to provide Holders with a reasonably detailed description of the mechanics for the delivery of ADSs upon conversion of Notes as set forth in the Deposit Agreement or the Restricted Deposit Agreement (including pursuant to a certain procedures letter for the issuance of restricted ADSs contemplated by Section 11 of the Restricted Deposit Agreement) upon request.
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Section 14.09 Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any ADSs, or of any securities, property or cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any ADSs or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion, the accuracy or inaccuracy of any mathematical calculation or formulae under this Indenture, whether by the Company or any Person so authorized by the Company for such purpose under this Indenture or the failure by the Company to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.07 relating either to the kind or amount of ADSs or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 14.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.
Section 14.10 Notice to Holders Prior to Certain Actions. In case of any:
(a) action by the Company or one of its Subsidiaries that would require an adjustment in the Conversion Rate pursuant to Section 14.04 or Section 14.11;
(b) Merger Event; or
(c) voluntary or involuntary dissolution, liquidation or winding-up of the Company or any of its Subsidiaries;
then, in each case (unless notice of such event is otherwise required pursuant to another provision of this Indenture), the Company shall cause to be filed with the Trustee and the Conversion Agent (if other than the Trustee) and to be mailed to each Holder at its address appearing on the Note Register, as promptly as possible but in any event at least 20 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action by the Company or one of its Subsidiaries or, if a record is not to be taken, the date as of which the holders of Ordinary Shares or ADSs, as the case may be, of record are to be determined for the purposes of such action by the Company or one of its Subsidiaries, or (ii) the date on which such Merger Event, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Ordinary Shares or ADSs, as the case may be, of record shall be entitled to exchange their Ordinary Shares or ADSs, as the case may be, for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding-up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such action by the Company or one of its Subsidiaries, Merger Event, dissolution, liquidation or winding-up.
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Section 14.11 Stockholder Rights Plans. To the extent that the Company has a rights plan in effect upon conversion of the Notes, each ADS delivered upon such conversion shall be entitled to receive (either directly or in respect of the Ordinary Shares underlying such ADSs) the appropriate number of rights, if any, and the certificates representing the ADSs delivered upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time. However, if, prior to any conversion, the rights have separated from the Ordinary Shares underlying the ADSs in accordance with the provisions of the applicable stockholder rights plan, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all or substantially all holders of the Ordinary Shares Distributed Property as provided in Section 14.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.
Section 14.12 Termination of Depositary Receipt Program. If the Ordinary Shares cease to be represented by American Depositary Shares issued under a depositary receipt program sponsored by the Company, all references in this Indenture to the ADSs shall be deemed to have been replaced by a reference to the number of Ordinary Shares (and other property, if any) represented by the ADSs on the last day on which the ADSs represented the Ordinary Shares and as if the Ordinary Shares and the other property had been distributed to holders of the ADSs on that day. In addition, all references to the Last Reported Sale Price of the ADSs will be deemed to refer to the Last Reported Sale Price of the Ordinary Shares, and other appropriate adjustments, including adjustments to the Conversion Rate, will be made to reflect such change. In making such adjustments, where currency translations between U.S. dollars and any other currency are required, the exchange rate in effect on the date of determination will apply.
ARTICLE 15
REPURCHASE OF NOTES AT OPTION OF HOLDERS
Section 15.01 Repurchase at Option of Holders.
(a) Each Holder shall have the right, at such Holders option, to require the Company to repurchase for cash on July 1, 2022 (the Repurchase Date), all of such Holders Notes, or any portion thereof that is an integral multiple of US$1,000 principal amount, at a repurchase price (the Repurchase Price) that is equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the Repurchase Date; provided that any such accrued and unpaid interest shall be paid not to the Holders submitting the Notes for repurchase on the Repurchase Date but instead to the Holders of such Notes at the close of business on the Regular Record Date immediately preceding the Repurchase Date. Not later than 20 Business Days prior to the Repurchase Date, the Company shall mail a notice (the Company Notice) by first class mail to the Trustee, to the Paying Agent and to each Holder at its address shown in the Note Register of the Note Registrar (and to beneficial owners as required by applicable law and to the Conversion Agent if other than the Trustee). The Company Notice shall include a Form of Repurchase Notice to be completed by a holder and shall state:
(i) the last date on which a Holder may exercise its repurchase right pursuant to this Section 15.01 (the Repurchase Expiration Time);
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(ii) the Repurchase Price;
(iii) the Repurchase Date;
(iv) the name and address of the Conversion Agent and Paying Agent;
(v) that the Notes with respect to which a Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Repurchase Notice in accordance with the terms of this Indenture;
(vi) that the Holder shall have the right to withdraw any Notes surrendered prior to the Repurchase Expiration Time; and
(vii) the procedures a Holder must follow to exercise its repurchase rights under this Section 15.01 and a brief description of those rights.
At the Companys request, the Trustee shall give such notice in the Companys name and at the Companys expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company.
Simultaneously with providing the Company Notice, the Company shall publish a notice containing the information included in the Company Notice in a newspaper of general circulation in The City of New York or publish such information on the Companys website or through such other public medium as the Company may use at that time.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.01.
Repurchases of Notes under this Section 15.01 shall be made, at the option of the Holder thereof, upon:
(A) delivery to the Paying Agent (or other agent appointed for such purpose) by the Holder of a duly completed notice (the Repurchase Notice) in the form set forth in Attachment 3 to the Form of Note attached hereto as Exhibit A, if the Notes are Physical Notes, or in compliance with the Depositarys procedures for surrendering interests in global notes, if the Notes are Global Notes, in each case during the period beginning at any time from the open of business on the date that is 20 Business Days prior to the Repurchase Date until the close of business on the Business Day immediately preceding the Repurchase Date; and
(B) delivery of the Notes, if the Notes are Physical Notes, to the Trustee at any time after delivery of the Repurchase Notice (together with all necessary endorsements) at the Corporate Trust Office of the Trustee, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Repurchase Price therefor.
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Each Repurchase Notice shall state:
(A) in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;
(B) the portion of the principal amount of the Notes to be repurchased, which must be US$1,000 or an integral multiple thereof; and
(C) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture;
provided, however, that if the Notes are Global Notes, the Repurchase Notice must comply with appropriate Depositary procedures.
Notwithstanding anything herein to the contrary, any Holder delivering to the Trustee the Repurchase Notice contemplated by this Section 15.01 shall have the right to withdraw, in whole or in part, such Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Repurchase Date by delivery of a duly completed written notice of withdrawal to the Trustee in accordance with Section 15.03.
The Trustee shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof.
No Repurchase Notice with respect to any Notes may be delivered and no Note may be surrendered for repurchase pursuant to this Section 15.01 by a Holder thereof to the extent such Holder has also delivered a Fundamental Change Repurchase Notice with respect to such Note in accordance with Section 15.02 and not validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section 15.03.
(b) Notwithstanding the foregoing, no Notes may be repurchased by the Company at the option of the Holders on the Repurchase Date if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such Repurchase Date (except in the case of an acceleration resulting from a default by the Company in the payment of the Repurchase Price with respect to such Notes). The Trustee will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a default by the Company in the payment of the Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn.
Section 15.02 Repurchase at Option of Holders Upon a Fundamental Change. (a) If a Fundamental Change occurs at any time, each Holder shall have the right, at such Holders option, to require the Company to repurchase for cash all of such Holders Notes, or any portion thereof that is equal to US$1,000 or an integral multiple of US$1,000, on the Business Day (the Fundamental Change Repurchase Date) notified in writing by the Company as set forth in Section 15.02(c) that is not less than 20 Business Days or more than 35 Business Days following the date of the Fundamental Change Company Notice at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the Fundamental Change Repurchase Price), unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this Article 15. The Trustee and the Conversion Agent, Paying Agent or any other agent appointed for such purpose shall have no responsibility to determine the Fundamental Change Repurchase Price.
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(b) Repurchases of Notes under this Section 15.02 shall be made, at the option of the Holder thereof, upon:
(i) delivery to the Paying Agent (or other agent appointed for this purpose) by a Holder of a duly completed notice (the Fundamental Change Repurchase Notice) in the form set forth in Attachment 2 to the Form of Note attached hereto as Exhibit A, if the Notes are Physical Notes, or in compliance with the Depositarys procedures for surrendering interests in global notes, if the Notes are Global Notes, in each case on or before the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date; and
(ii) delivery of the Notes, if the Notes are Physical Notes, to the Trustee at any time after delivery of the Fundamental Change Repurchase Notice (together with all necessary endorsements for transfer) at the Corporate Trust Office, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor.
The Fundamental Change Repurchase Notice in respect of any Notes to be repurchased shall state:
(i) in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;
(ii) the portion of the principal amount of Notes to be repurchased, which must be US$1,000 or an integral multiple thereof; and
(iii) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture;
provided, however, that if the Notes are Global Notes, the Fundamental Change Repurchase Notice must comply with appropriate Depositary procedures.
Notwithstanding anything herein to the contrary, any Holder delivering to the Trustee the Fundamental Change Repurchase Notice contemplated by this Section 15.02 shall have the right to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date by delivery of a duly completed written notice of withdrawal to the Trustee in accordance with Section 15.03.
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The Trustee shall promptly notify the Company of the receipt by it of any Fundamental Change Repurchase Notice or written notice of withdrawal thereof.
No Fundamental Change Repurchase Notice with respect to any Notes may be delivered and no Note may be surrendered by a Holder for repurchase thereof if such Holder has also surrendered a Repurchase Notice in accordance with Section 15.01 and not validly withdrawn such Repurchase Notice in accordance with Section 15.03.
(c) On or before the 20th calendar day after the occurrence of the effective date of a Fundamental Change, the Company shall provide to all Holders, the Trustee (and the Conversion Agent, Paying Agent and any other agent appointed for this purpose, in each case, if other than the Trustee) a written notice (the Fundamental Change Company Notice) of the occurrence of the effective date of the Fundamental Change and of the repurchase right at the option of the Holders arising as a result thereof. In the case of Physical Notes, such notice shall be by first class mail or, in the case of Global Notes, such notice shall be delivered in accordance with the applicable procedures of the Depositary. Simultaneously with providing such notice, the Company shall publish a notice containing the information set forth in the Fundamental Change Company Notice in a newspaper of general circulation in The City of New York or publish such information on the Companys website or through such other public medium as the Company may use at that time. Each Fundamental Change Company Notice shall specify:
(i) the events causing the Fundamental Change and whether such events also constitute a Make-Whole Fundamental Change;
(ii) the effective date of the Fundamental Change;
(iii) the last date on which a Holder may exercise the repurchase right pursuant to this Article 15;
(iv) the Fundamental Change Repurchase Price;
(v) the Fundamental Change Repurchase Date;
(vi) the name and address of the Trustee, the Paying Agent, the Conversion Agent or any other agent appointed for repurchase, if applicable;
(vii) if applicable, the Conversion Rate and any adjustments to the Conversion Rate as a result of such Fundamental Change if it is a Make-Whole Fundamental Change;
(viii) if applicable, that the Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Fundamental Change Repurchase Notice in accordance with the terms of this Indenture; and
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(ix) the procedures that Holders must follow to require the Company to repurchase their Notes.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.02.
At the Companys request, the Trustee shall give such notice in the Companys name and at the Companys expense; provided, however, that, in all cases, the text of such Fundamental Change Company Notice shall be prepared by the Company.
(d) Notwithstanding the foregoing, no Notes may be repurchased by the Company on any date at the option of the Holders upon a Fundamental Change if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes). The Trustee will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Fundamental Change Repurchase Notice with respect thereto shall be deemed to have been withdrawn.
Section 15.03 Withdrawal of Repurchase Notice or Fundamental Change Repurchase Notice. (a) A Repurchase Notice or Fundamental Change Repurchase Notice may be withdrawn (in whole or in part) by means of a duly completed written notice of withdrawal delivered to the Paying Agent (or other agent appointed for such purpose) in accordance with this Section 15.03 at any time prior to the close of business on the Business Day immediately preceding the Repurchase Date or prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, as the case may be, specifying:
(i) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted,
(ii) if Physical Notes have been issued, the certificate number of the Note in respect of which such notice of withdrawal is being submitted, and
(iii) the principal amount, if any, of such Note that remains subject to the original Repurchase Notice or Fundamental Change Repurchase Notice, as the case may be, which portion must be in principal amounts of US$1,000 or an integral multiple of US$1,000;
provided, however, that if the Notes are Global Notes, the notice must comply with appropriate procedures of the Depositary.
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Section 15.04 Deposit of Repurchase Price or Fundamental Change Repurchase Price. (a)The Company will deposit with the Paying Agent (or any other agent appointed for this purpose by the Company, or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 4.04) on or prior to 10:00 a.m., New York City time, one Business Day prior to the Repurchase Date or Fundamental Change Repurchase Date, as the case may be, an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Repurchase Price or Fundamental Change Repurchase Price. Subject to receipt of funds and/or Notes by the Paying Agent (or other agent appointed for this purpose by the Company) and the Trustee, as applicable, payment for Notes surrendered for repurchase (and not withdrawn in accordance with Section 15.03) will be made on the later of (i) the Repurchase Date or Fundamental Change Repurchase Date, as the case may be, (provided the Holder has satisfied the conditions in Section 15.01 or Section 15.02, as the case may be) and (ii) the time of book-entry transfer or the delivery of such Note to the Trustee (or other Paying Agent appointed by the Company) by the Holder thereof in the manner required by Section 15.01 or Section 15.02, as applicable, by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Note Register; provided, however, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. The Paying Agent (or other agent appointed for this purpose by the Company) shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Repurchase Price or Fundamental Change Repurchase Price, as the case may be.
(b) If by 10:00 a.m., New York City time, on the Repurchase Date or Fundamental Change Repurchase Date, as the case may be, the Paying Agent (or other agent appointed for this purpose by the Company) holds money sufficient to make payment on all the Notes or portions thereof that are to be repurchased on such Repurchase Date or Fundamental Change Repurchase Date, as the case may be, then, with respect to the Notes that have been properly surrendered for repurchase and not validly withdrawn, on such Repurchase Date or Fundamental Change Repurchase Date, as the case may be, (i) such Notes will cease to be outstanding, (ii) interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee) and (iii) all other rights of the Holders of such Notes will terminate (other than the right to receive the Repurchase Price or Fundamental Change Repurchase Price, as the case may be, and previously accrued and unpaid interest upon delivery or transfer of the Notes to the extent not included in the Repurchase Price or Fundamental Change Repurchase Price, as the case may be).
(c) Upon surrender of a Note that is to be repurchased in part pursuant to Section 15.01 or Section 15.02, the Company shall execute and the Trustee, upon receipt of a Company Order, shall authenticate and deliver to the Holder a new Note in an authorized denomination equal in principal amount to the unrepurchased portion of the Note surrendered.
Section 15.05 Covenant to Comply with Applicable Laws Upon Repurchase of Notes. In connection with any repurchase offer, the Company will, if required:
(a) comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act;
(b) file a Schedule TO or other required schedule under the Exchange Act; and
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(c) otherwise comply with all federal and state securities laws in connection with any offer by the Company to repurchase the Notes;
in each case, so as to permit the rights and obligations under this Article 15 to be exercised in the time and in the manner specified in this Article 15.
ARTICLE 16
OPTIONAL REDEMPTION
Section 16.01 Optional Redemption for Changes in the Tax Law of the Relevant Taxing Jurisdiction. Other than as described in this Article 16, the Notes may not be redeemed by the Company at its option prior to maturity. If the Company has, or on the next Interest Payment Date would, become obligated to pay to the Holder of any Note Additional Amounts that are more than a de minimis amount, as a result of:
(a) any change or amendment which is not publicly announced before, and becomes effective after, June 26, 2019 (or, if the Relevant Taxing Jurisdiction was not a Relevant Taxing Jurisdiction on such date, the date on which such Relevant Taxing Jurisdiction became a Relevant Taxing Jurisdiction under this Indenture) in the laws or any rules or regulations of a Relevant Taxing Jurisdiction; or
(b) any change which is not publicly announced before, and becomes effective on or after, June 26, 2019 (or, if the Relevant Taxing Jurisdiction was not a Relevant Taxing Jurisdiction on such date, the date on which such Relevant Taxing Jurisdiction became a Relevant Taxing Jurisdiction under this Indenture) in any written interpretation, administration or application of such laws, rules or regulations by any legislative body, court, governmental agency, taxing authority or regulatory or administrative authority of such Relevant Taxing Jurisdiction (including the enactment of any legislation and the announcement or publication of any judicial decision or regulatory or administrative interpretation or determination);
(each, a Change in Tax Law), the Company may, at its option, redeem all but not part of the Notes (except in respect of certain Holders that elect otherwise as described below) at a redemption price equal to 100% of the principal amount thereof (the Redemption Price), plus accrued and unpaid interest, if any, to, but not including, the date fixed by the Company for redemption (the Redemption Date), including, for the avoidance of doubt, any Additional Amounts with respect to such Redemption Price; provided that the Company may only redeem the Notes if: (i) the Company cannot avoid such obligations by taking reasonable measures available to the Company (provided that changing the jurisdiction of incorporation of the Company shall be deemed not to be a reasonable measure); and (ii) prior to or simultaneously with the notice of redemption, the Company delivers to the Trustee an opinion of outside legal counsel of recognized standing in the Relevant Taxing Jurisdiction specializing in taxation that the Company has or will become, on or before the Redemption Date, obligated to pay such additional amounts as a result of a Change in Tax Law and an Officers Certificate stating that such obligation cannot be avoided by taking reasonable measures available to the Company. The Trustee shall and is entitled to rely upon such opinion and Officers Certificate (without further investigation and enquiry) and it shall be conclusive and binding on the Holders.
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Notwithstanding anything to the contrary in this Article 16, neither the Company nor any successor Person may redeem any of the Notes in the case that Additional Amounts are payable in respect of PRC withholding tax and any other tax collected at source at the Applicable PRC Rate or less solely as a result of the Company or its successor Person being considered a PRC tax resident under the PRC Enterprise Income Tax law.
If the Redemption Date occurs after a Regular Record Date and on or prior to the corresponding Interest Payment Date, the Company shall pay or cause the Paying Agent to pay, on or at its election, before such Interest Payment Date, the full amount of accrued and unpaid interest, if any, and any Additional Amounts with respect to such interest, due on such Interest Payment Date to the record holder of the Notes on the Regular Record Date corresponding to such Interest Payment Date, and the Redemption Price shall be equal to 100% of the principal amount of such Note to be redeemed, including, for the avoidance of doubt, any Additional Amounts with respect to such Redemption Price. The Company shall notify the Trustee in writing of its election and the date on which such interest and any Additional Amounts with respect to such interest shall be paid at the time the Company provides notice of such redemption.
The Company shall give the Trustee and Holders of Notes not less than 30 days but no more than 60 days notice of redemption prior to the Redemption Date. If the Company directs the Trustee to distribute the notice to Holders of Notes, the Company will give such direction to the Trustee at least two Business Days prior to the date on which the Company directs the Trustee to send the notice to Holders of Notes. Simultaneously with providing such notice, the Company shall publish a notice containing this information in a newspaper of general circulation in The City of New York or publish the information on the Companys website or through such other public medium as the Company may use at that time. The Redemption Date must be a Business Day. The notice of redemption may not be revoked or subject to conditions, and outstanding Notes will become due and payable at the redemption price on the redemption date specified in the related notice.
Upon receiving such notice of redemption, each Holder shall have the right to elect to not have its Notes redeemed, provided that (i) the Company shall not be obligated to pay any Additional Amounts on any payment with respect to such Notes solely as a result of such Change in Tax Law that resulted in the obligation to pay such Additional Amounts (whether upon conversion, required repurchase in connection with a Fundamental Change or on the Repurchase Date, at maturity or otherwise, and whether in ADSs, Reference Property or otherwise) after the Redemption Date (or, if the Company fails to pay the Redemption Price on the Redemption Date, such later date on which the Company pays the Redemption Price), and (ii) all future payments with respect to such Notes shall be subject to the deduction or withholding of any taxes of such Relevant Taxing Jurisdiction required by law to be deducted or withheld as a result of such Change in Tax Law; provided further that, notwithstanding the foregoing, if a Holder electing not to have its Notes redeemed converts its Notes in connection with the Companys election to redeem the Notes in respect of such Change in Tax Law pursuant to Section 14.03(g), the Company shall be obligated to pay Additional Amounts, if any, with respect to such conversion.
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A Holder electing to not have its Notes redeemed must deliver to the Trustee and the Paying Agent a written notice of election so as to be received by the Trustee and Paying Agent no later than the close of business on the Business Day immediately preceding the Redemption Date; provided that, a Holder that complies with the requirements for conversion in Section 14.02(b) shall be deemed to have delivered a notice of its election to not have its Notes so redeemed. A Holder may withdraw any notice of election (other than such a deemed notice of election in connection with a conversion) by delivering to the Trustee and the Paying Agent a written notice of withdrawal prior to the close of business on the Business Day immediately preceding the Redemption Date (or, if the Company fails to pay the Redemption Price on the Redemption Date, such later date on which the Company pays the Redemption Price). If no election is made or deemed to have been made, the Holder shall have its Notes redeemed without any further action.
No Notes may be redeemed by the Company or its successor if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to the Redemption Date.
ARTICLE 17
MISCELLANEOUS PROVISIONS
Section 17.01 Provisions Binding on Companys Successors. All the covenants, stipulations, promises and agreements of the Company contained in this Indenture shall bind its successors and assigns whether so expressed or not.
Section 17.02 Official Acts by Successor Corporation. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or Officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation or other entity that shall at the time be the lawful sole successor of the Company.
Section 17.03 Addresses for Notices, Etc. Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders on the Company shall be deemed to have been sufficiently given or made, for all purposes if given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company with the Trustee) to Tower A, AVIC Zijin Plaza, Siming District, Xiamen, Fujian Province 361000, Peoples Republic of China. Any notice, direction, request or demand hereunder to or upon the Trustee shall be given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed to Deutsche Bank Trust Company Americas, Trust and Agency Services, 60 Wall Street, 24th Floor, Mail Stop: NYC60-1630, New York, New York 10005, Attn: Corporates Team, Facsimile: (732) 578-4635.
All notices and other communications under this Indenture shall be in writing in English.
So long as and to the extent that the Notes are represented by Global Notes and such Global Notes are held by DTC, notices to owners of beneficial interests in the Global Notes may be given by delivery of the relevant notice to DTC for communication by it to entitled account holders.
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The Company hereby acknowledges that it is fully aware of the risks associated with transmitting instructions via electronic methods (including facsimile), and being aware of these risks, authorizes the Trustee to accept and act upon any instruction sent to it or any Paying Agent, Conversion Agent or Note Registrar in the Companys name or in the name of one or more appropriate authorized signers of the Company via electronic methods (including facsimile). The Trustee shall be entitled to rely on Section 7.06 of this Indenture when accepting or acting upon any instructions, communications or documents transmitted by facsimile, and shall not be liable in the event any facsimile transmission is not received, or is mutilated, illegible, interrupted, duplicated, incomplete, unauthorized or delayed for any reason, including (but not limited to) electronic or telecommunications failure.
Furthermore, notwithstanding the above, if any Trustee receives information or instructions delivered by electronic mail, other electronic method or other unsecured method of communication believed by it to be genuine and to have been sent by the proper person or persons, the Trustee or any Paying Agent, Conversion Agent or Note Registrar shall have (i) no duty or obligation to verify or confirm that the person who sent such instructions is in fact a person authorized to give instructions or directions on behalf of the Company and (ii) absent its or their gross negligence or willful misconduct, no liability for any losses, liabilities, costs or expenses incurred or sustained by any holder, the Company or any other person as a result of such reliance on or compliance with such information or instructions.
The Trustee, by notice to the Company, may designate additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to it by first class mail, postage prepaid, at its address as it appears on the Note Register and shall be sufficiently given to it if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 17.04 Governing Law; Jurisdiction. THIS INDENTURE AND EACH NOTE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS INDENTURE AND EACH NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Indenture or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.
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The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
Section 17.05 Service of Process. The Company irrevocably appoints Cogency Global Inc. located at 10 East 40th Street, 10th Floor, New York, New York 10016 as its authorized agent in the Borough of Manhattan in the City of New York upon which process may be served in any such suit or proceeding, and agrees that service of process upon such agent, and written notice of said service to the Company by the person serving the same to Tower A, AVIC Zijin Plaza, Siming District, Xiamen, Fujian Province 361000, Peoples Republic of China, shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. The Company further agrees to take any and all action as may be necessary to maintain such designation and appointment of such agent in full force and effect for a period of eight years from the date of this Indenture. If for any reason such agent shall cease to be such agent for service of process, the Company shall forthwith appoint a new agent of recognized standing for service of process in the State of New York and deliver to the Trustee a copy of the new agents acceptance of that appointment within ten Business Days of such acceptance. Nothing herein shall affect the right of the Trustee, any agent or any Holder to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other court of competent jurisdiction. To the extent that the Company has or hereafter may acquire any sovereign or other immunity from jurisdiction of any court or from any legal process with respect to itself or its property, the Company irrevocably waives such immunity in respect of its obligations hereunder or under any Note.
Section 17.06 Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee. Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers Certificate and/or Opinion of Counsel stating that such action is permitted by the terms of this Indenture; provided, however, that such Opinion of Counsel shall not be required in connection with the Notes initially issued hereunder.
Each Officers Certificate provided for, by or on behalf of the Company in this Indenture and delivered to the Trustee with respect to compliance with this Indenture (other than the Officers Certificates provided for in Section 4.09) shall include (a) a statement that the person making such certificate is familiar with the requested action and this Indenture; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statement contained in such certificate is based; (c) a statement that, in the judgment of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed judgment as to whether or not such action is permitted by this Indenture; and (d) a statement as to whether or not, in the judgment of such person, such action is permitted by this Indenture.
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Notwithstanding anything to the contrary in this Section 17.06, if any provision in this Indenture specifically provides that the Trustee shall or may receive an Opinion of Counsel in connection with any action to be taken by the Trustee or the Company hereunder, the Trustee shall be entitled to, or entitled to request, such Opinion of Counsel.
Section 17.07 Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Fundamental Change Repurchase Date, Conversion Date, Repurchase Date or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date, and no interest shall accrue in respect of the delay.
Section 17.08 No Security Interest Created. Nothing in this Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.
Section 17.09 Benefits of Indenture. Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the Holders, the parties hereto, any Paying Agent, any Conversion Agent, any Note Registrar and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 17.10 Table of Contents, Headings, Etc. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 17.11 Execution in Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.
Section 17.12 Severability. In the event any provision of this Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.
Section 17.13 Waiver of Jury Trial. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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Section 17.14 Force Majeure. In no event shall the Trustee or the Agents be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee or the Agents, as the case may be, shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 17.15 Calculations. Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under the Notes, and in no instance shall the Trustee or the Conversion Agent be responsible for making such calculations. These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the ADSs, accrued interest payable on the Notes, the number of Additional ADSs to be added to the Conversion Rate upon a Make-Whole Fundamental Change, if any, the Conversion Rate of the Notes and any adjustments thereto. The Company shall make all these calculations in good faith and, absent manifest error, the Companys calculations shall be final and binding on Holders, the Trustee, the Paying agent and the Conversion Agent. The Company shall provide a schedule of its calculations to each of the Trustee, the Paying Agent and the Conversion Agent, and each of the Trustee, the Paying Agent and the Conversion Agent is entitled to rely conclusively and without liability upon the accuracy of the Companys calculations without independent verification. The Trustee will forward the Companys calculations to any Holder of Notes upon the prior written request of that Holder at the sole cost and expense of the Company.
Section 17.16 U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The Company agrees that it will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duty executed of the date first above written.
QUDIAN INC. | ||
By:
|
/s/ Min Luo
| |
Name: Min Luo | ||
Title: Chief Executive Officer |
[Signature Page to Indenture]
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee | ||
By:
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/s/ Robert S. Peschler | |
Name: ROBERT S. PESCHLER | ||
Title: VICE PRESIDENT | ||
By:
|
/s/ Jacqueline Bartnick | |
Name: Jacqueline Bartnick | ||
Title: Director |
[Signature Page to Indenture]
EXHIBIT A
[FORM OF FACE OF NOTE]
[INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]
[THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS THE OWNER AND HOLDER OF THIS NOTE FOR ALL PURPOSES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[INCLUDE FOLLOWING LEGEND IF A RESTRICTED SECURITY]
[THIS SECURITY, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION OF THIS SECURITY AND THE CLASS A ORDINARY SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT OR CONTRACTUALLY RESTRICTED SECURITIES, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS (A) A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) OR (B) NOT A U.S. PERSON AND LOCATED OUTSIDE THE UNITED STATES (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND THAT IT AND ANY SUCH ACCOUNT IS NOT, AND HAS NOT BEEN FOR THE IMMEDIATELY PRECEDING THREE MONTHS, AN AFFILIATE OF QUDIAN INC. (THE COMPANY), AND
A-1
(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) TO A NON-U.S. PERSON LOCATED OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY, THE DEPOSITARY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
NO AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY OR PERSON THAT HAS BEEN AN AFFILIATE (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY DURING THE THREE IMMEDIATELY PRECEDING MONTHS MAY PURCHASE, OTHERWISE ACQUIRE OR OWN THIS NOTE, THE AMERICAN DEPOSITARY SHARES DELIVERABLE UPON CONVERSION HEREOF AND THE CLASS A ORDINARY SHARES REPRESENTED THEREBY, OR A BENEFICIAL INTEREST HEREIN OR THEREIN.]
A-2
QUDIAN INC.
1.00% Convertibile Senior Note due 2026
No. [ ] [Initially]1 US$
CUSIP No. [ ]
Qudian Inc., a company duly organized and validly existing under the laws of the Cayman Islands (the Company, which term includes any successor company or corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.]2 [ ]3, or registered assigns, the principal sum [as set forth in the Schedule of Exchanges of Notes attached hereto]4 [of US$[ ]]5, which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed US$345,000,000 in aggregate at any time, in accordance with the rules and procedures of the Depositary, on July 1, 2026, and interest thereon as set forth below.
This Note shall bear cash interest at the rate of 1.00% per year from, and including, July 1, 2019, or from, and including, the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until July 1, 2026. Interest is payable semi-annually in arrears on each July 1 and January 1, commencing on January 1, 2020, to Holders of record at the close of business on the preceding June 15 and December 15 (whether or not such day is a Business Day), respectively. Additional Interest will be payable as set forth in Section 4.06(d), Section 4.06(e) and Section 6.03 of the within-mentioned Indenture, and any reference to interest on, or in respect of, any Note therein shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of such Section 4.06(d), Section 4.06(e) and Section 6.03, and any express mention of the payment of Additional Interest in any provision therein shall not be construed as excluding Additional Interest in those provisions thereof where such express mention is not made.
Any Defaulted Amounts shall accrue interest per annum at the rate per annum borne by the Notes plus one percent, subject to the enforceability thereof under applicable law, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Company, at its election, in accordance with Section 2.03(c) of the Indenture.
1 | Include if a Global Note. |
2 | Include if a Global Note. |
3 | Include if a Physical Note. |
4 | Include if a Global Note. |
5 | Include if a Physical Note. |
A-3
The Company shall pay or cause the Paying Agent to pay the principal of and interest on this Note, so long as such Note is a Global Note, in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Note. As provided in and subject to the provisions of the Indenture, the Company shall pay the principal of any Notes (other than Notes that are Global Notes) at the office or agency designated by the Company for that purpose. The Company has initially designated the Deutsche Bank Trust Company Americas as its Paying Agent, Conversion Agent and Note Registrar in respect of the Notes and its agency in the Borough of Manhattan, The City of New York, as a place where Notes may be presented for payment or for registration of transfer.
Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into ADSs on the terms and subject to the limitations set forth in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Note, and any claim, controversy or dispute arising under or related to this Note, shall be construed in accordance with and governed by the laws of the State of New York (without regard to the conflicts of laws provisions thereof).
In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control and govern.
This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually by the Trustee under the Indenture.
[Remainder of page intentionally left blank]
A-4
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
QUDIAN INC. | ||
By: |
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Name: | ||
Title: |
A-5
Dated:
TRUSTEES CERTIFICATE OF AUTHENTICATION
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.
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Title: |
A-6
[FORM OF REVERSE OF NOTE]
QUDIAN INC.
1.00% Convertible Senior Note due 2026
This Note is one of a duly authorized issue of Notes of the Company, designated as its 1.00% Convertible Senior Notes due 2026 (the Notes), limited to the aggregate principal amount of US$345,000,000, subject to Section 2.10 of the Indenture, all issued or to be issued under and pursuant to an Indenture dated as of July 1 2019 (the Indenture), between the Company and Deutsche Bank Trust Company Americas, as trustee (the Trustee), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties, privileges, disclaimers from liability and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture. The Rule 144A Notes and the Regulation S Notes initially have separate CUSIP numbers and will initially not be fungible.
In the case certain Events of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, and interest on, all Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of Notes then outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture. In the case certain Events of Default relating to a bankruptcy (or similar proceeding) with respect to the Company or a Significant Subsidiary of the Company shall have occurred, the principal of, and interest on, all Notes shall automatically become immediately due and payable, as set forth in the Indenture.
Subject to the terms and conditions of the Indenture, the Company will make or cause the Paying Agent to make all payments in respect of the principal amount on the Maturity Date, the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, as the case may be, to the Holder who surrenders a Note to collect such payments in respect of the Note. The Company will pay or cause the Paying Agent to pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.
Subject to the terms and conditions of the Indenture, Additional Amounts will be paid in connection with any payments made and deliveries caused to be made by the Company or any successor to the Company under or with respect to the Indenture and the Notes, including, but not limited to, payments of principal (including, if applicable, the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price), premium, if any, payments of interest, including any Additional Interest, and deliveries of ADSs or any other consideration due on conversion of a Note (together with payments of cash for any Fractional ADS or other consideration) upon conversion of the Notes to ensure that the net amount received by the beneficial owner of the Notes after any applicable withholding, deduction or reduction (and after deducting any taxes on the Additional Amounts) will equal the amounts that would have been received by such beneficial owner had no such withholding, deduction or reduction been required.
A-7
The Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein. It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or cause to be delivered, as the case may be, the principal (including the Redemption Price, the Repurchase Price and the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.
The Notes are issuable in registered form without interest coupons in denominations of US$1,000 principal amount and integral multiples thereof. In the manner and subject to the limitations provided in the Indenture, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer or similar tax that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange.
The Company may not redeem the Notes prior to the Maturity Date, except in the event of certain Changes in Tax Law as described in Section 16.01 of the Indenture. No sinking fund is provided for the Notes.
The Holder has the right, at such Holders option, to require the Company to repurchase for cash all of such Holders Notes or any portion thereof (in principal amounts of US$1,000 or integral multiples thereof) on the Repurchase Date at a price equal to the Repurchase Price.
Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holders option, to require the Company to repurchase for cash all of such Holders Notes or any portion thereof (in principal amounts of US$1,000 or integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price.
Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, prior to the close of business on the second Scheduled Trading Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is US$1,000 principal amount of Notes or an integral multiple thereof, into ADSs at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.
Terms used in this Note and defined in the Indenture are used herein as therein defined.
A-8
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM = as tenants in common
UNIF GIFT MIN ACT = Uniform Gifts to Minors Act
CUST = Custodian
TEN ENT = as tenants by the entireties
JT TEN = joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
A-9
SCHEDULE A6
SCHEDULE OF EXCHANGES OF NOTES
QUDIAN INC.
1.00% Convertible Senior Notes due 2026
The initial principal amount of this Global Note is [ ] UNITED STATES DOLLARS (US$[ ]). The following increases or decreases in this Global Note have been made:
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6 | Include if a Global Note. |
A-10
ATTACHMENT 1
[FORM OF NOTICE OF CONVERSION]
To: | QUDIAN INC. |
Tower A, AVIC Zijin Plaza
Siming District, Xiamen
Fujian Province 361000
Peoples Republic of China
+86-592-5911580
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Conversion Agent
Deutsche Bank Trust Company Americas
c/o DB Services Americas, Inc., Attn: Reorg Dept.,
5022 Gate Parkway, Suite 200, Jacksonville, FL 32256
Ref: Cusip 0090040AA4, AT4055, Qudian Inc.
Tel. +1-877-843-9767, Email: db.reorg@db.com
Fax: +1-615-866-3889
DEUTSCHE BANK TRUST COMPANY AMERICAS, as ADS Depositary
60 Wall Street
New York, NY 10005 United States
Fax: +1-732-544-6346, Email: adr@db.com
The undersigned registered holder of this Note hereby exercises the option to convert that Note, or the portion thereof (that is US$1,000 principal amount or an integral multiple thereof) below designated, into ADSs in accordance with the terms of the Indenture referred to in this Note, and directs that any ADSs deliverable upon such conversion, together with any cash payable for any Fractional ADS, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. Terms defined in the Deposit Agreement, the Restricted Deposit Agreement or the Indenture referred to in this Notice are used herein as so defined. If any ADSs or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp, issue, transfer or similar taxes, if any, in accordance with Section 14.02(d) and Section 14.02(e) of the Indenture. Any amount required to be paid to the undersigned on account of interest accompanies this Notice.
In connection with the conversion of this Note, or the portion hereof below designated, the undersigned acknowledges, represents to and agrees with the Company that the undersigned is not an affiliate (as defined in Rule 144 under the Securities Act) of the Company and has not been an affiliate (as defined in Rule 144 under the Securities Act) during the three months immediately preceding the date hereof.
1
[The undersigned further certifies:
1. The undersigned acknowledges (and if the undersigned is acting for the account of another person, that person has confirmed that it acknowledges) that the Restricted Securities received upon conversion of this Note (or securities represented thereby) have not been and are not expected to be registered under the Securities Act.
2. The undersigned further certifies that either:
(a) The undersigned is, and at the time ADSs are delivered in conversion of its Notes will be, the holder of the ADSs and the Ordinary Shares represented thereby, and (i) the undersigned is not a U.S. person (as defined in Regulation S under the Securities Act) and is located outside the United States (within the meaning of Regulation S) and acquired, or have agreed to acquire and will have acquired, the Notes being converted and the ADSs and the Ordinary Shares represented thereby being delivered in the conversion outside the United States and (ii) the undersigned is not in the business of buying and selling securities or, if the undersigned is in such business, the undersigned did not acquire the Notes being converted from the Company or any affiliate thereof in the initial distribution of the Notes.
OR
(b) The undersigned is a broker-dealer acting on behalf of its customer; its customer has confirmed to the undersigned that it is, and at the time ADSs are delivered in conversion of the said Notes will be, the holder of the ADSs and the Ordinary Shares represented thereby, and (i) it is not a U.S. person (as defined in Regulation S under the Securities Act) and it is located outside the United States (within the meaning of Regulation S) and acquired, or have agreed to acquire and will have acquired, the Notes being converted and the ADSs and the Ordinary Shares represented thereby being delivered in the conversion outside the United States and (ii) it is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Notes being converted from the Company or any affiliate thereof in the initial distribution of the Notes.
OR
(c) The undersigned is a qualified institutional buyer (as defined in Rule 144A under the Securities Act) acting for its own account or for the account of one or more qualified institutional buyers and the undersigned is (or such account or accounts are) the sole beneficial owner(s) of the ADSs to be received upon conversion of the Notes.
3. The undersigned acknowledges that the undersigned (and any such other account) may not continue to hold or retain any interest in Conversion ADSs if the undersigned (or such other account) becomes an Affiliate of the Company.
2
4. The undersigned agrees (and if the undersigned is acting for the account of another person, that person has confirmed that it agrees) that, prior to the Resale Restriction Termination Date, the undersigned (and such other account) will not offer, sell, pledge or otherwise transfer the Restricted Security (or securities represented by such Restricted Security) except in accordance with the restrictions set forth in that legend and any applicable securities laws of the United States and any state thereof.]7
The undersigned hereby instructs the ADS Depositary to register the ADSs in the name of:
1. | Name of Beneficial Owner to receive ADSs (English): |
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2. | Address of Beneficial Owner to receive ADSs (English): |
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3. | Name of Registered Holder of the Deposited Shares: |
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4. | Number of Deposited Shares: |
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5. | Number of ADSs to be issued: |
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6. | Beneficial Owners Tax ID Number: |
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7. | Contact Name and Tel No/email address: |
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[The undersigned instructs the Depositary to deliver the ADRs representing the ADSs to the following account:
ADS Receiving Broker ( * are mandatory fields):
a) | DTC Broker Name*: |
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b) | DTC Brokers Participant Account with DTC *: |
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c) | DTC Broker Contact Name: |
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d) | DTC Broker Contact Tel No/email: |
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e) | Beneficial Owners Account # with DTC Broker*: |
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e) | Local Broker Name (have account with DTC Broker)*: |
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Local Broker Sub-Account # with DTC Broker*: |
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7 | Include if a Restricted Security. |
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Deutsche Bank Trust Company Americas | |
DTC Account: #2655]8 |
For any ADS settlement inquiries, please contact DBTCA Broker Desk:
Tel: +1-212-250-9100 (New York) / +44-207-547-6500 (London) Email: adr@db.com
8 | Include bracketed language in the conversion Notice if the Note being converted is not a Restricted Security. |
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Dated: |
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Signature(s) |
Signature Guarantee
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if ADSs are to be issued, or Notes are to be delivered, other than to and in the name of the registered holder.
Fill in for registration of ADSs if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder:
(Name)
(Street Address)
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all): US$ ,000
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
Social Security or Other Taxpayer Identification Number
5
ATTACHMENT 2
[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]
To: | QUDIAN INC. |
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee
The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Qudian Inc. (the Company) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with Section 15.02 of the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is US$1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Fundamental Change Repurchase Date.
In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below:
Certificate Number(s):
Dated:
Signature(s)
Social Security or Other Taxpayer Identification Number
Principal amount to be repaid (if less than all): US$ ,000
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
1
ATTACHMENT 3
[FORM OF REPURCHASE NOTICE]
To: | QUDIAN INC. |
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee
The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Qudian Inc. (the Company) regarding the right of Holders to elect to require the Company to repurchase the entire principal amount of this Note, or the portion thereof (that is US$1,000 principal amount or an integral multiple thereof) below designated, in accordance with the applicable provisions of the Indenture referred to in this Note, at the Repurchase Price to the registered Holder hereof.
In the case of certificated Notes, the certificate numbers of the Notes to be purchased are as set forth below:
Certificate Number(s):
Dated:
Signature(s)
Social Security or Other Taxpayer Identification Number
Principal amount to be repaid (if less than all): US$ ,000
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
1
ATTACHMENT 4
[FORM OF ASSIGNMENT AND TRANSFER]
For value received hereby sell(s), assign(s) and transfer(s) unto (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Indenture governing such Note, the undersigned confirms that such Note is being transferred:
☐ To Qudian Inc. or a subsidiary thereof; or
☐ Pursuant to a registration statement that has become or been declared effective under the Securities Act of 1933, as amended; or
☐ Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended [(Rule 144A), and the undersigned confirms that the undersigned reasonably believes that the transferee of such Note is a qualified institutional buyer (within the meaning of Rule 144A) that is purchasing for its own account or for the account of another qualified institutional buyer and the undersigned has provided such transferee notice that the transfer is being made in reliance on Rule 144A]9; or
☐ Outside the United States in accordance with Regulation S under the Securities Act of 1933, as amended; or
☐ Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended (if available).
9 | Include if Regulation S Note. |
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Dated: | ||
Signature(s) | ||
Signature Guarantee
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if Notes are to be delivered, other than to and in the name of the registered holder. |
NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
2
EXHIBIT B
[FORM OF AUTHORIZATION CERTIFICATE]
I, [Name], [Title], acting on behalf of Qudian Inc. (the Company) hereby certify that:
(A) the persons listed below are (i) authorized Officers of the Company for purposes of the Indenture (the Indenture) dated as of July 1, 2019 between the Company and Deutsche Bank Trust Company Americas, as trustee, in relation to the 1.00% Convertible Senior Notes due 2026 (the Notes), (ii) duly elected or appointed, qualified and acting as the holder of the respective office or offices set forth opposite their names and (iii) the duly authorized persons who executed or will execute the Indenture and the Notes issued pursuant to the Indenture by their manual or facsimile signatures and were at the time of such execution, duly elected or appointed, qualified and acting as the holder of the offices set forth opposite their names;
(B) each of the individuals listed below have the authority to receive call backs at the telephone numbers noted below upon request of Deutsche Bank Trust Company Americas in connection with the Notes issued pursuant to the Indenture;
(C) each signature appearing below is the persons genuine signature; and
(D) attached hereto as Schedule I is a true, correct and complete specimen of the certificates representing the Notes.
B-1
IN WITNESS WHEREOF, I have hereunto executed and delivered this certificate on behalf of the Company as of the date indicated.
Dated:
[Name] | ||
By: |
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Title: |
B-2
SCHEDULE I
Name |
Title, Fax No., Email |
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B-3
Exhibit 8.1
LIST OF SUBSIDIARIES AND CONSOLIDATED VARIABLE INTEREST ENTITIES OF
QUDIAN INC.
Subsidiaries |
Jurisdiction of Incorporation | |
Qufenqi (Ganzhou) Information Technology Co., Ltd.* 趣分期(赣州)信息技术有限公司 |
PRC | |
Xiamen Happy Time Technology Co., Ltd.* 厦门快乐时代科技有限公司 |
PRC | |
Qufenqi (HK) Limited |
Hong Kong | |
QD Technologies Limited |
British Virgin Islands | |
Tianjin Qudian Financial Lease Co. Ltd.* 天津趣店融资租赁有限公司 |
PRC | |
QD Data Limited |
Hong Kong | |
Xiamen Qudian Financial Lease Co., Ltd.* 厦门趣店融资租赁有限公司 |
PRC | |
Jinan Qudian Car Leasing Co., Ltd.* 济南趣店汽车租赁有限公司 |
PRC | |
Wenzhou Qudian Car Leasing Co., Ltd.* 温州趣店汽车租赁有限公司 |
PRC | |
Nanchang Qudian Car Leasing Co., Ltd.* 南昌趣店汽车租赁有限公司 |
PRC | |
Ningxia Qudian Car Leasing Co., Ltd.* 宁夏趣店汽车租赁有限公司 |
PRC | |
Shijiazhuang Qudian Car Leasing Co., Ltd.* 石家庄趣店汽车租赁有限公司 |
PRC | |
Gansu Qudian Car Sale & Service Co., Ltd.* 甘肃趣店汽车销售有限公司 |
PRC | |
Shenyang Qudian Car Leasing Co., Ltd.* 沈阳趣店汽车租赁有限公司 |
PRC | |
Chongqing Qudian Car Leasing Co., Ltd.* 重庆趣店汽车租赁有限公司 |
PRC | |
Suzhou Qudian Car Leasing Co., Ltd.* 苏州趣店汽车租赁有限公司 |
PRC | |
Taiyuan Qudian Car Leasing Co., Ltd.* 太原趣店汽车租赁有限公司 |
PRC | |
Xiamen Qudian Car Sale & Service Co., Ltd.* 厦门趣店汽车销售服务有限公司 |
PRC | |
Zhengzhou Qudian Car Leasing Co., Ltd.* 郑州趣店汽车租赁有限公司 |
PRC | |
Guiyang Qudian Car Leasing Co., Ltd.* 贵阳趣店汽车租赁有限公司 |
PRC | |
Chengdu Qudian Car Leasing Co., Ltd.* 成都趣店汽车租赁有限公司 |
PRC | |
Nanjing Qudian Car Leasing Co., Ltd.* 南京趣店汽车租赁有限公司 |
PRC | |
Changsha Qudian Car Leasing Co., Ltd.* 长沙趣店汽车租赁有限公司 |
PRC | |
Chongqing Dabai Car Leasing Co., Ltd.* 重庆大白汽车租赁有限公司 |
PRC | |
Xiamen Xincheng Youda Financing Guarantee Co., Ltd.* 厦门信诚友达融资担保有限公司 |
PRC | |
Xiamen Youqi Technology Co., Ltd.* 厦门友契科技有限公司 |
PRC | |
Xiamen Youdun Technology Co., Ltd.* 厦门友盾科技有限公司 |
PRC | |
Xiamen Youxiang Times Technology Service Co., Ltd.* 厦门优享时代科技服务有限公司 |
PRC | |
Consolidated Variable Interest Entities (VIEs) |
Jurisdiction of Incorporation | |
Beijing Happy Time Technology Development Co., Ltd.* 北京快乐时代科技发展有限公司 |
PRC | |
Xiamen Qudian Technology Co., Ltd.* 厦门趣店科技有限公司 |
PRC | |
Hunan Qudian Technology Development Co., Ltd.* 湖南趣店科技发展有限公司 |
PRC | |
Ganzhou Qudian Technology Co., Ltd.* 赣州趣店科技有限公司 |
PRC | |
Xiamen Weipujia Technology Co., Ltd.* 厦门唯谱家科技有限公司 |
PRC | |
Xiamen Qu Plus Plus Technology Development Co., Ltd* 厦门趣加加科技发展有限公司 |
PRC | |
Subsidiaries of Consolidated VIEs |
Jurisdiction of Incorporation | |
Ganzhou Happy Fenqi Network Service Co., Ltd.* 赣州快乐分期网络服务有限公司 |
PRC | |
Xinjiang Qudian Technology Co., Ltd. * 新疆趣店科技有限公司 |
PRC | |
Fuzhou High-tech Zone Microcredit Co., Ltd.* 抚州高新区趣分期小额贷款有限公司 |
PRC | |
Ganzhou Happy Life Network Microcredit Co., Ltd.* 赣州快乐生活网络小额贷款有限公司 |
PRC | |
Qufenqi (Beijing) Information Technology Co., Ltd.* 趣分期(北京)信息技术有限公司 |
PRC | |
Fuzhou Happy Time Technology Development Co., Ltd.* 抚州快乐时代科技发展有限公司 |
PRC |
Xiamen Qudian Commercial Factoring Co., Ltd.* 厦门趣店商业保理有限公司 |
PRC | |
Ganzhou Happy Fenqi Technology Development Co., Ltd.* 赣州快乐分期科技发展有限公司 |
PRC | |
Ganzhou Happy Time E-Commerce Co., Ltd.* 赣州快乐时代电子商务有限公司 |
PRC | |
Xiamen Junda Network Technology Co., Ltd.* 厦门均达网络科技有限公司 |
PRC | |
Tianjin Qufenqi Technology Co., Ltd.* 天津趣分期科技有限公司 |
PRC | |
Tianjin Happy Fenqi Technology Development Co., Ltd.* 天津快乐分期科技发展有限公司 |
PRC | |
Hunan Happy Time Technology Development Co., Ltd.* 湖南快乐时代科技发展有限公司 |
PRC | |
Yihuang Qudian Technology Development Co., Ltd.* 宜黄县趣店科技发展有限公司 |
PRC | |
Jiangxi Chunmian Technology Development Co., Ltd.* 江西春眠科技发展有限公司 |
PRC | |
Beijing Happy Fenqi Technology Development Co., Ltd.* 北京快乐分期科技发展有限公司 |
PRC | |
Ganzhou Qudian Commerce Development Co., Ltd.* 赣州趣店商贸发展有限公司 |
PRC | |
Tianjin Happy Time Technology Development Co., Ltd.* 天津快乐时代科技发展有限公司 |
PRC | |
Xiamen Wanlimu Technology Co., Ltd.* 厦门万里目科技有限公司 |
PRC |
* | The English name of this subsidiary, consolidated VIE or subsidiary of consolidated VIE, as applicable, has been translated from its Chinese name. |
Exhibit 12.1
Certification by the Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Min Luo, certify that:
1. | I have reviewed this annual report on Form 20-F of Qudian Inc. (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
Date: | April 27, 2020 | |
By: | /s/ Min Luo | |
Name: | Min Luo | |
Title: | Chairman and Chief Executive Officer |
Exhibit 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Yan Gao, certify that:
1. | I have reviewed this annual report on Form 20-F of Qudian Inc. (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
Date: | April 27, 2020 | |
By: | /s/ Yan Gao | |
Name: | Yan Gao | |
Title: | Vice President of Finance |
Exhibit 13.1
Certification by the Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Qudian Inc. (the Company) on Form 20-F for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Min Luo, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | April 27, 2020 | |
By: | /s/ Min Luo | |
Name: | Min Luo | |
Title: | Chairman and Chief Executive Officer |
Exhibit 13.2
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Qudian Inc. (the Company) on Form 20-F for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Yan Gao, Vice President of Finance of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(3) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(4) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | April 27, 2020 | |
By: | /s/ Yan Gao | |
Name: | Yan Gao | |
Title: | Vice President of Finance |
Exhibit 15.1
10/F, Tower B, CPIC Plaza, No. 28 Fengsheng Lane, Xicheng District, Beijing 100032, China
Tel: 86 10 5776 3888 Fax: 86 10 5776 3777
April 27, 2020
Qudian Inc.
Tower A, AVIC Zijin Plaza
Siming District, Xiamen
Fujian Province 361000
Peoples Republic of China
as the Company
Dear Sirs,
We consent to the references to our firm under the heading Item 3. Key InformationD. Risk FactorsRisks Related to Our Corporate Structure If the PRC government deems that the contractual arrangements in relation to our consolidated VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. and Item 4. Information on the CompanyC. Organizational StructureOur Contractual Arrangements with Consolidated VIEs and Their Shareholders in Qudian Inc.s Annual Report on Form 20-F for the year ended December 31, 2019 (the Annual Report), which is filed with the Securities and Exchange Commission (the SEC) on April 27, 20120. We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Yours faithfully,
/s/ Tian Yuan Law Firm
Tian Yuan Law Firm
Exhibit 15.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-224249) pertaining to the 2016 Equity Incentive Plan of Qudian Inc. of our reports dated April 27, 2020, with respect to the consolidated financial statements of Qudian Inc., and the effectiveness of internal control over financial reporting of Qudian Inc., included in this Annual Report (Form 20-F) for the year ended December 31, 2019.
/s/ Ernst & Young Hua Ming LLP
Shanghai, The Peoples Republic of China
April 27, 2020