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LDK SOLAR CO., LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
FOR THE PERIOD FROM JULY 5, 2005 TO DECEMBER 31, 2005
AND THE YEAR ENDED DECEMBER 31, 2006
(Amounts in US$ thousands, except share and per share data)
b) The Company shall issue additional ordinary shares, rights, options or warrants to subscribe for
or purchase ordinary shares without consideration or for a consideration per share less than the then
effective conversion price on the date the Company issues or sells such new securities; and
c) The Company shall distribute to all holders of its ordinary shares any share capital of the
Company (other than ordinary shares) or evidences of indebtedness or cash or other assets (excluding
regular cash dividends or distributions paid from retained earnings of Company and dividends or
distributions referred to in previous paragraph a)).
Management has determined that there was no embedded beneficial conversion feature attributable to
the Series B Shares, since the initial conversion price of the Series B Shares is equal to the Series B issue
price, which was higher than the fair value of the Company's ordinary shares at the commitment date
determined by management based on the valuation performed by Sallmanns. In addition, under the provisions
of EITF Issue No. 00-27 ""Application of Issue No. 98-5 to Certain Convertible Instrument'', management
determined that the contingent beneficial conversion feature relating to the Conversion ratio adjustment will
be recognized only when the related audit report is delivered and the contingency is resolved and with respect
of the Series B Dilution Adjustment, upon the issuance of additional ordinary shares. To the extent that the
2006/2007 audited net earnings, as defined, is below US$57,000 or the Company issued additional ordinary
shares at a price less than the then prevailing Series B Shares' conversion price, the intrinsic value that results
from such contingent beneficial conversion feature would be recognized as an addition to paid-in capital with a
corresponding charge to net income available to ordinary shareholders at the earliest conversion date, which is
the later of the issuance date or the date the contingency is resolved. As the contingency relating to the
2006/2007 audited net earnings was not resolved as of December 31, 2006, management has not considered
the 2006/2007 conversion ratio adjustment when preparing the consolidated financial statements for the year
ended December 31, 2006.
Voting rights
Each Series B Share has voting rights equivalent to the number of ordinary shares into which such
Series B Share is then convertible.
Registration rights
Holders of Series B Shares have registration rights similar to the holders of Series A Shares and the
ordinary shareholders. These registration rights include demand, F-3 or equivalent, and piggyback rights. The
specific terms of registration rights would include at least the following: (i) starting three years after the
Closing Date, the holders of majority of the outstanding Series A Shares and Series B Shares may request a
Form F-1 registration statement to be filed; (ii) starting one year after the Qualified IPO, two (2) demand
registrations upon request of the holders of 50% of the outstanding Series A Shares and Series B Shares on
Form F-3 or equivalent if listed on a non-US stock exchange; (iii) unlimited piggyback registrations in
connections with registrations of shares for the account of the Company (other than the Qualified IPO) or
selling shareholders exercising demand rights; and (iv) cut-back provisions providing that registrations (other
than the Qualified IPO) must include at least 25% of the shares requested to be included by the holders of
registrable securities, and the ordinary shareholders, management, employees, directors and consultants of the
Company must be cut back before the holders of registrable securities would be cut back. The registration
rights agreement does not provide for liquidated damages in the event that the Company fails to have the
registration statement declared effective or if the effectiveness is not maintained.
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