AMENDMENT NO. 2 TO SHARE SUBSCRIPTION AGREEMENT
Exhibit 4.6
EXECUTION COPY
AMENDMENT NO. 2 TO SHARE SUBSCRIPTION AGREEMENT
AMENDMENT NO. 2 TO SHARE SUBSCRIPTION AGREEMENT (this “Amendment No. 2”) dated as of October
20, 2008 (the “Amendment Date”) by and among (1) CICC Sun Company Limited, a company incorporated
under the laws of the British Virgin Islands (“CICC”), (2) Carlyle Asia Growth Partners III, L.P.,
a limited partnership formed under the laws of the Cayman Islands (“CAGP”), (3) CAGP III
Co-Investment, L.P. (“CAGP Co-Invest”, together with CAGP, “Carlyle”), (4) Concord Medical Services
Holdings Limited, an exempted company with limited liability organized and existing under the laws
of the Cayman Islands (the “Company”), (5) the Controlling Shareholders (as defined below) and (6)
the other parties listed on the signature page hereof.
W I T N E S S E T H:
WHEREAS, pursuant to a Share Subscription Agreement dated as of February 5, 2008 (the
“Original Agreement”), the Company agreed to issue and sell to each of CICC and Carlyle and each of
CICC and Carlyle agreed to subscribe for certain Series A redeemable convertible preferred shares
of the Company on the terms and conditions set forth in the Original Agreement;
WHEREAS, certain terms in the Original Agreement were amended pursuant to an Amendment to
Share Subscription Agreement dated as of April 2, 2008 (the “Amendment No. 1”);
WHEREAS, the parties hereto and certain other parties entered into a Share Subscription
Agreement dated as of October 10, 2008, as amended on October 20, 2008 (the “Series B Share
Subscription Agreement”), pursuant to which the Company agreed to issue and sell to each of CICC
and Carlyle and each of CICC and Carlyle agreed to subscribe for certain Series B redeemable
convertible preferred shares, par value US$0.01 per share, of the Company (the “Series B Shares”)
on the terms and conditions set forth therein;
WHEREAS, the parties hereto desire to amend the Original Agreement, as amended by the
Amendment No. 1 (the “Existing Agreement”), to reflect the changes set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Amendments. (a) The Existing Agreement is amended by deleting the existing
definition of “Controlling Shareholders” in the preamble.
(b) The Existing Agreement is amended by adding the following definitions to Section 1.01:
“Amended and Restated Shareholders’ Agreement” means the Amended and
Restated Shareholders’ Agreement dated October 8, 2008 by and among the Company,
Carlyle, CICC, the Controlling Shareholders and certain other Persons listed on
the signature pages thereto.
“Amendment to Convertible Loan Agreement” means the Amendment to Convertible
Loan Agreement dated October 20, 2008 by and among the Company, Carlyle, the
Controlling Shareholders and the Group Companies.
“China Medstar” means China Medstar Pte. Ltd., a company incorporated under
the laws of Singapore.
“Controlling Shareholders” means, collectively, the following Persons:
(1) Xx. Xxxxx
Xxxxx (
), a PRC citizen with passport number X00000000 (“Xx.
Xxxxx”);
), a PRC citizen with passport number X00000000 (“Xx.
Xxxxx”);
(2) CZY Investments Limited, a company incorporated under the laws of the British
Virgin Islands and a direct wholly owned Subsidiary of Xx. Xxxxx;
(3) Xx. Xxxx;
(4) Daketala International Investment Holdings Ltd., a company incorporated under
the laws of the British Virgin Islands and a direct wholly owned Subsidiary of
Xx. Xxxx;
(5) Mr. Sun;
(6) Dragon Image Investment Ltd., a company incorporated under the laws of the
British Virgin Islands and a direct wholly owned Subsidiary of Mr. Sun;
(7) Mr. Xxxxx Xxxx (
), a PRC citizen with passport number X00000000 (“Xx.
Xxxxx”);
), a PRC citizen with passport number X00000000 (“Xx.
Xxxxx”);
(8) Thousand Ocean Group Limited, a company incorporated under the laws of the
British Virgin Islands and a direct wholly owned Subsidiary of Xx. Xxxxx;
(9) Xx. Xxx Yaw Kong (
), a Malaysia citizen with passport number X00000000
(“Xx. Xxx”);
), a Malaysia citizen with passport number X00000000
(“Xx. Xxx”);
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(10) Top Mount Group Limited, a company incorporated under the laws of the
British Virgin Islands and a direct wholly owned Subsidiary of Xx. Xxx;
(11) Xx. Xxx;
(12) Xx. Xxxx Xxx, a New Zealand citizen with passport XX000000 (“Xx. Xxx”); and
(13) Notable Enterprise Limited, a company incorporated under the laws of the
British Virgin Islands and a direct wholly owned Subsidiary of Xx. Xxx.
“Convertible Loans” means, collectively, (i) the convertible loan in the
principal amount of US$5,000,000 borrowed by the Company from Carlyle pursuant to
the Amended and Restated Convertible Loan Agreement by and among the Company,
Carlyle and certain other parties thereto dated as of April 2, 2008, and (ii) the
convertible loan in the principal amount of US$20,000,000 borrowed by the Company
from Carlyle pursuant to the Convertible Loan Agreement by and among the Company,
Carlyle and certain other parties thereto dated as of April 10, 2008, as amended
by the Amendment to Convertible Loan Agreement.
“QPO” means a firm-commitment underwritten IPO (i) led by an internationally
reputable underwriter, approved by a majority of the Board of Directors (which
majority shall include the Carlyle Director, the CICC Director and the Starr
Director, and yielding a valuation of the Company at not less than US$450 million
immediately prior to the consummation of such IPO, or (ii) any other IPO approved
by holders of at least 70% of the then outstanding Series B Shares.
“QPO Date” means the date on which the QPO is consummated.
“Second Amended and Restated Memorandum and Articles” means the Second
Amended and Restated Memorandum and Articles of the Company adopted by the board
of directors and shareholders of the Company on October 20, 2008.
“Series B Shares” means the Series B redeemable convertible preferred
shares, par value US$0.01 per share, of the Company.
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(c) The Existing Agreement is amended by replacing the existing definitions of “Group” and
“2008 Net Income” in Section 1.01 with the following new definitions, respectively:
“Group” means, at any time, collectively, the Company and all direct and
indirect then-current and future Subsidiaries of the Company.
“2008 Net Income” means the consolidated after-tax net income of the Company
for the Company’s fiscal year ending December 31, 2008; provided that (i) the
2008 Net Income shall not include the cumulative effect of any change or changes
in accounting principles; (ii) the 2008 Net Income shall not include any
extraordinary or non-recurring earnings obtained or losses incurred by any Group
Company; (iii) the 2008 Net Income shall not include non-cash charges or expenses
relating to any share-based compensation, the Convertible Loans, Series A Shares
and Series B Shares; (iv) the 2008 Net Income shall not include the consolidated
after-tax net income generated from sales of medical equipment by China Medstar
and its Subsidiaries to the extent it exceeds 30% of China Medstar’s consolidated
after-tax net income for the year ending December 31, 2008 (the calculation of
which shall not include (A) the cumulative effect of any change or changes in
accounting principles and (B) any extraordinary or non-recurring earnings or
losses); (v) the 2008 Net Income shall include the consolidated after-tax net
income of China Medstar for the whole year ending December 31, 2008 and, if such
inclusion is agreed to by all Investors, the full-year after-tax net income of
any other business that the Company may have acquired after the date hereof; and
(vi) any dividend paid by the Company on the Preferred Shares pursuant to the
Second Amended and Restated Memorandum and Articles shall not be deemed expenses
for the purposes of calculating 2008 Net Income. For the avoidance of doubt, any
accounts receivable generated by the Company during the Company’s fiscal year
ending December 31, 2008 and written off by the Company in connection with the
audit of the 2008 Audited Financial Statements shall not be deemed a
non-recurring loss and shall be included as a loss when calculating the 2008 Net
Income.
(d) The Existing Agreement is amended by adding the following rows to the table in Section
1.01(b):
Pre-Closing Options
|
8.16 | (a) | ||
Post Closing Options
|
8.16 | (b) |
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(e) The Existing Agreement is amended by replacing the existing Article 4 with the following
new Article 4:
ARTICLE 4
Earning Adjustments
Earning Adjustments
Section 4.01. Calculation of 2008 Net Income. As soon as practicable and
in any event within one hundred and fifty (150) days after the end of the
Company’s fiscal year ending December 31, 2008, the Company shall complete the
2008 Audited Financial Statements and on the same date of such completion have
the accounting firm who prepared the 2008 Audited Financial Statements calculate
the 2008 Net Income based on the 2008 Audited Financial Statements.
Section 4.02. Adjustment with respect to the Subscription. If the 2008 Net
Income is lower than the RMB equivalent of US$21,430,000 (calculated with the
spot exchange rate between US dollars and RMB as quoted by the People’s Bank of
China on the Closing Date), the Controlling Shareholders shall, jointly and
severally,
(a) transfer to each Investor free of charge a number of Ordinary Shares
equal to (x) the number of such Investor’s Purchased Shares, multiplied by (y) a
ratio, the numerator of which is equal to (i) 7 times the RMB equivalent of
US$21,430,000 (calculated with the spot exchange rate between US dollars and RMB
as quoted by the People’s Bank of China on the Closing Date) minus (ii) 7 times
the 2008 Net Income, and the denominator of which is equal to (I) 7 times the
2008 Net Income minus (II) the Total Closing Investment; and
(b) pay to each Investor the US dollar equivalent (calculated with the spot
exchange rate between US dollars and RMB as quoted by the People’s Bank of China
on the date of such payment) of an amount equal to (x) the Purchase Price of such
Investor, multiplied by (y) a ratio, the numerator of which is equal to (i) 7
times the RMB equivalent of US$21,430,000 (calculated with the spot exchange rate
between US dollars and RMB as quoted by the People’s Bank of China on the Closing
Date) minus (ii) 7 times the 2008 Net Income, and the denominator of which is
equal to (I) 7 times the RMB equivalent of US$21,430,000 (calculated with the
spot exchange rate between US dollars and RMB as quoted by the People’s Bank of
China on the Closing Date) minus (II) the Total Closing Investment, multiplied by
(z) 0.3.
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Section 4.03. Adjustment with respect to the Carlyle Loan Conversion. If
the 2008 Net Income is lower than the RMB equivalent of US$21,430,000 (calculated
with the spot exchange rate between US dollars and RMB as quoted by the People’s
Bank of China on the Closing Date), the Controlling Shareholders shall, jointly
and severally,
(a) transfer to Carlyle free of charge a number of Ordinary Shares equal to
(x) the number of Series A Shares Carlyle acquired as a result of the Carlyle
Loan Conversion multiplied by (y) a ratio, the numerator of which is equal to (i)
7 times the RMB equivalent of US$21,430,000 (calculated with the spot exchange
rate between US dollars and RMB as quoted by the People’s Bank of China on the
Closing Date) minus (ii) 7 times the 2008 Net Income, and the denominator of
which is equal to (I) 7 times the 2008 Net Income minus (II) the Total Closing
Investment; and
(b) pay to Carlyle the US dollar equivalent (calculated with the spot
exchange rate between US dollars and RMB as quoted by the People’s Bank of China
on the date of such payment) of an amount equal to (x) the Existing Carlyle Loan
Conversion Amount, multiplied by (y) a ratio, the numerator of which is equal to
(i) 7 times the RMB equivalent of US$21,430,000 (calculated with the spot
exchange rate between US dollars and RMB as quoted by the People’s Bank of China
on the Closing Date) minus (ii) 7 times the 2008 Net Income, and the denominator
of which is equal to (I) 7 times the RMB equivalent of US$21,430,000 (calculated
with the spot exchange rate between US dollars and RMB as quoted by the People’s
Bank of China on the Closing Date) minus (II) the Total Closing Investment,
multiplied by (z) 0.3.
Section 4.04. Procedure of Adjustment. The adjustments set forth in
Sections 4.02 and 4.03 shall be made within five (5) Business Days of the day on
which the 2008 Net Income is calculated pursuant to Section 4.01. On each date
on which the adjustments are to be made, the Controlling Shareholders shall (i)
deliver to each Investor a copy of the updated register of members of the Company
dated such date and duly certified by a duly authorized director of the Company
evidencing such Investor’s ownership of the Ordinary Shares transferred to such
Investor pursuant to Sections 4.02 and 4.03, respectively, which Ordinary Shares
shall be free and clear of any Lien (including any restrictions on the voting
rights or transferability of such Ordinary Shares other than those restrictions
set forth in this Agreement) and duly authorized, validly issued, fully paid and
non-assessable; and (ii) cause the Company to deliver to such Investor a
certificate representing such Ordinary Shares.
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Section 4.05. Termination of Adjustment Rights. Sections 4.01 through 4.04
shall terminate upon the occurrence of the QPO.
(f) The Existing Agreement is amended by replacing the existing Section 8.11 with the
following new Section 8.11:
Section 8.11. QPO. Each Group Company and each Controlling Shareholder
shall use its or his or her best efforts to complete the QPO by the third
anniversary of the closing of subscription contemplated by the Series B Share
Subscription Agreement.
(g) The Existing Agreement is amended by replacing the existing Section 8.16 with the
following new Section 8.16:
Section 8.16. Employee Stock Options. (a) Notwithstanding anything to the
contrary set forth in Section 8.01, prior to the Closing Date (as defined in the
Series B Share Subscription Agreement), the Company may adopt an employee share
option plan under which the Company will be authorized to grant a maximum number
of share options equal to 1.5% of the Ordinary Shares outstanding immediately
prior to the Closing (as defined in the Series B Share Subscription Agreement),
calculated on a Fully-Diluted basis (the “Pre-Closing Options Pool”).
Notwithstanding anything to the contrary set forth in the Amended and Restated
Shareholders’ Agreement and the Second Amended and Restated Memorandum and
Articles, the majority of the directors of the Company (which majority shall
include the directors designated by Carlyle and CICC pursuant to the
Shareholders’ Agreement or the Amended and Restated Shareholders’ Agreement, as
applicable) shall have the sole right to determine the granting of the share
options in the Pre-Closing Options Pool.
(b) The majority of the directors of the Company (which majority shall
include all directors designated by the Investors pursuant to the Amended and
Restated Shareholders’ Agreement) may adopt an employee share option plan under
which the Company will be authorized to grant a maximum number of share options
equal to 3.0% of the Ordinary Shares outstanding on (x) the QPO Date or (y) April
30, 2009, whichever is earlier, calculated on a Fully-Diluted basis (the
“Post-Closing Options Pool”); provided that (A) no share options in the
Post-Closing Options Pool shall be granted to any of the Controlling Shareholders
unless such grant has been approved by all directors of the Company designated by
the Investors pursuant the Amended and Restated Shareholders’ Agreement, and (B)
the exercise price
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of any such share option shall not be lower than the fair market value of
the Ordinary Share on a per share basis on the date that such share option is
granted.
SECTION 2. Effect of Amendment. Except as amended by this Amendment No. 2, the Existing
Agreement shall remain unchanged and in full force and effect. From and after the Amendment Date,
each reference to “this Agreement,” “hereof,” “hereunder” or words of like import, and all
references to the Agreement in any and all agreements, instruments, documents, notes, certificates
and other writings of every kind and nature shall be deemed to mean the Existing Agreement as
amended by this Amendment No. 2, except as is otherwise expressly stated.
SECTION 3. General. (a) This Amendment No. 2 shall be binding on the successors and
permitted assigns of the parties hereto; (b) this No. 2 Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard to conflicts of law
principles thereunder and shall be subject to the jurisdiction of the courts in the State of New
York; (c) this Amendment No. 2 may be executed in more than one counterpart, each of which shall be
deemed an original and any counterpart so executed shall be deemed to be one and the same
instrument; (d) each party hereto acknowledges that the parties hereto have participated jointly in
the negotiation and drafting of this Amendment No. 2, and in the event an ambiguity or question of
intent or interpretation arises, this Amendment No. 2 shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any
party hereto by virtue of the authorship of any of the provisions of this Amendment No. 2; (e) if
any part of any provision of this Amendment No. 2 shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity only, without in
any way affecting the remaining parts of such provision or the remaining provisions of this
Amendment; and (f) each party hereto acknowledges that the remedies at law of the other parties
hereto for a breach or threatened breach of this Amendment No. 2 would be inadequate and, in
recognition of this fact, any party hereto, without posting any bond, and in addition to all other
remedies that may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent injunction or any
other equitable remedy that may then be available.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 2 as of the date
first written above.
| CONCORD MEDICAL SERVICES HOLDINGS LIMITED |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| ASCENDIUM GROUP LIMITED |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| CHINA MEDSTAR PTE. LTD. |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| CYBER MEDICAL NETWORK LTD. |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| OUR MEDICAL SERVICES, LTD. |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| CHINA MEDICAL SERVICES (HOLDINGS) LIMITED |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
SHENZHEN AOHUA MEDICAL SERVICES CO., LTD.
|
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
SHENZHEN AOHUA MEDICAL LEASING AND SERVICES CO., LTD.
|
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
SHANGHAI MEDSTAR LEASING CO., LTD.
|
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
CMS HOSPITAL MANAGEMENT CO., LTD.
|
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| /s/ Xxxxx Xxx | ||||
| Xxxxx Xiaodi Sun, in his individual capacity | ||||
| DRAGON IMAGE INVESTMENT LTD. |
||||
| By: | /s/ Xxxxx Xxx | |||
| Name: | Xxxxxx Xiaodi Sun | |||
| Title: | ||||
| /s/ Xxxx Xxxxxx | ||||
| Xxxx Xxxxxx, in his individual capacity | ||||
| DAKETALA INTERNATIONAL INVESTMENT HOLDINGS LTD. |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | ||||
| /s/ Bona Xxx | ||||
| Bona Xxx, in her individual capacity | ||||
| NOTABLE ENTERPRISE LIMITED |
||||
| By: | /s/ Bona Xxx | |||
| Name: | Bona Xxx | |||
| Title: | ||||
| /s/ Xxxxx Xxxxx | ||||
| Xxxxx Xxxxx, in his individual capacity | ||||
| CZY INVESTMENTS LIMITED |
||||
| By: | /s/ Xxxxx Xxxxx | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | ||||
| /s/ Xxxxx Xxxx | ||||
| Xxxxx Xxxx, in his individual capacity | ||||
| THOUSAND OCEAN GROUP LIMITED |
||||
| By: | /s/ Xxxxx Xxxx | |||
| Name: | Xxxxx Xxxx | |||
| Title: | ||||
| /s/ Yap Yaw Kong | ||||
| Yap Yaw Kong, in his individual capacity | ||||
| TOP MOUNT GROUP LIMITED |
||||
| By: | /s/ Yap Yaw Kong | |||
| Name: | Yap Yaw Kong | |||
| Title: | ||||
| /s/ Liu Xxxxxxx | ||||
| Xxx Haifeng, in his individual capacity | ||||
| CICC SUN COMPANY LIMITED |
||||
| By: | /s/ Xxxxxxx Xxxxxx Chen | |||
| Name: | Xxxxxxx Xxxxxx Xxxx | |||
| Title: | ||||
| CARLYLE ASIA GROWTH PARTNERS III, L.P. | ||||||
| By: | CAGP General Partner, L.P., as its General Partner | |||||
| By: | CAGP, Ltd., as the General Partner of CAGP General Partner, L.P. | |||||
| By: | /s/ Xxxxxx X. X’Xxxxxxx
|
|||||
| Title: | ||||||
| CAGP III CO-INVESTMENT, L.P. | ||||||
| By: | CAGP General Partner, L.P., as its General Partner | |||||
| By: | CAGP, Ltd., as the General Partner of CAGP General Partner, L.P. | |||||
| By: | /s/ Xxxxxx X. X’Xxxxxxx | |||||
| Name: Xxxxxx X. X’Xxxxxxx | ||||||
| Title: | ||||||
