EXHIBIT 4.4
EXECUTION COPY
(1) MINDRAY INTERNATIONAL HOLDINGS LIMITED
(2) THE INVESTORS
(3) THE SHAREHOLDERS
SHAREHOLDERS' AGREEMENT
TABLE OF CONTENTS
CLAUSE PAGE
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1. INTERPRETATION....................................................... 1
2. FINANCIAL AND OTHER INFORMATION...................................... 9
3. THE INVESTOR DIRECTOR................................................ 10
4. MATTERS REQUIRING CONSENT............................................ 12
5. TRANSFERS OF SHARES.................................................. 14
6. NEW SHAREHOLDERS..................................................... 17
7. QUALIFIED IPO........................................................ 18
8. ADJUSTMENTS.......................................................... 19
9. FURTHER COVENANTS.................................................... 21
10. CONFIDENTIAL INFORMATION............................................. 21
11. ANNOUNCEMENTS........................................................ 22
12. DURATION............................................................. 22
13. NOTICES AND OTHER COMMUNICATIONS..................................... 23
14. MISCELLANEOUS........................................................ 25
15. GOVERNING LAW AND ARBITRATION........................................ 26
16. PREVIOUS AGREEMENTS.................................................. 26
SCHEDULE 1 PART A THE SHAREHOLDERS...................................... 27
PART B - THE INVESTORS........................................ 28
SCHEDULE 2 UNDERTAKING................................................... 29
SCHEDULE 3 DETAILS OF THE GROUP.......................................... 31
SCHEDULE 4 DEED OF ADHERENCE............................................. 33
-i-
THIS AGREEMENT is made on 26 September 2005
BETWEEN:
(1) MINDRAY INTERNATIONAL HOLDINGS LIMITED a private company limited by shares
incorporated in the Cayman Islands, with its registered office at c/o Codan
Trust Company (Cayman) Limited, Century Yard, Criket Square, Xxxxxxxx
Drive, P.O. Box 2681 GT, Xxxxxx Town, Grand Cayman, British West Indies
(the "Company");
(2) THE PERSONS whose names and addresses are set out in Part B of Schedule 1
(each an "INVESTOR" and together the "INVESTORS"); and
(3) THE INDIVIDUALS whose names and addresses are set out in Part A of Schedule
1 (the "SHAREHOLDERS").
WHEREAS:
(A) The Company is a private company limited by shares organised and existing
under the laws of the Cayman Islands.
(B) As at the date of this Agreement, the Company has an authorised share
capital of HK$6,000,000 comprising 5,000,000,000 ordinary shares of
HK$0.001 each and 1,000,000,000 Convertible Redeemable Preference Shares of
HK$0.001 each, and the issued and paid up share capital of the Company is
HK$78,350.054 comprising 75,350,054 ordinary shares of HK$0.001 each and
3,000,000 Convertible Redeemable Preference Shares of HK$0.00I each, which
are owned by the Shareholders as set out in Schedule 1. Further information
relating to the Company and its subsidiaries, as at the date of this
Agreement, is contained in Schedule 3.
(C) The parties are on same date simultaneously completing, in accordance with
the Subscription Agreement, (i) a subscription for the Subscription Shares
(as defined below); (ii) the acquisition by the Investors of the Secondary
Shares (as defined below) from the Major Shareholders; and (iii) the
acquisition by the Investors of the DCL Shares (as defined below) from DCL.
(D) The parties hereto wish to enter into this Agreement to govern, inter alia,
the relationship among themselves in respect of the operation and
management of the Company and their respective rights and obligations in
connection therewith.
THE PARTIES AGREE as follows:
1. INTERPRETATION
1 In this Agreement:
"2005 NET PROFITS" means the consolidated net profits after tax and
minority interests of the PRC Company but excluding any one-time gains or
losses from asset sales, all as shown in the audited consolidated accounts
of the Group for the financial year ending 31
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December 2005 as audited by a Big 4 accounting firm in accordance with
Accounting Principles;
"ACCOUNTING PRINCIPLES" means the International Financial Reporting
Standards promulgated by the International Accounting Standards Board
("IASB") (which includes standards and interpretations approved by the IASB
and International Accounting Standards (IAS) issued under previous
constitutions), together with its pronouncements thereon from time to time,
and applied on a consistent basis;
"ADJUSTED NEW MONEY" means Subscription Amount - Adjusted Old Money;
"ADJUSTED OLD MONEY" means Adjusted PRC Pre-Money Valuation x 3.488%
(3.488% =3186;
"ADJUSTED PRC PRE-MONEY VALUATION" means 11.0 times the 2005 Net Profits
subject to a floor of US$285 million and a cap of US$400 million;
"AFFILIATE" means with respect to any person, any other person that
directly or indirectly, through one or more intermediaries, Controls is
Controlled by, or under common Control with the first mentioned person;
"ARTICLES" means the articles of association of the Company, as amended
from time to time;
"ASSOCIATE" has the meaning set out in the Listing Rules;
"AUDITED NET INCOME" for any financial year means the net income of the PRC
Company as set forth in the audited Financial Statements for such financial
year;
"AUDITORS" means the auditors of the Company from time to time;
"BIG 4" means any one of KPMG, Deloitte Touche Tohmatsu,
PricewaterhouseCoopers and Ernst & Young or their respective successors;
"BUSINESS" means the business of research and development, manufacturing
and distribution of medical equipment and related products and the
provision of services for such equipment and products;
"BOARD" means the board of directors of the Company from time to time;
"BUSINESS DAY" means a day (excluding Saturday) on which banks are
generally open for business in Hong Kong and in the PRC;
"BUY-OUT EXPENDITURES" means the aggregate amount paid by the Company
whether in the form of cash or shares, for the acquisition of any shares in
the PRC Company made after the date of this Agreement up to the Ownership
Adjustment Date;
"CASH ADJUSTMENT" has the meaning given to that term in Clause 8.4;
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"CAYMAN ADJUSTED POST MONEY VALUATION" means Cayman Adjusted Pre-Money
Valuation + Adjusted New Money;
"CAYMAN ADJUSTED PRE MONEY VALUATION" means (Adjusted PRC Pre-Money
Valuation X the Company's percentage ownership in the PRC Company as of the
Ownership Adjustment Date) -- (Buy-Out Expenditures);
"CAYMAN POST MONEY VALUATION" means Cayman Pre-Money Valuation +
US$28,089,302;
"CAYMAN PRE MONEY VALUATION" means:
(US$341,440,000 x the Company's percentage ownership in the PRC
Company as of the Ownership Adjustment Date) - (Buy-out Expenditures)
"COMPANIES ORDINANCE" means the Companies Ordinance (Chapter 32 of the Laws
of Hong Kong), as amended from time to time;
"COMPETITOR" means any operator for so long as such operator (or any entity
over which such operator has direct or indirect Control) is involved in the
Business and could have a similar target customer base as that of the
Group;
"CONTROL" means the power of a person (or persons acting in concert) to
secure that the affairs of another are conducted directly or indirectly in
accordance with the wishes of - that person (or persons acting in concert)
by means of: in the case of a company, being , the beneficial owner of more
than 50 per cent of either the issued share capital of that company or of
the voting rights in that company, or having the right to appoint or remove
a majority of the directors or otherwise control the votes at board
meetings of that company by virtue of any powers conferred by the articles
of association, shareholders' agreement or any other document regulating
the affairs of that company; in the case of a partnership, being the
beneficial owner of more than 50 per cent. of the capital of that
partnership, or having the right to control the composition of or the votes
to the majority of the management of that partnership by virtue of any
powers conferred by the partnership agreement or any other document
regulating the affairs of that partnership; or, in the case of an
individual, being an Associate of that individual; and "CONTROLLED" shall
be construed accordingly. For these purposes, "PERSONS ACTING IN CONCERT",
in relation to a person, are persons who actively co-operate, pursuant to
an agreement or understanding (whether formal or informal), with a view to
obtaining or consolidating Control of that person;
"CONVERSION PRICE" means the price per Share to be issued upon conversion
of all or some of the Convertible Redeemable Preference Shares and which is
calculated in accordance with the Terms and Conditions;
"CONVERSION SHARES" means the Shares to be issued by the Company upon
conversion of the Convertible Redeemable Preference Shares;
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"CONVERTIBLE REDEEMABLE PREFERENCE SHARES" means the convertible redeemable
preference shares of HK$0.01 each in the capital of the Company, having the
rights and being subject to the restrictions set out in the Terms and
Conditions;
"DCL" means Dragon City International Investment Limited;
"DCL AMOUNT" means US$3,970,233, the aggregate purchase price for the DCL
Shares;
"DCL SHARES" means the total number of Convertible Redeemable Preference
Shares acquired from DCL pursuant to the Subscription Agreement;
"ENCUMBRANCE" means a lien, charge or other encumbrance or right
exercisable by a third party having similar effect including, without
limitation, options, warrants and other rights (including conversion or
pre-emption);
"EQUITY SHARE CAPITAL" means the issued share capital of the Company
including the Convertible Redeemable Preference Shares, but excluding any
part thereof which does not either as respects dividends or as respects
capital carry any right to participate beyond a specified amount or beyond
an amount calculated by reference to a specified rate in a distribution;
"ESCROW AGENT" and "ESCROW SHARES" have the meanings set out in Clause 8.3;
"ESOP DILUTION" means the total number of outstanding share options granted
to employees of the Company under duly authorised employee share option
plans, expressed as a percentage of the Fully-Diluted Share Capital;
"EXCHANGE RATE" means the mid point buying and selling rate, expressed in
RMB, for the conversion between RMB and US Dollars published by the Bank of
China on the date of execution of this Agreement;
"FAMILY MEMBER" means the spouse, co-habitee, mother, father, grandmother,
grandfather, brother, sister or child of a Major Shareholder;
"FINANCIAL STATEMENTS" shall include a balance sheet, income statement and
statement of cash flows prepared in accordance with the Accounting
Principles;
"FULLY DILUTED SHARE CAPITAL" means at any time the total number of Shares
then issued, assuming the conversion, exchange and exercise in full of all
of the then issued Ordinary Share Equivalents, including, the conversion of
all of the issued Convertible., Redeemable Preference Shares at the then
prevailing Conversion Price;
"GROUP" means the Company and its subsidiaries and "Group Member" means any
one of them (including the Company itself);
"HK$" means the lawful currency of Hong Kong;
"HONG KONG" means the Hong Kong Special Administrative Region of the PRC;
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"IPO" means a listing of the ordinary share capital of the Company on the
Stock Exchange;
"IPO PRICE" means the lowest price in the range for the offering price per
ordinary share of the Company to be listed on the Stock Exchange;
"INTELLECTUAL PROPERTY RIGHTS" means:
(a) patents, trade marks, service marks, registered designs, applications
and rights to apply for any of those rights, trade, business and
company names, internet domain names and e-mail addresses,
unregistered trade marks and service marks, copyrights, database
rights, rights in software, knowhow, rights in designs and inventions;
and
(b) rights under licences, consents, orders, statutes or otherwise in
relation to a right in paragraph (a);
"INVESTOR DIRECTOR" means the director appointed to the Board from time to
time by the Investors pursuant to Clause 3.1, the first such Investor
Director being appointed in accordance with the terms of the Subscription
Agreement;
"LAST ACCOUNTING DATE" means 31 December 2004;
"LISTING RULES" means the Rules Governing the Listing of Securities on the
Stock Exchange of Hong Kong Limited;
"MAJOR SHAREHOLDERS" means Xu Hang, Li Xiting and Xxxxx Xxxxxx and "MAJOR
SHAREHOLDER" means any one of them;
"NET SHARE ADJUSTMENT" has the meaning given to that term in Clause 8.4;
"NEW MONEY" means US$28,089,302;
"OBSERVER" has the meaning given to that term in Clause 3.3;
"OLD MONEY" means US$11,910,698;
"ORDINARY SHARE EQUIVALENTS" means any security or obligation which is by
its terms convertible into or exchangeable or exercisable for Shares or
other share capital of the Company, including without limitation, the
Convertible Redeemable Preference Shares, other convertible preference
shares or convertible debt instruments, any option, warrant or other
subscription or purchase-right with respect to the Shares or such other
share capital in the Company;
"OWNERSHIP ADJUSTMENT" means the adjustment to the Conversion Price on the
Ownership Adjustment Date and which is calculated in accordance with the
Terms and Conditions;
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"OWNERSHIP ADJUSTMENT DATE" means the earlier of (i) the earliest
practicable date prior to an IPO and (ii) the Performance Adjustment Date;
"PARENT GROUP" means with respect to an entity, its direct and indirect
subsidiaries and Affiliates;
"PERFORMANCE ADJUSTMENT DATE" means the date by reference to which the
adjustments pursuant to Clause 8 are carried out which shall be within one
month following the date the audited accounts of the PRC Company for the
year ending 31 December 2005 become available but in any event no later
than 30 June 2006;
"PERMITTED TRANSFERS" means any transfer of Equity Share Capital:
(i) to a person who is to hold such Equity Share Capital transferred, as a
nominee on behalf of the transferor (but excludes any transfer by such
nominees and a nominee for the purposes of this definition excludes
any entity that is a member of an Investor);
(ii) by a nominee to the beneficial owner of such Equity Share Capital to
another nominee of the same beneficial owner; or
(iii) to an Affiliate; or
(iv) in the case of a Major Shareholder to a Family Member,
"PRC" means the People's Republic of China excluding, for the purposes of
this Agreement, Hong Kong, the Macau Special Administrative Region and
Taiwan;
"PRC COMPANY" means Shenzhen Mindray Bio-medical Electronics Co., Ltd which
is incorporated in the PRC as a joint stock company;
"PRC PRE-MONEY VALUATION" means US$341,440,000;
"PRIME RATE" means the Hong Kong Dollar Prime Rate of The Hong Kong and
Shanghai Banking Corporation Limited;
"QUALIFIED IPO" has the meaning set out in Clause 7.5;
"RMB" means Renminbi, the lawful currency of the PRC;
"SECONDARY SALE AMOUNT" means US$7,940,465, the aggregate purchase price
for the Secondary Shares;
"SECONDARY SHARES" means the number of Convertible Redeemable Preference
Shares acquired from the Major Shareholders pursuant to the Subscription
Agreement;
"SHARE(S)" means ordinary shares of HK$0.01 each in the issued share
capital of the Company existing on the date of this Agreement and all other
(Currupted Text) any) stock or shares from time to time and for the time
being ranking part passu therewith and all other (if any)
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stock or shares in the Equity Share Capital resulting from any
sub-division, consolidation or re-classification thereof; having the rights
and -being subject to the restrictions set out in the Articles;
"STOCK EXCHANGE" means The Stock Exchange of Hong Kong Limited or such
other internationally recognised stock exchange as may be agreed by any one
of the investors and the Major Shareholders in writing from time to time;
"SUBSCRIPTION AGREEMENT" means the subscription and share purchase
agreement dated 6 July 2005 and entered into between the Company, DCL, the
Investors and the Major Shareholders in relation to, inter alia, the
subscription for the Convertible Redeemable Preference Shares by the
Investors;
"SUBSCRIPTION AMOUNT" means US$40,000,000 in aggregate representing (i) the
Subscription Monies; (ii) the Secondary Sale Amount and (iii) the DCL
Amount;
"SUBSCRIPTION MONIES" means US$28,089,302 representing the entire amount
paid by the Investors for the Subscription Shares under the Subscription
Agreement;
"SUBSCRIPTION PRICE" means the Subscription Amount divided by the sum of
the number of Convertible Redeemable Preference Shares issued and the
Secondary Sale Shares and DCL Shares purchased pursuant to the Subscription
Agreement;
"SUBSCRIPTION SHARES" means the total number of Convertible Redeemable
Preference Shares issued to the Investors by the Company pursuant to the
Subscription Agreement;
"TAX" means any form of Taxation, levy, duty, charge, contribution or
impost of whatever nature (including any related fine, penalty, surcharge
or interest) imposed by a Tax Authority;
"TAX AUTHORITY" means any local, municipal, governmental, state, federal or
other fiscal, revenue, customs or excise authority, body or official
anywhere in the world including, without limitation, the Inland Revenue
Department of Hong Kong, the State Tax Bureau of the PRC and the relevant
provincial and/or local Tax bureau of the PRC;
"TERMS AND CONDITIONS" means the terms and conditions of the Convertible
Redeemable Preference Shares attached at Schedule 6 of the Subscription
Agreement;
"TRANSFEREE PARTY" means (i) the Major Shareholders, if the Net Share
Adjustment is in favour of the Major Shareholders, or (ii) the Investors,
if the Net Share Adjustment is in favour of the Investors;
"TRANSFEROR PARTY" means (i) the Investors, if the Net Share Adjustment is
in favour of the Major Shareholders, or (ii) the Major Shareholders if the
Net Share Adjustment is in favour of the Investors;
"USS" means the lawful currency of the United States of America
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1.2 In this Agreement, a reference to:
1.2.1 "CERTIFIED COPY" is a reference to a document certified by a director
of the Company as being a true and complete copy of the original;
1.2.2 "COSTS" includes a reference to costs, charges and expenses of every
description;
1.2.3 a "SUBSIDIARY" or "XXXXXXX COMPANY" shall be construed in accordance
with Section 2 of the Companies Ordinance;
1.2.4 a document in the "AGREED FORM" is a reference to a document in a
form approved and for the purposes of identification signed by or on
behalf of each of the parties;
1.2.5 a "PERSON" includes a reference to a body corporate, association,
joint venture or partnership, in each case, whether incorporated or
not;
1.2.6 a "PERSON" includes a reference to that person's heir, legal personal
representative;
1.2.7 a "PARTY" is a reference to a party to this Agreement by virtue of it
having executed this Agreement and "PARTIES" means all of them;
1.2.8 "INCLUDING" shall be construed without limitation; and
1.2.9 a Recital, a Clause or a Schedule, unless the context requires
otherwise, is a reference to a Recital of, Clause of or a Schedule to
this Agreement.
1.3 Where a consent or approval is expressed in this Agreement to be required
of the Investors it shall be deemed to have been given if the relevant
matter or transaction has been approved by (i) any one of the Investors in
writing and (ii) the Investor Director in compliance With all procedures.
in the Articles regarding notice and Board meetings and either (a) Clauses
1.3.1 to 1.3.3 have all been satisfied or (b) Clause 1.3.4 has been
satisfied:
1.3.1 been approved at a Board meeting at which the Investor Director is
present with the Investor Director affirmatively voting in favour of
the specific relevant matter or transaction;
1.3.2 been recorded clearly in the minutes of that Board meeting as a
Matter which requires the consent of the Investors and which has
received the prior consent of the Investor Director; and
1.3.3 a copy of the board minutes of the relevant meeting has been
acknowledged in writing or countersigned by the Investor Director as
representing a true and accurate record of the matters discussed and
agreed at that meeting by such Investor Director, or
1.3.4 been consented to in advance in writing by the Investor Director.
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The Investor Director shall at all times be authorised to exercise the
approval rights of an Investor on behalf of all the Investors distinct from
the exercise of approval rights in his capacity as an Investor Director.
Such approval rights shall be exercised contemporaneously with the exercise
of Investor Director approval rights but by way of a separate written
instrument.
For the avoidance of doubt, if consent is sought and obtained from an
Investor and/or an Investor Director, such consent shall be binding on all
other Investors, and in the event that consent is requested in writing from
an Investor and/or an Investor Director and no reply is received within 5
Business Days of such request, consent shall be deemed to have been granted
by the Investors in the case of a request made of an Investor, and by the
Investor Director in the case of a request made of an Investor Director.
1.4 The headings in this Agreement do not affect its interpretation.
2. FINANCIAL AND OTHER INFORMATION
2.1 The Company shall supply each Investor, the Investor Director and an
Observer with, as soon as practicable, and in any event, within 90 days
after the end of each financial year beginning with the financial year
ending 31 December 2005, the audited annuals consolidated Financial
Statements and the notes attaching thereto, of the Group for that year.
2.2 The Company shall supply each Investor, Investor Director and Observer
with, as soon as practicable, and in any event within 30 days, after the
end of each calendar month, unaudited monthly consolidated Financial
Statements of the Group for that month.
2.3 No later than 30 days prior to the end of each financial year, the Company
shall prepare and deliver to each Investor, Investor Director and Observer
an annual consolidated budget and business plan for the next financial year
in respect of the Group.
2.4 All audits to be made under, or for the purposes of, this Clause 2 shall be
performed in accordance with the Accounting Principles by a Big 4
accounting firm.
2.5 The Company shall, and shall procure that each Group Member shall, upon
prior reasonable notice in writing being given by any of the Investors, the
Investor Director or the Observer provide at the cost of the requesting
party reasonable access to documents (including financial and operating
data), contracts, books, records, personnel, offices, and other facilities
and properties of the Group during normal business hours.
2.6 Any one of the Investors, the Investor Director and an Observer shall be
entitled to routinely consult with and advise management of the Company
with respect to operations of the Group, including all of the Group's
business and financial matters and management's proposed annual operating
plans, and management will meet regularly during each year with them at
mutually agreeable times for such consultation and advice, including to
review progress in achieving said plans. The Company shall supply
reasonable advance written notice to any one of the Investors, the Investor
Director and an Observer of any significant new initiatives or material
changes to the existing
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operating plans of the Group, and shall, if requested in writing to do so,
afford each of them adequate time to meet with management to consult on
such initiatives or changes prior to implementation. The Company shall give
consideration to the advice given and any proposals made by any one of the
Investors, the Investor Director or an Observer.
3. THE INVESTOR DIRECTOR
3.1 For so long as the Investors, together with their transferees under
Permitted Transfers hold in aggregate no less than the lower of (i) 50% of
their percentage interest of shareholdings held upon the date of this
Agreement (whether converted or not) or (ii) 5% of the Equity Share
Capital, the Investors shall be entitled from time to time to appoint and
remove from the Board one Investor Director, and upon removal to appoint
another person in his place; the initial appointment of the Investor
Director shall be made pursuant to the Subscription Agreement; subsequent
appointments and removals shall be made by written notice served on the
Company which shall take effect immediately. For the avoidance of doubt the
Investors' holdings for the purpose of this Clause 3.1 shall include any
Convertible Redeemable Preference Shares which are subject to a redemption
demand pursuant to a Redemption Notice (as defined in the Articles) until
such Redemption Notice has been satisfied in full. At any time that GS
Capital Partners V Institutional, L.P. ("GS Institutional") is one of the
Investors, the Investor Director shall be appointed and removed by GS
Institutional.
3.2 In the event that the Investors, together with their transferees under
Permitted Transfers hold in aggregate less than the lower of (i) 50% of
their percentage interest of shareholdings held upon the date of this
Agreement (whether converted or not) or (ii) 5% of the Equity Share
Capital, the Investors shall procure that the Investor Director appointed
pursuant to Clause 3.1 shall forthwith resign. For the avoidance of doubt
the Investors' holdings for the purpose of this Clause 3.2 shall include
any Convertible, Redeemable Preference Shares which are subject to a
redemption demand pursuant to a Redemption Notice (as defined in the
Articles) until such Redemption Notice has been satisfied in full.
3.3 If the Investors are not entitled to appoint a member of the Board pursuant
to Clause 3.1 and provided that any Investor or its Affiliates or
transferees under Permitted Transfers hold any interest in the Equity Share
Capital, each Investor shall be entitled from time to time by notice in
writing to the Company, to appoint and rename a person as an observer
("Observer") provided that each Investor shall nominate the same individual
as the other Investors as its Observer such that at any given time there
will only be one individual acting as an Observer and such Observer agrees
to be bound by all rules and regulations applicable to the Board and
execute a confidentiality undertaking in favour of the Company. At any time
that GS Institutional is one of the Investors, the Observer shall be
nominated by GS Institutional and that Observer shall be the Observer
nominated on behalf of all the other Investors.
3.4 An Observer shall have the right to attend all meetings of the Board and
committees and receive all the information that the directors of the
Company (including committee
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members) would be entitled to receive (including information related to the
business and operations of the Company), and may pass such information to
the same persons as the Investor Director (if appointed) would be entitled
to pass that information. An Observer shall not be entitled to vote at any
meetings of the Board, nor shall an Observer be, or be regarded as, an
officer of the Company and shall not be counted in the quorum of any
meeting of the Board. However, an Observer shall be permitted to discuss
the affairs, finances and accounts of the Group with, and to make proposals
and furnish advice with respect thereto to, the Board.
3.5 Prior to a Qualified IPO, the Board shall establish a Compensation
Committee and an Audit Committee. For so long as the Investors are entitled
to appoint a member of the Board pursuant to Clause 3.1, the Investor
Director for the time being will be a member of such committees and will
have the right to be appointed to any other sub-committee established by
the Board prior to a Qualified IPO.
3.6 At all times prior to a Qualified IPO, the following matters shall require
prior Board approval:
3.6.1 appointment and removal of the chief executive officer and the chief
financial officer of the Company;
3.6.2 the settlement of any litigation in excess of RMB10 million by. any
Group Member;
3.6.3 any material change in the accounting policies of any Group Member
from those adopted in the Accounts;
3.6.4 an increase of more than 30% in the total compensation of any member
of the management of the Group whose annual compensation (including
any bonus) is more than RMB1 million in any 12 month period;
3.6.5 change in the size of the Board; or
3.6.6 the adoption of an annual budget and any business plan of a Group
member;
3.7 At all times prior to a Qualified IPO, each Shareholder and the Company
shall procure that (i) all shareholder and board resolutions necessary for
implementation by the PRC Company of decisions of the Board are passed by
the PRC Company and (ii) no shareholder or board resolution other than the
foregoing (which shall to the extent possible be in form and substance
identical to resolutions passed by the Board) is passed by the PRC Company.
3.8 Subject to Clause 3.1, prior to a Qualified IPO, the Board shall consist of
no more than 10 directors, comprised of at least three independent
directors (the appointment of such independent directors being subject to
the prior approval of the Investors) and the Investor Director.
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4. MATTERS REQUIRING CONSENT
4.1 At all times prior to a Qualified IPO and for so long as the Investors,
together with their transferees under Permitted Transfers hold in aggregate
no less than the lower of (i) 50% of their percentage interest of
shareholdings held upon the date of this Agreement (whether converted or
not) or (ii) 5% of the Equity Share Capital, the Company and the
Shareholders shall use their respective rights and powers, whether as
shareholder, director or otherwise to procure, that no Group Member shall
do or agree to do any of the following matters unless with the prior
consent (such consent (or refusal) not to be unreasonably delayed) of any
one of the Investors:
4.1.1 the entering into any merger or consolidation of any Group Member
with one or more entities;
4.1.2 the liquidation, winding up or dissolution of any Group Member, or
the filing of bankruptcy or similar proceedings;
4.1.3 the disposal of any assets or property (other than in the ordinary
course of business) owned by any Group Member of a total value per
transaction of more than RMB100 million;
4.1.4 any amendments (by merger or otherwise) to any Group Member's
articles of association or other constitutional documents save for any
incidental amendments required to be made to the articles of
association of the PRC Company in connection with operating matters in
the ordinary course of business, provided that the scope or
consequences of such amendments are not likely to directly or
indirectly circumvent or alter the rights of the Investors or the
approval rights of the Investors hereunder;
4.1.5 any repurchase or redemption of the equity of any Group Member other
than a redemption of the Convertible Redeemable Preference Shares or a
repurchase of any Conversion Shares as agreed upon by the Investor;
4.1.6 the issuance of, or any action that reclassifies any Equity Share
Capital or Ordinary Share Equivalents into, shares having preferences
or priority as to dividends or assets senior or pari passu to the
Convertible Redeemable Preference Shares;
4.1.7 the issuance of any Equity Share Capital or Ordinary Share
Equivalents other than in connection with (i) an IPO, (ii) an
acquisition of minority interests in the1 PRC Company or (iii)
pursuant to the exercise of options granted under any share incentive
schemes approved by the Board and any one of the Investors provided
that in each case such issuance would not otherwise require the
consent of any one of the Investors pursuant to Clauses 4.1.6 or
4.1.12;
4.1.8 any amendments (by merger or otherwise) to the rights, preferences,
privileges or powers of the Convertible Redeemable Preference Shares;
12
4.1.9 the retention of any external professional advisor other than a Big 4
accounting firm to provide Tax advisory services to the Group or to
assist in the preparation of Tax returns;
4.1.10 the entry into any transaction or series of related transactions by
any Group Member, which has as an objective and/or the effect of
securing a Tax benefit;
4.1.11 any Tax-motivated restructuring of the Group or of the business,
operations or practices thereof;
4.1.12 the adoption of any share option or share incentive scheme or
employee share trust or share ownership plan; and
4.1.13 any transaction or series of transactions in excess of RMB2 million
by any Group Member with a Major Shareholder (or any of its Associates
or Family Members) or a director of a Group Member or an Associate of
any such director.
For the avoidance of doubt the Investors' holdings for the purpose of
this Clause 4.1 shall include any Convertible Redeemable Preference
Shares which are subject to a redemption demand pursuant to a
Redemption Notice (as defined ins' the Articles) until such Redemption
Notice has been satisfied in full.
4.2 Prior to a Qualified IPO, for so long as the Audited Net Income in any
financial year is less than RMB500 million the prior consent (such consent
(or refusal) not to be unreasonably delayed) of any one of the Investors is
required in relation to the matters referred to below, save that if the
Audited Net Income for any financial year exceeds RMB500 million, from the
time that such Financial Statements are released to the Investors in
accordance with Clause 2.1 the prior consent of any one of the Investors
shall not be required in relation to any of the matters referred to below
and no prior consent is required to be obtained in relation to such matters
unless the Audited Net Income falls below RMB500 million for two
consecutive financial years and in which case the prior consent of any one
of the Investors in relation to the matters referred to below is required
from the date in the following financial year on which the Financial
Statements are released to the Investors in accordance with Clause 2.1;
4.2.1 the declaration of dividends or any distribution made with respect to
any equity security by any Group Member in respect of any financial
year commencing 1 January 2005 or thereafter of more than 60% of such
Group Member's Audited Net Income (as shown in the Financial
Statements) of that year;
4.2.2 the taking out of any loan or the incurrence of any indebtedness by
the Group or a Group Member in excess of RMB 100 million, whether in a
single transaction or a series of related transactions which occur
within a three-month period;
4.2.3 any capital commitment with an aggregate value in excess of RMB100
million, whether in a single transaction or a series of related
transactions, by any Group Member unless such commitment has already
been specifically approved;
13
4.2.4 any Group Member making any acquisition or disposal of or relating to
any Intellectual Property Rights with a value attributable to such
right in excess of RMB100 million or more;
4.2.5 any change in any Group Member's auditors;
4.2.6 any material changes to any Group Member's business plan previously
approved by the Board;
4.2.7 the granting of any security over any material assets of the Group or
extending a loan to or guaranteeing any loans for any person which is
not a Group Member, or
4.2.8 the making of any loan or advance to any person, firm, body corporate
or other business other than in the normal course of business and on
an arms' length basis.
5. TRANSFERS OF SHARES
5.1 Subject to Clause 6.1, with the exception of Permitted Transfers and
transfers under Clause 8, if any investor wishes to transfer any of its
Convertible Redeemable Preference Shares or Conversion Shares, it shall be
entitled to do so only in accordance with the following provisions:
5.1.1 Such Investor (the "SELLING INVESTOR") shall serve a written notice
("TRANSFER NOTICE") on the Major Shareholders stating the number of
Convertible Redeemable Preference Shares or Conversion Shares that it
offers to sell ("TRANSFER SHARES").
5.1.2 Within 15 Business bays of the receipt of a Transfer Notice, the
Major Shareholders shall each be entitled to make an offer in writing
to the Selling Investor (which should be copied to the Company) to
purchase all or any of the Transfer Shares at any price for each such
Transfer Share (the "PRESCRIBED PRICE"), provided that the Prescribed
Price shall always be deemed to be the highest price per share offered
by any of the Major Shareholders.
5.1.3 if the Selling Investor receives offers for such number of Transfer
Shares in excess of the number of Transfer Shares on offer for sale,
then those Major Shareholders who have made such offers (each, a
"BUYING MAJOR SHAREHOLDER") shall be deemed (as far as practicable and
without exceeding the number of Transfer Shares which each such Major
Shareholder shall have offered to purchase) to have offered to
purchase the Transfer Shares at the Prescribed Price in proportion to
their existing holdings of Shares.
5.1.4 If the Selling Investor receives offers to purchase any of the
Transfer Shares in accordance with Clause 5.1.2, the Selling Investor
shall within 10 Business Days upon the expiry o L the 15-Business Day
period provided in clause 5.1 2 notify the Selling Investor and the
Buying Major Shareholders as to whether their offers are accepted, and
the Selling Investor shall be bound to transfer such number of
Transfer Shares to such Major Shareholder(s) as set out in the notice
circulated by
14
the Company within 10 Business Days thereafter (free from all liens,
charges, encumbrances and third party rights whatsoever and together
with all rights then attaching thereto) upon payment of the Prescribed
Price for each Transfer Share. Such notice shall state the name and
address of each of the Buying Major Shareholders and the number of
Transfer Shares to be acquired by him and the purchase shall be
completed at a place and time to be mutually agreed between the
Selling Investor and the relevant Buying Major Shareholder being not
less than 3 and not more than 10 Business Days after the date of such
notice.
5.1.5 If the Selling Investor fails to transfer any Transfer Shares to a
Buying Major Shareholder in accordance with Clause 5.1.4, the Board
may with prior notice to the Selling Investor authorise any person to
execute and deliver on his behalf the necessary stock transfer form
and the Company shall against receipt of the Prescribed Price for each
Transfer Share for the Selling Investor cause the relevant Buying
Major Shareholder to be registered as the holder of such Transfer
Shares (subject to payment of any stamp duty, if required). The
receipt by the Company of the purchase money shall be a good discharge
to the Buying Major Shareholder (who shall not be bound to see to the
application thereof). The Selling Investor shall in such case be bound
to deliver up his certificate for the Transfer Shares to the Company
whereupon he shall be entitled to receive the Prescribed Price for
each Transfer Share without interest. If such certificate shall
comprise any Transfer Shares which the Selling Investor has not become
bound to transfer as aforesaid, the Company shall issue to the Selling
Investor a new certificate for such shares.
5.1.6 If the Investor does not accept the offers to purchase all of the
Transfer Shares in accordance with Clause 5.1.2 then the Investor
shall within the period of three months from the date of its notice to
the Major Shareholders be entitled to transfer to another transferee
those Transfer Shares at a price which is not less than the Prescribed
Price for each share.
5.2 Subject to Clause 6.1, with the exception of Permitted Transfers and
transfers under Clause 8, if any Major Shareholder wishes to transfer any
of its Shares, it shall be entitled to do so only in accordance with the
following provisions ("TRANSFEROR SHAREHOLDER"):
5.2.1 It shall serve a written notice ("SHARE TRANSFER NOTICE") on the
Company stating the number of Shares it wishes to transfer ("SALE
SHARES") and the proposed price for each such Sale Share (the "SALE
PRICE").
5.2.2 Within 5 Business Days of the receipt of a Share Transfer Notice the
Company shall send a copy of it to the other Major Shareholders and
the Investors (collectively for the purposes of this Clause 5.2 the
"TRANSFEREE SHAREHOLDERS") who shall each be entitled to offer to
purchase all or any of the Sate Shares at the Sale Price. Any such
offer must be made in writing to the Company within 15 Business Days
of the dispatch by the- Company of such copy of the Share Transfer
Notice.
15
5.2.3 If the Company receives offers for a number of Sale Shares in excess
of the number of Sale Shares on offer, then those Transferee
Shareholders who have made such offers (each, an "ACCEPTING TRANSFEREE
SHAREHOLDER") shall be deemed (as far as practicable and without
exceeding the number of Sale Shares which each such Transferee
Shareholder shall have offered to purchase) to have offered to
purchase the Sale Shares in proportion to their existing percentage
shareholding interest in the Fully Diluted Share Capital.
5.2.4 If the Company receives offers to purchase any of the Sale Shares in
accordance with Clause 52.2, it shall within 10 Business Days give
notice thereof to the Transferor Shareholder who shall then be bound
to transfer such Sale Shares within 10 Business Days thereafter (free
from all liens, charges, encumbrances and third party rights
whatsoever and together with all rights then attaching thereto) upon
payment of the Sale Price for each Sale Share. Such notice shall state
the name and address of each of the Accepting Transferee Shareholders
and the number of Sale Shares to be acquired by him and the purchase
shall be completed at a place and time to be appointed by the Company
being not less than 3 and not more than 10 Business Days after the
date of such notice.
5.2.5 If -a Transferor Shareholder fails to transfer any Sale Shares to an
Accepting Transferee Shareholder in accordance with Clause 5.2.4, the
Board may with prior notice to the Transferor Shareholder authorise
any person to execute and deliver on his behalf the necessary stock
transfer form and the Company shall against receipt of the Sale Price
for each Sale Share for the Transferor Shareholder cause the relevant
Accepting Transferee Shareholder to be registered as the holder of
such Sale Shares (subject to payment of any stamp duty, if required).
The receipt of the Company for the purchase money shall be a good
discharge to the Accepting Transferee Shareholder (who shall not be
bound to see to the application thereof). The Transferor Shareholder
shall in such case be bound to deliver up his certificate for the Sale
Shares to the Company whereupon he shall be entitled to receive the
Sale Price for each Sale Share without interest. If such certificate
shall comprise any Sale Shares which the Transferor Shareholder has
not become bound to transfer as aforesaid, the Company shall issue to
the Transferor Shareholder a new certificate for such Sale Shares.
5.2.6 If the Company does not receive offers to purchase all of the Sale
Shares in accordance with Clause 5.2.2 then the Company shall promptly
notify then Transferor Shareholder. The Transferor Shareholder shall
within the period of three months from the date of its notice to the
Transferee Shareholders be entitled to transfer those remaining Sale
Shares for which the Company has not received offers at. a price which
is not less than the Sale Price for each share, provided that in
respect of a Transferor Shareholder who is also a Major Shareholder it
shall:
(a) procure that an offer is extended by the third party purchaser to
each Investor, at the Sale Price and on no less favourable terms
to those offered to the Transferor Shareholder in respect of such
number of Convertible Redeemable Preference Shares (on an
as-converted basis) and/or
16
Conversion Shares (to the extent any or all of the Convertible
Redeemable Preference Shares have already been converted) held by
each Investor representing the following percentage of the
Investor's total as-converted shareholdings:
A
--- x 100%
B
where:
A = total number of Shares initially to be acquired by the third
party purchaser from the Transferor Shareholder, and
B = total number of Shares then held by the Major Shareholders;
(b) if the third party purchaser is unwilling to so extend the offer
to include such additional shareholdings, the number of Shares
that the Transferor Shareholder may sell to such third party
purchaser shall be reduced so that the Transferor Shareholders
and the Investor(s) exercising their co-sale rights under this
Clause 5.26 shall sell-down pro rata to their respective total
shareholdings.
5.3 Subject to Clause 7.4, without the prior written consent of the Major
Shareholders, no Investor shall transfer or dispose of any of its
Convertible Redeemable Preference Shares or Conversion Shares to any
person:
5.3.1 within 12 months of the date of this Agreement (other than as part
of any secondary sales in an IPO); or
5.3.2 prior to an IPO to any person who is a Competitor.
6. NEW SHAREHOLDERS
6.1 In the case of transfers by a Major Shareholder or the Investors pursuant
to Clause 5, no more than 2% of the Equity Share Capital in the Company can
be transferred (whether in one or a series of transactions) to a person who
is not already a party to this Agreement unless that person has already
executed a deed of adherence in the form set out in Schedule 4 in which he
or it is treated as a Major Shareholder or an Investor (as the case may
be), save that in the event of any transfer of less than 2% of outstanding
shares such transfer shall be conditional upon and be subject to the person
to whom the shares are being transferred to executing an undertaking in the
form set out in Schedule 2.
6.2 All executed deeds of adherence shall be delivered to and held by the
Company.
6.3 For the purpose of this Agreement, transfers of legal and beneficial
interests in any entity through which the Major Shareholders hold Shares,
shall be considered transfers by the Major Shareholders of its Shares, and
accordingly Clause 5.2, 6.1 and 7.6 shall apply mutatis mutandis to such
transfers.
17
7. QUALIFIED IPO
7.1 The Company and each of the Shareholders shall use their reasonable
endeavours to conduct a Qualified IPO within three years from the date of
this Agreement.
7.2 In the event that a proposed IPO (including a Qualified IPO) is aborted for
any reason, and the parties have undertaken relevant structuring and other
preparatory steps in respect of such IPO or Qualified IPO, each of the
Company and the Shareholders shall take all necessary steps as are required
to restore all the Shareholders, the Investors and the Company to the
position they enjoyed before the steps for such 1P0 or Qualified IPO were
undertaken, including, inter alia, re-adopting the Company's Articles in
the form in place prior to any revisions made in connection with the IPO
process and reversing any steps taken to convert the Convertible Redeemable
Preference Shares.
7.3 The parties acknowledge that subject to compliance with all applicable
laws, regulations, the Listing Rules and any requirement of the Stock
Exchange or any other applicable authorities, in the event of a Qualified
IPO or IPO neither the Investors nor the Investor Director will give any
representations, warranties, indemnities or undertakings other than in
respect of the Investor's ownership of Equity Share Capital.
7.4 In an IPO, if the Company, after consultation with the underwriters,
decides that the IPO shall include a sale of secondary shares in the
Company, i.e., those Shares of the Company in existence prior to the IPO,
the parties agree to act in good faith and to determine a ratio upon which
the Shareholders and each Investor may sell their respective holdings in
the Company, provided that the Investors agree that should they elect to
sell any of their holdings pursuant to this Clause 7.4 they will not sell
more than 2S% of the Conversion Shares then held and will agree that the
remaining holding excluding any of its Escrow Shares will be subject to a
lock-up of no more than 6 months.
7.5 For the purposes of this Agreement, a "QUALIFIED IPO" means an IPO on the
Stock Exchange which occurs within the following periods with the
corresponding minimum IPO Price or an IPO to which any one of the Investors
has otherwise consented expressly to as a Qualified IPO:
IPO TUNING
(NO. OF MONTHS AFTER THE COMPLETION DATE UP TO
THE DATE OF ANY PROSPECTUS ISSUED IN CONNECTION
WITH A LISTING) 0 - 6 6 - 12 12 - 18 18 - 24 THEREAFTER
----------------------------------------------- ----- ------ ------- ------- ----------
IPO Price as % of the Conversion Price 100% 120% 135% 170% 200%
7.6 The Major Shareholders agree that at all times prior to the completion of a
Qualified IP0 they will directly or indirectly in the aggregate hold at
least 30% of the Fully Diluted Share Capital, and each Major Shareholder
agrees that it will not sell in aggregate more than 25% of its Shares held
as of the date of this Agreement.
18
8. ADJUSTMENTS
8.1 On the Performance Adjustment Date the performance adjustment (the
"PERFORMANCE ADJUSTMENT") shall occur such that, either:
(a) if the 2005 Net Profits are more than US$31,040,000 the Investors
shall, at the election of the Major Shareholders either (i) pay the
Cash Adjustment to the Major Shareholders, (ii) have the obligation to
sell to the Major Shareholders (who in turn will be obliged to
purchase) such number of Shares at such time as determined in
accordance with the provisions of Clauses 8.3 and 8.4 or (iii) pay the
Net Share Adjustment by way of partly a proportion of the Cash
Adjustment and the remaining amount to be satisfied in Shares in
accordance with the provisions of Clauses 8.3 and 8.4; or
(b) if the 2005 Net Profits are less than US$31,040,000, the Major
Shareholders shall at the election of the Investors either (1) pay the
Cash Adjustment to the Investors; (ii) have the obligation to sell to
the Investors (who in turn will be obliged to purchase) such number of
Shares at such time as determined in accordance with the provisions of
Clauses 8.3 and 8.4 or (iii) pay the Net Share Adjustment by way of
partly a proportion of the Cash Adjustment and the remaining amount to
be satisfied in Shares in accordance with the provisions of Clauses
8.3 and 8.4.
8.2 Pursuant to Clause 8.1, in the event that the Investors, or the Major
Shareholders, as the case may be, elect to be paid the Cash Adjustment,
such Cash Adjustment shall be paid (subject to Clause 8.8, without
interest) in US$ in immediately available funds no later than the date that
is thirty (30) days following the Performance Adjustment Date. Any election
by either the Major Shareholders or the Investors to implement the
Performance Adjustment partly or entirely through the Cash Adjustment may
only be implemented after an IPO or Qualified IPO, as the case may be.
8.3 The investors (pro rata) and the Major Shareholders (pro rata) shall place
with Law Debenture Corporation, Hong Kong or another escrow agent agreed to
by any one of the Investors and the Major Shareholders (the "ESCROW AGENT")
the maximum number of Shares and Convertible Redeemable Preference Shares
that the Investors or the Major Shareholders may be obligated to transfer
in accordance with the provisions of Clause 8.4 (assuming the Conversion
Price is set at the Subscription Price) (the "ESCROW SHARES"). At any time
after the Net Share Adjustment is to be effected in accordance with Clauses
8.4 and 8.5, the Transferor Party shall:
(i) pay the Cash Adjustment (if the Major Shareholders are the Transferor
Party) to the Investors or (if the Investors are the Transferor Party)
to the Major Shareholders, in lieu of the Net Share Adjustment; or
(ii) instruct the Escrow Agent to effect the Net Share Adjustment by:
(1) instructing a broker (such broker to be selected by the
Transferee Party) to (x) sell such number of Escrow Shares at
such time and in such manner as
19
the Transferee Party may deem appropriate and (y) transfer the
proceeds of the sale (net of any transaction expenses incurred in
connection with such sale) of such number of Escrow Shares in
freely convertible currency to the Transferee Party pursuant to
the Net Share Adjustment; and/or
(2) transferring such number of Escrow Shares to the Transferee Party
as may be requested by the Transferee Party in accordance with
Clause 8.5; provided that, in no event shall Escrow Shares be
transferred under this sub-clause (2) if such transfer may
trigger a mandatory offer or other related anti-takeover
protections of the relevant listing or other rules of the
relevant Stock Exchange.
In addition, immediately after the determination of the Net Share
Adjustment in accordance with the provisions of Clause 8.4, the Escrow
Agent shall without condition return all or such portion of the Escrow
Shares not included in the Net Share Adjustment to the Transferee Party and
the Transferor Party.
8.4 For the avoidance of doubt the adjustment to the Investors' as-converted
shareholdings, whether upwards or downwards, will be such that:
Subscription Amount
E = B - ------------------------------------ x D x (1-C)
Cayman Adjusted Post Money Valuation
B = the total number of Ordinary Share Equivalents held by the Investors'
(as-if converted) immediately prior to the Performance Adjustment Date
C = ESOP Dilution immediately up to the Performance Adjustment Date
D = the Fully-Diluted Share Capital immediately prior to the Performance
Adjustment Date
E = the total number of Ordinary Share Equivalents (as-if converted) to be
transferred to/from. Major Shareholders immediately after the
Performance Adjustment
(1) The Net Share Adjustment shall be equal to E.
(2) The Cash Adjustment shall be calculated in accordance with the
following formula:
Cayman Adjusted Post Money Valuation
Cash Adjustment = ------------------------------------ x E
D
20
(3) For the avoidance of doubt, the Conversion Price used in the
event the Ownership Adjustment Date is the same as the
Performance Adjustment Date shall be the Conversion Price
prevailing immediately after the Ownership Adjustment has
occurred in accordance with the Terms and Conditions.
8.5 At any time after the Performance Adjustment Date, the Transferee Party
shall have the right to purchase from the Transferor Party for an aggregate
purchase price of US$1.00, the number of Shares or Convertible Redeemable
Preference Shares, as the case may be, equivalent to the Net Share
Adjustment.
8.6 Any Shares acquired by the Investors pursuant to the Net Share Adjustment
shall immediately be re-classified by the Company and redesignated into
Convertible Redeemable Preference Shares unless such acquisition occurs
after a Qualified IPO. Any Convertible Redeemable Preference Shares
acquired by the Major Shareholders pursuant to the Net Share Adjustment
shall immediately be re-classified by the Company into Shares. The parties
shall promptly take all actions necessary to effect such
re-classifications.
8.7 The RMB equivalent of any amount referred to in this Clause 8 in US$ shall
be calculated using the Exchange Rate.
8.8 In the event that the Escrow Shares are subject to a lock-up at the time of
election of the Cash Adjustment, such Cash Adjustment shall be payable
immediately following expiry of such lock-up and such amount shall accrue
interest daily at the Prime Rate for the period between demand and payment.
9. FURTHER COVENANTS
9.1 Each Major Shareholder undertakes and covenants with each Investor that he
shall not, while he holds any interest in the Equity Share Capital of any
Group Member (and for a period 12 months thereafter) carry on, set up, be
employed, engaged or interested in a business anywhere in the PRC that is
or is about to be in competition with the Group.
9.2 Each Shareholder covenants to take all necessary actions to procure the
Company to realise the rights of the Convertible Redeemable Preference
Shares including timely redemption, as set out in the Terms and Conditions.
10. CONFIDENTIAL INFORMATION
Subject to the provisions' of this Clause 10, each party shall keep
confidential information obtained from the Company relating to the
Company's business and/or financial affairs of the Group (the "CONFIDENTIAL
INFORMATION") confidential unless:
10.1 that information comes into the public domain otherwise than through a
breach of that party's obligations under this Clause 10; or
10.2 such information is required to be disclosed by law, by a rule of a
securities exchange on which that person's shares (or the shares of a
member of that person's Parent Group's
21
shares) are listed or traded or by a governmental authority or other
authority with relevant powers to which a person (or a member of that
person's Parent Group) is subject or submits, whether or not the
requirement has the force of law, provided that such disclosure shall, so
far as is practicable, be made after consultation with the Company and
after taking into account the Company's reasonable requirements as to its
timing, content and manner of making or despatch,
PROVIDED THAT each party may disclose Confidential Information when such
disclosure is required or necessary to be made, to:
(a) members of that party's Parent Group;
(b) an employee or director of, or professional adviser, to any member of
that party's Parent Group; or
(c) any person to whom it is proposing to transfer shares in accordance
with the provisions of this Agreement,
(which disclosure shall be expressly permitted under the terms of this
Agreement) provided that the party shall use reasonable endeavours to
ensure that the recipient of the Confidential Information complies with the
provisions of this Clause 10 and a breach by the recipient is deemed to be
a breach of the party that made/authorised/permits the disclosure.
11. ANNOUNCEMENTS
Except as required by law, regulation or legal process no announcement in
relation to the transactions contemplated by this Agreement shall be made
without the prior consent of any one of the Investors in the case of an
announcement by either any one of the Major Shareholders or the Company and
in the case of an announcement by any one of the Investors not without the
prior consent of any one of the Major Shareholders and the Company.
12. DURATION
This Agreement shall terminate:
(a) upon a Qualified IPO;
(b) with respect to any Shareholder, when that Shareholder ceases to hold
any shares in the capital of the Company; or
(c) with respect to an Investor, when such Investor (or transferees under
a Permitted Transfer) ceases to hold any shares in the capital of the
Company (either directly or through any nominee or manager), except
that this Clause 12, Clause 1 (Interpretation), Clause 2 (Financial
and Other Information), Clauses 3.3 and 3.4 (The Investor Director),
Clause 8 (Adjustments), Clause 10 (Confidential Information), Clause
11 (Announcements), Clause 13 (Notices and Other
22
Communications), Clause 14 (Miscellaneous) and Clause 15 (Governing
Law and Arbitration) shall continue to bind the parties irrespective
of termination save that in the case of Clauses 2, 3.3 and 3.4 this
shall be subject to the consent of the Stock Exchange, and is without
prejudice to the rights and obligations of each party ceasing to be a
party to this Agreement which have accrued as at that date.
13. NOTICES AND OTHER COMMUNICATIONS
13.1 Any notice or other communication under or in connection with this
Agreement shall be in writing and shall be delivered personally or sent by
registered post in a pre-paid envelope (and air mail in the case of an
address outside Hong Kong) or by facsimile, to the party due to receive the
notice or communication at its address set out in Clause 13.3 or such other
address as a party may specify by notice in writing to the others.
13.2 In the absence of evidence of earlier receipt, any notice or communication
shall be deemed to have been duly given:
13.2.1 if delivered personally, when left at the address stated in Clause
13.3 (or where such time is outside the normal business hours of the
recipient, on the opening of the next following Business Day);
13.2.2 if sent to an address in Hong Kong, on the Business Day after
posting it;
13.2.3 if sent by air mail to an address outside Hong Kong, five Business
Days after posting it; and
13.2.4 if sent by facsimile, when confirmation of its transmission has been
recorded by the sender's fax machine (or where such time is outside
the normal business hours of the recipient, on the opening of the next
following Business Day).
13.3 The addresses referred to in Clause 13.1 are:
XU HANG
Address: Mindray Building, Keji 12th Road South, Hi-tech Industrial
Park, Nanshan, Xxxxxxxx, XXX, 000000
Facsimile No: x00 000 000 00000
LI XITING
Address: Xxxxxxx Xxxxxxxx, Xxxx 00xx Xxxx Xxxxx, Xx-xxxx Xxxxxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxx, XXX, 000000
Facsimile No: x00 000 000 00000
23
XXXXX XXXXXX
Address: Mindray Building, Keji 12th Road South, Hi-tech Industrial
Park, Nanshan, Xxxxxxxx, XXX, 000000
Facsimile No: x00 000 000 00000
NEW DRAGON (NO. 12) INVESTMENTS LIMITED
Address: Mindray Building
Keji 12th Road South
Hi-tech Industry Park
Nanshan, Shenzhen 518057
People's Republic of China
Attention Xxxxx Xxxx
Facsimile No: x00 000 0000-0000
QUIET WELL LIMITED
Address: Mindray Building
Xxxx 00xx Xxxx Xxxxx
Xx-xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 000000
People's Republic of China
Attention Xxxxx Xxxx
Facsimile No: x00 000 0000-0000
ABLE CHOICE INVESTMENTS LIMITED
Address: Mindray Building
Keji 12th Road South
Hi-tech Industry Park
Nanshan, Shenzhen 518057
People's Republic of China
Attention Xxxxx Xxxx
Facsimile No: x00 000 0000-0000
THE INVESTORS
Address: Xxxxxxx Xxxxx (Asia) L.L.C., Xxxxxx Kong Center, 00xx Xxxxx,
0 Xxxxx'x Xxxx Xxxxxxx Xxxx Xxxx
Attention Xxxxx Xxx
Facsimile No: x000 0000 0000
24
COMPANY
Address: Mindray Building, Keji 12th Road South, Hi-tech Industry
Park, Nanshan, Shenzhen, PRC, 518057
Attention Xu Hang
Facsimile No: x00 000 0000 0000
14. MISCELLANEOUS
14.1 The provisions of this Agreement shall be binding upon and accrue to the
benefit of the parties and their respective heirs, legal representatives,
successors and permitted assigns.
14.2 This Agreement may be amended only by a written document signed by all the
parties.
14.3 Any liability to any party hereunder may in whole or in part be released,
compounded or compromised or time or indulgence given by that party in
their absolute discretion as regards the other party under such liability
without in any way prejudicing or affecting the rights of the party to whom
such liability is owed against any such other party subject to the same or
a like liability, whether joint or several or otherwise.
14.4 Nothing contained in this Agreement shall be deemed to constitute a
partnership between the parties and the parties shall not be deemed to be
connected with each other solely because they are parties to this
Agreement.
14.5 No failure to exercise or delay in exercising or enforcing any right or
remedy under this Agreement shall constitute a waiver thereof and no single
or partial exercise or enforcement of any right or remedy under this
Agreement shall preclude or restrict the further exercise or enforcement of
any such right or remedy. The rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights and remedies
provided by law.
14.6 The invalidity, illegality or unenforceability of any provision of this
Agreement shall not affect the continuation in force of the remainder of
this Agreement.
14.7 This Agreement may be executed in any number of counterparts all of which
duly executed and delivered shall constitute the same instrument.
14.8 In the event of any inconsistency between the Subscription Agreement and
this Agreement, this Agreement shall prevail, and in the event of any
inconsistency between the Articles and this Agreement, as between the
parties hereto this Agreement shall prevail.
14.9 Following the date of this Agreement each party agrees for so long as it
remains a party to this Agreement to take such action as may be necessary
to make effective the transactions contemplated by this Agreement and any
of the matters referred to herein.
25
14.10 None of the parties to this Agreement may assign or transfer any of their
rights or obligations under this Agreement except pursuant to a permitted
Transfer or any transfer pursuant to Clause 5.
15. GOVERNING LAW AND ARBITRATION
15.1 This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong.
15.2 If any dispute between the parties arises in connection with this
Agreement, they shall use all reasonable endeavours to resolve the matter
amicably. If one party gives another notice that a material dispute has
arisen and those parties are unable to resolve the dispute within 30 days
of service of notice, then the dispute shall be referred to arbitration in
accordance with Clause 15.3.
15.3 All disputes arising out of or in connection with this Agreement shall be
finally settled under the Rules of Arbitration of the International Chamber
of Commerce by three arbitrators appointed in accordance with the said
Rules. The arbitration institute shall be the International Court of
Arbitration of the International Chamber of Commerce. The place of
arbitration shall be in Hong Kong. The language of the arbitration shall be
English.
16. PREVIOUS AGREEMENTS
The parties acknowledge that this Agreement will replace any agreement
(whether in writing or not) entered into by any party relating to the
Company or shareholdings in the Company.
AS WITNESS the hands of the parties or their duly authorised representatives the
day and year first above written.
26
--------------------------------------------------------------------------------
SCHEDULE 1
PART A - THE SHAREHOLDERS
PERCENTAGE
OF ISSUED
NAME AND ADDRESS CLASS AND AMOUNTS OF SHARES OWNED SHARE CAPITAL
---------------- --------------------------------- ---------------
XU HANG 23,049,582 26.982234%
Mindray Building ORDINARY SHARES
Keji 12th Road South held through
Hi-tech Industry Park NEW DRAGON (NO. 12) INVESTMENTS
Nanshan, Shenzhen LIMITED
PRC, 518057 Xxxxxx Xxxxx, X.X. Xxx 000
Xxxxxx Xxxx
Grand Cayman
Cayman Islands
British West Indies
LI XITING 19,874,970 23.265979%
Mindray Building ORDINARY SHARES
Keji 12th Road South held through
Hi-tech Industry Park QUIET WELL LIMITED
Xxxxxxx, Xxxxxxxx Xxxxxx Xxxx Xxxxxxxx
XXX, 000000 X.X. Xxx 000
Xxxx Xxxx
Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx
XXXXX XXXXXX 3,976,878 4.655401%
Mindray Building ORDINARY SHARES
Keji 12th Road South held through 9.237194%
Hi-tech Industry Park ABLE CHOICE INVESTMENTS LIMITED'S (Able Choice
Nanshan, Shenzhen total holding of 7,890,876 Investments
PRC, 518057 Ordinary shares Limited's total
X.X. Xxx 000 shareholding)
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
27
PART B - THE INVESTORS
PERCENTAGE
OF ISSUED
NAME AND ADDRESS CLASS AND AMOUNTS OF SHARES OWNED SHARE CAPITAL
---------------- --------------------------------- ---------------
GS CAPITAL PARTNERS V FUND, 5,305,080 6.210217%
L.P. CONVERTIBLE
Xxxxxxx Sachs (Asia) L.L.C. REDEEMABLE
68th Floor Xxxxxx Kong Center PREFERENCE SHARES
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
GS CAPITAL PARTNERS V 2,740,384 3.207940%
OFFSHORE FUND, L.P. CONVERTIBLE
Xxxxxxx Sachs (Asia) L.L.C. REDEEMABLE
68th Floor Xxxxxx Kong Center PREFERENCE SHARES
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
GS CAPITAL PARTNERS V 1,819,188 2.129573%
Institutional, L.P. CONVERTIBLE
Xxxxxxx Sachs (Asia) L.L.C. REDEEMABLE
68th Floor Xxxxxx Kong Center PREFERENCE SHARES
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
GS CAPITAL PARTNERS V GMBH 210,325 0.246210%
& Co. KG CONVERTIBLE
Xxxxxxx Sachs (Asia) L.L.C. REDEEMABLE
68th Floor Xxxxxx Kong Center PREFERENCE SHARES
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
SUB TOTAL OF INVESTORS 10,074,977 11.793940%
CONVERTIBLE
REDEEMABLE
PREFERENCE SHARES
28
SCHEDULE 2
UNDERTAKING
TO: [_____] (The "COMPANY")
[Date]
In consideration of the acquisition of [type of shares/number of shares], we,
[name of acquiror], hereby undertake that in the event of any connected person
(as defined in the Rules Governing the Listing of Securities on the Stock
Exchange of Hong Kong Limited) acquiring [type of shares] such that in the
aggregate, the combined holdings of [name of acquirer] and the connected person
is more than 2% of the outstanding [class of shares] in the company we will
execute a deed of adherence in the form attached to this undertaking and procure
that such connected person also executes a deed of adherence in respect of its
holding in the Company.
----------------------------------------
For and on behalf of
[______________________________________]
Name:
----------------------------------
Title:
---------------------------------
29
DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made on [_____________] 200[_]
BY [_______] OF [_______] (the "COVENANTOR") in favour of the persons whose
names are set out in the schedule to this Deed and is SUPPLEMENTAL to the
Shareholders' Agreement dated [_______] 2005 made by (1) [-] (2) [Investors] and
(3) the Shareholders (the "SHAREHOLDERS' AGREEMENT")
THIS DEED WITNESSES as follows:
1. The Covenantor confirms that it has been given and read a copy of the
Shareholders' Agreement and covenants with each person named in the
schedule to this Deed to perform and be bound by all the terms of the
Shareholders' Agreement, as if the Covenantor were [an Investor/a
Shareholder] who is party to the Shareholders' Agreement.
2. This Deed is governed by the laws of Hong Kong Special Administrative
Region of the People's Republic of China.
IN WITNESS WHEREOF this Deed has been executed by the Covenantor and is intended
to be and is hereby delivered on the date first above written
SCHEDULE
[Parties to Shareholders' Agreement including those who have executed earlier
deeds of adherence].
30
SCHEDULE 3
DETAILS OF THE GROUP
A. THE COMPANY
Company number CT-150186
1. Address of registered office c/o Codan Trust Company (Cayman)
Limited, Century Yard, Cricket
Square, Xxxxxxxx Drive, P.O. Box
2681 GT, Xxxxxx Town, Grand Cayman,
British West Indies
2. Date and place of incorporation 10 June 2005
3. Authorised share capital HK$380,000
4. Issued share capital HK$0.01
5. Directors Xu Xxxx
Xx Xiting
6. Auditors Deloitte Touche Tohmatsu
B. PRC COMPANY
1. Company number [Chinese text] 109722
2. Address of registered office Mindray Building, Keji 12th
Road South, Hi-tech Industrial Park,
Nanshan, Shenzhen, PRC, 818057
3. Date and place of incorporation 25 January 1999
Xxxxxxxx, XXX
0. Authorised share capital RMB86,000,000
5. Issued share capital RBM86,000,000
6. Directors Xu Xxxx
Xx Xxxxxx
Xxx Xxxx
Xxxx Fuquing
Dai Xxxxxxx
Xxxxx Shaokang
Xxxxxx Xxxxx
31
7. Auditors Deloitte Touche Tohmatsu
C. [CHINESE TEXT]
1. Company number 1101081782163
2. Address of registered office 5-5 (3/F West), Block 0, 0 Xxxxxx
Xx Xxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx XXX
0. Date and place of incorporation 6 December 2004
Xxxxxx, XXX
0. Authorised share capital RMB10,000,000
5. Issued share capital RMB10,000,000
6. Directors Li Xiting
7. Auditors N/A
32
SCHEDULE 4
DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made on [__________] 200[_]
BY [______] OF [______] (the "COVENANTOR") in favour of the persons whose names
are set out in the schedule to this Deed and is SUPPLEMENTAL to the
Shareholders' Agreement dated [______] 2005 made by (1) [-] (2) [Investors] and
(3) the Shareholders (the "SHAREHOLDERS' AGREEMENT")
THIS DEED WITNESSES as follows:
1. The Covenantor confirms that it has been given and read a copy of the
Shareholders' Agreement and covenants with each person named in the
schedule to this Deed to perform and be bound by all the terms of the
Shareholders' Agreement, as if the Covenantor were [an Investor/a
Shareholder] who is party to the Shareholders' Agreement.
2. This Deed is governed by the laws of Hong Kong Special Administrative
Region of the People's Republic of China.
IN WITNESS WHEREOF this Deed has been executed by the Covenantor and is intended
to be and is hereby delivered on the date first above written
SCHEDULE
[Parties to Shareholders' Agreement including those who have executed earlier
deeds of adherence].
33
EXECUTED by the parties:
GS CAPITAL PARTNERS V FUND, L.P.
BY: GSCP V Advisors, L.L.C.
its General Partner
BY:
-------------------------------------
GS CAPITAL PARTNERS V OFFSHORE FUND, L.P.
BY: GSCP V Offshore Advisors, L.L.C.
its General Partner
BY:
-------------------------------------
GS CAPITAL PARTNERS V GmbH & CO. KG
BY: GS Advisors V,. L.L.C.
its Managing Limited Partner
BY:
-------------------------------------
GS CAPITAL PARTNERS V INSTITUTIONAL, L.P.
BY: GS Advisors V, L.L.C.
its General Partner
BY:
-------------------------------------
Signed by
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
MINDRAY INTERNATIONAL )
HOLDINGS LIMITED )
34
Signed by
-----------------------------------------
XU HANG
Signed by
-----------------------------------------
LI XITING
Signed by
-----------------------------------------
XXXXX XXXXXX
Signed by
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
NEW DRAGON (NO. 12) INVESTMENTS )
LIMITED )
35
Signed by
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
QUIET WELL LIMITED )
Signed by
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
ABLE CHOICE INVESTMENTS LIMITED )
36
EXECUTED by the parties:
GS CAPITAL PARTNERS V FUND, L.P.
BY: GSCP V Advisors, L.L.C.
its General Partner
BY: /s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
GS CAPITAL PARTNERS V OFFSHORE FUND, L.P.
BY: GSCP V Offshore Advisors, L.L.C.
its General Partner
BY: /s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
GS CAPITAL PARTNERS V GmbH & CO. KG
BY: GS Advisors V,. L.L.C.
its Managing Limited Partner
BY: /s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
GS CAPITAL PARTNERS V INSTITUTIONAL, L.P.
BY: GS Advisors V, L.L.C.
its General Partner
BY: /s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
Signed by
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
MINDRAY INTERNATIONAL )
HOLDINGS LIMITED )
37
EXECUTED by the parties:
GS CAPITAL PARTNERS V FUND, L.P.
BY: GSCP V Advisors, L.L.C.
its General Partner
BY:
-------------------------------------
GS CAPITAL PARTNERS V OFFSHORE FUND, L.P.
BY: GSCP V Offshore Advisors, L.L.C.
its General Partner
BY:
-------------------------------------
GS CAPITAL PARTNERS V GmbH & CO. KG
BY: GS Advisors V,. L.L.C.
its Managing Limited Partner
BY:
-------------------------------------
GS CAPITAL PARTNERS V INSTITUTIONAL, L.P.
BY: GS Advisors V, L.L.C.
its General Partner
BY:
-------------------------------------
Signed by
/s/ Xu Hang
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
MINDRAY INTERNATIONAL )
HOLDINGS LIMITED )
38
Signed by
/s/ Xu Hang
-----------------------------------------
XU HANG
Signed by
/s/ Li Xiting
-----------------------------------------
LI XITING
Signed by
/s/ Xxxxx Xxxxxx
-----------------------------------------
XXXXX XXXXXX
Signed by
/s/ Xu Hang
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
NEW DRAGON (NO. 12) INVESTMENTS )
LIMITED )
39
Signed by
/s/ Li Xiting
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
QUIET WELL LIMITED )
Signed by
/s/ Xxxxx Xxxxxx
-----------------------------------------
-----------------------------------------
duly authorized for and on behalf of )
ABLE CHOICE INVESTMENTS LIMITED )
40
