Document:

exv10w2

EXHIBIT
10.2

DEALER MANAGER OPERATING AGREEMENT

     THIS DEALER MANAGER OPERATING AGREEMENT (the “Agreement”) is entered into and effective as of
November 19, 2009 (the “Effective Date”), by and between Gladstone Commercial Corporation, a
Maryland corporation (the “Company”), and Halcyon Capital Markets, LLC, a Massachusetts limited
liability company (the “Dealer Manager”).

     WHEREAS, the Company is offering for sale in a private placement offering (the “Offering”) up
to 3,333,333 shares of the Company’s Senior Common Stock (the “SCS Shares”) pursuant to a
Confidential Private Placement Memorandum of the Company dated November 19, 2009; and

     WHEREAS, pursuant to that certain Dealer Manager Agreement dated November 19, 2009, the Dealer
Manager has agreed to act as the dealer manager for the Offering and the Company has agreed to pay
certain commissions and fees to the Dealer Manager for such services; and

     WHEREAS, the Company has agreed to advance funds to cover certain expenses to enable the
Dealer Manager to commence sales efforts in connection with the Offering; and

     WHEREAS, the parties hereto desire to set forth their understanding of the advancement of
these expenses pursuant to the terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual covenants and conditions contained
in this Agreement and other good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, the parties agree as follows:

     1. Budget. Attached as Exhibit A hereto is the initial budget of revenues and
expenses associated with the Offering (the “Budget”) agreed upon by the Company and the Dealer
Manager. The Dealer Manager agrees to use its best efforts to utilize funds advanced by the
Company pursuant to this Agreement in accordance with the Budget. Material exceptions to the
Budget must be approved by the Company in advance. The Budget may be revised to adapt to changes
in market conditions or marketing plans upon the mutual agreement of the parties.

     2. Expense Advances. Subject to the terms and conditions below, the Company hereby agrees to
advance to the Dealer Manager a Mutually Agreed upon amount each month based upon the budgeted
“Projected Dealer Manager Cash Flow” line item contained in the Budget. “Mutually Agreed” means
that the Dealer Manager and the Company must agree on the amount to be disbursed before the end of
each month and in order to do that the Dealer Manager will submit a projected use of money from the
prior disbursement by the 23rd day of the month based on the actual spending and the projected
spending. The Mutually Agreed upon amount to be advanced by the Company for each calendar month
shall be paid to the Dealer Manager by wire transfer or other immediately available funds at least
three (3) days prior to the first day of such month; provided, that the amount advanced for the
first calendar month shall be payable after the Dealer Manager furnishes satisfactory evidence to
the Company of the admission of Dan Werry as a member of the Dealer Manager. Expense advances
advanced to the Dealer Manager will be used only for the items set out in the Budget and for the
amounts set out in the Budget.

     3. Reimbursement of Advances. The Company may apply the portion of the dealer manager fee
(the “Halcyon DM Fee”) attributable to the Dealer Manager (i.e., net of any marketing or

 

 

other similar fees required to be paid to participating broker-dealers) against funds
previously advanced by the Company to the Dealer Manager in any given month. The Halcyon DM Fee
shall not be paid by the Company to the Dealer Manager until the Projected Dealer Manager Cash
Flow—Total Cumulative on the Budget has reached positive and remains positive for two consecutive
months. The maximum total amount to be paid by the Company to the Dealer Manager from all sources
(not including the 7% commissions) shall not exceed 3.75% (including the 1% that may be paid to
participating broker-dealers as marketing fees) of the Gross Offering Proceeds, meaning all SCS
Shares sold by the Dealer Manager multiplied by $15, except for SCS Shares sold to an Institution
without the Company’s prior written approval in accordance with the Dealer Manager Agreement. To
the extent that the maximum total amount paid to the Dealer Manager combined with expenses advanced
by the Company under this Agreement exceeds 3.75% (including any amounts paid to broker-dealers by
the Company) of the Gross Offering Proceeds, the Dealer Manager shall reimburse the Company for
such excess within five (5) days of the ending of the Offering per Section 7 below.

     4. Monthly Reports. The Dealer Manager shall provide to the Company for each calendar month,
no later than the fifth day of the subsequent calendar month, a report of actual expenses and sales
pursuant to the Offering, in sufficient detail to permit the Company to evaluate the performance of
the Dealer Manager in relation to the Budget. In addition the Dealer Manager shall provide the
following reports:

          (a) Weekly or daily on key accounts regarding the signing of the sales agreement.

          (b) Weekly or daily on wholesalers regarding the sale of SCS Shares.

          (c) Any and all other reasonable documentation requested by the Company.

     5. New Sponsor Approval. The Dealer Manager agrees that it shall not act as dealer manager or
provide similar services for any new sponsor of any private or public offering without the prior
written approval of the Company, which approval shall not be unreasonably withheld. When
determining whether to grant such approval, the Company shall primarily consider the following
factors: (a) whether the proposed new sponsor will be offering directly competing products (e.g.,
single-tenant, net lease properties); (b) whether there is a reasonable probability that the
credibility or reputation of the proposed new sponsor could be detrimental to the goodwill of the
Company and its affiliates, and (c) if adding another offering would adversely distract the
employees of the broker-dealers from the sale of the SCS Shares.

     6. State Registrations. The Dealer Manager shall be registered as a broker-dealer in every
state that it intends to sell in within thirty (30) days after the Effective Date, and shall not
make any sales of SCS Shares unless and until all such registrations are completed.

     7. Term and Termination.

          (a) Term. Unless earlier terminated as provided below, the term of this Agreement
(the “Term”) shall commence on the Effective Date and shall terminate on the earlier to occur of
(i) the effective date of the termination of the Offering, (ii) the effective date of the
termination of the Dealer Manager Agreement, or (iii) a default under this Agreement.

          (b) Termination by the Company. Notwithstanding anything in this Agreement or the
Dealer Manager Agreement to the contrary, the Company may terminate this Agreement in any of the
following circumstances: (i) after the earlier to occur of 120 days following the receipt by the
Dealer

2

 

Manager of the Offering’s third-party due diligence report and FINRA-compliant marketing
support materials or the date on which the Company has advanced $500,000 to the Dealer Manager
under this Agreement; (ii) in the event that the Dealer Manager has not fully complied with its
registration obligations pursuant to Section 6 above; (iii) if the Investment Committee of the
Company determines, in its sole and absolute discretion, that market conditions or the business of
the Company may be adversely affected by continuing to offer the SCS Shares in the Offering; or
(iv) if the Dealer Manager does not furnish satisfactory evidence of the admission of Dan Werry as
a member of the Dealer Manager within five (5) business days after the Effective Date.

          (c) Termination by the Dealer Manager. Notwithstanding anything in this Agreement or
the Dealer Manager Agreement to the contrary, the Dealer Manager may terminate this Agreement in
any of the following circumstances: (i) the Company fails to make any payment to the Dealer Manager
pursuant to this Agreement within fifteen (15) days after such payment is due; (ii) the Company or
its representatives frustrate sales and marketing activities by (A) refusing to participate in a
sales or marketing event as reasonably requested by the Dealer Manager or (B) unreasonably delaying
the approval or production of necessary support materials, third-party due diligence reports, or
the execution and maintenance of broker-dealer selling agreements; or (iii) the Company sustains
significant material damage to Company goodwill such that it becomes highly unlikely that the
Dealer Manager can sell the Company’s shares.

          (d) Effect of Termination. Upon a termination by the Company or the Dealer Manager
pursuant to subsection (b) or (c): (i) neither party shall have any further obligations other than
as specified under this Agreement; and (ii) the parties shall reasonably cooperate to preserve and
minimize any disruption to relationships developed by the Dealer Manager with the participating
broker-dealers listed on Exhibit B in connection with the Offering.

     8. Potential Future Additional Affiliated Dealer Manager. The Dealer Manager understands,
acknowledges and agrees that the Dealer Manager has been appointed as dealer manager of the
Offering of the SCS Shares on a non-exclusive basis and that the Company may, in the future, enter
into a separate dealer manager agreement with Circadian Partners, LLC, an affiliate of the
Company’s adviser and a member firm of FINRA, for the sale of the SCS Shares on the same or similar
terms set forth in the Dealer Manager Agreement.

     9. Miscellaneous.

          (a) Assignment. This Agreement may not be assigned by either party, except with the
prior written consent of the other party. This Agreement shall be binding upon the parties hereto,
their heirs, legal representatives, successors and permitted assigns.

          (b) Entire Agreement; Amendment. Other than the Dealer Manager Agreement, which
governs the relationship of the Dealer Manager and the Company in connection with the Offering,
this Agreement constitutes the complete and exclusive statement of the agreement between the
parties relating to the subject matter hereof and supersedes all prior written and oral statements
or agreements with respect to such subject matter. This Agreement may be amended or modified only
in a writing signed by the parties.

          (c) Applicable Law and Venue. This Agreement was executed and delivered in, and its
validity, interpretation and construction shall be governed by, the laws of the State of Virginia.
The parties hereby agree that venue for any action brought in connection with this Agreement shall
lie exclusively in McLean, Virginia.

3

 

          (d) Counterparts. This Agreement may be executed in any number of counterparts. Each
counterpart, when executed and delivered, shall be an original contract, but all counterparts, when
taken together, shall constitute one and the same agreement. Facsimile and electronic executions
and deliveries shall have the full force and effect of original signatures.

4

 

          IN WITNESS WHEREOF, the undersigned have executed this Agreement, effective as of the date
first written above.

	 	 	 	 	 
	 	

COMPANY:

Gladstone Commercial Corporation

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	

DEALER MANAGER:

Halcyon Capital Markets, LLC

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

5

 

Exhibit A

Budget

[See attached]

 

 

Exhibit A

Gladstone $50M Reg D Offering

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Nov	 	 	Dec	 	 	Jan	 	 	Feb	 	 	March	 	 	April	 	 	May	 	 	June	 	 	July	 	 	Aug	 	 	Sept	 	 	Oct	 	 	 	 	 
	 	 	 	 	 	 	2009	 	 	2009	 	 	2009	 	 	2010	 	 	2010	 	 	2010	 	 	2010	 	 	2010	 	 	2010	 	 	2010	 	 	2010	 	 	2010	 	 	 	 	 
	 	 	 	 	 	 	Month 1	 	 	Month 2	 	 	Month 3	 	 	Month 4	 	 	Month 5	 	 	Month 6	 	 	Month 7	 	 	Month 8	 	 	Month 9	 	 	Month 10	 	 	Month 11	 	 	Month 12	 	 	 	Total	 
	 	 	 	 
	Broker Dealer Expenses:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wholesalers Payroll
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	14,640	 	 	 	14,640	 	 	 	21,840	 	 	 	21,840	 	 	 	21,840	 	 	 	21,840	 	 	 	39,840	 	 	 	39,840	 	 	 	39,840	 	 	 	39,840	 	 	 	39,840	 	 	 	39,840	 	 	 	 	355,680	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Operations Payroll
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	27,552	 	 	 	27,552	 	 	 	27,552	 	 	 	32,779	 	 	 	34,912	 	 	 	34,912	 	 	 	37,952	 	 	 	37,952	 	 	 	37,952	 	 	 	37,952	 	 	 	37,952	 	 	 	37,952	 	 	 	 	412,971	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BD Sponsorship
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	30,000	 	 	 	30,000	 	 	 	—	 	 	 	105,000	 	 	 	22,500	 	 	 	22,500	 	 	 	7,500	 	 	 	7,500	 	 	 	—	 	 	 	 	225,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Admin
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	10,150	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	300	 	 	 	 	13,450	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Marketing
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	12,750	 	 	 	13,300	 	 	 	11,500	 	 	 	11,909	 	 	 	21,134	 	 	 	34,467	 	 	 	31,617	 	 	 	37,617	 	 	 	32,742	 	 	 	29,742	 	 	 	29,742	 	 	 	—	 	 	 	 	266,520	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Start-Up
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	116	 	 	 	10,000	 	 	 	5,750	 	 	 	1,300	 	 	 	800	 	 	 	663	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	18,629	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other O/H
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	Totals	 	 	 	7,300	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	6,800	 	 	 	 	82,100	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dues/Subscriptions
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 
	 	 	Totals	 	 	 	—	 	 	 	650	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	650	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Broker/Dealer Expenses (Monthly)
	 	 	 	 	 	 	72,508	 	 	 	73,242	 	 	 	73,742	 	 	 	104,928	 	 	 	115,786	 	 	 	98,982	 	 	 	221,509	 	 	 	145,009	 	 	 	140,134	 	 	 	122,134	 	 	 	122,134	 	 	 	84,892	 	 	 	 	1,375,000	 
	 	 	 	 
	Broker Dealer Income:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equity First Year — INPUT
	 	 	50	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	Equity Raised
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,250,000	 	 	 	2,500,000	 	 	 	6,250,000	 	 	 	6,250,000	 	 	 	6,250,000	 	 	 	6,250,000	 	 	 	6,250,000	 	 	 	6,250,000	 	 	 	8,750,000	 	 	 	 	50,000,000	 
	 	 	 	 
	Halcyon DM Fee
	 	 	3.75	%	 	 	—	 	 	 	—	 	 	 	—	 	 	 	46,875	 	 	 	93,750	 	 	 	234,375	 	 	 	234,375	 	 	 	234,375	 	 	 	234,375	 	 	 	234,375	 	 	 	234,375	 	 	 	328,125	 	 	 	 	1,875,000	 
	 	 	 	 
	Cumulative Halcyon DM Fee
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	46,875	 	 	 	140,625	 	 	 	375,000	 	 	 	609,375	 	 	 	843,750	 	 	 	1,078,125	 	 	 	1,312,500	 	 	 	1,546,875	 	 	 	1,875,000	 	 	 	 	 	 
	 	 	 	 
	Local BD Marketing Fees (1)
	 	 	1.00	%	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(12,500	)	 	 	(25,000	)	 	 	(62,500	)	 	 	(62,500	)	 	 	(62,500	)	 	 	(62,500	)	 	 	(62,500	)	 	 	(62,500	)	 	 	(87,500	)	 	 	 	(500,000	)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Commissions to Reg Reps in (2)
	 	 	7.00	%	 	 	—	 	 	 	—	 	 	 	—	 	 	 	87,500	 	 	 	175,000	 	 	 	437,500	 	 	 	437,500	 	 	 	437,500	 	 	 	437,500	 	 	 	437,500	 	 	 	437,500	 	 	 	612,500	 	 	 	 	3,500,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Commissions Paid (2)
	 	 	7.00	%	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(87,500	)	 	 	(175,000	)	 	 	(437,500	)	 	 	(437,500	)	 	 	(437,500	)	 	 	(437,500	)	 	 	(437,500	)	 	 	(437,500	)	 	 	(612,500	)	 	 	 	(3,500,000	)
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Dealer Manager Income (Monthly)
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	34,375	 	 	 	68,750	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	240,625	 	 	 	 	1,375,000	 
	 	 	 	 
	Total
Cumulative
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	34,375	 	 	 	103,125	 	 	 	275,000	 	 	 	446,875	 	 	 	618,750	 	 	 	790,625	 	 	 	962,500	 	 	 	1,134,375	 	 	 	1,375,000	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Projected Dealer Manager Cash Flow
	 	 	 	 	 	 	(72,508	)	 	 	(73,242	)	 	 	(73,742	)	 	 	(70,553	)	 	 	(47,036	)	 	 	72,893	 	 	 	(49,634	)	 	 	26,866	 	 	 	31,741	 	 	 	49,741	 	 	 	49,741	 	 	 	155,733	 	 	 	 	 	 
	Total
Cumulative
	 	 	 	 	 	 	(72,508	)	 	 	(145,750	)	 	 	(219,492	)	 	 	(290,045	)	 	 	(337,081	)	 	 	(264,188	)	 	 	(313,822	)	 	 	(286,956	)	 	 	(255,215	)	 	 	(205,474	)	 	 	(155,733	)	 	 	0	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Issuer/Sponsor (GOOD) Costs:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total GOOD Costs
	 	 	 	 	 	 	228,500	 	 	 	77,083	 	 	 	90,833	 	 	 	35,833	 	 	 	73,750	 	 	 	34,500	 	 	 	23,000	 	 	 	67,750	 	 	 	31,500	 	 	 	21,500	 	 	 	65,750	 	 	 	29,500	 	 	 	 	779,500	 
	Aggregate Counter
	 	 	 	 	 	 	228,500	 	 	 	305,583	 	 	 	396,417	 	 	 	432,250	 	 	 	506,000	 	 	 	540,500	 	 	 	563,500	 	 	 	631,250	 	 	 	662,750	 	 	 	684,250	 	 	 	750,000	 	 	 	779,500	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GOOD Org & Off Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Re-Couped Expense (50)
	 	 	1.56	%	 	 	—	 	 	 	—	 	 	 	—	 	 	 	19,487	 	 	 	38,975	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	136,412	 	 	 	 	779,500	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Advisor/GLDMGT Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 
	Total GLDMGT Income
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	93,750	 	 	 	—	 	 	 	—	 	 	 	269,531	 	 	 	—	 	 	 	—	 	 	 	468,750	 	 	 	 	832,031	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Combined Totals
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Broker/Dealer
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FM Broker/Dealer Expenses
	 	 	 	 	 	 	72,508	 	 	 	73,242	 	 	 	73,742	 	 	 	104,928	 	 	 	115,786	 	 	 	98,982	 	 	 	221,509	 	 	 	145,009	 	 	 	140,134	 	 	 	122,134	 	 	 	122,134	 	 	 	84,892	 	 	 	 	1,375,000	 
	FM Broker/Dealer Income
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	34,375	 	 	 	68,750	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	171,875	 	 	 	240,625	 	 	 	 	1,375,000	 
	 	 	 	 
	Broker/Dealer Total
	 	 	 	 	 	 	(72,508	)	 	 	(73,242	)	 	 	(73,742	)	 	 	(70,553	)	 	 	(47,036	)	 	 	72,893	 	 	 	(49,634	)	 	 	26,866	 	 	 	31,741	 	 	 	49,741	 	 	 	49,741	 	 	 	155,733	 	 	 	 	0	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GOOD
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GOOD Costs
	 	 	 	 	 	 	228,500	 	 	 	77,083	 	 	 	90,833	 	 	 	35,833	 	 	 	73,750	 	 	 	34,500	 	 	 	23,000	 	 	 	67,750	 	 	 	31,500	 	 	 	21,500	 	 	 	65,750	 	 	 	29,500	 	 	 	 	779,500	 
	GOOD Income
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	19,487	 	 	 	38,975	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	97,437	 	 	 	136,412	 	 	 	 	779,500	 
	 	 	 	 
	GOOD Total
	 	 	 	 	 	 	(228,500	)	 	 	(77,083	)	 	 	(90,833	)	 	 	(16,346	)	 	 	(34,775	)	 	 	62,937	 	 	 	74,437	 	 	 	29,687	 	 	 	65,937	 	 	 	75,937	 	 	 	31,687	 	 	 	106,912	 	 	 	 	—	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GOOD & BD Cash Flow- Monthly
	 	 	 	 	 	 	(301,008	)	 	 	(150,325	)	 	 	(164,575	)	 	 	(86,898	)	 	 	(81,811	)	 	 	135,830	 	 	 	24,803	 	 	 	56,553	 	 	 	97,678	 	 	 	125,678	 	 	 	81,428	 	 	 	262,645	 	 	 	 	 	 
	 	 	 	 
	GOOD & BD Cash Flow- Cumulative
	 	 	 	 	 	 	(301,008	)	 	 	(451,333	)	 	 	(615,909	)	 	 	(702,807	)	 	 	(784,618	)	 	 	(648,788	)	 	 	(623,984	)	 	 	(567,431	)	 	 	(469,752	)	 	 	(344,074	)	 	 	(262,645	)	 	 	0	 	 	 	 	0	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GLD MGT
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GLDMGT Expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GLDMGT Income
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	93,750	 	 	 	—	 	 	 	—	 	 	 	269,531	 	 	 	—	 	 	 	—	 	 	 	468,750	 	 	 	 	832,031	 
	 	 	 	 
	GLDMGT Total
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	93,750	 	 	 	—	 	 	 	—	 	 	 	269,531	 	 	 	—	 	 	 	—	 	 	 	468,750	 	 	 	 	832,031	 
	 	 	 	 

 

 

Exhibit B

Participating Broker-Dealers

[See attached]EX-10.9

Exhibit 10.9

CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

REDACTED Version of Exhibit 10.9

Translation

CERTAIN INFORMATION (INDICATED BY ASTERISKS) IN THIS EXHIBIT

HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES

AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN

REQUESTED WITH RESPECT TO THE OMITTED PORTION.

Medical Equipment Lease Agreement

Parties:

Lessee: Chang’an Hospital Company Limited          (“Party A”)

Legal Representative: Cai Shijie

Address: No.17, Wenjing Road, Xi’an

Lessor: Medstar (Shanghai) Leasing Co., Ltd.          (“Party B”)

Legal Representative: Cheng Zheng

Address: Suite 803, 620 Zhangyang Road, Pudong New District, Shanghai

Whereas:

	1.	 	For purposes of maintaining its leading position in medical technology and academic
development, the Lessee plans to expand the cancer diagnostic and treatment center (the
“Centre”) and wishes to install certain medical equipment;
	 
	2.	 	The Lessor is a professional company which is engaged in the lease of large medical equipment
as well as provision of relevant services;
	 
	3.	 	The Lessor intends to purchase from Xi’an Century Friendship Medical Technology Co., Ltd.
such medical equipment as set out in Appendix 1 hereto and lease the same to the Lessee for
use by Chang’an Hospital and the Lessee accepts the manufacturer, specifications, model,
equipping, etc. of such equipment;

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	NOW, THEREFORE, upon friendly consultations and based on the principle of equality and
mutual benefit, Party A and Party B hereby agree as follows with respect to the leasing by
Party B to Party A of the medical equipment set out in Appendix 1 hereto (the “Leased
Assets”):

Article 1 Leased Assets

	1.1	 	Party B agrees to lease to Party A the Leased Assets listed in Appendix 1 hereto, the price
of which is RMB*** million.
	 
	1.2	 	In order for the lease project to be carried out smoothly, Party A shall be responsible for
procuring all necessary procurement licenses, environmental evaluation and assessment, charges
and prices approval filing, and such other matters as required for the operation of the Leased
Assets. Party A shall also process and complete all procedures required for the use and
installation of the Leased Assets and shall construct and furnish the machine room, etc.
required for the Leased Assets pursuant to the regulations and rules of the state and relevant
authorities.

Article 2 Use of the Leased Assets

	2.1	 	The Leased Assets shall be used at Party A’s premises for the purpose of carrying out cancer
diagnostic and treatment work.
	 
	2.2	 	The Leased Assets must be installed and placed at the location agreed by the Parties within
the premises of Party A. Without the written consent of Party B, Party A shall not change the
location and operation environment of the Leased Assets.

Article 3 Ownership of the Leased Assets

	3.1	 	During the Lease Term, the ownership of the Leased Assets as listed in the Appendix to this
Agreement, including any parts and components, replacement

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	parts, attached parts and auxiliary parts of (or to be attached to) the Leased Assets,
shall always belong to Party B. During the Lease Term, Party A shall only enjoy the right
to use the Leased Assets. Party A may not sell, transfer, sub-lease, mortgage, or make
investment by means of, the Leased Assets, or otherwise conduct any other action that may
infringe Party B’s rights and benefits. Otherwise, Party A shall assume corresponding
breach of contract liabilities.
	 
	3.2	 	Where Party A is shut down, suspended, merged or acquired, or modifies the type of its
ownership or enters into bankruptcy, Party A shall have no right to dispose of the Leased
Assets. Party B’s ownership of the Leased Assets shall not be affected by any agreement
entered into by Party A with any third party or any change to Party A’s status as a legal
person.
	 
	3.3	 	During the performance of the Agreement, Party B shall have the right to inspect the use and
conditions of the Leased Assets and as long as such inspection would not affect the use of the
equipment, Party A shall facilitate the carrying-out of such inspection. Without Party B’s
written consent, Party A may not add or remove any parts and components of the Leased Assets
nor shall it change the premises of use of the Leased Assets. Party B shall have the right to
affix marks of ownership onto the Leased Assets. Party B (or its entrusted agent) shall have
the right to inspect, on a regular basis or at any time, the use and conditions of the Leased
Assets and Party A shall exert every effort to facilitate the same.
	 
	3.4	 	Party B shall have the right to mortgage the Leased Assets or transfer its beneficial
interests to a third party, provided that the implementation of this Agreement and the normal
use by Party A shall not be affected thereby.

Article 4 Lease Term

	4.1	 	The Lease Term shall be 15 years, commencing from September 1, 2009 and expiring on August 31, 2024. If
the Parties fail to formally commence the lease as of September 1, 2009, the Lease Term will
be extended accordingly and will be re-agreed by the Parties by a supplementary instrument.

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	4.2	 	The Lease Term shall be fixed. During the Lease Term, Party A may not unilaterally suspend
or terminate the lease hereunder nor shall it request any change to the provisions hereof on
any ground.
	 
	4.3	 	Upon expiration of the Lease Term, the Parties may renew this Agreement after Party B shall
have conducted relevant maintenance, upgrading and renovation work in respect of the Leased
Assets based on the then actual conditions of the Leased Assets, provided that Party B shall
guarantee the normal operation of the Leased Assets during the term of the renewed agreement.

Article 5 Rental Fee and Payment

	5.1	 	Rental fee calculation method:
	 
	 	 	From ***, the rental fee = ***;
	 
	 	 	From ***, the rental fee = ***;
	 
	 	 	(1) Revenue of Leased Assets: Total fee amounts received from the use of the Leased Assets
for diagnosis (or treatment)
	 
	 	 	(2) Hospital-Paid Costs and Expenses: Various costs and expenses incurred during the
course of diagnostic or treatment, including: the wages, bonus, welfare benefits, overtime
charges and travel and accommodation expenses of the personnel of the Centre (exclusive of
personnel dispatched by both Parties); water and power utility charges; costs of
consumables; document printing costs; hospitality expenses; academic exchange expenses; R&D
assistance costs; the repair and maintenance costs of the Leased Assets; costs of office
supplies; telephone charges; medical dispute settlement expenses, etc.
	 
	5.2	 	The rental fee shall be paid on a monthly basis. Party A shall transfer the rental fee of
the previous month to the designated account of Party B by the 15th day of each
month. The information of the account for the receipt of rental fee payments is as follows:
	 
	 	 	Account Name: Medstar (Shanghai) Leasing Co., Ltd.
	 
	 	 	Bank name: Shanghai Waigaoqiao Gaoqiao Branch, Agricultural Bank of China

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	Account number: ***
	 
	 	 	Simultaneously, Party B shall issue an official tax invoice to Party A.
	 
	 	 	During the term of this Agreement, the making of payment by Party A to the designated bank
account set forth above shall be deemed performance of its payment obligation hereunder and
the making of payment by Party A to any other account or in any other manner without the
consent of Party B shall not be deemed performance of its obligation hereunder. Where
Party B needs to change its account for the rental fee payment, Party B shall give prior
written notice to Party A and Party A’s finance department.

Article 6 Rights and Obligations of the Parties

	6.1	 	Party A’s rights and obligations

	6.1.1	 	Party A shall issue on a monthly basis a rental fee confirmation letter to Party B, setting
out the fee amounts of the Leased Assets, the Hospital-Paid Costs and expenses, etc. Party A
shall warrant the truthfulness of the data provided in such letter.
	 
	6.1.2	 	Party A shall provide the machine room and auxiliary rooms for the Leased Assets and add
necessary auxiliary facilities, etc.; shall provide professional personnel including experts,
doctors, nurses and technicians and shall provide convenience in respect of logistics
services.
	 
	6.1.3	 	Party A shall assist the supplier in handling domestic transportation, installation,
commissioning, etc. of the equipment.
	 
	6.1.4	 	Party A shall be responsible for the treatment and other medical decisions of the patients
as well as for the timely handling of medical disputes arising from the Centre.

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	6.1.5	 	Party A shall properly manage and safeguard the Leased Assets and shall designate
specially-assigned staff to take charge of the daily work in connection with the operation of
the Leased Assets.
	 
	6.1.6	 	Party A shall be responsible for processing and completing all procedures with the competent
supervising departments and relevant authorities in relation to the approval of the project,
procurement permits, environmental evaluation and assessment, approval of charges and prices
and qualification for medical insurance coverage, as well as all relevant routine procedures
as required to be processed on a yearly basis.
	 
	6.1.7	 	Party A may not use the Leased Assets for diagnosis and treatment free of charge. If any
fee exemption or reduction is required by any extraordinary circumstance, such exemption or
reduction shall be approved and signed by both Parties.
	 
	6.1.8	 	Party A may not terminate earlier or modify this Agreement on the ground that Party B has
recovered its costs, or that the revenue from the Leased Assets is continually growing, or
that any leader of the Hospital has been changed.
	 
	6.1.9	 	During the Lease Term, Party A may not separately operate any other project competing with
the Center either by itself or in cooperation with any third party.

	6.2	 	Party B’s rights and obligations

	6.2.1	 	Party B shall, in cooperation with the supplier, timely deliver to Party A the Leased Assets
designated by Party A and shall assist the supplier in installing and commissioning the Leased
Assets.
	 
	6.2.2	 	Party B shall inform itself of the operation status of the Leased Assets at all times based
on the income and expenses information related to the operation of the Leased Assets as
provided by Party A.
	 
	6.2.3	 	Party B shall have the right to dispatch Leased Assets administration personnel to manager
the Leased Assets and shall have the right to keep a book recording the number of patients
diagnosed or treated with the

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	Leased Assets, the purchase and use of consumables and other costs related to the
use of the Leased Assets and Party A shall cooperate with the same.
	 
	6.2.4	 	Without written authorization of Party B, the administration personnel dispatched by Party B
shall have no authority to amend or supplement any matters agreed hereunder on behalf of Party
B.
	 
	6.2.5	 	Party B or Party B’s entrusted agent (including asset appraisers, accountants, etc) shall
have the right to examine the use and the condition of the Leased Assets and Party A shall
exert every effort to facilitate the same.
	 
	6.2.6	 	Party B shall assist the supplier in providing such technical documentation as required for
the use of the Leased Assets.
	 
	6.2.7	 	Party B shall assist the supplier in conducting daily repair and maintenance work in respect
of the Leased Assets.
	 
	6.2.8	 	Party B shall cooperate with the professional management company in relation to the planning
and organization of the Centre’s academic promotion and guidance on its operation and
management.
	 
	6.2.9	 	Upon expiry of the Lease Term, where terms and conditions are equal, Party B shall have the
preemptive right to provide leasing with respect to any similar project in the future.

Article 7 Delivery, Examination and Acceptance of the Leased Assets

	7.1	 	Delivery, examination and acceptance: After the Leased Assets are delivered to the premises,
Party A shall examine the Leased Assets for acceptance in accordance with the Appendix hereof.
In the event that the Leased Assets fail to meet the agreed requirements, Party A shall
timely make a note on the delivery receipt and wait for Party B to resolve the same. Party A
shall be responsible for safeguarding the Leased Assets once the Leased Assets arrive at the
location for installation or operation.
	 
	7.2	 	Technical examination and acceptance: If, upon installation and commissioning and completion
by Party A of the diagnostic or treatment of the first 30 patients,

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	Party A confirms that the Leased Assets are in consistency with the technical requirements,
Party A shall issue to Party B an acceptance receipt within 5 days, whereupon the delivery
of the Leased Assets shall be deemed completed. Where Party A fails to timely issue such
receipt or to raise any written objection, the Leased Assets shall be deemed properly
delivered. Thereupon, the Lease Term shall commence and the charges collected from such 30
patients shall be included as the revenue of the Center.
	 
	7.3	 	Where the Leased Assets fail to pass the acceptance examination, the supplier shall be
responsible for addressing the matter.
	 
	7.4	 	Considering the Leased Assets hereunder are purchased by
Party B from Xi’an Century
Friendship Medical Technology Co., Ltd., the Parties agree that
Xi’an Century Friendship
Medical Technology Co., Ltd. shall be responsible for delivering the Leased Assets to the site
designated by Party A. The Parties will, in conjunction with Xi’an Century Friendship Medical
Technology Co., Ltd., conduct the acceptance examination. No risk arising out of the delivery
acceptance and the technical acceptance shall be borne by Party B. If the Leased Assets pass
the acceptance examination, Party A shall unconditionally lease the Leased Assets; if the
Leased Assets fail to pass the acceptance examination, Xi’an Century Friendship Medical
Technology Co., Ltd. shall bear relevant liabilities and Party A shall not bring any suit or
claims against Party B in respect of the same.

Article 8 Liability for Loss and Damage of the Leased Assets and Third Party Injury

	8.1	 	During the Lease Term, Party B shall be responsible to maintain for the Leased Assets
insurance with an insurer acceptable to the Parties, and Party B or any third party designated
by Party B shall be named as the beneficiary. The insurance premium shall be included as
Hospital-Paid Costs and Expenses.

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	8.2	 	During the Lease Term, upon occurrence of any insurance-covered incident, Party A shall
actively cooperate with Party B in processing the claim with the relevant insurer.
	 
	8.3	 	During the Lease Term, if the Leased Assets are lost or damaged due to reasons attributable
to Party A, Party A shall, at its costs and expenses, take one or several of the following
actions as determined by Party B:

(i) To restore or repair the Leased Assets to the effect that the Leased Assets
become capable of being used in a completely normal manner;

(ii) To effect replacement in respect of the Leased Assets with parts, components
or assets of the same model and function as the Leased Assets;

(iii) In the case of the circumstances (i) and (ii) above, Party A shall continue
to lease the Leased Assets and its obligation to pay the rental fee shall remain
unchanged. During the period where the Leased Assets cannot be operated normally,
Party A shall pay to Party B a monthly rental fee equal to the average rental fee
amount of the three months preceding the loss or damage of the Leased Assets.

(iv) Insurance proceeds may be used to cover the repair costs of the Leased Assets
and any shortfall amount shall be paid by Party A.

(v) Where the loss or damage of the Leased Assets is beyond repair, Party A shall
be liable to indemnify Party B against losses pursuant to the breach of contract
provisions hereof.

	8.4	 	If any third party (e.g. patients) suffers any injury as a result of reasons attributable to
the Leased Assets themselves (such as technical factors or quality defects, etc.), Party A
shall, in conjunction with Party B, seek recourse against the seller of the Leased Assets.
	 
	8.5	 	If any third party (e.g. patients) suffers any injury as a result of Party A’s negligent use
of the Leased Assets, Party A shall be held liable.
	 
	8.6	 	If any third party (e.g. patients) suffers any injury as a result of force majeure (other
than as a result of reasons attributable to the Leased Assets themselves or the fault of Party
A), in principle, neither Party A nor Party B shall be liable to

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	indemnify, provided that Party A shall have the duty to take precautions against such kind
of “risks” by taking out third party liability insurance.

Article 9 Disposal of the Leased Assets Upon Expiry of the Lease Term

Upon the expiry of the Lease Term, if the Parties do not renew
the Agreement, the Leased Assets shall be returned to Party B.

Article 10 Breach of Agreement

	10.1	 	Party A and Party B shall perform the corresponding responsibilities and obligations in
accordance with the time schedules as provided in this Agreement. In case of any beach of
Agreement, the breaching party shall compensate the other party’s economic loss.
	 
	10.2	 	Any delay in making rental fee payment by Party A shall not exceed two months. In case of
any such delay, Party A shall pay Party B a daily default penalty equal to 0.05% of the
overdue amount, except where such delay is caused by the force majeure.
	 
	10.3	 	Any breach by Party A set forth below shall be deemed a material breach by Party A:

	 	10.3.1	 	any failure by Party A to perform the lease obligations upon purchase of the Leased
Assets by Party B from Xi’an Century Friendship Medical Technology Co., Ltd. in
violation of this Agreement;
	 
	 	10.3.2	 	any delay by Party A in making any rental fee payment exceeding two months by Party
A;
	 
	 	10.3.3	 	any unilateral early termination or modification of this Agreement by Party A in
violation of this Agreement;
	 
	 	10.3.4	 	any interference by Party A in Party B’s management or financial supervision of the
Leased Assets;
	 
	 	10.3.5	 	any unilateral disposal (including sale, sub-lease, removal or transfer, etc.) by
Party A of the Leased Assets in violation of this Agreement;

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	10.3.6	 	provision of any false information by Party A regarding the Revenue of the Leased
Assets and so on, such that the rental fee payment collected by Party B is less than
the amount to which Party B is entitled;
	 
	 	10.3.7	 	introduction of any similar medical equipment with similar functions to the Leased
Assets through any third party or cooperation with any third party to develop similar
projects in violation of this Leased Agreement;
	 
	 	10.3.8	 	any suspension of normal medical services to patients using the Leased Assets for a
period exceeding 30 days due to the man-made reasons of Party A; or any severe
destruction or loss of the Leased Assets due to improper use, intentional damage or
careless storage by Party A.

	10.4	 	In case of any material breach of Agreement by Party A, Party B shall have the right to
terminate this Agreement and take any of the following measures:

	 	10.4.1	 	request Party A to immediately make full payment of all undue rental fee, default
penalty and all other amounts payable;
	 
	 	 	 	Undue Rental Fee = Remaining Lease Term (month) × monthly average rental fee
obtained by Party B in one year prior to the beach of Agreement
If the Lease Term is shorter than one year, the monthly average rental fee obtained
by Party B shall be deemed 3% of the purchase price of the equipment.
Default Penalty = Undue Rental Fee ×50%
	 
	 	10.4.2	 	terminate this Agreement, and Party B shall take over the Leased Assets to continue
the operation, and the revenue generated from such operation of the Leased Assets
shall be solely owned by Party B. Party B shall also have the right to request Party A
to pay the default penalty (the calculation method is the same as above) and all other
amounts payable.

	10.5.	 	In case of any of the above mentioned breach or infringement by Party A, Party A shall also
be liable for all costs for lawsuits, legal counsel fee and other expenses arising from Party
B’s realization of its creditor’s rights.

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

Article 11 Dispute Resolution

Any and all disputes related to this Agreement shall be
resolved by Party A and Party B through consultation. In case
that no settlement could be reached through consultation,
either party may bring an action before the People’s Court
designated by Party B.

Article 12 Appendix

The Appendix to this Agreement is an integrated part hereof and
shall have the equal legal validity as that of the main text
hereof.

Article 13 Effectiveness of the Agreement

This Agreement shall become effective upon being signed and
stamped by Party A and Party B.

Article 14 Termination of the Agreement

	14.1	 	This Agreement shall be automatically terminated upon the expiry of the Lease Term.
	 
	14.2	 	All claims and indebtedness arising from the performance of this Agreement by Party A and
Party B shall be terminated upon full repayment of all debts, including all rental fee
payments, default penalties, indemnification, and so on.
	 
	14.3	 	In case of impossibility of performance of the Agreement or use of the Leased Assets due to
war, natural disaster, force majeure and other factors, this Agreement shall be terminated and
neither party shall be liable to or have any rights against the other party.
	 
	14.4	 	Prior to the commencement of the Lease Term, under the following circumstances, Party B shall
have the right to terminate this Agreement without any liability:

	 	14.4.1	 	Party A fails to obtain the procurement permits for the medical equipment;
	 
	 	14.4.2	 	Party A fails to prepare and provide, on a timely basis, the premises for using the
Leased Assets.

	14.5	 	In the event that the government or the military adjusts its policy and issues any regulation
or document for prohibiting equipment lease within the country or

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CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

	 	 	within the military system, resulting in this Agreement not being able to be performed, but
without affecting the use of the Leased Assets, Party A shall be responsible for
coordination and negotiation. During such period of coordination and negotiation, Party A
shall be still subject to the obligation for paying the rental fee on a timely basis. If
no resolution can be reached upon negotiation, this Agreement may be terminated in early
manner, provided, however, that Party A shall make a lump-sum payment for the remaining
rental fee payments to Party B. The remaining rental fee payments shall be equal to ***
minus ***:
	 
	 	 	Remaining Rental Fee Payments = ***

Article 15 Miscellaneous

	15.1	 	Prior to the formal operation of the Leased Assets, the Parties shall enter into certain
supplemental documents, such as the Composition of the Organization and Management Department
of the Leased Assets and Financial Management Process of the Leased Assets, with respect to
the specific matters concerning the management department and financial management process of
the Leased Assets.
	 
	15.2	 	The Parties hereto have carefully read through all the terms of this Agreement. Reasonable
manner has been adopted to urge the Parties to pay attention to the terms regarding exemption
or restriction on their responsibilities as provided herein. Per request of the Parties,
explanation has been made in respect of the relevant terms.
	 
	16.2	 	The Parties hereto have authorized their respective representatives to sign this Agreement.
All terms of this Agreement are a true expression of the intents of the Parties and shall have
legal binding effect on the Parties.

Article 16 The original of this Agreement and the Appendix hereto shall be prepared in four copies
of which Party A and Party B shall each hold two copies.

13

 

CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

Article 17 With respect to any matters not covered herein, the Parties may enter into a
supplemental agreement with respect thereto. Any supplemental agreement and this Agreement shall
have equal legal validity.

Article 18 This Agreement is signed and executed on August 25, 2009 in Xi’an.

(No operative text below)

14

 

CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

Party A: Chang’an Hospital Company Limited

Legal Representative

(or Authorized Representative): (Signature and Seal)

Party B: Medstar (Shanghai) Leasing Co., Ltd.

Legal Representative

(or Authorized Representative): (Signature and Seal)

15

 

CONFIDENTIAL TREATMENT REQUESTED BY CONCORD MEDICAL SERVICES HOLDINGS LIMITED

Appendix I:

List of Leased Assets

	 	 	 	 	 	 	 	 	 	 	 
	Item	 	Description of Equipment	 	Brand	 	Quantity	 	Manufacturer	 	Type
	1	 	MM50
	 	 	 	1	 	IBA	 	MM50
	2	 	PET/CT
	 	GE	 	1	 	GE	 	DisscoveryLs
	3	 	Novalis
	 	 	 	1	 	Varian	 	Simulator included
	4	 	CT
	 	 	 	1	 	SHIMADZU	 	SCT-6800TXL
	5	 	MRI
	 	 	 	1	 	Philips	 	Interal.5T
	6	 	Cyclotron
	 	 	 	1	 	IBA	 	CYCLONE18/9

16

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