SECURITIES PURCHASE AGREEMENT by and among CHINDEX INTERNATIONAL, INC. as the Company AND MAGENTA MAGIC LIMITED as the Purchaser
EXECUTION
COPY
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933 (THE “ACT”), AND ARE PROPOSED TO BE ISSUED IN RELIANCE UPON THE SAFE HARBOR
PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT
BE
REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH
THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER
THE
ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
ACT.
by
and
among
CHINDEX
INTERNATIONAL, INC.
as
the
Company
AND
MAGENTA
MAGIC LIMITED
as
the
Purchaser
Dated: November 7,
2007
This
Securities Purchase Agreement (this “Agreement”) is dated as of
November 7, 2007, by and between CHINDEX INTERNATIONAL, INC., a company
organized and existing under the laws of the State of Delaware of the United
States (the “Company”) and MAGENTA MAGIC LIMITED, a company
organized and existing under the laws of the British Virgin Islands and
wholly-owned, directly or indirectly, by JPMorgan Chase & Co (the
“Purchaser”).
WHEREAS,
the Company proposes to issue, and the Purchaser proposes to purchase,
US$10,000,000 Tranche A Shares (as defined below), US$25,000,000 Tranche B
Notes
(as defined below) and US$15,000,000 Tranche C Notes (as defined below) of
the
Company upon the terms and subject to the conditions of this
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein and for other good and valuable consideration the receipt and adequacy
of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions
For
all
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires the following terms shall have the meanings set
forth
below. Defined terms used but not otherwise defined herein shall have
the meanings given to such terms in the other sections of this
Agreement.
“2005IFC
Facility” mans the credit facility extended by the International
Finance Corporation to the Company in the amount of RMB64,880,000 on August
31,
2005, as amended to the date hereof.
“Act”
means the Securities Act of 1933, as amended.
“Affiliate”
of any specified Person means:
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(a)
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any
other Person directly or indirectly controlling or controlled by
or under
direct or indirect common control with such specified Person,
or
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(b)
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any
other Person who is a director or executive officer
of:
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(1)
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such
specified Person,
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(2)
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any
Subsidiary of such specified Person,
or
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(3)
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any
Person described in clause (a)
above.
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For
the
purposes of this definition, “control” when used with respect to any Person,
means the direct or indirect ownership of in excess of 50% of the equity
interests in such Person or the power to direct or
influence the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.
“Agreement”
has the meaning given in the recitals.
“Amended
Rights Agreement” means the Rights Agreement dated June 4, 2007 as
amended on November 4, 2007, in the form attached hereto as Exhibit
D.
Purchase
Agreement
1
“Applicable
Law” means, with respect to any Person or any property, any statute,
rule, regulation, law or ordinance, or any judgment, decree or order applicable
to such Person or such property.
“Business
Day” means a day other than Saturday, Sunday or any day on which banks
located in New York and Hong Kong are authorized or obligated to
close.
“Charter
Documents” mean, with respect to a Person, its articles of
incorporation, certificate of incorporation, by-laws, joint venture agreement
or
shareholder agreement (if applicable), or other organizational documents of
such
Person.
“Clinics”
means Beijing United Family Jianguomen Clinic, Inc. (“北京和睦家建国门诊所有限公司”
in Chinese), Beijing United Family Clinic, Inc. (“北京市和睦家诊所有限责任公司”
in Chinese), Shanghai United Family Clinic, Inc. (“上海和美家诊所有限公司”
in Chinese).
“Closing”
has the meaning given in Section 4.
“Closing
Date” has the meaning given in Section 4.
“Commission”
means the U.S. Securities and Exchange Commission.
“Common
Stock” means shares of common stock of the Company, par value $0.01 per
share, divided into class A common stock (“Class A”) and class
B common stock (“Class B”) respectively.
“Company”
has the meaning given in the recitals.
“Conversion
Shares” means shares of Class A Common Stock issuable upon the
conversion of the Notes.
“Corporate
Agreements” means the agreements listed in
Schedule 1 hereto entered into by the Group Companies
and the
Clinics.
“Disclosure
Schedule” has the meaning given in Section 5.
“Environmental
Laws” shall mean all federal, national, state, regional and local laws,
statutes, ordinances and regulations, in each case as amended or supplemented
from time to time, and any judicial or administrative interpretation thereof,
including orders, consent decrees or judgments relating to the regulation and
protection of human health, safety, the environment and natural
resources.
“Escrow
Agent” means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (Attention ▇▇▇▇ ▇. ▇▇▇▇▇) or
such other agent or representative as the parties may mutually agree that,
for
purposes of Section 4 of this Agreement, shall hold in escrow the Tranche C
Notes.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“FCPA”
has the meaning given in Section 5(aa).
“GAAP”
means United States generally accepted accounting principles applied on a
consistent basis during periods involved.
Purchase
Agreement
2
“Governmental
Authority” means any federal, state, national, provincial, local or
other governmental authority, governmental or regulatory agency or body, court,
arbitrator or self-regulatory organization of applicable
jurisdictions.
“Group
Companies” means Beijing Chindex Hospital Management Consulting Co.,
Ltd. (“北京美中互利医院管理咨询有限公司”
in Chinese), Beijing United Family Health Center (“北京和睦家妇婴医疗保健中心”
in Chinese), Shanghai United Family Hospital, Inc. (“上海和睦家医院有限公司”
in Chinese), Chindex Holdings International Trade (Tianjin) Co., Ltd. (“清达互利国际贸易（天津）有限公司”
in Chinese), Chindex Shanghai International Trading Company, Ltd. (“谦达国际贸易（上海）有限公司”
in Chinese), Chindex (Beijing) International Trading Co., Ltd. (“美中互利（北京）国际贸易有限公司”
in Chinese), the Clinics, the Company, and the Company’s other existing and
future, direct and indirect, Subsidiaries.
“Indebtedness”
has the meaning given in Section 5(q).
“Hazardous
Substance” has the meaning given in Section 5(v).
“Intellectual
Property Rights” has the meaning given in Section 5(w).
“Investor
Rights Agreement” means the investor rights agreement dated November 7,
2007 by and among the Company and the Purchaser, in the form attached hereto
as
Exhibit A.
“Lien”
means a mortgage, charge, pledge, lien, hypothecation or other security interest
or agreement securing any obligation of any Person.
“Material
Adverse Effect” means a material adverse effect on the business,
management, operations or financial condition of the Company and its
Subsidiaries taken as a whole; provided that no change or effect arising out
of
or in connection with or resulting from any of the following shall be deemed,
either alone or in combination, to constitute or contribute to a Material
Adverse Effect: (i) general economic conditions or changes affecting any country
or market generally; (ii) conditions or fluctuations in financial markets in
any
jurisdiction; (iii) conditions affecting the entire medical products
distribution industry or the medical services industry generally in any
jurisdiction; or (iv) any action, change, effect, circumstance or condition
expressly required by or in connection with this Agreement or directly or
demonstrably attributable to the execution, performance or announcement of
this
Agreement or the transactions contemplated hereby.
“Material
Agreement” has the meaning given in Section 5(r).
“NASDAQ”
means The Nasdaq Stock Market, Inc.
“Notes”
has the meaning given in Section 3, in the form attached hereto as Exhibit
B.
“Permits”
means all material licenses, permits, certificates, consents, orders, approvals
and other authorizations presently required or necessary from all Governmental
Authorities.
“Person”
means any individual, corporation, company (including any limited liability
company), association, partnership, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof, or
any
other entity.
“PFIC”
has the meaning given in Section 6(c).
Purchase
Agreement
3
“PRC”
means the People’s Republic of China, not including Taiwan, Hong Kong and
Macau.
“Proceeding”
means an action, claim, suit or demand before or brought by any Governmental
Authority.
“Purchaser”
has the meaning given in the recitals.
“Registration
Rights Agreement” means a registration rights agreement dated as of
November 7, 2007 between the Company and the Purchaser, in the form attached
hereto as Exhibit C.
“Regulation
S” has the meaning given in Section 3.
“SEC”
means the Securities and Exchange Commission of the United States.
“SEC
Reports” has the meaning given in Section 5(k).
“Securities”
means, collectively, the Tranche A Shares, the Notes and the Conversion
Shares.
“Shareholder
Side Letters” means the shareholder side letters, each dated as of
November 7, 2007 in the form attached hereto as Exhibit E.
“Subsidiary”
means, (i) in respect of any Person, any corporation, company (including any
limited liability company), association, partnership, joint venture or other
business entity of which at least a majority of the total voting power or the
voting stock is at the time owned or controlled, directly or indirectly, by
such
Person, or (ii) in respect of the Company, without prejudice to the foregoing
entities under paragraph (i), any corporation, company (including any limited
liability company), association, partnership, joint venture or other business
entity from time to time organized and existing under the laws of the PRC whose
financial reporting is consolidated with the Company pursuant to GAAP in any
audited financial statements filed by the Company with the Commission in
accordance with the Exchange Act, including without limitation each
Clinic.
“Taxes”
has the meaning given in Section 5(t).
“Tranche
AShares” has the meaning given in Section
3(a).
“Tranche
B Notes” has the meaning given in Section 3(b).
“Tranche
C Notes” has the meaning given in Section 3(c).
“Transaction
Documents” means this Agreement, the originally-issued Notes, the
Investor Rights Agreement, the Registration Rights Agreement, and the
Shareholder Side Letters, or any of them as the context may so
require.
“US$”
means the lawful currency of the United States from time to time.
2. Rules
of Construction.
Unless
the context otherwise requires:
(a) a
term
has the meaning assigned to it;
Purchase
Agreement
4
(b) “or”
is
not exclusive;
(c) words
in
the singular include the plural, and in the plural include the
singular;
(d) all
references in this Agreement to “Sections”, “Exhibits” and other subdivisions
are to the designated Sections, Exhibits and subdivisions of this Agreement
as
originally executed;
(e) a
reference to any person is, where relevant, deemed to be a reference to or
to
include, as appropriate and expressly permitted under the Transaction Documents,
that person’s successors and assignees or transferees;
(f) the
words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Section or other
subdivision;
(g) references
to a statute or statutory provision are to be construed as a reference to that
statute or statutory provision as it may be amended from time to time;
and
(h) the
word
“knowledge” and other words of similar import used herein in respect of the
Company, any of its Subsidiaries and/or any of its Affiliates, unless the
context expressly states otherwise, means the actual knowledge after due inquiry
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇.
3. Purchase
and Sale of Tranche A Shares and Notes.
Subject
to the terms and conditions of this Agreement, the Company will issue and sell
to the Purchaser, and the Purchaser will purchase from the Company at the
Closing:
(a) 359,195
shares of the Company’s Class A Common Stock (the “Tranche A
Shares”) at a purchase price of US$27.84 per share for US$10,000,000
(“Purchase Price”);
(b) the
Company’s Convertible Notes due 2017 of US$1,000,000 principal amount each (the
“Tranche B Notes”), representing an aggregate principal amount
of US$25,000,000, convertible into shares of the Company’s Class A Common Stock;
and
(c) the
Company’s Convertible Notes due 2017 of US$1,000,000 principal amount each (the
“Tranche C Notes,” and together with Tranche B Notes, the
“Notes”), representing an aggregate principal
amount of
US$15,000,000, convertible into shares of the Company’s Class A Common Stock,
provided that the Undelivered Portion of Tranche C Notes (as defined
below) shall be treated as provided in Section 4(b) below in order that the
transactions contemplated hereby comply in full with NASDAQ Marketplace Rule
4350(i)(1)(D) (“Rule 4350”).
The
Purchaser understands that the Securities are being offered and sold to it
in
reliance on the safe harbor provided by Regulation S under the Act so that
the
registration requirements of the Act do not apply and that the Company is
relying on the truth and accuracy of the representations, warranties and
agreements of the Purchaser set forth in Section 7 of this agreement in relying
on such safe harbor.
4. Closing
and Delivery.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, the
issue
and sale to the Purchaser of the Tranche A Shares and the Notes under this
Agreement (the
Purchase
Agreement
5
“Closing”)
shall occur at the Beijing office of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, or
at such other place as the Company and the Purchaser mutually agree, at or
about
9:30 a.m., Beijing time, on the third (3rd) Business Day after all of the
conditions set forth in Section 8 have been satisfied or, in the sole discretion
of the Purchaser, waived or on such other time or Business Day on or prior
to
December 31, 2007 as may be mutually agreed upon by the Company and the
Purchaser (the “Closing Date”). At the Closing:
(i) The
Company shall
(1) deliver
to the Purchaser a share certificate or certificates duly endorsed to the
Purchaser representing such number of the Tranche A Shares as provided in
Section 3(a);
(2) have
duly registered the name of the Purchaser with the Company’s transfer agent as
record owner of the number of Tranche A Shares sold to the
Purchaser;
(3) deliver
to the Purchaser the Tranche B Notes as provided in Section 3(b), registered
in
the name of the Purchaser;
(4) subject
to the satisfaction of the condition required under Section 3(c), deliver
to the
Purchaser the Tranche C Notes as provided in Section 3(c), registered in
the
name of the Purchaser; and
(5) deliver
to the Purchaser the Transaction Documents to which it is a party duly executed
by the Company.
(ii) The
Purchaser shall
(1) deliver
to the Company the purchase price in the amount of US$10,000,000 for the
Tranche
A Shares pursuant to Section 3(a) by wire transfer of immediately available
funds to an account of the Company, which shall be designated by the Company
at
least two (2) Business Days prior to the Closing Date;
(2) deliver
to the Company the purchase price in the amount of US$25,000,000 for the
Tranche
B Notes pursuant to Section 3(b) by wire transfer of immediately available
funds
to an account of the Company, which shall be designated by the Company at
least
two (2) Business Days prior to the Closing Date;
(3) subject
to the satisfaction of the condition required under Section 3(c), deliver
to the
Company the purchase price in the amount of US$15,000,000 for the Tranche
C
Notes pursuant to Section 3(c) by wire transfer of immediately available
funds
to an account of the Company, which shall be designated by the Company at
least
two (2) Business Days prior to the Closing Date; and
(4) deliver
to the Company the Transaction Documents to which it is a party duly executed
by the Purchaser.
(b) If
the shareholders’ approval requirement under Rule 4350 has not been satisfied
prior to the Closing in respect of any portion of the Tranche C Notes, on
the
Closing Date:
(i) the
Company shall deliver to the Purchaser global certificates representing such
portion of the Tranche C Notes that, when the Conversion Shares issuable
upon
the
Purchase
Agreement
6
conversion
of such portion of the Tranche C Notes are aggregated with the Tranche A Shares
and the Conversion Shares issuable upon conversion of the Tranche B Notes,
represent approximately 19.9% (or such other percentage as close to 19.9% as
possible based on rounding such portion of the Tranche C Notes to US$1,000,000
or a multiple of US$1,000,000 so that no change to the Tranche C Notes
denomination will be required) of the issued and outstanding shares
of the Company’s Common Stock (the “Delivered Portion of Tranche C
Notes”) against payment by the Purchaser of the purchase price in an
amount proportionate to the Delivered Portion of Tranche C Notes by wire
transfer of immediately available funds to an account of the Company, which
shall be designated by the Company at least two (2) Business Days prior to
the
date of payment.
(ii) The
Company shall deliver to the Escrow Agent certificates representing the balance
of the Tranche C Notes and the Delivered Portion of Tranche C Notes (the
“Undelivered Portion of Tranche C Notes”) under an escrow
agreement containing customary terms under such circumstances to be executed
by
the parties.
(iii) Upon
the satisfaction of the shareholders’ approval requirement of Rule 4350, as
evidenced by a true and certified copy of the shareholders resolution or
consent
to that effect delivered to the Purchaser as soon as practicable and in no
event
later than January 31, 2008 following the Closing Date (the “Tranche C
Delivery Date”) and subject to (x) all the representations and
warranties under Section 5 remain true and correct as of such date and (y)
all
the covenants under Section 6 are performed, satisfied and complied with
at or
prior to such date, the Escrow Agent shall, and the Company shall cause the
Escrow Agent, to deliver to the Purchaser the certificates representing the
Undelivered Portion of Tranche C Notes held in escrow against payment by
the
Purchaser of the purchase price in the amount proportionate to the Undelivered
Portion of Tranche C Notes pursuant to Section 3(c) by wire transfer of
immediately available funds to an account of the Company, which shall be
designated by the Company at least two (2) Business Days prior to the date
of
payment; provided, that after January 31, 2008, either the Company or the
Purchaser shall have the right to elect to direct the Escrow Agent to return
the
certificates representing the Undelivered Portion of Tranche C Notes and
terminate this Agreement with respect to the Undelivered Portion of Tranche
C
Notes; provided, further, that in the event the Escrow Agent
fails for any reason to deliver to the Purchaser the certificates held in
escrow
(unless such failure is the fault of the Purchaser), the Company shall have
such
certificates cancelled and issue and deliver promptly to the Purchaser new
certificates representing the Undelivered Portion of Tranche C
Notes.
5. Representations
and Warranties of the Company. Except as set forth in
(i) the Disclosure Schedule to be made part of this Agreement
(“Disclosure Schedule”) or (ii) any SEC Reports filed by the
Company including the exhibits incorporated by reference since March 31, 2007
(the “Balance Sheet Date”) prior to the Closing Date, which
exceptions shall be deemed part of the representations and warranties made
hereunder, the Company represents and warrants to the Purchaser the following
as
of the date of this Agreement, and such representations and warranties shall
be
deemed to also be made as of the Closing Date (if different from the date of
this Agreement) and the Tranche C Delivery Date (if different from the Closing
Date), provided that each representation or warranty deemed to be made
after the date of this Agreement shall be deemed to be made by reference to
the
facts and circumstances existing at the date on which such representation or
warranty is deemed to be made (except that, for the avoidance of doubt, any
representation or warranty that is expressed to be made by reference to the
facts and circumstances existing as at a specific date shall be made by
reference to the facts and circumstances existing as at such specific
date);
(a) Organization,
Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full
Purchase
Agreement
7
corporate
power and authority to conduct its business as currently
conducted. Each Group Company is duly organized, validly
existing and in good standing under the laws of the jurisdiction(s) where it
is
organized and/or conducts its business, and has full corporate power and
authority to conduct its business as currently conducted. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the character of the property owned
or
leased or the nature of the business transacted by it makes qualification
necessary, except where the failure to be so qualified would not be reasonably
expected to have a Material Adverse Effect. The Charter Documents of
each of the Subsidiaries organized and existing under the PRC laws are valid
and
have been duly approved or registered (as required) by competent PRC
Governmental Authorities.
(b) Capitalization
and Voting Rights. All of the issued and outstanding shares of
the Company’s capital stock as of the Closing are duly authorized, validly
issued, fully paid and non-assessable, were issued in accordance with the
registration or qualification provisions of the Act, if applicable, and any
relevant “blue sky” laws of the United States, if applicable, or pursuant to
valid exemptions therefrom and were issued in compliance with other applicable
laws (including, without limitation, applicable PRC or Delaware laws, rules
and
regulations) and are not subject to any rescission right or put right on the
part of the holder thereof nor does any holder thereof have the right to require
the Company to repurchase such capital stock. The authorized capital stock
of
the Company consists of shares of stock of all classes.
(i) The
authorized capital stock is divided into 28,700,000 shares of Common Stock,
$0.01 par value per share, including 3,200,000 shares designated as Class
B
Common Stock, and 500,000 shares of Preferred Stock, $0.01 par value per
share
(the “Preferred Stock”). As of the date hereof,
there were 6,690,242 shares of Class A Common Stock issued and outstanding,
775,000 shares of Class B Common Stock issued and outstanding and no shares
of
Preferred Stock issued and outstanding. As of September 30, 2007, the
Company (x) had reserved an aggregate of one million shares of Common Stock
for
issuance to employees, directors and consultants pursuant to the Company’s 1994
Stock Option Plan, 2004 Stock Incentive Plan and 2007 Stock Incentive Plan,
of
which approximately 321,334 shares of Class A Common Stock are subject to
outstanding, unexercised options as of such date and (y) has issued and
outstanding warrants to purchase an aggregate of 430,559 shares of Common
Stock
of the Company pursuant to the 2004 and 2005 Securities Purchase Agreements
as
filed in the related SEC Reports. Other than as set forth above or as
contemplated in the SEC Reports or this Agreement, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
any
Group Company is a party or by which either any Group Company is bound or
obligating any Group Company to issue, deliver, sell, repurchase or redeem,
or
cause to be issued, delivered, sold, repurchased or redeemed, any shares
of the
capital stock of such Group Company or obligating such Group Company to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
(ii) Voting
and Other Agreements. The Company is not a party to any
agreement, written or oral, and there is no agreement, written or oral, with
any
Person that requires (x) the voting or giving of written consents with respect
to any security of the Company (including, without limitation, any voting
agreements, voting trust agreements, shareholder agreements) or the voting
by a
director of the Company, (y) the sale, transfer or other disposition with
respect to any security of the Company or (z) any restrictions with respect
to
the issuance or sale of any of the Securities or the consummation of the
transactions contemplated under the Transaction Documents.
(c) Issuance
of Tranche A Shares. The issuance of the Tranche A Shares has
been duly and validly authorized by all necessary corporate and stockholder
action, and the Tranche A Shares, when issued and paid for pursuant to this
Agreement, will be validly issued, fully paid and non-assessable
Purchase
Agreement
8
shares
of
Class A Common Stock, free from all Liens and free of any restrictions on
transfer other than contemplated by the Transaction Documents and Applicable
Law.
(d) Issuance
of Notes. The Notes, when issued and paid for pursuant to this Agreement,
will be duly executed and delivered and will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
the
enforcement of creditors’ rights generally and (ii) rights of acceleration, if
any, and the availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered in a
Proceeding in equity or at law).
(e) Issuance
of Conversion Shares. The Conversion Shares have been duly and
validly reserved for issuance by the Company and, when issued pursuant to the
terms of the Notes, will be validly issued, fully paid and non-assessable,
free
from all Liens and free of restrictions on transfer other than as contemplated
by the Transaction Documents and Applicable Law.
(f) Authorization;
Enforceability. The Company has all requisite corporate right,
power and authority to enter into each Transaction Document and to consummate
the transactions contemplated thereby. Each Transaction Document has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
the
enforcement of creditors’ rights generally and (ii) rights of acceleration, if
any, and the availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered in a
Proceeding in equity or at law). There are no preemptive rights or rights of
first refusal on behalf of any Person applicable to the issuance of any of
the
Securities.
(g) No
Conflict; Governmental and Other Consents.
(i) The
execution, delivery and performance by the Company of the Transaction Documents
and the consummation of the transactions contemplated thereby will not result
in
the violation of any Applicable Law or of any provision of the Certificate
of
Incorporation or Bylaws, each as amended to date, of the Company or any of
the
Group Companies, and will not conflict with, or result in a breach or violation
of, any of the terms or provisions of, or constitute (with due notice or lapse
of time or both) a default under, any lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the
Company, or any of the Group Company, is a party or by which it is bound or
to
which any of its properties or assets is subject, nor result in the creation
or
imposition of any Lien upon any of the properties or assets of the Company,
or
any of the Group Company, except to the extent that any such violation, conflict
or breach would not be reasonably likely to have a Material Adverse
Effect. No holder of any of the securities of the Company or any of
its Subsidiaries has any rights (“demand,” “piggyback” or otherwise) to have the
securities registered by reason of the intention to file, filing or
effectiveness of a registration statement pursuant to the Act and the rules
and
regulations promulgated thereunder.
(ii) No
consent, approval, authorization or other order of any Governmental Authority
or
other third-party is required to be obtained by the Company in connection with
the authorization, execution and delivery of this Agreement or with the
authorization, issue and sale of the Securities hereunder, except such
post-Closing filings as may be required to be made with the
Purchase
Agreement
9
Commission,
NASDAQ and with any state or foreign blue sky or securities regulatory authority
and the draft notice filed under the NASDAQ Marketplace Rule 4310, which is
not
in strict compliance with the notice period requirements under Rule
4310.
(h) Permits. Except
as set forth in the Disclosure Schedule, each of the Group Companies possesses
all material Permits from, and has made all material declarations and filings
with, all Governmental Authorities, presently required or necessary to own
or
lease, as the case may be, and to operate their respective properties and to
carry on their respective businesses as now conducted. All of such
Permits are valid and in full force and effect. Each of the Group
Companies has fulfilled and performed all of its respective obligations with
respect to such Permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or result in
any
other material impairment of the rights of the holder of any such
Permit. None of the Group Companies has received actual notice of any
Proceeding relating to revocation or modification of any such
Permit.
(i) Compliance
with Instruments. None of the Group Companies is in violation of
its Charter Documents. None of the Group Companies is in breach of or
in default of any Material Contracts or under any bond, debenture, note or
other
evidence of indebtedness, indenture, mortgage, deed of trust, lease or any
other
agreement or instrument to which any of them is a party or by which any of
them
or their respective property is bound except where such breach or default would
not have a Material Adverse Effect.
(j) Litigation. There
are no pending or, to the Company’s knowledge, threatened, legal or governmental
Proceedings against the Company, which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect. There is no
action, suit, Proceeding, inquiry or investigation before or by any court,
public board or body (including, without limitation, the Commission) pending
or,
to the knowledge of the Company, threatened against or affecting the Company
or
any of its Subsidiaries wherein an unfavorable decision, ruling or finding
could
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under the Transaction
Documents.
(k) Accuracy
of Reports. All reports required to be filed by the Company
within the two years prior to the date of this Agreement (the “SEC
Reports”) under the Exchange Act have been filed with the Commission,
complied at the time of filing in all material respects with the requirements
of
their respective forms except for the absence of the 2005 IFC Facility from
the
exhibit of the relevant SEC Reports and, except to the extent amended, updated
or superseded by any subsequently filed report, were complete and correct in
all
material respects as of the dates at which the information was furnished, and
contained (as of such dates) no untrue statements of a material fact nor omitted
to state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(l) Financial
Information. The Company’s financial statements for the past
three years prior to the date hereof that appear in the SEC Reports have been
prepared in accordance with GAAP, except in the case of unaudited statements,
as
permitted by Form 10-Q of the SEC or as may be indicated therein or in the
notes
thereto, applied on a consistent basis throughout the periods indicated and
such
financial statements fairly present in all material respects the financial
condition and results of operations of the Company and the Subsidiaries as
of
the dates and for the periods indicated therein. Subsequent to the Balance
Sheet
Date, (A) none of the Group Companies has incurred any liabilities, direct
or
contingent, that are material, individually or in the aggregate, to such Group
Company, or has entered into any material transactions not in the ordinary
course of business, (B) there has not been any decrease in the capital stock
or
any material increase in indebtedness of the Group Companies for
money
Purchase
Agreement
10
borrowed
or guaranteed beyond US$2,000,000, or any payment of or declaration to pay
any
dividends or any other distribution with respect to the Group
Companies other than Group Companies that are wholly-owned Subsidiaries of
the Company, and (C) there has not been any change in the business, management,
operations or financial condition of any Group Company that would be reasonably
likely to have a Material Adverse Effect.
(m) Accounting
Controls. The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted only
in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(n) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002. The Company is in compliance, in all material
respects, with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
and
all rules and regulations promulgated thereunder.
(o) Investment
Company. The Company is not an “investment company” within the
meaning of such term under the Investment Company Act of 1940, as amended,
and
the rules and regulations of the Commission thereunder.
(p) Subsidiaries. To
the extent required under applicable Commission rules, Exhibit 21.1 to the
Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007,
sets forth each Subsidiary of the Company, showing the jurisdiction of its
incorporation or organization.
(1) All
of
the outstanding shares of capital stock or similar equity interests of each
Subsidiary owned or controlled, directly or indirectly, by the Company and/or
its Subsidiaries, have been validly issued, are fully paid and are owned
(except
with respect to the Clinics) or controlled by the Company and/or its Subsidiary
free and clear of any Lien except under the 2005 IFC Facility.
(2) No
Group
Company is a party to, or otherwise subject to any legal restriction or any
agreement (other than this Agreement) restricting the ability of such Subsidiary
to pay dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding shares
of capital stock or similar equity interests of such Subsidiary.
(q) Indebtedness.
Except as set forth in the Disclosure Schedule, the financial statements in
the
SEC Reports reflect, to the extent required, as of the date thereof all
outstanding secured and unsecured Debt (as defined in the Investor Rights
Agreement) of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments.
(r) Material
Agreements. Except as set forth in the Disclosure Schedule,
neither the Company nor any Subsidiary is a party to any written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement,
a
copy of which would be required to be filed with the SEC as an exhibit to Form
10-K (each, a “Material Agreement”). The Company and
each of its Subsidiaries has in all material respects performed all the
obligations required to be performed by them to date under the foregoing
agreements, have received no notice of default by the Company or the Subsidiary
that is a party thereto, as the case may be, and, to the Company’s knowledge,
are not in default under any Material
Purchase
Agreement
11
Agreement
now in effect, the result of which would be reasonably likely to have a Material
Adverse Effect.
(s) Transactions
with Affiliates. Except as set forth in the Disclosure Schedule
and other employee or director compensation arrangements, there are no loans,
leases, agreements, contracts, royalty agreements, management contracts or
arrangements or other continuing transactions with aggregate obligations of
any
party exceeding $120,000 between (a) the Company, any Subsidiary or any of
their
respective customers or suppliers on the one hand, and (b) on the other hand,
any Person who would be covered by Item 404(a) of Regulation S-K promulgated
under the Act or any company or other entity controlled by such
Person.
(t) Taxes. The
Company and each Subsidiary has prepared and filed all federal, state, local,
foreign and other tax returns for income, gross receipts, sales, use and other
taxes and custom duties (“Taxes”) required by law to be filed
by it. Such filed tax returns are complete and accurate, except for
such omissions and inaccuracies which, individually or in the aggregate, do
not
and would not have a Material Adverse Effect. The Company and each
Subsidiary has paid or made provisions for the payment of all Taxes shown to
be
due on such tax returns and all additional assessments, and adequate provisions
have been and are reflected in the financial statements of the Company and
the
Subsidiaries for all current Taxes to which the Company or any Subsidiary is
subject and which are not currently due and payable, except for such Taxes
which, if unpaid, individually or in the aggregate, do not and would not have
a
Material Adverse Effect. None of the federal income tax returns of
the Company or any Subsidiary for the past five years has been audited by the
Internal Revenue Service. The Company has not received written notice
of any assessments, adjustments or contingent liability (whether federal, state,
local or foreign) in respect of any Taxes pending or threatened against the
Company or any Subsidiary for any period which, if unpaid, would have a Material
Adverse Effect.
(u) Insurance. The
Company and its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the Company
believes are prudent in the businesses in which the Company and its Subsidiaries
are engaged. All such insurance policies insuring the Group Companies
and their respective businesses, assets, employees, officers and directors
are
in full force and effect. Each of the Group Companies is in
compliance with the terms of such policies and instruments in all material
respects. Neither the Company nor any of its Subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as
and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without an increase in cost greater
than general increases in cost experienced for similar companies in similar
industries with respect to similar coverage.
(v) Environmental
Matters. All real property owned, leased or otherwise operated by
the Company and its Subsidiaries is free of contamination from any substance,
waste or material currently identified to be toxic or hazardous pursuant to,
within the definition of a substance which is toxic or hazardous under, or
which
may result in liability under, any Environmental Law, including, without
limitation, any asbestos, polychlorinated biphenyls, radioactive substance,
methane, volatile hydrocarbons, industrial solvents, oil or petroleum or
chemical liquids or solids, liquid or gaseous products, or any other material
or
substance (“Hazardous Substance”) which has caused or would
reasonably be expected to cause or constitute a threat to human health or
safety, or an environmental hazard in violation of Environmental Law or to
result in any environmental liabilities that would be reasonably likely to
have
a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has caused or suffered to occur any release, spill, migration,
leakage, discharge, disposal, uncontrolled loss, seepage, or filtration of
Hazardous Substances that would reasonably be expected to result in
environmental liabilities that would be reasonably likely to have a Material
Adverse Effect. The
Purchase
Agreement
12
Company
and each Subsidiary has generated, treated, stored and disposed of any Hazardous
Substances in compliance with applicable Environmental Laws, except for such
non-compliances that would not be reasonably likely to have a Material Adverse
Effect. The Company and each Subsidiary has obtained, or has applied
for, and is in compliance with and in good standing under all Permits required
under Environmental Laws (except for such failures that would not be reasonably
likely to have a Material Adverse Effect) and neither the Company nor any of
its
Subsidiaries has any knowledge of any Proceedings to substantially modify or
to
revoke any such permit. There are no investigations or Proceedings
pending or, to the Company's knowledge, threatened against the Company, any
of
its Subsidiaries or any of the Company’s or its Subsidiaries’ facilities
relating to Environmental Laws or Hazardous
Substances. “Environmental Laws” shall mean all
federal, national, state, regional and local laws, statutes, ordinances and
regulations, in each case as amended or supplemented from time to time, and
any
judicial or administrative interpretation thereof, including orders, consent
decrees or judgments relating to the regulation and protection of human health,
safety, the environment and natural resources.
(w) Intellectual
Property Rights and Licenses. The Company and its Subsidiaries
own or have the right to use any and all information, know-how, trade secrets,
patents, copyrights, trademarks, trade names, software, formulae, methods,
processes and other intangible properties that are of a such nature and
significance to the business that the failure to own or have the right to use
such items would have a Material Adverse Effect (“Intellectual Property
Rights”). The Company (including its Subsidiaries) has not
received any notice that it is in conflict with or infringing upon the asserted
intellectual property rights of others in connection with the Intellectual
Property Rights, and, to the Company’s knowledge, neither the use of the
Intellectual Property Rights nor the operation of the Company’s businesses is
infringing or has infringed upon any intellectual property rights of
others. All payments have been duly made that are necessary to
maintain the Intellectual Property Rights in force. No claims have
been made, and to the Company’s knowledge, no claims are threatened, that
challenge the validity or scope of any material Intellectual Property Rights
of
the Company or any of its Subsidiaries. The Company and each of its
Subsidiaries have taken reasonable steps to obtain and maintain in force all
licenses and other permissions under Intellectual Property Rights of third
parties necessary to conduct their businesses as heretofore conducted by them,
and now being conducted by them, and as expected to be conducted, and neither
the Company nor any of its Subsidiaries is or has been in material breach of
any
such license or other permission.
(x) Labor,
Employment and Benefit Matters. None of the Subsidiaries is bound
by or subject to a collective bargaining agreement or similar written
agreement with any organization representing its
employees. There are no existing, or to the Company’s knowledge,
threatened strikes or other labor disputes against the Company or any of its
Subsidiaries that would be reasonably likely to have a Material Adverse
Effect. Except as set forth in the Disclosure Schedule, there is no
organizing activity involving employees of the Company or any of its
Subsidiaries pending or, to the Company’s or its Subsidiaries’ knowledge,
threatened by any labor union or group of employees. There are no
representation Proceedings pending or, to the Company’s or its Subsidiaries’
knowledge, threatened with the U.S. National Labor Relations Board, and no
labor
organization or group of employees of the Company or its Subsidiaries has made
a
pending demand for recognition.
(y) ERISA
Matter. None of the Company nor any of its Subsidiaries (i) has
terminated any “employee pension benefit plan” as defined in Section 3(2) of
ERISA (as defined below) under circumstances that present a material risk of
the
Company or any of its Subsidiaries incurring any liability or obligation that
would be reasonably likely to have a Material Adverse Effect, or (ii) has
incurred or expects to incur any outstanding liability under Title IV of the
Employee Retirement Income Security Act of 1974, as amended and all rules and
regulations promulgated thereunder (“ERISA”).
Purchase
Agreement
13
(z) Investment
Company. None of the Group Companies is, and as a result of the
offer and sale of the Securities contemplated herein will not be, required
to
register as an “investment company” under, and as such term is defined in, the
U.S. Investment Company Act of 1940, as amended in connection with or as a
result of the application of the proceeds from the sale of the
Securities.
(aa) Compliance
with Law. All Group Companies are in compliance in all material
respects with all Applicable Laws, except for such noncompliance that would
not
reasonably be likely to have a Material Adverse Effect. None of the
Group Companies has received any notice of, nor does the Company have any
knowledge of, any violation (or of any investigation, inspection, audit or
other
Proceeding by any Governmental Authority involving allegations of any violation)
of any Applicable Law involving or related to any Group Company which has not
been dismissed or otherwise disposed of that would be reasonably likely to
have
a Material Adverse Effect. None of the Group Companies has received
notice or otherwise has any knowledge that the Company is charged with,
threatened with or under investigation with respect to, any violation of any
Applicable Law that would reasonably be likely to have a Material Adverse
Effect. Each Group Company and its directors, officers, employees and
agents or other person acting under and with its express authorization have
complied in all respects with the Foreign Corrupt Practices Act of 1977, as
amended, and any rules and regulations promulgated thereunder (the
“FCPA”).
(bb) Money
Laundering Laws. The operations of each of the Group Companies
are and have been conducted at all times in compliance with the money laundering
statutes of applicable jurisdictions, the rules and regulations thereunder
and
any related or similar rules, regulations or guidelines, issued, administered
or
enforced by any applicable governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving
any
of the Group Companies with respect to the Money Laundering Laws is pending
or,
to the Company’s knowledge, threatened.
(cc) Ownership
of Property. Except as set forth in the Disclosure Schedule, each
of the Company and its Subsidiaries has (i) good and marketable fee simple
title
to its owned real property, if any, free and clear of all Liens, except for
Liens permitted by this Agreement; (ii) a valid leasehold interest in all leased
real property, and each of such leases is valid and enforceable in accordance
with its terms (subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy), and is in full force and effect, and (iii) good title to,
or
valid leasehold interests in, all of its other properties and assets free and
clear of all Liens, except as set forth in the Disclosure Schedule, or which
otherwise do not individually or in the aggregate have a Material Adverse
Effect.
(dd) Compliance
with NASDAQ Listing Requirements. The Company is in compliance in all
material respects with all currently effective NASDAQ continued listing
requirements and corporate governance requirements as applied to the Company
except for the draft notice filed under the NASDAQ Marketplace Rule 4310, which
is not in strict compliance with the notice period requirements under Rule
4310. The Company’s Class A Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on NASDAQ, trading in the Class
A Common Stock has not been suspended, and the Company has taken no action
designed to terminate, or likely to have the effect of terminating, the
registration of the Class A Common Stock under the Exchange Act or de-listing
the Class A Common Stock from NASDAQ.
(ee) No
Integrated Offering. Assuming the accuracy of the Purchaser’s
representations and warranties set forth herein, neither the Company, nor any
of
its Affiliates or other
Purchase
Agreement
14
Person
acting on the Company’s behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any Common Stock that
would
cause the sale of the Securities pursuant to this Agreement to be integrated
with prior offerings of the Company for purposes of the Act, when such
integration would cause such sale not to be exempt from the requirements of
Section 5 of the Act.
(ff) General
Solicitation. Neither the Company nor, to its knowledge, any Person acting
on behalf of the Company, has offered or sold any Class A Common Stock by any
form of “general solicitation” within the meaning of Rule 502 under the
Act. To the knowledge of the Company, no Person acting on its behalf
has offered any Class A Common Stock for sale other than to the Purchaser and
certain other “accredited investors” within the meaning of Rule 501 under the
Act.
(gg) No
Registration. Assuming the accuracy of the representations and
warranties made by, and compliance with the covenants of, the Purchasers herein,
no registration of the Securities under the Act is required in connection with
the offer and sale of the Securities by the Company to the Purchasers as
contemplated by this Agreement.
(hh) No
Stabilization. The Company has not and, no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause
or
to result in, or that has constituted or which might reasonably be expected
to
constitute, the stabilization or manipulation of the price of any security
of
any of the Group Companies to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid anyone any compensation
for
soliciting purchases of, the Tranche A Shares and the Notes, or (iii) paid
or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Group Companies.
(ii) The
Corporate Agreements:
(1) have
been
duly authorized, executed and delivered by the Group Companies and the nominee
shareholders (to the extent they are party thereto) and constitute a legal,
valid and binding obligation of each such Group Company and nominee
shareholders, enforceable against such Group Companies and nominee shareholders
in accordance with their terms unless the non-enforceability would not have
a
Material Adverse Effect, except as (i) the enforceability thereof may be
limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to
fraudulent transfers), reorganization, moratorium or similar laws affecting
the
enforcement of creditors’ rights generally and (ii) rights of acceleration, if
any, and the availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered in
a
Proceeding in equity or at law);
(2) have
been
effected in compliance with all applicable national, provincial, municipal
and
local laws and no consents, approvals, authorizations, orders, registrations
and
qualifications by any Governmental Authority, any self-regulatory organization
or any court of other tribunal or any stock exchange authorities are required
in
connection with the Corporate Agreements in all material respects;
and
(3) are
not
the subject of any action, claim, suit, demand, hearing, notice of violation
or
deficiency or proceeding seeking to restrain, enjoin or otherwise challenge
any
of the transactions contemplated therein, except to the extent such would
not,
individually or in the aggregate, have a Material Adverse
Effect.
(jj) Disclosure. The
Company understands and confirms that the Purchaser will rely on the foregoing
representations in effecting transactions contemplated under the Transaction
Documents at the Closing. All documents and materials provided by the Company
to
the Purchaser in
Purchase
Agreement
15
writing
in response to a Due Diligence Request List dated October 17, 2007 and all
information contained in the Disclosure Schedule and the SEC Reports are true
and correct in all material respects and do not contain any untrue statement
of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they
were made, not misleading.
6. Covenants
of the Company.
The
Company hereby covenants and agrees, and to the extent permitted by the
Applicable Law, agrees to cause each of other Group Companies to
undertake:
(a) During
the 90-days period commencing on the date hereof and prior to making any public
disclosure or filings as may be required by Applicable Laws with respect to
any
of the Transaction Documents and the transactions contemplated hereby and
thereby, to provide the Purchaser and its counsel with the reasonable
opportunity to review and comment on such public disclosure documents and
consider in good faith any comments received by the Purchaser or its
counsel.
(b) To
pay
all stamp, documentary and transfer taxes and other duties, if any, which may
be
imposed by any Governmental Authorities or any political subdivision thereof
or
taxing authority thereof or therein with respect to the initial issuance of
the
Tranche A Shares and the Notes or the sale thereof to the
Purchaser.
(c) The
Company will use its commercially reasonable efforts not to become, and cause
its Subsidiaries not to become, a “passive foreign investment company” within
the meaning of Section 1297 of the Internal Revenue Code of 1986
(“PFIC”). If the Company has knowledge that it or
any of its Subsidiaries has become a PFIC, the Company will promptly notify
the
Purchaser and provide all information relating to the Company reasonably
requested by the Purchaser that is necessary for it to make a qualified electing
fund (QEF) election.
(d) Prior
to
and following the Closing Date, each of the Clinics and the relevant Group
Companies, as the case may be, shall not amend or waive, fail to exercise its
rights, assign or transfer, terminate suspend or abandon, all or any part of
a
Corporate Agreement such that it would have a Material Adverse
Effect. The Clinics and the relevant Group Companies, as the case may
be, shall not, without the prior consent of the Company, pay any dividends
out
of profits or make any other similar distributions of profits to its
shareholders.
(e) Each
Group Company and its directors, officers, employees and agents or other person
acting under and with its express authorization will comply in all respects
with
the Foreign Corrupt Practices Act of 1977, as amended, and any rules and
regulations promulgated thereunder.
7. Purchaser’s
Representations, Warranties and
Agreements.
(A) The
Purchaser represents and warrants to the Company that:
(a) The
Purchaser is duly organized, validly existing and in good standing
under the laws of the State of Delaware of the United States.
(b) The
Purchaser has all requisite power and authority to enter into this Agreement
and
to consummate the transactions contemplated hereby. This Agreement has been
duly
executed and delivered by the Purchaser and constitutes the legal, valid and
binding obligation of the Purchaser,
Purchase
Agreement
16
enforceable
against the Purchaser in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and (ii) rights of acceleration, if any, and the availability of
equitable remedies may be limited by equitable principles of general
applicability (regardless of whether considered in a Proceeding in equity or
at
law).
(c) The
execution and delivery by the Purchaser of this Agreement and the consummation
of the transactions contemplated hereby will not result in the violation of
any
law, statute, rule, regulation, order, writ, injunction, judgment or decree
of
any court or Governmental Authority to or by which the Purchaser is
bound. No consent, approval, authorization or other order of any
Governmental Authority or other third-party is required to be obtained by the
Purchaser in connection with the authorization, execution and delivery of this
Agreement.
(d) Purchaser
and its officers and agents have incurred no obligation or liability, contingent
or otherwise, for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement and will indemnify and hold
the Company harmless from any such payment alleged to be due by or through
Purchaser as a result of the action of Purchaser or its officers or
agents.
(e) The
Purchaser has sufficient knowledge and experience in financial, tax and business
matters to enable the Purchaser to utilize the information made available to
the
Purchaser in connection with the transactions contemplated hereby, to evaluate
the merits and risks of an investment in the Securities and to make an informed
investment decision with respect to an investment in the
Securities.
(f) The
Purchaser is not a “U.S. Person” (as defined in Rule 902 of Regulation S) and it
understands that no action has been or will be taken in any jurisdiction by
the
Company that would permit a public offering of the Securities in any country
or
jurisdiction where action for that purpose is required. The Purchaser
is not acquiring the Securities for the account or benefit of any U.S. Persons
except in accordance with exemption from registration requirements of the Act
below or in a transaction not subject thereto.
(g) The
purchaser did not become aware of the Company or the Securities through any
form
of “directed selling efforts” (as defined in Rule 902 of Regulation S), general
solicitation or general advertising in violation of the Act has been or will
be
used nor will any offers by means of any directed selling efforts in the United
States be made by the Purchaser or any of its representatives in connection
with
the offer and sale of any of the Securities.
(h) At
the
time of the origination of contact concerning the transactions contemplated
by
this Agreement and on the date of execution and delivery of this Agreement
by
the Purchaser, the Purchaser was outside of the United States.
(i) No
sale
of the Notes to any one subsequent purchaser will be for less than US$1,000,000
principal amount and no Note will be issued in a smaller principal
amount.
(B) The
Purchaser agrees with the Company as follows:
(a) The
Purchaser acknowledges that the Tranche A Shares, the Notes and the Conversion
Shares are “restricted securities” as defined in Rule 144 under the
Act.
Purchase
Agreement
17
(c) The
Purchaser and the Company agree that the Company will refuse to register any
transfer to the Tranche A Shares, the Notes or the Conversion Shares not made
in
accordance with the provisions of Regulation S under the Act, pursuant to
registration under the Act, or pursuant to an available exemption from
registration.
(d) The
Purchaser agrees to resell the Tranche A Shares, the Notes and the Conversion
Shares only in accordance with the provisions of Regulation S under the Act,
pursuant to registration under the Act, or pursuant to an available exemption
from registration pursuant to the Act.
(e) The
Purchaser acknowledges and agrees that all certificates representing the Tranche
A Shares, the Notes and the Conversion Shares will be endorsed with the
following legend in accordance with Regulations S under the Act:
“THE
SECURITIES REPRESENTED BY THE CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1993 (THE “ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON THE
SAFE HARBOR PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES
MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT.”
(f) The
Purchase consents to the Company making a notation on its records and giving
instructions to any transfer agent of the Company in order to implement the
restrictions on transfer of the Securities set forth in this
Agreement.
8. Conditions
Precedent to the Obligation of the Purchaser to
Purchasethe Tranche A Shares and the
Notes.
The
Purchaser’s obligation to consummate the transactions as contemplated under this
Agreement is subject to the satisfaction or waiver, on or before the Closing,
of
each of the following conditions, to the extent applicable:
(a) All
the
representations and warranties regarding all Group Companies contained in each
Transaction Documents shall be true and correct in all material respects as
of
the date hereof and at the Closing Date. The Company shall have
performed, satisfied and complied with, in all material respects to the
Purchaser’s satisfaction in its sole discretion, all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or
complied with by them at or prior to the Closing.
(b) No
injunction, restraining order or order of similar nature by a Governmental
Authority shall have been issued as of the Closing Date that would prevent
or
materially interfere with the consummation of the transactions contemplated
under the Transaction Documents; and no stop order suspending the qualification
or exemption from qualification of any of the Securities in any jurisdiction
shall have been issued and no Proceeding for that purpose shall have been
commenced or, to the knowledge of the Company, be pending or threatened as
of
the Closing Date.
Purchase
Agreement
18
(c) No
action
shall have been taken by any Governmental Authority and no Applicable Law shall
have been enacted, adopted or issued that would, as of the Closing Date, prevent
the consummation of the transactions contemplated under the Transaction
Documents.
(d) The
Company shall have obtained any and all approvals, consents and waivers
necessary for the consummation of the transactions contemplated under the
Transaction Documents as of Closing in accordance with the terms hereof,
including, but not limited to, all applicable Permits, authorizations, approvals
or consents of any Governmental Authority.
(e) The
Purchaser will not be deemed as an “Acquiring Person” under the Rights Agreement
dated June 4, 2007 between the Company and American Stock Transfer & Trust
Company as the rights agent, which shall have been amended prior to the Closing
in the form attached hereto as Exhibit E and shall be treated, for all
purposes and in respect of all rights and obligations, on a parity with all
other holders of Class A Common Stock of the Company.
(f) The
Purchaser shall have received on the Closing Date:
(1) a
certificate dated the Closing Date, signed by the Chief Executive Officer
of the
Company on behalf of the Company to the effect that (w) the representations
and
warranties set forth in Section 5 are true and correct with the same force
and
effect as though expressly made at and as of the Closing Date, except for
those
representations and warranties that speak as of a specified date, which shall
be
true and correct in all material respects on and as of such date, (x) the
Company has complied with all agreements and satisfied all conditions on
its
part to be performed or satisfied hereunder at or prior to the Closing, and
(y)
the sale of any of the Tranche A Shares or the Notes has not been enjoined
(temporarily or permanently;
(2) a
certificate dated the Closing Date, signed by the Secretary of the Company,
including specimen signatures of those officers of the Company authorized
to
sign the Transaction Documents, to which the Company is a party, on behalf
of
the Company, attaching true, complete and up to date copies of the certificate
of incorporation and by-laws of the Company, and attaching the certificate
of
good standing of the Company;
(3) the
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, U.S. counsel to the Company, dated the
Closing Date, in the form attached hereto as Exhibit F; and
(g) Prior
to
the Closing Date, there has been no change that would have resulted, or would
be
reasonably expected to result, in a Material Adverse Effect.
(h) Each
of
the Transaction Documents shall have been executed and delivered by all parties
thereto other than the Purchaser, and the Purchaser shall have received a fully
executed original (or clearly legible facsimile copy) of each Transaction
Document.
(i) None
of
the other parties to any of the Transaction Documents shall be in breach or
default under their respective obligations thereunder.
9. Termination.
(a) Without
prejudice to the Purchaser’s right under Section 4(b)(ii) to terminate in
respect of the Tranche C Notes, the Purchaser may unilaterally terminate this
Agreement at any time prior to the Closing Date by written notice to the Company
if any of the following has occurred:
Purchase
Agreement
19
(i) at
any
time after December 31, 2007 if the Closing shall not have occurred on or
before
such date and such failure to consummate is not caused by a breach of this
Agreement by the Purchaser; provided, however, that the
Company may by written notice to the Purchaser delivered on or before such
date
extend such date until January 31, 2008 if the failure of the Closing to
have
occurred on or before December 31, 2007 shall have resulted from the failure
of
the condition set forth in Section 8(c).
(ii) the
failure of Company to satisfy the conditions contained in Section 8
on or prior to the Closing Date; or
(iii) suspension
of trading in the Class A Common Stock by NASDAQ or the suspension or limitation
of trading generally in securities on any national securities exchange (as
defined in the Securities Exchange Act of 1934) or any setting of limitations
on
prices for securities on such exchange.
(b) The
Company may terminate this Agreement at any time prior to the Closing Date
by
written notice to the Purchaser at any time after December 31, 2007 if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the Company;
provided, however, that the Purchaser may by written notice to
the Company delivered on or before such date extend such date until January
31,
2008 if the failure of the Closing to have occurred on or before December 31,
2007 shall have resulted from the failure of the condition set forth in Section
8(c).
10. Survival
of Representations and Indemnities. The
representations and warranties and covenants of the Company set forth in this
Agreement shall remain operative and in full force and effect, and will survive
indefinitely.
11. Substitution
of Purchaser. The Purchaser shall have
the right to substitute any one of its Affiliates in the financial service
industry excluding One Equity Partners or companies invested in by One Equity
Partners as the purchaser of the Tranche A Shares and the Notes by written
notice to the Company, which notice shall be signed by both the Purchaser and
such Affiliate and delivered to the Company at least three Business Days prior
to the Closing, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations and warranties set forth in Section
7. Upon receipt of such notice, wherever the word “Purchaser” is used
in this Agreement (other than in this Section 11), such word shall be deemed
to
refer to such Affiliate in lieu of the original Purchaser. In the
event that such Affiliate is so substituted as the purchaser hereunder and
such
Affiliate thereafter transfers to the original Purchaser all of the Tranche
A
Shares and the Notes then held by such Affiliate, upon receipt by the Company
of
notice of such transfer, wherever the word “Purchaser” is used in this Agreement
(other than in this Section 11), such word shall no longer be deemed to refer
to
such Affiliate, but shall refer to the original Purchaser, and the original
Purchaser shall have all the rights of an original holder of the Tranche A
Shares and the Notes under this Agreement.
12. Miscellaneous.
(a) Notices
given pursuant to any provision of this Agreement shall be addressed as follows:
(i) if to the Company, to: Chindex International, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Chief Executive
Officer, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇; and (ii)
if
to the Purchaser, to: ▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇.▇., ▇▇ ▇▇/▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇
Purchase
Agreement
▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, Fax: ▇▇▇▇ ▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇/ ▇▇▇▇
▇▇,
with a copy to Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, at Tower 2, China
Central Place, Suite 1505-1506, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
People’▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Fax: ▇▇▇
(▇▇)
▇▇▇▇-▇▇▇▇, Attention: Mr. ▇▇▇▇▇▇ Sun.
(b) This
Agreement has been and is made solely for the benefit of and shall be binding
upon the parties hereto as and to the extent provided in this Agreement, and
no
other Person shall acquire or have any right under or by virtue of this
Agreement.
(c) THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
(d) The
parties hereto agree that any suit, action or Proceeding arising out of or
based
upon this Agreement or the transactions contemplated hereby shall be instituted
in any State or U.S. federal court in The City of New York and County of New
York, and waives any objection which it may now or hereafter have to the laying
of venue of any such Proceeding, and irrevocably submits to the exclusive
jurisdiction of such courts in any suit, action or Proceeding.
(e) The
parties hereto each hereby waive any right to trial by jury in any action,
Proceeding or counterclaim arising out of or relating to this
Agreement.
(f) No
failure to exercise, and no course of dealing with respect to, and no delay
in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of
any
other right, power or remedy.
(g) This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature
is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
(h) The
headings in this Agreement are for convenience of reference only and shall
not
constitute part of this Agreement nor limit or otherwise affect the meaning
of
any provision of this Agreement.
(i) If
any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, in each case to the extent permitted by Applicable Law, and
the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would
have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void
or
unenforceable, to the extent permitted by Applicable Law.
(j) This
Agreement may be amended, modified or supplemented, and waivers or consents
to
departures from the provisions hereof may be given; provided that the
same are in writing and signed by all of the signatories hereto.
Purchase
Agreement
21
[Signature
Page(s) to Follow]
Purchase
Agreement
22
IN
WITNESS WHEREOF, the undersigned
have executed this Securities Purchase Agreement as of the date first written
above.
|
CHINDEX
INTERNATIONAL, INC.
|
|||
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
||
|
Title:
|
Chief
Executive Office and President
|
||
|
MAGENTA
MAGIC LIMITED
|
|||
|
By:
|
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | ||
|
Name:
|
▇▇▇▇▇▇
▇▇▇▇▇
|
||
|
Title:
|
Authorized
Signatory
|
||
Signature
Page to Purchase Agreement
Schedule
1
Corporate
Agreements
|
1.
|
Agreements
for Beijing United Family Clinic, Inc (“北京市和睦家诊所有限责任公司”
in
Chinese), entered into on August 30, 2002 by and between Chindex
(Beijing)
Consulting, Inc and respectively, ▇▇. ▇▇▇ Bohong and Mr. ▇▇▇
▇▇▇▇
|
|
2.
|
Articles
of Association of Beijing United Family Clinic,
Inc.
|
|
3.
|
Service
Fee Agreement entered into on April 1, 2006 by and between Beijing
United
Family Jianguomen Clinic, Inc (“北京和睦家建国门诊所有限公司”
in
Chinese) and Chindex (Beijing) Consulting,
Inc.
|
|
4.
|
Service
Fee Agreement entered into on April 1, 2006 by and between Shanghai
United
Family Clinic Inc (“上海和美家诊所有限公司”
in
Chinese) and Chindex (Beijing) Consulting,
Inc.
|
Purchase
Agreement
Schedule
1
Exhibit
A
Investor
Rights Agreement
Purchase
Agreement
Exhibit
A
Exhibit
B
Tranche
B Note
and
Tranche
C Note
Purchase
Agreement
Exhibit
B
Exhibit
C
Registration
Rights Agreement
Purchase
Agreement
Exhibit
C
Exhibit
D
Amendment
No. 1 to Rights Agreement, Dated November 4, 2007
Purchase
Agreement
Exhibit
D
Exhibit
E
Shareholder
Side Letters
respectively
for
▇▇▇▇▇▇▇
▇▇▇▇▇▇
and
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Purchase
Agreement
Exhibit
E
EXECUTION
COPY
THIS
INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made and
entered into as of November 7, 2007, by and among CHINDEX INTERNATIONAL, INC.,
a
Delaware corporation (the “Company”), and MAGENTA MAGIC
LIMITED, a company organized and existing under the laws of the British Virgin
Islands and wholly owned, directly or indirectly, by JPMorgan Chase & Co
(the “Holder”). Capitalized terms used herein
but not otherwise defined herein shall have the respective meanings set forth
in
the Securities Purchase Agreement (as defined below) and the Schedule 1
attached to this Agreement.
WITNESSETH:
WHEREAS,
the Company and Holder have entered into that certain Securities Purchase
Agreement dated as of November 7, 2007 (the “Securities Purchase
Agreement”), pursuant to which the Company has agreed to issue to
Holder, and Holder has agreed to purchase from the Company, the Securities
in an
aggregate consideration of US$50,000,000; and
WHEREAS,
it is a condition to the Closing under the Securities Purchase Agreement that
the parties hereto shall have executed this Agreement.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto, intending to be legally bound by this Agreement, agree as
follows:
1. Representations
and Warranties of the Company. The Company (the
“Warrantor”), represents and warrants on its own behalf
and on behalf of each of the other Group Companies that: (i) as of
November 7, 2007, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is a director and the beneficial owner, free
and clear of all Liens, of 161,012 shares of Class A Common Stock and 440,000
shares of Class B Common Stock, which constitutes in the aggregate approximately
24.8% of the outstanding voting power of the Company’s capital stock calculated
pursuant to Rule 13d-3, (ii) ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ is a director and the
beneficial owner, free and clear of all Liens, of 180,972 shares of Class A
Common Stock and 260,500 shares of Class B Common Stock, which constitutes
in
the aggregate approximately 15.4% of the outstanding voting power of the
Company’s capital stock calculated pursuant to Rule 13d-3, (iii) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
is a director and the beneficial owner, free and clear of all Liens, of 163,148
shares of Class A Common Stock and 74,500 shares of Class B Common Stock, which
constitutes in the aggregate approximately 5.4% of the outstanding voting power
of the Company’s capital stock calculated pursuant to Rule 13d-3, and (iv) each
of the Ariel ▇▇▇▇▇▇▇▇ ▇▇▇ Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Trust, of each of which ▇▇. ▇▇▇▇▇▇ is a trustee, beneficially owns,
free
and clear of all Liens, 20,000 shares of Class B Common Stock, the outstanding
voting power of which is included for, and retained by, ▇▇. ▇▇▇▇▇▇ as stated
above.
1.1 The
Warrantor has full power and authority to make, enter into and carry out the
terms of this Agreement. This Agreement has been duly executed and
delivered by the Warrantor and constitutes the legal, valid and binding
obligations of such Warrantor enforceable against such Warrantor in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
the
enforcement of creditors’ rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability (regardless of whether considered in a Proceeding in equity or
at
law). There are no preemptive rights or rights of first refusal on behalf of
any
Person applicable to the issuance of any of the Securities.
2. Covenants
and Agreements.
The
Company hereby covenants and agrees, and to the extent permitted by Applicable
Law, the Company hereby undertakes and agrees, where applicable, to cause each
Group Company, to do as follows, unless waived by the Holder:
2.1 Financial
Information. As long as the Holder owns 5% or more of the
Company’s voting shares then outstanding on Fully-Diluted basis during the
period commencing from the Closing Date until the earlier of the date after
(i)
in the event that both New JV Hospitals are to be constructed and opened for
operation, then (x) two years have elapsed since the official commencement
of
operation by both of the New JV Hospitals (as defined below), or (y) one year
has elapsed since both New JV Hospitals have respectively achieved a break-even
EBITDA for any 12-month period ending on a date that is the last day of a fiscal
quarter as evidenced by audited Financial Statements for such period, or (z)
the
fifth anniversary of the Closing Date; or (ii) in the event that only one New
JV
Hospital is to be constructed and opened for operation, (x) two years have
elapsed since the official commencement of operation by such New JV Hospital,
or
(y) one year has elapsed since such New JV Hospital has achieved a break-even
EBITDA for any 12-month period ending on a date that is the last day of a fiscal
quarter as evidenced by audited Financial Statements for such period, or (z)
the
fifth anniversary of the Closing Date (in each case, the “Restricted
Period”), the Company shall deliver to the Holder:
(a) as
soon
as practicable, but in any event within forty-five (45) days of the end of
each
quarter the unaudited statements of operations and statements of cash flows
for
such quarter and the unaudited balance sheets as of the end of such quarter
(collectively the “Financial Statements”) in respect of
the Company on a consolidated basis, and the existing operations relating solely
to marketing and selling medical equipment and products (“MPD
Business”), and the existing operations engaged in the healthcare
services business (“UFH Business”);
(b) within
forty-five (45) days of the end of each calendar quarter a project progress
report in respect of each hospital and clinic project then under construction
(each a “New Healthcare Unit”) as generally compared
with the relevant budget for that project; provided that none of the information
contained in such reports shall constitute a representation or warranty as
to
the accuracy or completeness thereof nor be used in connection with any
securities transaction of any kind whatsoever nor be disclosed to any Person
unless such Person has agreed in writing with the Company as a third-party
beneficiary to be bound by the terms of this provision to the same extent it
applies to the Holder; and
(c) upon
reasonable written request, an update on the status of receipt or expected
receipt of material permits, approvals, consents obtained and to be obtained
from any Governmental Authority for the construction, development and operation
of each of such New Healthcare Units; provided that none of the information
contained in such updates shall constitute a representation or warranty as
to
the accuracy or completeness thereof nor be used in connection with any
securities transaction of any kind whatsoever nor be disclosed to any Person
unless such Person has agreed in writing with the Company as a third-party
beneficiary to be bound by the terms of this provision to the same extent it
applies to the Holder.
2.2 Access
to Books and Records. As long as the Holder owns 5% or more of
the Company’s voting shares then outstanding on Fully-Diluted basis during the
Restricted Period, the Company shall permit the Holder the right to visit and
inspect any of its properties upon reasonable notice to the Chief Executive
Officer or Chief Financial Officer of the Company, to seek information relating
to the operating and financial performance and results of any Group Company,
and
discuss the affairs and the operating and financial performance of any Group
Company with the directors and Chief Executive Office or Chief Financial Officer
of the Company all at such reasonable times as may be requested by the
Holder.
Investor
Rights Agreement
2
2.3 Management
Continuity. As long as the Holder owns 5% or more of the
Company’s voting shares then outstanding on Fully-Diluted basis during the
Restricted Period, the Company shall use its best efforts to ensure, subject
to
Applicable Law, that (x) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ remains as the Chief Executive Officer
and President of the Company; (y) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ alone, or together with
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and/or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (collectively, the “Major
Shareholders”), retain the principal responsibility to appoint
senior management officers of the Company, oversee their performance of the
Company and the Subsidiaries, and develop and implement the business strategy
and the expansion plan of the Company and the Subsidiaries.
2.4 Use
of
Proceeds. The Company shall use the net proceeds from the sale of
any of the Securities in any amount only for funding, directly or indirectly,
the following projects (A) the proposed new 125-bed hospital to be established
by the Company in Guangzhou, Guangdong Province, the PRC (“Guangzhou
Hospital”); (B) the proposed new 150-bed hospital to be established
by the Company or any expansion of the existing hospital in Beijing, the PRC
(“Beijing Hospital,” and together with Guangzhou
Hospital, the “New JV Hospitals”); (C) the proposed new
clinic(s) to be established in Guangzhou, Guangdong Province, the PRC; (D)
the
proposed new clinic to be established in Shanghai, the PRC; (E) the existing
dental service clinic in Shunyi District, Beijing, the PRC; (F) no more than
US$5,000,000 in the MPD Business, and (G) any other new projects with prior
consent of the Holder, such consent not to be unreasonably withheld or
delayed.
2.5 Insurance. As
long as the Holder owns 5% or more of the Company’s voting shares then
outstanding on Fully-Diluted basis during the Restricted Period, the Group
Companies shall use commercially reasonable efforts (i) to maintain all existing
insurance policies, and (ii) in respect of each New Healthcare Unit, to cause
at
least the same or substantially similar such policies to apply in all material
respects.
2.6 No
Pledge of Company’s Shares. During the Restricted Period, the
Company shall provide the Holder with notice, at least fifteen (15) days prior
to effecting the registration of any proposed transfer of shares by any Major
Shareholder, in order to afford the Holder an opportunity to enforce its rights
under the applicable Shareholder Side Letter.
2.7 New
JV
Hospitals. As long as the Holder owns 5% or more of the Company’s
voting shares then outstanding on Fully-Diluted basis during the Restricted
Period, the following conditions must be met in respect of each New JV
Hospital:
(a) The
Company shall own 60% or more of the registered capital of such New JV
Hospital;
(b) The
Company shall obtain effective management and operational control of each New
JV
Hospital in a manner consistent with (if not more favorable than) the current
management and operational control of the Company in Beijing United Family
Hospital and Shanghai United Family Hospital;
(c) the
Company shall make available to the Holder the following information regarding
such New JV Hospital as reasonably requested prior to the finalizing of the
applicable principal joint venture contract: (A) the proposed capital budget,
including proposed working capital and contingency amounts, the proposed plan
for the construction, commencement of operations, staffing, training and
marketing, (B) a proposed general time schedule for the material expenditures
contemplated in such budget and (C) any other information that the Holder may
reasonably request regarding such New JV Hospital; and
Investor
Rights Agreement
3
(d) Shareholders
and/or partners of the New JV Hospital other than the Company shall receive
dividends or any other distributions on equity only in proportion to their
respective ownership interest in the registered capital of the New JV Hospital
as provided in the applicable formation and/or organizational documents
thereof.
2.8 Information
Technology Plan. The Purchaser shall have received from the
Company within two (2) months of the Closing Date a detailed description of
the
information technology program (the “New IT Program”)
for the Company’s existing and new facilities and shall have had reasonable
opportunity to discuss with the Company on the foregoing.
2.9 No
Default. As long as the Holder owns 5% or more of the Company’s
voting shares then outstanding on Fully-Diluted basis during the Restricted
Period, the Company shall, and the Company shall cause each of the other Group
Companies to, (a) comply with all covenants and undertakings relating to capital
expenditure under the Facilities (as defined in the Tranche B Note); and (b)
cure any event of default that may arise from or in connection with any existing
or future Debt instrument evidencing the greater of (i) US$1,000,000 or (ii)
10%
of the total Debt of the Company at the time of such default (and described
as
such and not waived under the fundamental instruments governing such Debt)
within forty-five (45) days from the occurrence of such event of default or
such
longer period as is contemplated for such cure by such instruments.
2.10 Executive
Employment Terms. The Company shall, immediately after the
Closing and in no event later than fifteen (15) Business Days following the
Closing, cause a board or an appropriate board committee resolution to be duly
entered approving and ratifying the term of each of the employment agreements
between the Company and the each Major Shareholder for a period of no less
than
seven years and ten months commencing from March 1, 2006 through December 31,
2013.
3. New
Issue. Without limiting any remedies otherwise available to the
Holder at law or in equity in any manner, the Company shall not issue any new
equity or equity-linked security if, in the reasonable opinion of the Holder,
such issuance would result in the conditions contained in Section 2.3 (x) or
(y)
no longer being true, unless the intended purchaser(s) of such new issue agrees
and represents in writing to the Company that it does not have any present
intention to remove any of the Major Shareholders from his/her management
position at the Company or change his/her position at the Company.
4. Right
of First Refusal for Future Securities Offerings.
4.1 Issuance
Notice. Subject to the terms and conditions of this Section and
Applicable Laws, if the Company proposes to issue or sell any shares of equity
securities or equity-linked securities (“Shares”) to a
purchaser or purchasers (the “Proposed Third Party
Purchaser”) during the Restricted Period, the Company shall,
provided the Holder at such time holds not less than 7.5% of the total voting
shares of the Company then outstanding on a Fully-Diluted basis, not less than
ten (10) calendar days prior to the consummation of such issuance or sale of
Shares, offer such Shares to the Holder by sending written notice (an
“Issuance Notice”) to the Holder, which shall state (a)
the identity of the Proposed Third Party Purchaser, or if a public offering,
a
description in reasonable detail of the offering, (b) a description of the
securities to be issued or sold, including detailed terms of such securities,
(c) the number of Shares proposed to be issued to the Proposed Third Party
Purchaser, (d) the proposed purchase price for the Shares (the
“Issuance Price”); and (d) a description in reasonable
detail of the material terms and conditions of such proposed
sale. The Issuance Notice shall also state that the Company has
received a proposal from the Proposed Third Party Purchaser and in good faith
believes a binding agreement for the Shares is obtainable on the terms set
forth
in the Issuance Notice.
Investor
Rights Agreement
4
4.2 Option;
Exercise. By notification to the Company within ten (10) days
after the Issuance Notice is given, the Holder may elect to purchase for cash,
at the price and on the terms and conditions specified in such Issuance Notice,
up to 20% of the Shares by delivering to the Company written notice and
confirmation of its commitment to so purchase, and the number of shares to
be so
purchased, prior to the expiration of such 10-day period, on the same terms
and
conditions as the Proposed Third Party Purchaser. The closing of any sale
pursuant to this Section 4.2 shall occur on a date set by the Company and in
any
event within sixty (60) days after the date on which such notification is given
by the Holder. The Holder shall be entitled, with the prior written
consent of the Company, such consent not to be unreasonably withheld or delayed,
to apportion the rights of first refusal hereby granted to it among itself
and
its Affiliates in such proportions as it deems appropriate.
4.3 Sale
to Third Parties. To the extent that the Shares are not elected
to be purchased or acquired as provided in Section 4.2, the Company may, during
the sixty (60) day period following the expiration of the 10-day period as
set
forth in Section 4.2, offer and sell the remaining unsubscribed portion of
such
securities in the Issuance Notice at a price not less than, and upon terms
no
more favorable to the Proposed Third Party Purchaser than, those specified
in
the Issuance Notice. If the Company does not enter into an agreement
for the sale of such securities within such period, or if such agreement is
not
consummated within sixty (60) days after the execution thereof, the right of
first refusal provided hereunder shall be deemed to be revived and such Shares
shall not be offered to a third party unless first reoffered to the Holder
in
accordance with this Section 4.
4.4 Exceptions. Notwithstanding
any other provision of this Agreement to the contrary, the rights of the Holder
pursuant to this Sections 3 and 4 shall not apply to securities issued: (i)
upon
exercise, exchange or conversion of any securities and all other securities
of
the Company that are as at the date hereof authorized, issued or outstanding
and
that represent any other direct or indirect rights to acquire, or constitute
interests or participations in, Common Stock or rights to acquire securities
that are directly or indirectly exercisable for, convertible into or
exchangeable for Common Stock; (ii) as a stock dividend upon any subdivision
of
shares of Common Stock; (iii) pursuant to subscriptions, warrants, options,
convertible securities, or other rights, issued, or to be issued, under any
stock option or other equity incentive plan or arrangement approved by the
Company’s Board of Directors and in place from time to time for the benefit of
the Company’s directors, employees, consultants or independent contractors,
including without limitation the Company’s 2004 Stock Incentive Plan and 2007
Stock Incentive Plan or (iv) pursuant to a share swap in a strategic merger
or
acquisition transaction.
5. Reserved
Matters.
5.1 Acts
of the Company. As long as the Holder owns 7.5% or more of the
Company’s voting shares then outstanding on Fully-Diluted basis during the
Restricted Period, notwithstanding anything to the contrary in the Certificate
of Incorporation or Articles of the Company or the charter documents of any
Subsidiary, the Company shall not, and shall use its best efforts not to permit
any Subsidiary to, take any action described below without prior written
approval by the Holder, which approval shall not be unreasonably withheld or
delayed:
(a) Incurrence
by the Company or any Subsidiary any Debt unless, after giving effect to the
application of the proceeds thereof, (A) the Consolidated Leverage Ratio (as
defined in Schedule 1) as at the date of determination is not greater
than 3.00 to 1.00; and (B) the Consolidated Interest Coverage Ratio (as defined
in Schedule 1), as at the date of determination is not less than 3.00 to
1.00. For purposes of calculating the Consolidated Leverage Ratio and
the Consolidated Interest Coverage Ratio hereunder, Debt shall not include
the
amount of the Tranche B Notes and the Tranche C Notes;
Investor
Rights Agreement
5
(b) Issuance
of any new shares of Class B Common Stock (other than in a stock split or any
recapitalization transactions having similar effect);
(c) Issuance
of any new class of equity securities other than the preferred shares under
the
Rights Agreement dated June 4, 2007, as amended on
November 4, 2007;
November 4, 2007;
(d) Amend
the
Company’s Charter Documents to change any of the rights, obligations or
privileges of any shares of Class A or Class B Common Stock; and
(e) Increase
in the budget for the New JV Hospitals (a copy of which is attached hereto
as
Exhibit A) in excess of RMB402,230,000 for Guangzhou Hospital or in
excess of RMB440,612,000 for Beijing Hospital; and
5.2 Additional
Rights of the Holder. Notwithstanding anything to the contrary in
the Certificate of Incorporation or Articles of the Company or the charter
documents of any Subsidiary, which the parties hereby agree to amend to be
consistent with this Agreement to the extent permitted by Applicable
Laws:
(a) The
Holder shall be entitled to freely transfer any of the Securities to any third
party provided, that the transferee shall be bound by all obligations,
limitations, restrictions and qualifications (but not the rights) under this
Agreement of the Holder, provided, further, that the Holder
shall not transfer any of the Securities to a third party that, directly or
indirectly through any Affiliate, operates or has indicated its intention to
operate, any hospital or similar healthcare service operation or that provides
or intends to provide healthcare services at the time of, or foreseeably after,
the intended transfer;
(b) As
long
as the Holder owns 5% or more of the Company’s voting shares then outstanding on
Fully-Diluted basis during the Restricted Period, the Holder shall be entitled
to appoint and have act at its own expense a third party consultant approved
in
advance by the Company (which approval not to be unreasonably withheld or
delayed) to review project progress for the New JV Hospitals and the New IT
Program; provided, that prior to any such engagement, such consultant
shall enter into a written and legally binding agreement with the Company
pursuant to which such consultant shall agree to confidentiality provisions
reasonably acceptable to the Company and that the Holder shall share with the
Company a summary of the findings and advice received from such
consultant.
5.3 New
Issuances. Until the first anniversary of the Closing Date, the
Company shall not, and shall use its best efforts not to permit any Subsidiary
to, without the prior written approval of the Holder which approval shall not
be
unreasonably withheld, issue any shares of Class A Common Stock or any
equity-linked securities (other than as contemplated by Section 4.4(i) to (iii)
hereof) unless the price per share in such proposed issuance be at a premium
to
the Purchase Price of at least the greater of (i) twenty-five percent (25%)
per
annum calculated to the date of such proposed issuance or (ii) fifteen percent
(15%).
6. Miscellaneous.
6.1 Termination. Except
for this Section 6, which
shall survive the termination of this Agreement, or as otherwise expressly
provided herein, this Agreement will be automatically terminated with no further
effect at such time that neither the Holder nor any of its Affiliates owns
any
of the Securities.
6.2 Specific
Enforcement. Upon a material breach by the Warrantor of this
Agreement, in addition to any such damages as the Holder is entitled to,
directly or indirectly, by reason of said breach, the Holder shall be entitled
to injunctive relief against such Warrantor if such relief is
Investor
Rights Agreement
6
applicable
and available, as a remedy at law would be inadequate and
insufficient. Nothing in this Section shall be construed as limiting
the Holder’s remedies in any way.
6.3 Confidentiality. The
information made available to the Holder pursuant to this Agreement shall
constitute confidential information unless it is (i) otherwise known or
available to the public or (ii) disclosed to the Holder by any third party
other
than the Company without violating the confidentiality obligation, if any,
of
such third party or (iii) independently developed or obtained by the Holder,
and
to the extent it is treated as confidential information, it shall not be
disclosed to any Person unless such Person has agreed in writing with the
Company as a third-party beneficiary to be bound by the terms of this provision
to the same extent it applies to the Holder. None of the information
made available under Section 2 shall constitute a representation or warranty
as
to the accuracy or completeness thereof nor shall it be used in
connection with any securities transaction of any kind whatsoever.
6.4 Notices. Notices
given pursuant to any provision of this Agreement shall be addressed as follows:
(i) if to the Company, to: Chindex International, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Chief Executive
Officer, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇; and (ii)
if
to the Purchaser, to: C/O JPMorgan Chase Bank N.A. at ▇▇/▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, Fax: ▇▇▇▇ ▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇
▇▇▇ / ▇▇▇▇ ▇▇, and with a copy to Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, at
Tower 2, China Central Place, Suite 1505-1506, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, People’▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Fax: ▇▇▇
(▇▇)
▇▇▇▇-▇▇▇▇, Attention: Mr. ▇▇▇▇▇▇ Sun.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be personally delivered or delivered by overnight courier
or
mailed by first-class registered or certified mail, postage prepaid, return
receipt requested, or by facsimile transmission. Every notice
hereunder shall be deemed to have been duly given or served on the date on
which
personally delivered, with receipt acknowledged, upon transmission by facsimile
and confirmed facsimile receipt, or two (2) days after the same shall have
been
deposited with a reputable international overnight courier.
6.5 Amendments
and Waiver. Unless otherwise specifically stated herein, any term
of this Agreement may be amended with the written consent of the party against
whom enforcement may be sought and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the Company, in the case of the Holder’s
obligations, and by the Holder in the case of the obligations of any other
parties hereto. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed
to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
6.6 Entire
Agreement. This Agreement, together with the other Transaction
Documents, embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings relating to the
subject matter hereof.
6.7 Severability. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement
to the extent permitted by law.
6.8 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of law thereof.
Investor
Rights Agreement
7
The
parties hereto agree that any suit, action or proceeding arising out of or
based
upon this Agreement or the transactions contemplated hereby shall be instituted
in any State or U.S. federal court in The City of New York and County of New
York, and waives any objection which it may now or hereafter have to the laying
of venue of any such proceeding, and irrevocably submits to the exclusive
jurisdiction of such courts in any suit, action or Proceeding.
6.9 Successors
and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall be binding upon, and inure to the benefit
of,
the respective representatives, successors and explicitly permitted assigns
of
the parties hereto. Unless otherwise provided herein, the Holder may
assign, without prior consent of the Company, its rights hereunder to any of
its
Affiliates in the financial service industry excluding One Equity Partners
or
companies invested in by One Equity Partners.
6.10 No
Third Party Beneficiary. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is
not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
6.11 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[Signature
page(s) to follow]
Investor
Rights Agreement
8
IN
WITNESS WHEREOF, the undersigned have executed this Investor Rights Agreement
as
of the day and year written above.
| THE COMPANY: | |||
| Chindex International, Inc. | |||
|
|
By:
|
||
| Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: Chief Executive Officer | |||
|
Accepted
and Agreed to:
|
|
|
Magenta
Magic Limited
|
|
|
By:
|
|
|
Name:
▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Title: Authorized
Signatory
|
|
Signature
Page to Investor Rights Agreement
Schedule
1
Definition
of Certain Accounting Terms
“Consolidated
EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of the Company and its Subsidiaries on a consolidated
basis for the most recently completed four fiscal quarters of the Company
plus (a) the following to the extent deducted in calculating
such Consolidated Net Income for such period: (i) Consolidated Interest Expense;
(ii) the provision for federal, state, local and foreign income taxes payable
and tax contingencies; (iii) depreciation and amortization expense; and (iv)
all
other non-cash items decreasing Consolidated Net Income of the Company and
its
Subsidiaries; minus (b) the following to the extent added in
calculating such Consolidated Net Income for such period: (i) federal, state,
local and foreign income tax credits and tax contingency
credits; (ii) all non-cash items increasing Consolidated Net Income
of the Company and its Subsidiaries for such period; (iii) interest or financial
income, (iv) extraordinary profits or losses; and (v) income or expenses from
discontinued operations, and (vi) any other non-operating income or
expense.
"Consolidated
Interest Expense" means, at any date of determination, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including interest
obligations that are capitalized, accrued, accreted, payable in the form of
increased principal) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense, under leases that have been (or should
be,
in accordance with GAAP) recorded as capitalized leases, that is treated as
interest expense in accordance with GAAP, in each case, of or by the Company
and
its Subsidiaries on a consolidated basis for the most recently completed four
fiscal quarters of the Company. For purposes of calculating, as at any date
of
determination, Consolidated Interest Expense in connection with the calculation
of the Consolidated Interest Coverage Ratio (a) Debt of the Company and its
Subsidiaries shall be calculated on a pro forma basis based on the assumption
that such Debt was incurred on the first day of the four most recently completed
fiscal quarters of the Company; and (b) associated gross interest expense,
determined in accordance with GAAP, of such Debt (if it bears interest at a
floating rate) shall be calculated at the current rate (as of the date of such
calculation) under the agreement governing such Debt.
“Consolidated
Interest Coverage Ratio” means, as at any date of determination,
the ratio of
(a)
Consolidated EBITDA, to
(b)
Consolidated Interest Expense.
“Consolidated
Leverage Ratio” means, as at any date of determination, the ratio
of
(a)
Debt
of the Company and its Subsidiaries on a consolidated basis, to
(b)
Consolidated EBITDA.
“Consolidated
Net Income” means, as at any date of
determination, the net income (or loss) of the Company and its Subsidiaries
on a
consolidated basis for the most recently completed four fiscal quarters of
the
Company.
“Debt”
means, with respect to any Person on any date of determination (without
duplication):
(a)
all
obligations of such Person for money borrowed and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;
Investor
Rights Agreement
Schedule
1
(b)
in
respect of any capitalized lease of such Person, the capitalized amount thereof
that would appear on a balance sheet of such Person prepared as of such date
in
accordance with GAAP;
(c)
all
obligations of such Person representing the deferred purchase price of property,
all conditional sale obligations of such person and all obligations of such
person under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business);
(d)
all
obligations of such Person for the reimbursement of any obligor on any letter
of
credit, banker’s acceptance or similar credit;
(e)
all
obligations of such Person to purchase, redeem, retire, defease of otherwise
make a payment in respect of any preferred stock of such Person or any
Subsidiary;
(f)
all
obligations of the type referred to in paragraphs (a) through (f) above of
other
Persons secured by any lien on any property of such Person (whether or not
such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the fair market value of such property and the amount
of the obligation so secured;
(g)
net
obligations of such Person under any hedging agreement; and
(h)
all
guarantees on behalf of such Person in respect of any of the foregoing, or
by
such Person on behalf of any third party for any direct or contingent financial
obligation of such third party.
The
amount of Debt of any Person at any date shall be the outstanding balance,
or
the accreted value of such Debt in the case of Debt issued with original issue
discount, at such date of all unconditional obligations as described above
and
the maximum liability, upon the occurrence of the contingency giving rise to
the
obligation, of any contingent obligations at such date. For purposes
of calculating, as at any date of determination, the Consolidated Leverage
Ratio, Debt of the Company and its Subsidiaries shall be calculated on a pro
forma basis based on the assumption that any Debt to be incurred by the Company
or a Subsidiary was incurred on the last day of the most recently completed
quarter of the Company. Notwithstanding the foregoing, neither the
Tranche B Notes nor the Tranche C Notes should be included as Debt for any
purpose or reason hereunder.
“Fully-Diluted”
means, for the purpose of calculating the percentage of the Company’s voting
shares in this Agreement, that such calculation shall assume that all voting
shares issued or issuable pursuant to any exercise, conversion, exchange,
subscription or otherwise in connection with any warrants, options (including
pursuant to the Company’s stock option plan), convertible securities or any
agreement to sell or issue voting shares or securities which may be exercised,
converted or exchanged for voting shares, has been so issued, regardless whether
such securities are subject to future vesting or conditions of any kind or
forfeiture.
Investor
Rights Agreement
Schedule
1
EXECUTION
COPY
REGISTRATION
RIGHTS AGREEMENT
dated
as
of November 7, 2007
by
and
among
CHINDEX
INTERNATIONAL, INC.
and
MAGENTA
MAGIC LIMITED
1
REGISTRATION
RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is made and
entered into as of November 7, 2007, by and between CHINDEX INTERNATIONAL,
INC.,
a Delaware corporation (the “Company”), and MAGENTA
MAGIC LIMITED, a private corporation organized under the laws of the British
Virgin Islands (“Purchaser”).
W
I T N E S S E T H :
WHEREAS,
the Company
and Purchaser entered into that certain Securities Purchase Agreement dated
as
of November 7, 2007 (the “Purchase Agreement”), in
connection with which the Company shall issue and sell to Purchaser 359,195
shares of the Tranche A Shares and reserved 1,436,781 shares of Conversion
Shares to be issued and issuable upon conversion of the Tranche B Notes and
Tranche C Notes.
WHEREAS,
to induce
Purchaser to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights provided for in this Agreement for the holders
of Registrable Shares (as defined below); and
WHEREAS,
the execution
of this Agreement is a condition to the closing of the transactions contemplated
by the Purchase Agreement.
NOW,
THEREFORE, in
consideration of the premises and the mutual covenants of the parties hereto,
and for other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. As
used in this Agreement, the following terms shall have the following
meanings. Capitalized terms not otherwise defined herein shall have
meanings ascribed to them under the Purchase Agreement.
“144A/Regulation
S Shares” means the shares of Common Stock initially sold to
Purchaser in the private placement and resold by Purchaser to “qualified
institutional buyers” (as such term is defined in Rule 144A) or to “non-U.S.
persons” (in accordance with Regulation S) in an “offshore transaction” (in
accordance with Regulation S), as applicable.
“Agreement”
is defined in the recital of this Agreement.
“Commission”
means the Securities and Exchange Commission.
“Company”
is defined in the recital of this Agreement, and includes any successor
thereto.
“Controlling
Person” is defined in Section 6(a).
“Demand
Registration” is defined in Section 2(b)(i).
“Demand
Registration Statement” is defined in Section
2(b)(i).
“End
of Suspension Notice” is defined in Section
5(b).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission pursuant
thereto.
Registration
Rights Agreement
2
“Fair
Market Value” means, with respect to a share of Common Stock, (i)
if such Common Stock is listed on a national securities exchange in the United
States, the 10 consecutive trading day average of the closing price per share
of
the Common Stock on such national securities exchange immediately following
the
time the Mandatory Shelf Registration Statement is declared effective by the
Commission, as published by the Wall Street Journal or other reliable
publication, (ii) if a public market exists for such shares of Common Stock
but such shares are not listed on a national securities exchange, the 10
consecutive trading day average of the mean between the closing bid and asked
quotations in the over-the-counter market for a share of such Common Stock
immediately following the time the Mandatory Shelf Registration Statement is
declared effective by the Commission, or (iii) if such Common Stock is not
then listed on a national securities exchange or traded in the over-the-counter
market, the price per share of Common Stock determined in good faith by the
Company’s board of directors based on the average of the estimated fair market
value of the Common Stock during the 10 consecutive trading day period following
the date on which the Mandatory Shelf Registration Statement is declared
effective by the Commission.
“Form
10-K” means an annual report required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act, as
such
form may be amended from time to time, or any similar form, rule or regulation
hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such form, provided that such form need not
include those items required by Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002.
“Form 10-Q”
means a quarterly report required to be filed with the Commission pursuant
to
Section 13 or Section 15(d) of the Exchange Act, as such form may be amended
from time to time, or any similar form, rule or regulation hereafter adopted
by
the Commission as a replacement thereto having substantially the same effect
as
such form, provided that such form need not include those items required by
Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
“Free
Writing Prospectus” means a free writing prospectus, as defined in
Rule 405.
“Holder”
means each record owner of any Registrable Shares from time to time, including
Purchaser and its Affiliates.
“Indemnified
Party” is defined in Section 6(c).
“Indemnifying
Party” is defined in Section 6(c).
“Issuer
Free Writing Prospectus” means an issuer free writing prospectus,
as defined in Rule 433.
“Liabilities”
is defined in Section 6(a).
“Mandatory
Shelf Registration Statement” is defined in
Section 2(a).
“NASD”
means the National Association of Securities Dealers, Inc.
“No
Objections Letter” is defined in Section 4(t).
“Notice
and Questionnaire” is defined in Section
2(a)(iii).
“Participants”
is defined in the introductory paragraph of this Agreement.
“Permitted
Free Writing Prospectus” is defined in the last paragraph of
Section 4.
Registration
Rights Agreement
3
“Person”
means an individual, limited liability company, partnership, corporation, trust,
unincorporated organization, government or agency or political subdivision
thereof, or any other legal entity.
“Piggyback
Registration Statement” is defined in Section
2(b).
“Purchaser”
is defined in the introductory paragraph of this Agreement, and includes any
successor thereto.
“Purchase
Agreement” is defined in the first recital clause of this
Agreement.
“Prospectus”
means the prospectus included in any Registration Statement, including any
preliminary prospectus, and all other amendments and supplements to any such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
prospectus.
“Purchaser
Indemnitee” is defined in Section 6(a).
“Registrable
Shares” means (i) the Shares, (ii) Conversion Shares issued or
issuable upon conversion of the Notes, and (iii) Common Stock or any
other securities of the Company issued as a dividend or other distribution
with
respect to, or in exchange for, or in replacement of, the Common Stock owned
by
the Holders, provided, that, any such securities shall cease to be
Registrable Shares when (x) such securities shall have been sold or transferred
without limitation pursuant to a Registration Statement, (y) such
securities have been or may be sold or transferred without limitation to the
public pursuant to Rule 144 (or any similar provision then in force, including
Rule 144(k) but not Rule 144A) under the Securities Act, or (z) such securities
shall have ceased to be outstanding.
“Registration
Expenses” means any and all reasonable expenses incident to the
performance of or compliance with this Agreement, including: (i) all
Commission, securities exchange, NASD registration, listing, inclusion and
filing fees (including those of Purchaser and Holders associated or affiliated
with Purchaser), (ii) all reasonable fees and expenses incurred in connection
with compliance with international, federal or state securities or blue sky
laws
(including any registration, listing and filing fees and reasonable fees and
disbursements of counsel in connection with blue sky qualification of any of
the
Registrable Shares and the preparation of a blue sky memorandum and compliance
with the rules of the NASD), (iii) all reasonable expenses of any Persons in
preparing or assisting in preparing, word processing, duplicating, printing,
delivering and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities
sales
agreements, certificates and any other documents relating to the performance
under and compliance with this Agreement, (iv) all fees and expenses incurred
in
connection with the listing or inclusion of any of the Registrable Shares on
The
NASDAQ Stock Market pursuant to Section 4(n), (v) the reasonable fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company (including the expenses of any special audit and
“cold comfort” letters required by or incident to such performance) and the
reasonable fees and disbursements of one counsel, reasonably acceptable to
the
Company, for the Holders, selected by the Holders holding a majority of the
Registrable Shares, (vi) any fees and disbursements customarily paid in issues
and sales of securities (including the fees and expenses of any experts retained
by the Company in connection with any Registration Statement), provided,
however, that Registration Expenses shall exclude brokers’ or
underwriters’ discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Registrable Shares by a Holder and the fees and
disbursements of any counsel to the Holders other than as provided for in clause
(v) above.
Registration
Rights Agreement
4
“Registration
Statement” means any Mandatory Shelf Registration Statement,
Demand Registration Statement or Piggyback Registration Statement.
“Regulation
S” means Regulation S (Rules 901-905) promulgated by the
Commission under the Securities Act, as such rules may be amended from time
to
time, or any similar rule or regulation hereafter adopted by the Commission
as a
replacement thereto having substantially the same effect as such
regulation.
“Rule
144”, “Rule 144A”, “Rule
158”, “Rule 405”, “Rule
415”, “Rule 424” or “Rule
433”, respectively, means such specified rule
promulgated by the Commission pursuant to the Securities Act, as such rule
may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same
effect as such rule.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.
“Shares”
means the Shares of Common Stock being offered and sold pursuant to the terms
and conditions of the Purchase Agreement.
“Suspension
Event” is defined in Section 5(b).
“Suspension
Notice” is defined in Section 5(b).
“Underwritten
Offering” means a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
2. REGISTRATION
RIGHTS.
(a) Mandatory
Shelf Registration. As set forth in Section 4, the
Company agrees to file with the Commission within 30 days, from the date on
which the Holder provides the Company with a completed and signed questionnaire
in the form provided as Appendix A hereto, a shelf registration statement on
Form S-3 or such other form under the Securities Act then available to the
Company providing for the resale pursuant to Rule 415 from time to time by
the
Holders of their Registrable Shares for a three-year period commencing from
the
Closing Date (the “Mandatory Shelf Registration
Statement”).
(i) Effectiveness
and Scope. The Company shall use its reasonable best
efforts to cause the Mandatory Shelf Registration Statement to be declared
effective by the Commission as promptly as practicable following such filing
and
to remain effective until the date on which all Shares in respect thereof cease
to be Registrable Shares. The Mandatory Shelf Registration Statement
shall provide for the resale from time to time, and pursuant to any method
or
combination of methods legally available (including an Underwritten Offering,
a
direct sale to purchasers, a sale through brokers or agents or a sale over
the
internet) by the Holders of any and all Registrable Shares.
(ii) Underwriting. If
any Holder proposes to conduct an Underwritten Offering under the Mandatory
Shelf Registration Statement, such Holder shall advise the Company and all
other
Holders whose securities are included in the Mandatory Shelf Registration
Statement (if applicable), of the managing underwriters
for such proposed Underwritten Offering (which may be Purchaser or an Affiliate
thereof); such managing underwriters to be subject to the approval of the
Company, not to be unreasonably withheld. In such event, the Company
shall enter into an underwriting agreement in customary form with the managing
underwriters, which shall include, among other provisions, indemnities to the
effect and to the extent provided in Section 6, and shall take all such
other reasonable actions as are requested by the
Registration
Rights Agreement
5
managing
underwriter in order to expedite or facilitate the registration and disposition
of the Registrable Shares included in such Underwritten Offering; provided,
however, that the Company shall be required to cause appropriate officers of
the Company or its Affiliates to participate in a “road show” or similar
marketing effort being conducted by such underwriter with respect to such
Underwritten Offering only if the Holders reasonably anticipate gross proceeds
from such Underwritten Offering of at least $10 million. All Holders
proposing to distribute their Registrable Shares through such Underwritten
Offering shall enter into an underwriting agreement in customary form with
the
managing underwriters selected for such underwriting and complete and execute
any questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Company such information in writing as the
Company may reasonably request for inclusion in the Registration Statement;
provided, however, that
no Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements as are customary and reasonably requested by the
underwriters. Notwithstanding any other provision of this Agreement,
with respect to an Underwritten Offering in connection with the Mandatory Shelf
Registration Statement, if the managing underwriters determine in good faith
that marketing factors require a limitation on the number of shares to be
included in such Underwritten Offering, then the managing underwriters may
exclude shares (including Registrable Shares) from the Underwritten Offering,
and any shares included in the Underwritten Offering shall be allocated to
each
of the Holders requesting inclusion of their Registrable Shares in such
Underwritten Offering on a pro rata basis based on the total number of
such Registrable Shares requested to be included.
(iii) Selling
Stockholder Questionnaires. Each Holder agrees, by its
acquisition of Shares, that if such Holder wishes to sell Registrable Shares
pursuant to the Mandatory Shelf Registration Statement and related Prospectus,
it will do so only in accordance with this Section 2(a)(iii). Each Holder
wishing to sell Registrable Shares pursuant to the Mandatory Shelf Registration
Statement and related Prospectus agrees to deliver a written notice,
substantially in form and substance of Annex A (a “Notice and
Questionnaire”), to the Company. The Company shall mail the Notice
and Questionnaire to the Holders no later than the date of initial filing of
the
Mandatory Shelf Registration Statement with the Commission. No Holder shall
be
entitled to be named as a selling securityholder in the Mandatory Shelf
Registration Statement as of the initial effective date of the Mandatory Shelf
Registration Statement, and no Holder may use the Prospectus forming a part
thereof for resales of Registrable Shares at any time, unless such Holder has
returned a completed and signed Notice and Questionnaire to the Company by
the
deadline for response set forth therein; provided, however, Holders shall
have at least 20 days from the date on which the Notice and Questionnaire is
first mailed to such Holders to return a completed and signed Notice and
Questionnaire to the Company. Notwithstanding the foregoing, (x) upon the
request of any Holder that did not return a Notice and Questionnaire on a timely
basis or did not receive a Notice and Questionnaire because it was a subsequent
transferee of Registrable Shares after the Company mailed the Notice and
Questionnaire, the Company shall distribute a Notice and Questionnaire to such
Holders at the address set forth in the request and (y) upon receipt of a
properly completed Notice and Questionnaire from such Holder, the Company shall
use its best efforts to name such Holder as a selling securityholder in the
Mandatory Shelf Registration Statement by means of a pre-effective amendment,
by
means of a post-effective amendment or, if permitted by the Commission, by
means
of a Prospectus supplement to the Mandatory Shelf Registration Statement;
provided, however, that the Company will have no obligation to add
Holders to the Mandatory Shelf Registration Statement as selling securityholders
more frequently than once every 30 calendar days.
(b) Demand
Registration.
(i) Request
for registration. If (i) the Mandatory Shelf
Registration Statement is not declared effective by the 120th day following
the
Closing or (ii) the Commission shall have issued a stop order relating to the
Mandatory Shelf Registration Statement and such order remains in effect, and
the
Registration
Rights Agreement
6
Company
receives from the Holders of Registrable Shares constituting at least 3% of
the
then outstanding Common Stock of the Company on a Fully-Diluted basis (such
Holder or Holders referred to as the “Initiating
Holder”) a request in writing that the Company effect any
registration with respect to the Registrable Shares held by such Initiating
Holder then outstanding on a form other than Form S-3 (including the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by reference,
if
any, in such registration statement, the “Demand Registration
Statement”), the Company shall (i) within ten (10) days of receipt
of such written request, give written notice of the proposed registration to
all
other Holders, and (ii) as soon as practicable, use its reasonable best efforts
to effect registration of those Registrable Shares (“Demand
Registration”) that the Company has been so requested to register
by the Initiating Holder and all other Holders to whom notice was given within
twenty (20) days after receiving such written notice from the Company on that
form and to cause those Registrable Shares to be qualified in jurisdictions
as
the Holder or Holders may reasonably request, subject to limitations of this
Section 2. The Company shall not be obligated to take any action to
effect any registration pursuant to this Section 2(b)(i) after the Company
has
effected a total of four Demand Registrations.
(ii) Right
of Deferral. Notwithstanding the foregoing, the Company
shall not be obligated to file a Demand Registration Statement pursuant to
this
Section 2, if the Company furnishes to the Initiating Holder a
certificate signed by a director of the Company certifying that in the good
faith judgment of the Board it would be seriously detrimental to the Company
for
a Demand Registration Statement to be filed because (i) a merger, consolidation,
substantial acquisition or other similar corporate action is expected to occur
imminently or (ii) the Company intends to issue equity securities or
equity-linked securities not pursuant to a registration statement, then the
Company’s obligation to use its reasonable best efforts to file a Demand
Registration Statement shall be deferred for a period not to exceed ninety
(90)
days from the receipt of the request to file the registration by that Holder;
provided, that the Company shall not exercise the right to delay a
request contained in this Section 2(b)(ii) more than once in any 12-month
period, and provided further, that during such 90-day period, the
Company shall not file a registration statement for securities to be issued
and
sold for its own account (except on Form S-4).
(iii) Registration
of Other Securities in Demand Registration. Any Demand
Registration Statement filed pursuant to the request of the Holders under this
Section 2 may, subject to the provisions of Section 2(b)(iv),
include securities of the Company other than the Registrable
Shares. If the Company, officers or directors of the Company holding
securities other than the Registrable Shares, or holders of securities other
than the Registrable Shares, request inclusion of other securities of the
Company held thereby in the registration, the Company may, in its sole
discretion, offer to any or all of the Company, those officers or directors,
and
the holders of securities other than the Registrable Shares, that their
securities be included in the underwriting and may condition that offer on
the
acceptance by those Persons of the terms of this Section 2.
(iv) Underwriting. If
any Holder proposes to conduct an Underwritten Offering under the Demand
Registration Statement, such Holder shall advise the Company and all other
Holders whose securities are included in the Demand Registration Statement
(if
applicable), of the managing underwriters for such
proposed Underwritten Offering; such managing underwriters to be subject to
the
approval of the Company. In such event, the Company shall enter into
an underwriting agreement in customary form with the managing underwriters,
which shall include, among other provisions, indemnities to the effect and
to
the extent provided in Section 6, and shall take all such other
reasonable actions as are requested by the managing underwriter in order to
expedite or facilitate the registration and disposition of the Registrable
Shares included in such Underwritten Offering; provided, however, that
the Company shall be required to cause appropriate officers of the Company
or
its Affiliates to participate in a “road show” or similar marketing effort being
conducted by such underwriter with respect to such Underwritten
Offering
Registration
Rights Agreement
7
only
if
the Holders reasonably anticipate gross proceeds from such Underwritten Offering
of at least US$10 million. All Holders proposing to distribute their
Registrable Shares through such Underwritten Offering shall enter into an
underwriting agreement in customary form with the managing underwriters selected
for such underwriting and complete and execute any questionnaires, powers of
attorney, indemnities, securities escrow agreements and other documents
reasonably required under the terms of such underwriting, and furnish to the
Company such information in writing as the Company may reasonably request for
inclusion in the Registration Statement. Notwithstanding any other
provision of this Agreement, with respect to an Underwritten Offering in
connection with the Demand Registration Statement, if the managing underwriters
determine in good faith that marketing factors require a limitation on the
number of shares to be included in such Underwritten Offering, then the managing
underwriters may exclude shares (including Registrable Shares) from the
Underwritten Offering, and any shares included in the Underwritten Offering
shall be allocated to each of the Holders requesting inclusion of their
Registrable Shares in such Underwritten Offering on a pro rata basis
based on the total number of such Registrable Shares requested to be
included.
(v) Selling
Stockholder Questionnaires. Each Holder agrees, by its
acquisition of the Securities issued or issuable under the Purchase Agreement,
that if such Holder wishes to sell Registrable Shares pursuant to the Demand
Registration Statement and related Prospectus, it will do so only in accordance
with this Section 2(b)(v). Each Holder wishing to sell
Registrable Shares pursuant to the Demand Registration Statement and related
Prospectus agrees to deliver a written notice, substantially in form and
substance of Annex A (a “Notice and
Questionnaire”), to the Company. The Company shall mail
the Notice and Questionnaire to the Holders no later than the date of initial
filing of the Demand Registration Statement with the Commission. No
Holder shall be entitled to be named as a selling securityholder in the Demand
Registration Statement as of the initial effective date of the Demand
Registration Statement, and no Holder may use the Prospectus forming a part
thereof for resales of Registrable Shares at any time, unless such Holder has
returned a completed and signed Notice and Questionnaire to the Company by
the
deadline for response set forth therein; provided, however, Holders shall
have at least twenty (20) days from the date on which the Notice and
Questionnaire is first mailed to such Holders to return a completed and signed
Notice and Questionnaire to the Company. Notwithstanding the
foregoing, (x) upon the request of any Holder that did not return a Notice
and
Questionnaire on a timely basis or did not receive a Notice and Questionnaire
because it was a subsequent transferee of Registrable Shares after the Company
mailed the Notice and Questionnaire, the Company shall distribute a Notice
and
Questionnaire to such Holders at the address set forth in the request and (y)
upon receipt of a properly completed Notice and Questionnaire from such Holder,
the Company shall use its best efforts to name such Holder as a selling
securityholder in the Demand Registration Statement by means of a pre-effective
amendment, by means of a post-effective amendment or, if permitted by the
Commission, by means of a Prospectus supplement to the Demand Registration
Statement; provided, however, that the Company will have no obligation to
add Holders to the Demand Registration Statement as selling securityholders
more
frequently than once every thirty (30) calendar days.
(c) Piggyback
Registration. If, after the date hereof and within three
years following the Closing Date, the Company proposes to file a registration
statement under the Securities Act providing for a public offering of the
Company’s equity securities, other than the Mandatory Shelf Registration
Statement or a registration statement on Form S-8 or Form S-4 or any similar
form hereafter adopted by the Commission as a replacement therefor (including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement, the “Piggyback
Registration Statement”), the Company will notify each Holder of
Registrable Shares constituting at least 3% of the then outstanding Common
Stock
of the Company on a Fully-Diluted basis of the proposed filing if clause (i)
or
(ii) of the following sentence applies. If (i) the Piggyback
Registration Statement relates to an Underwritten Offering, or (ii) the
Mandatory Shelf Registration
Registration
Rights Agreement
8
Statement
is not then effective, then each Holder in the case of clauses (i) and (ii)
shall be given an opportunity to include in such Piggyback Registration
Statement all or any part of such Holder’s Registrable Shares. Each
such Holder desiring to include in any such Piggyback Registration Statement
all
or part of such Holder’s Registrable Shares shall, within 10 days after delivery
of the above-described notice by the Company, so notify the Company in writing,
and in such notice shall inform the Company of the number of Registrable Shares
such Holder wishes to include in such Piggyback Registration Statement and
provide, as a condition to such inclusion, such information regarding itself,
its Registrable Shares and the intended method of disposition of such securities
as is required pursuant to Regulation S-K promulgated under the Securities
Act
to effect the registration of the Registrable Shares. Any Holder’s
election to include any Registrable Shares in such Piggyback Registration
Statement will not affect the inclusion of such Registrable Shares in the
Mandatory Shelf Registration Statement until such Registrable Shares have been
sold under the Piggyback Registration Statement, at which time the Company
may
remove from the Mandatory Shelf Registration Statement such Registrable
Shares.
(i) Right
to Terminate Piggyback Registration. At any time, the
Company may terminate or withdraw any Piggyback Registration Statement referred
to in this Section 2(c) and without any obligation to any such Holder
whether or not any Holder has elected to include Registrable Shares in such
registration. The Company may suspend the effectiveness and use of
any Piggyback Registration Statement at any time for an unlimited amount of
time
whether or not any Holder has elected to include Registrable Shares in such
registration.
(ii) Underwriting. The
Company shall advise the Holders of the identity of the managing underwriters
for any Underwritten Offering proposed under the Piggyback Registration
Statement. The right of any such Holder’s Registrable Shares to be
included in any Piggyback Registration Statement pursuant to this Section
2(c) shall be conditioned upon such Holder’s participation in such
Underwritten Offering and the inclusion of such Holder’s Registrable Shares in
the Underwritten Offering to the extent provided herein. All Holders
proposing to distribute their Registrable Shares through such Underwritten
Offering shall enter into an underwriting agreement in customary form with
the
managing underwriters selected for such underwriting and complete and execute
any questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Company such information in writing as the
Company may reasonably request for inclusion in the Registration Statement;
provided, however, that no Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements as are
customary and reasonably requested by the underwriters. Notwithstanding any
other provision of this Agreement, if the managing underwriters determine in
good faith that marketing factors require a limitation on the number of shares
to be included, then the managing underwriters may exclude shares (including
Registrable Shares) from the Piggyback Registration Statement and the
Underwritten Offering, and any shares of Common Stock included in the Piggyback
Registration Statement and the Underwritten Offering shall be allocated,
first, to the Company, and second, to any Person exercising demand
registration rights that are the basis for such registration, and third,
to each of the Holders requesting inclusion of their Registrable
Shares in such Piggyback Registration Statement on a
pro rata basis based on the total number of such
shares
requested to be included; provided, that if (i) the Mandatory Shelf
Registration Statement is not declared effective by the 120th day following
the
Closing or (ii) the Commission shall have issued a stop order relating to the
Mandatory Shelf Registration Statement and such order remains in effect, then
the number of Registrable Shares requested by any holder for inclusion in the
Piggyback Registration shall be allocated on a pro rata basis with the
person exercising demand registration rights that are the basis for such
registration; provided, further, that the number of Registrable Shares to
be included in the Piggyback Registration Statement shall not be reduced unless
all other securities of the Company held by other holders of the Company’s
capital stock with registration rights that are inferior (with respect to such
reduction) to the registration rights of the Holders set forth herein, are
first
entirely excluded from the underwriting and registration. If any
Holder
Registration
Rights Agreement
9
disapproves
of the terms of any Underwritten Offering, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter, delivered at
least 10 Business Days before the effective date of the Piggyback Registration
Statement. Any Registrable Shares excluded or withdrawn from such
Underwritten Offering shall be excluded and withdrawn from the Piggyback
Registration Statement.
(iii) Hold-Back
Agreement. By electing to include Registrable Shares in
the Piggyback Registration Statement, if any, the Holder shall be deemed to
have
agreed not to effect any sale or distribution of securities of the Company
of
the same or similar class or classes of the securities included in the
Registration Statement or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 under
the
Securities Act, or enter into any other transaction designed to directly or
indirectly transfer any of the economic consequences of ownership of Common
Stock of the Company, during such periods as reasonably requested (but in no
event longer than 120 days following the effective date of the Piggyback
Registration Statement), provided each of the executive officers and directors
of the Company that holds shares of Common Stock of the Company or securities
convertible into or exchangeable or exercisable for shares of Common Stock
of
the Company is subject to at least the same restrictions for the entire time
period required of the Holders hereunder) by the managing underwriters, if
an
Underwritten Offering.
(iv) Mandatory
Shelf Registration not Impacted by Piggyback Registration
Statement. The Company’s obligation to file the
Mandatory Shelf Registration Statement shall not be affected by the filing
or
effectiveness of the Piggyback Registration Statement.
(d) Expenses. The
Company shall pay all Registration Expenses (including those of Purchaser and
Holders affiliated or associated with Purchaser) in connection with the
registration of the Registrable Shares pursuant to this
Agreement. Each Holder participating in a registration pursuant to
this Section 2 shall bear such Holder’s proportionate share (based on the
total number of Registrable Shares sold in such registration) of all discounts
and commissions payable to underwriters or brokers and all transfer taxes in
connection with a registration of Registrable Shares pursuant to this Agreement
and any other expense of the Holders not specifically allocated to the Company
pursuant to this Agreement relating to the sale or disposition of such Holder’s
Registrable Shares pursuant to any Registration Statement.
3. RULE
144 AND RULE 144A REPORTING; REPORTS TO HOLDERS.
(a) With
a
view to making available the benefits of certain rules and regulations of the
Commission that may permit the sale of the Registrable Shares to the public
without registration, the Company agrees to, so long as any Holder owns any
Registrable Shares:
(i) make
and
keep adequate current public information available, as those terms are
understood and defined in Rule 144(c) at all times after the effective date
of
the first registration statement filed by the Company for an offering of the
Company’s securities to the general public;
(ii) use
its
best efforts to file (including electronically on ▇▇▇▇▇) with the Commission
in
a timely manner all reports and other documents required to be filed by the
Company under the Securities Act and the Exchange Act
(iii) so
long
as a Holder owns any Registrable Shares constituting 144A/Regulation S Shares,
if the Company is not required to file reports and other documents under the
Securities Act and the Exchange Act, it will make available other information
as
required by, and so long as necessary to permit sales of Registrable Shares
pursuant to, Rule 144 or Rule 144A; and
Registration
Rights Agreement
10
(iv) furnish
to any Holder promptly upon request a written statement by the Company as to
its
compliance with the reporting requirements of Rule 144 and of the Exchange
Act,
a copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company, and take such reasonable further
actions consistent with this Section 3, as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such Registrable Shares without registration.
(b) So
long
as a Holder owns any Registrable Shares, notwithstanding that the Company may
not be required to file reports under the Securities Act or the Exchange Act
or
otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated
by
the Commission, the Company shall furnish to the Holders all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-K and 10-Q if the Company were required to
file
such forms, including a “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and, with respect to the annual information
only, audit reports thereon by the certified independent accountants of the
Company. Such annual reports shall be furnished within 60 days of
fiscal year end and such quarterly reports shall be furnished within 15 days
after the end of such quarter.
4. REGISTRATION
PROCEDURES. In connection with the obligations of the
Company with respect to any registration pursuant to this Agreement, the Company
shall:
(a) notify
Purchaser, in writing, at least
10 Business Days before filing a Registration Statement, of its intention to
file a Registration Statement with the Commission and, at least 5 Business
Days
before filing, provide a copy of the Registration Statement to Purchaser;
prepare and file with the Commission, as specified in this Agreement, each
Registration Statement, which Registration Statement shall comply as to form
in
all material respects with the requirements of the applicable form and include
all financial statements required by the Commission to be filed therewith and
shall be reasonably acceptable to Purchaser; notify Purchaser at least 5
Business Days before filing of any amendment or supplement to such Registration
Statement and, at least 3 Business Days before filing, provide a copy of such
amendment or supplement to Purchaser for review and comment; promptly following
receipt from the Commission, provide to Purchaser copies of any comments made
by
the staff of the Commission relating to such Registration Statement and the
Company’s responses thereto for review and comment; and use its reasonable best
efforts to cause the Mandatory Shelf Registration Statement and the Demand
Registration Statement to become effective as soon as practicable after filing
and to remain effective as set forth in Section 2(a)(i) and Section
2(b)(i) respectively;
(b) subject
to Section 4(i), (i)
prepare and file with the Commission such amendments and post-effective
amendments to each such Registration Statement as may be necessary to keep
such
Registration Statement effective for the period described in Section
2(a)(i) and Section 2(b)(i), (ii) cause each Prospectus contained
therein to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 or any similar rule that may
be
adopted under the Securities Act, (iii) promptly amend or supplement each such
Registration Statement to include the Company’s quarterly and annual financial
information and other material developments (unless the Company is eligible
to
incorporate such information by reference into the Registration Statement),
during which time sales of the Registrable Shares under the Registration
Statement will be suspended until such amendment or supplement is filed and
effective, and (iv) comply in all material respects with the provisions of
the
Securities Act with respect to the disposition of all Registrable Shares covered
by each Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the selling Holders
thereof;
Registration
Rights Agreement
11
(c) furnish
to the Holders, without charge,
as many copies of each Prospectus, including each preliminary Prospectus, any
Issuer Free Writing Prospectus, and any amendment or supplement thereto and
such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Shares; the Company
hereby consents to the use, in accordance with Applicable Law, of such
Prospectus, including each preliminary Prospectus, and any Issuer Free Writing
Prospectus by the Holders, if any, in connection with the offering and sale
of
the Registrable Shares covered by any such Prospectus;
(d) use
its
best efforts to register or qualify, or obtain exemption from registration
or
qualification for, all Registrable Shares by the time the applicable
Registration Statement is declared effective by the Commission under all
applicable state securities or “blue sky” laws of such domestic jurisdictions as
Purchaser or any Holder covered by a Registration Statement shall reasonably
request in writing, keep each such registration or qualification or exemption
effective during the period such Registration Statement is required to be kept
effective pursuant to Section 2(a)(i) and Section 2(b)(i) and do
any and all other acts and things that may be reasonably necessary or advisable
to enable such Holder to consummate the disposition in each such jurisdiction
of
such Registrable Shares owned by such Holder; provided, however, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction or to register as a broker or dealer in such jurisdiction where
it
would not otherwise be required to qualify but for this Section 4(d),
(ii) subject itself to taxation in any such jurisdiction, or (iii) submit to
the
general service of process in any such jurisdiction;
(e) use
its reasonable best efforts to
cause all Registrable Shares covered by such Registration Statement to be
registered and approved by such other domestic governmental agencies or
authorities, if any, as may be necessary to enable the Holders thereof to
consummate the disposition of such Registrable Shares;
(f) notify
Purchaser and each Holder with
Registrable Shares covered by a Registration Statement promptly and, if
requested by Purchaser or any such Holder, confirm such advice in writing (i)
when such Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of
the
issuance by the Commission or any state securities authority of any stop order
suspending the effectiveness of such Registration Statement or the initiation
or
threatening of any proceedings for that purpose (including a pending proceeding
against the Company under Section 8A of the Securities Act in connection with
the offering of the Registrable Shares), (iii) of any request by the Commission
or any other federal or state governmental authority for amendments or
supplements to such Registration Statement or related Prospectus or any Issuer
Free Writing Prospectus or for additional information, and (iv) of the happening
of any event during the period such Registration Statement is effective as
a
result of which such Registration Statement or the related Prospectus or any
Issuer Free Writing Prospectus or any document incorporated by reference therein
contains (other than with respect to information provided to the Company in
writing by the Holders for use therein) any untrue statement of a material
fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading (which information shall be
accompanied by an instruction to suspend the use of the Registration Statement
and the Prospectus and such Issuer Free Writing Prospectus until the requisite
changes have been made), and at the request of any such Holder;
(g) during
the period of time referred to
in Section 2(a)(i), use its reasonable best efforts to avoid the issuance
of, or if issued, to obtain the withdrawal of, any order enjoining or suspending
the use or effectiveness of a Registration Statement or suspending the
qualification (or exemption from qualification) of any of the Registrable Shares
for sale in any jurisdiction, as promptly as practicable;
(h) upon
request, furnish to each
requesting Holder with Registrable Shares covered by a Registration Statement,
without charge, at least one conformed copy of such Registration Statement
and
Registration
Rights Agreement
12
any
post-effective amendment or supplement thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(i) except
as provided in Section 5,
upon the occurrence of any event contemplated by Section 4(f)(iv), use
its reasonable best efforts to promptly prepare a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any Issuer
Free Writing Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares, such Prospectus or Issuer Free Writing
Prospectus will not contain (other than with respect to information provided
to
the Company in writing by the Holders for use therein) any untrue statement
of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and, upon request, promptly furnish
to each requesting Holder covered by such Registration Statement a reasonable
number of copies of each such supplement or post-effective
amendment;
(j) if
requested by the managing
underwriters or any Holders of Registrable Shares being sold in connection
with
an Underwritten Offering, (i) promptly incorporate in a Prospectus supplement
or
post-effective amendment such material information as the managing underwriters
or such Holders indicate relates to them or otherwise reasonably request be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(k) in
the case of an Underwritten
Offering, use its reasonable best efforts to provide to the Holders and the
underwriters a signed counterpart, addressed to each such Holder and the
underwriters, of: (i) an opinion of counsel for the Company, dated
the date of each closing under the underwriting agreement, reasonably
satisfactory to the underwriters; and (ii) a “comfort” letter, dated the
effective date of such Registration Statement and the date of each closing
under
the underwriting agreement, signed by the independent public accountants who
have certified the Company’s financial statements included in such Registration
Statement, covering substantially the same matters with respect to such
Registration Statement (and the Prospectus included therein) and with respect
to
events subsequent to the date of such financial statements, as are customarily
covered in accountants’ letters delivered to underwriters in underwritten public
offerings of securities, and such other financial matters as the underwriters
may reasonably request and customarily obtained by underwriters in underwritten
offerings, provided that, to be an addressee of the comfort letter, each Holder
may be required to confirm that it is in the category of persons to whom a
comfort letter may be delivered in accordance with applicable accounting
literature;
(l) enter
into customary agreements (including in the case of an Underwritten Offering,
an
underwriting agreement in customary form) and take all other action in
connection therewith to expedite or facilitate the distribution of the
Registrable Shares included in such Registration Statement and, in the case
of
an Underwritten Offering, make representations and warranties to the
underwriters in such form and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same to the extent
customary if and when requested;
(m) in
connection with an Underwritten Offering, use its reasonable best efforts to
make available for inspection by the representative of any underwriters
participating in any disposition pursuant to a Registration Statement, all
financial and other records and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by
any
such representatives, the managing underwriters, counsel thereto or accountants
in connection with a Registration Statement; provided, however, that such
records, documents or information that the Company determines, in good faith,
to
be confidential and notifies such representatives, managing underwriters,
counsel thereto or accountants are confidential shall not be used by the
underwriters or the Holders as the basis for any market
Registration
Rights Agreement
13
transactions
in the securities of the Company) and shall not be disclosed by the
representatives, managing underwriters, counsel thereto or accountants unless
(i) the disclosure of such records, documents or information is necessary to
avoid or correct a material misstatement or material omission in a Registration
Statement or Prospectus, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public; provided further, that upon
learning that the disclosure of such records, documents or information is sought
in a court of competent jurisdiction, the recipient of such confidential
information shall give notice to the Company and allow (and cooperate with)
the
Company at its expense to undertake appropriate action to prevent disclosure
of
the information deemed confidential. To the extent practicable, the
foregoing inspection and information gathering shall be coordinated on behalf
of
the Holders and the other parties entitled thereto by one counsel designated
by
and on behalf of the Holders and the other parties, which counsel the Company
determines in good faith is reasonably acceptable;
(n) use
its reasonable best efforts
(including seeking to cure in the Company’s listing or inclusion application any
deficiencies cited by the exchange or market) to maintain the listing on The
Nasdaq Stock Market;
(o) prepare
and file in a timely manner all
documents and reports required by the Exchange Act and, to the extent the
Company’s obligation to file such reports pursuant to Section 15(d) of the
Exchange Act expires before the expiration of the effectiveness period of the
Registration Statement as required by Section 2(a)(i), the Company shall
register the Registrable Shares under the Exchange Act and shall maintain such
registration through the effectiveness period required by Section
2(a)(i);
(p) provide
a CUSIP number for all
Registrable Shares not later than the effective date of the Registration
Statement;
(q) (i)
otherwise use its reasonable best
efforts to comply in all material respects with all applicable rules and
regulations of the Commission, (ii) make generally available to its
stockholders, as soon as reasonably practicable, earnings statements covering
at
least 12 months that satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder, and (iii) delay filing any Registration Statement
or Prospectus or amendment or supplement to such Registration Statement or
Prospectus to which any Holder of Registrable Shares covered by any such
Registration Statement shall have reasonably objected on the grounds that such
Registration Statement or Prospectus or amendment or supplement does not comply
in all material respects with the requirements of the Securities Act, such
Holder having been furnished with a copy thereof at least 3 Business Days before
the filing thereof, provided that the Company may file such Registration
Statement or Prospectus or amendment or supplement following such time as the
Company shall have made a good faith effort to resolve any such issue with
the
objecting Holder and shall have advised the Holder in writing of its reasonable
belief that such filing complies in all material respects with the requirements
of the Securities Act;
(r) cause
to be maintained a registrar and
transfer agent for all Registrable Shares covered by any Registration Statement
from and after a date not later than the effective date of such Registration
Statement;
(s) in
connection with any sale or transfer
of the Registrable Shares (whether or not pursuant to a Registration Statement)
that will result in the securities being delivered no longer constituting
Registrable Shares, cooperate with the Holders and the managing underwriters
to
facilitate the timely preparation and delivery of certificates representing
the
Registrable Shares to be sold, which certificates shall not bear any transfer
restrictive legends (other than as required by the Company’s charter), and to
enable such
Registration
Rights Agreement
14
Registrable
Shares to be in such denominations and registered in such names as the managing
underwriters or the Holders may request at least 3 Business Days before any
sale
of the Registrable Shares;
(t) if
required under the rules of the
NASD, in connection with the initial filing of a Shelf Registration Statement
and each amendment thereto with the Commission pursuant to Section 2(a), prepare
and, within one Business Day of such filing with the Commission, to file with
the NASD all forms and information required or requested by the NASD in order
to
obtain written confirmation from the NASD that the NASD does not object to
the
fairness and reasonableness of the underwriting terms and arrangements (or
any
deemed underwriting terms and arrangements) (each such written confirmation,
a
“No Objections Letter”) relating to the resale of Registrable Shares pursuant to
the Shelf Registration Statement, including, without limitation, information
provided to the NASD through its COBRADesk system, and shall pay all costs,
fees
and expenses incident to the NASD’s review of the Shelf Registration Statement
and the related underwriting terms and arrangements, including, without
limitation, all filing fees associated with any filings or submissions to the
NASD and the legal expenses, filing fees and other disbursements of Purchaser
and any other NASD member that is the holder of, or is affiliated or associated
with an owner of, Registrable Shares included in the Shelf Registration
Statement (including in connection with any initial or subsequent member
filing);
The
Company may require the Holders to
furnish to the Company in writing such information regarding the proposed
distribution by such Holder as the Company may from time to time reasonably
request in writing or as shall be required to effect the registration of the
Registrable Shares, and no Holder shall be entitled to be named as a selling
stockholder in any Registration Statement and no Holder shall be entitled to
use
the Prospectus forming a part thereof if such Holder does not timely provide
such information to the Company. Each Holder further agrees to
furnish promptly to the Company in writing all information required from time
to
time to make the information previously furnished by such Holder not
misleading.
Each
Holder agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 4(f)(ii), 4(f)(iii) or 4(f)(iv), such
Holder will immediately discontinue disposition of Registrable Shares pursuant
to a Registration Statement until (i) any such stop order is vacated or (ii)
if
an event described in Section 4(f)(iii) or 4(f)(iv) occurs, such
Holder’s receipt of the copies of the supplemented or amended
Prospectus. If so directed by the Company, such Holder will deliver
to the Company (at the reasonable expense of the Company) all copies in its
possession, other than permanent file copies then in such Holder’s possession,
of the Prospectus covering such Registrable Shares current at the time of
receipt of such notice.
Each
Holder represents that it has not
prepared or had prepared on its behalf or used or referred to, and agrees that
it will not prepare or have prepared on its behalf or use or refer to, any
Free
Writing Prospectus, and has not distributed and will not distribute any written
materials in connection with the offer or sale of the Registrable Shares without
the prior express written consent of the Company and, in connection with any
Underwritten Offering, the underwriters. Any such Free Writing
Prospectus consented to by the Company and the underwriters, as the case may
be,
is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents and agrees that it
has treated and will treat, as the case may be, each Permitted Free Writing
Prospectus as an Issuer Free Writing Prospectus, including in respect of timely
filing with the Commission, legending and record keeping.
5. SUSPENSION
PERIOD.
(a) Subject
to the provisions of this Section 5, following the effectiveness of
a Registration Statement (and the filings with any international, federal or
state securities commissions), the Company may direct the Holders (in the case
of a Mandatory Shelf Registration Statement) or Initiating Holders
(in
Registration
Rights Agreement
15
the
case
of a Demand Registration Statement or Piggyback Registration Statement), in
accordance with Section 5(b), to suspend sales of the Registrable Shares
pursuant to a Registration Statement for such times as the Company reasonably
may determine is necessary and advisable (but in no event for more than an
aggregate of 90 days, including for purposes of such
calculation, any days that were deferred under Section 2(b)(ii), in any
consecutive 12-month period commencing on Closing, except as a result of a
review of any post-effective amendment by the Commission before declaring any
post-effective amendment to the Registration Statement effective,
provided that the Company has used its reasonable best efforts to cause
such post-effective amendment to be declared effective) if
(i) a certificate is delivered by the Company and signed by a director of the
Company certifying that in the good faith judgment of the Board it would be
seriously detrimental to the Company to proceed with such sale because (x)
a
merger, consolidation, substantial acquisition or other similar corporate action
is expected to occur imminently or (y) the Company intends to issue equity
securities or equity-linked securities not pursuant to a registration statement;
or (ii) the majority of the members of the Board of Directors of the
Company shall have determined in good faith, upon the advice of counsel, that
it
is required by law, rule, regulation or Commission-published release or
interpretation to supplement the Registration Statement or file a post-effective
amendment to the Registration Statement in order to incorporate information
into
the Registration Statement for the purpose of (1) including in the
Registration Statement any prospectus required under Section 10(a)(3) of the
Securities Act; (2) reflecting in the prospectus included in the
Registration Statement any facts or events arising after the effective date
of
the Registration Statement (or of the most-recent post-effective amendment)
that, individually or in the aggregate, represents a fundamental change in
the
information set forth therein; or (3) including in the prospectus included
in the Registration Statement any material information with respect to the
plan
of distribution not disclosed in the Registration Statement or any material
change to such information. Upon the occurrence of any such
suspension, the Company shall use its reasonable best efforts to cause the
Registration Statement to become effective or to promptly (and in the case
of a
suspension under clause (ii), use reasonable best efforts to within seven (7)
days) amend or supplement the Registration Statement on a post-effective basis
or to take such action as is necessary to make resumed use of the Registration
Statement compatible with the Company’s best interests, as applicable, so as to
permit the Holders to resume sales of the Registrable Shares as soon as
possible.
(b) In
the
case of an event that causes the Company to suspend the use of a Registration
Statement (a “Suspension Event”), the Company shall
give written notice (a “Suspension Notice”) to
Purchaser and the Holders (or the Initiating Holders, as the case may be) to
suspend sales of the Registrable Shares and such notice shall state generally
the basis for the notice and that such suspension shall continue only for so
long as the Suspension Event or its effect is continuing and the Company is
using its best efforts and taking all reasonable steps to terminate suspension
of the use of the Registration Statement as promptly as possible. No
Holder shall effect any sales of the Registrable Shares pursuant to such
Registration Statement (or such filings) at any time after it has received
a
Suspension Notice from the Company and before receipt of an End of Suspension
Notice (as defined below). If so directed by the Company, each Holder
will deliver to the Company (at the expense of the Company) all copies other
than permanent file copies then in such Holder’s possession of the Prospectus
and any Issuer Free Writing Prospectus covering the Registrable Shares at the
time of receipt of the Suspension Notice. The Holders (or the
Initiating Holders, as the case may be) may recommence effecting sales of the
Registrable Shares pursuant to the Registration Statement (or such filings)
following further notice to such effect (an “End of Suspension
Notice”) from the Company, which End of Suspension Notice shall be
given by the Company to the Holders (or the Initiating Holders, as the case
may
be) and Purchaser in the manner described above promptly following the
conclusion of any Suspension Event and its effect.
(c) Notwithstanding
any provision herein to the contrary, subject to any Suspension Events or as
contemplated by Section 4(f)(iv), the Company shall use its reasonable
best efforts to cause each Registration Statement to be maintained effective
pursuant to this Agreement until the Registrable Shares are not Registrable
Shares.
Registration
Rights Agreement
16
6. INDEMNIFICATION
AND CONTRIBUTION.
(a) The
Company agrees to indemnify and hold harmless (i) Purchaser, each Holder and
any
underwriter (as determined in the Securities Act) for such Holder (including,
if
applicable, Purchaser), (ii) each Person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) any of the foregoing (a “Controlling Person”),
and (iii) the respective officers, directors, partners, members, employees,
representatives and agents of any such Person or any Controlling Person (any
Person referred to in clause (i), (ii) or (iii) may hereinafter be referred
to
as an “Purchaser Indemnitee”) from and against any and
all losses, claims, damages, judgments, actions, reasonable out-of-pocket
expenses, and other liabilities, including, as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing or defending any claim
or
action, or any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of outside
counsel to any Purchaser Indemnitee, joint or several (the
“Liabilities”), directly or indirectly related to,
based upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or Issuer Free Writing Prospectus (as amended or supplemented),
or
any preliminary Prospectus or any other document prepared by the Company used
to
sell the Registrable Shares, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the
statements therein (in the case of a Prospectus, in light of the circumstances
under which they were made), not misleading, except insofar as such Liabilities
arise out of or are based upon (i) any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Purchaser Indemnitee furnished to the Company or
any
underwriter in writing by such Purchaser Indemnitee expressly for use therein,
or (ii) any sales by any Holder after the delivery by the Company to such Holder
of a Suspension Notice and before the delivery by the Company of an End of
Suspension Notice. The Company shall notify the Holders promptly of
the institution, threat or assertion of any claim, proceeding (including any
governmental investigation), or litigation which it shall have become aware
in
connection with the matters addressed by this Agreement which involves the
Company or a Purchaser Indemnitee. The indemnity provided for herein
shall remain in full force and effect regardless of any investigation made
by or
on behalf of any Purchaser Indemnitee.
(b) In
connection with any Registration Statement in which a Holder is participating,
such Holder agrees, severally and not jointly, to indemnify and hold harmless
Purchaser, the Company, each Person who controls the Company or Purchaser within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and the respective officers, directors, partners, members, representatives,
employees and agents of such Person or Controlling Person to the same extent
as
the foregoing indemnity from the Company to each Purchaser Indemnitee, but
only
with reference to (i) untrue statements or omissions or alleged untrue
statements or omissions made in reliance upon and in strict conformity with
information relating to such Holder furnished to the Company in writing by
such
Holder expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary Prospectus and (ii) any
sales by any Holder after the delivery by the Company to such Holder of a
Suspension Notice and before the delivery by the Company of an End of Suspension
Notice. The liability of any Holder pursuant to clause (i) of the
immediately preceding sentence shall in no event exceed the net proceeds
received by such Holder from sales of Registrable Shares giving rise to such
obligations. If a Holder elects to include Registrable Shares in an
Underwritten Offering, the Holder shall be required to agree to such customary
indemnification provisions as may reasonably be required by the underwriter
in
connection with such Underwritten Offering.
(c) If
any
suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to Section 6(a) or
6(b), such Person (the “Indemnified Party”), shall promptly notify the
Person against whom such indemnity may be sought (the “Indemnifying Party”), in
writing (to the extent
Registration
Rights Agreement
17
legally
advisable) of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any Liability which it may have
under this Section 6, except to the extent the Indemnifying Party is
materially prejudiced by the failure to give notice), and the Indemnifying
Party, upon request of the Indemnified Party, shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party and
any
others the Indemnifying Party may reasonably designate in such proceeding and
shall assume the defense of such proceeding and pay the fees and expenses
actually incurred by such counsel related to such
proceeding. Notwithstanding the foregoing, in any such proceeding,
any Indemnified Party may retain its own counsel, but the fees and expenses
of
such counsel shall be at the expense of such Indemnified Party, unless (i)
the
Indemnifying Party and the Indemnified Party shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Party failed within a reasonable
time after notice of commencement of the action to assume the defense and employ
counsel reasonably satisfactory to the Indemnified Party, (iii) the Indemnifying
Party and its counsel do not pursue in a reasonable manner the defense of such
action or (iv) the named parties to any such action (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party, or
any
Affiliate of the Indemnifying Party, and such Indemnified Party shall have
been
reasonably advised by counsel that, either (x) there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party or such Affiliate of the Indemnifying Party
or (y) a conflict may exist between such Indemnified Party and the Indemnifying
Party or such Affiliate of the Indemnifying Party, in which event the
Indemnifying Party may not assume or direct the defense of such action on behalf
of such Indemnified Party, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or separate but
substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all such
Indemnified Parties, which firm shall be designated in writing by those
Indemnified Parties who sold a majority of the Registrable Shares sold by all
such Indemnified Parties and any such separate firm for the Company, the
directors, the officers and such control Persons of the Company as shall be
designated in writing by the Company. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed, but if
settled with such consent or if there be a final judgment for the plaintiff,
the
Indemnifying Party agrees to indemnify any Indemnified Party from and against
any Liability by reason of such settlement or judgment to the extent provided
in
this Section 6 without reference to this sentence. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity
could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all Liability
on claims that are the subject matter of such proceeding.
(d) If
the
indemnification provided for in Section 6(a) or 6(b) is for any
reason held to be unavailable to an Indemnified Party in respect of any
Liabilities referred to therein (other than by reason of the exceptions provided
therein) or is insufficient to hold harmless a party indemnified thereunder,
then each Indemnifying Party under such sections, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable
by
such Indemnified Party as a result of such Liabilities (i) in such proportion
as
is appropriate to reflect the relative benefits of the Indemnified Party on
the
one hand and the Indemnifying Parties on the other in connection with the
statements or omissions that resulted in such Liabilities, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Indemnifying
Parties and the Indemnified Party, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand,
and any Purchaser Indemnitees, on the other, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Registration
Rights Agreement
18
(e) The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 6 were determined by pro rata allocation (even if
such Indemnified Parties were treated as one entity for such purpose), or by
any
other method of allocation that does not take account of the equitable
considerations referred to in Section 6(d). The amount paid or
payable by an Indemnified Party as a result of any Liabilities referred to
in
Section 6(d) shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6, in
no event shall a Purchaser Indemnitee be required to contribute any amount
in
excess of the amount by which proceeds received by such Purchaser Indemnitee
from sales of Registrable Shares exceeds the amount of any damages that such
Purchaser Indemnitee has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. For
purposes of this Section 6, each Person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) Purchaser or a Holder shall have the same rights to contribution as
Purchaser or such Holder, as the case may be, and each Person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act) the Company, and each officer, director, partner,
member, employee, representative, agent or manager of the Company shall have
the
same rights to contribution as the Company. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party
or
parties from whom contribution may be sought, but the omission to so notify
such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section
6 or otherwise, except to the extent that any party is materially prejudiced
by the failure to give notice. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act),
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The
indemnity and contribution agreements contained in this Section 6 will be
in addition to any Liability which any Indemnifying Party may otherwise have
to
any Indemnified Party. Each Purchaser Indemnitee’s obligations to
contribute pursuant to this Section 6 are not joint but are several in
the proportion that the number of Shares sold by such Purchaser Indemnitee
bears
to the number of Shares sold by all Purchaser Indemnities.
7. TERMINATION
OF THE COMPANY’S OBLIGATIONS
. The
Company shall have no further obligations pursuant to this Agreement at such
time as no Registrable Shares are outstanding after their original issuance,
provided, however, that the Company’s obligations under Sections
3, and 6 (and any related definitions) shall remain in full force and effect
following such time; provided, further, that if no Registrable Shares are
outstanding after their original issuance because the Company redeemed the
Registrable Shares pursuant to its charter documents, the Company’s obligations
hereunder shall terminate at such time.
8. MISCELLANEOUS.
(a) Remedies. In
the event of a breach by the Company of any of its obligations under this
Agreement, each Holder, in addition to being entitled to exercise all rights
provided herein or, in the case of Purchaser, in the Purchase Agreement, or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Subject to Section
6, the Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) Amendments
and Waivers. This Agreement may not be amended, modified
or supplemented, and waivers or consents to or departures from the provisions
hereof may not be given,
Registration
Rights Agreement
19
without
the written consent of the Company and Holders beneficially owning a majority
of
the Registrable Shares; provided, however, that for
purposes of this Agreement, Registrable Shares owned, directly or indirectly,
by
an entity that is an Affiliate of the Company due to the Company’s owning an
interest in such entity shall not be deemed to be
outstanding. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof with respect to a matter that relates
exclusively to (i) the Mandatory Shelf Registration Statement may be given
only
with the consent of a majority of Registrable Shares covered thereby and (ii)
the rights of a Holder whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders may be given by such Holder;
provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions
of
the immediately preceding sentence.
(c) Notices. All
notices and other communications, provided for or permitted hereunder shall
be
made in writing and delivered by facsimile (with receipt confirmed), overnight
courier or registered or certified mail, return receipt requested, or by
telegram, addressed as follows:
(i) if
to a
Holder, at the most current address given by the transfer agent and registrar
of
the Shares to the Company (including by email);
(ii) if
to the
Company, at the offices of the Company at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer (facsimile ▇▇
(▇▇▇) ▇▇▇-▇▇▇▇); with a copy (which shall not constitute notice) to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇ (facsimile ▇▇ (▇▇▇) ▇▇▇-▇▇▇▇);
and
(iii) if
to
Purchaser, at the offices of Purchaser at 26/F, Chater House, ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇: Principal Investment Management, Middle
Office (facsimile ▇▇▇▇ ▇▇▇▇-▇▇▇▇); with a copy (which shall not
constitute notice) to Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Tower 2, China
Central Place, 1505-1506, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
Attention: ▇▇▇▇▇▇ Sun, Esq. (facsimile ▇▇▇ (▇▇)
▇▇▇▇-▇▇▇▇).
(d) Successors
and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns
of
each of the parties hereto and shall inure to the benefit of each
Holder. The Company agrees that the Holders shall be third party
beneficiaries to the agreements made hereunder by Purchaser and the Company,
and
each Holder shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
hereunder; provided, however, that such Holder fulfills all of
its obligations hereunder.
(e) Counterparts. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and
the
same agreement.
(f) Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF
CONFLICTS OF LAW THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN
THE
LAW OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF
THE
STATE OF NEW YORK OR SITTING IN NEW YORK COUNTY IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF
Registration
Rights Agreement
20
THE
AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(g) Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts
to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention
of the parties hereto that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(h) Entire
Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(i) Registrable
Shares Held by the Company or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Shares is required hereunder, Registrable Shares (or securities convertible
into
Registrable Shares) held by the Company or entities that are Affiliates of
the
Company due to the Company’s owning an interest in such
entities shall not be counted in determining whether such
consent or approval was given by the Holders of such required
percentage.
(j) Survival. This
Agreement is intended to survive the consummation of the transactions
contemplated by the Purchase Agreement. The indemnification and
contribution obligations under Section 6 shall survive the termination of
the Company’s obligations under Section 2.
(k) Headings. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the provisions of this Agreement. All
references made in this Agreement to “Section” refer to such Section of this
Agreement, unless expressly stated otherwise.
(l) Adjustment
for Stock Splits, etc. Wherever in this Agreement there
is a reference to a specific number of shares with respect to any securities,
then upon the occurrence of any subdivision, combination, or stock dividend
of
such shares, the specific number of shares with respect to any securities so
referenced in this Agreement shall automatically be proportionally adjusted
to
reflect the effect on the outstanding shares of such class or series of stock
by
such subdivision, combination, or stock dividend.
(m) No
Inconsistent Terms. The Company represents, warrants and
agrees that (i) the rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders
of
any other outstanding securities issued or guaranteed by the Company under
any
other agreement and (ii) the Company has not entered into any agreement that
is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.
[Remainder
of this Page Intentionally Left Blank]
Registration
Rights Agreement
21
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
|
CHINDEX
INTERNATIONAL, INC.
|
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|
By:
|
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|
Name:
|
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|
Title:
|
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|
MAGENTA
MAGIC LIMITED
|
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By:
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Name:
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Title:
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Signature
Page to Registration Rights Agreement
APPENDIX
A
[Company]
Questionnaire
for Selling Stockholders
This
questionnaire is being furnished to the stockholders of
[ ]
(the “Company”) that have purchased shares of the
Company’s common stock, par value $0.01 per share
(“Shares”), in the Company’s private
placement that closed on
[ ],
or their respective transferees. The Company will use the
information obtained in response to this Questionnaire in the preparation of
the
Registration Statement the Company is required to file with the SEC to permit
the public offer and sale of the Shares issued in the private placement (the
“Registration Statement”) and filings with the
National Association of Securities Dealers, Inc.
(“NASD”) in connection with the Registration
Statement.
Please
complete and return this questionnaire to
[ ],
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Tower 2, China Central Place,
1505-1506, Chaoyang District, Beijing, China. (telephone ▇▇▇ (▇▇)
▇▇▇▇-▇▇▇▇) by 5 p.m. Beijing Time on [_________,
_____________].
Please
answer all questions. If the answer to any question is “none” or
“not applicable,” please so state.
If
there
is any question about which you have any doubt, please set forth the relevant
facts in your answer.
|
1.
|
Please
set out below the name, as you wish it to appear in the “Selling
Stockholder” section of the Registration Statement, and address of the
holder of the Shares.
|
Name:
Address:
|
2.
|
Please
state the total number of currently outstanding Shares that the
holder beneficially owns* and the form of ownership and the date
that it acquired such Shares.
|
*
See
Appendix A below for definitions.
|
3.
|
List
below the nature of any position, office or other material relationship
which any affiliate* of the holder has, or has had within the
past three years, with the Company or any of its
affiliates*.
|
|
4.
|
The
beneficial owner of the Shares to be registered for resale
is:
|
¨ an
individual;
¨ a
corporation;
¨ a
limited liability company;
¨ a
partnership;
¨ other
entity.
|
5.
|
If
you checked a box other than the one opposite “an individual” in Question
4, please disclose (1) each natural person in your organization who
exercises voting and/or investment control with respect to the securities
held by the beneficial owner named in Question 1 and (2) his or her
title
and relation to the beneficial owner. If the beneficial owner
is an entity, such as a limited partnership or limited liability
company,
that is in turn managed or controlled by another entity rather than
an
individual(s), please proceed up the corporate chain of your organization
until you reach the individual(s) that exercise voting and/or investment
control over the Shares. If you do not believe that any
individual exercises investment and/or voting control over the Shares
to
be registered for resale, please provide the name of the entity(ies)
that
you believe exercises voting and/or investment control over the Shares
in
the space below and proceed to Question
6.
|
|
6.
|
If
you believe that no individual exercises voting or investment control
over
the Shares to be registered for resale, please answer the following
questions:
|
|
|
(a)
Do
one or two individuals have the ability to vote or sell the
Shares?
|
|
|
¨
Yes –
one or two individuals have the ability to vote or sell the
Shares
|
|
|
¨
No –
more than two individuals have the ability to vote or sell the
Shares
|
(b)
If
you answered “Yes” above, please provide the names of those individuals, their
title and relation to the beneficial owner. Under SEC guidelines,
this individual(s) exercises voting and/or investment control over the
Shares.
(c)
If
you answered “No” to Question 6(a), (1) do three or more natural persons have
voting and investment power over the securities, or control an entity which
has
such voting and investment power AND (2) is a majority vote of such persons
required to determine how to vote and whether to sell the Shares held by the
beneficial owner?
¨
Yes
¨
No
(d)
If
you answered “No” to (c) above, please provide the names of the natural persons,
their title and relation to the beneficial owner. Under SEC
guidelines, these individuals exercise voting and/or investment control over
the
Shares.
|
7.
|
If
the holder expressly wishes to disclaim beneficial ownership* of
any Shares listed under Question 2 for any reason in the Registration
Statement, indicate below the Shares and circumstances for disclaiming
such beneficial
ownership*.
|
|
8.
|
With
respect to the Shares to be included in the Registration Statement,
please
list any party that has or may have secured a lien, security interest
or
any other claim relating to such Shares and please give a full description
of such claims.
|
|
9.
|
If
the holder presently contemplates a sale (other than pursuant to
the
Registration Statement) or purchase, is presently committed to sell
or
purchase, any of the Shares, or plans to sell the Shares, once the
Registration Statement is effective, other than pursuant to the Plan
of
Distribution attached on Appendix B, please state the number of
Shares and provide a description of the contemplated
transaction.
|
|
10.
|
State
whether the holder is :
|
|
(a)
|
a
member* of the NASD?
|
Yes ¨ No ¨
|
(b)
|
a
person associated with a member* of the
NASD?
|
Yes ¨ No ¨
|
(c)
|
an
affiliate* of a member* of the
NASD?
|
Yes ¨ No ¨
|
(d)
|
associated*
or affiliated* through equity ownership or otherwise with a
member* of the NASD or owns stock or any other securities of
any
NASD member* not purchased in the open
market?
|
Yes ¨ No ¨
|
(e)
|
an
immediate family member* of any member* or person
associated with a member*?
|
Yes ¨ No ¨
|
(f)
|
an
entity or person that has made any outstanding subordinated loans
to any
member*?
|
Yes ¨ No ¨
If
you
answered “Yes” to any part of this Question 10, provide the following
information:
|
(a)
|
the
name of the member(s)*:
|
|
(b)
|
the
nature of the affiliation* or association* or family
relationship:
|
|
(c)
|
whether
the member* is participating* in any capacity in the
offering of the Shares:
|
|
(d)
|
the
Member* whose securities the holder owns and a description of
the
securities:
|
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(e)
|
the
Member* the holder has loaned money to and a brief description
of
the loan:
|
|
(f)
|
all
financing, investment and/or advisory services provided in the past
180
days, to be provided up to the time the Company files the Registration
Statement, or to be provided during the 90 days following effectiveness
of
the Registration Statement by any participating member*, and
compensation attributable to such services (we may require copies
of any
related agreements):
|
11. State
whether the holder is affiliated with a registered broker or
dealer.
Affiliated ¨ Not
affiliated ¨
|
12.
|
If
the holder is affiliated with a registered broker or dealer, did
the
holder purchase the Shares in the ordinary course of business and
at the
time of purchase of the Shares had no agreements or understandings,
directly or indirectly, to distribute the
Shares?
|
Yes ¨ No ¨
The
undersigned selling stockholder of the Company hereby furnishes the foregoing
information for use by the Company in connection with the preparation of the
Registration Statement.
The
undersigned will notify
[ ]
at the address above in writing immediately of any changes in the foregoing
answers that should be made as a result of any developments occurring prior
to
the time that all the Shares are sold pursuant to the Registration Statement
referred to above. Otherwise, the Company is to understand that the
above information continues to be, to the best of the undersigned’s knowledge,
information and belief, complete and correct.
The
undersigned, by executing and returning this Questionnaire, confirms its
existing understanding that it will be bound by the terms and conditions of
the
Registration Rights Agreement entered into on [Date], between the Company and
[Placement Agent].
Dated:
_____________, 2007
_________________________________________
Name
of
Holder (please print)
_________________________________________
(Signature
of Holder or By Authorized Person executing for Holder)
Printed
Name: _____________________________
Its: _________________________________
(Printed
Name of Authorized Person and
Title for persons executing for entities)
Email
address: _____________________________
APPENDIX
A
Certain
Terms Used in Questionnaire
Affiliate. For
NASD purposes (Question 10 above), the term “affiliate” or “affiliated” means a
company which controls, is controlled by or is under common control with a
member. A company will be presumed to control a member if the company
beneficially owns 10% or more of the outstanding voting securities of a member
which is a corporation, or beneficially owns a partnership interest in 10%
or
more of the distributable profits or losses of a member which is a
partnership. A member will be presumed to control a company if the
member and persons associated with the member beneficially own 10% or more
of
the outstanding voting securities of a company which is a corporation, or
beneficially own a partnership interest in 10% or more of the distributable
profits or losses of a company which is a partnership. A company will
be presumed to be under common control with a member if
|
o
|
the
same natural person or company controls both the member and company
by
beneficially owning 10% or more of the outstanding voting securities
of a
member or company which is a corporation, or by beneficially owning
a
partnership interest in 10% or more of the distributable profits
or losses
of a member or company which is a partnership
or
|
|
o
|
a
person having the power to direct or cause the direction of the management
or policies of the member or the company also has the power to direct
or
cause the direction of the management or policies of the other entity
in
question.
|
For
other
purposes of this Questionnaire, an “affiliate” of a company is a person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such company.
Associated. The
term “associated” means
|
o
|
any
corporation or organization (other than the Company or any of its
subsidiaries) of which the holder is an officer, director or partner
or of
which the holder is, directly or indirectly, the beneficial owner
of 5% or
more of any class of equity
securities,
|
|
o
|
any
trustee or other estate in which the holder has a substantial beneficial
interest or as to which you serve as trustee or in a similar
capacity,
|
|
o
|
the
holder’s spouse,
|
|
o
|
any
relative of the holder’s spouse or any relative of the holder who has the
same home as the holder or who is a director or officer or key executive
of the Company or any of its subsidiaries,
and
|
|
o
|
any
partner, syndicate member of a person with whom the holder has agreed
to
act in concert with respect to the acquisition, holding, voting or
disposition of the Company’s
securities.
|
Investor
Rights Agreement
Beneficial
Ownership A person “beneficially owns” a security if he, directly
or indirectly, has or shares voting power or investment power of such security,
whether through a contract, arrangement, understanding, relationship or
otherwise. A person is also the beneficial owner of a security if he
has the right to acquire beneficial ownership at any time within 60 days (i)
through the exercise of any option, warrant or right, (ii) through the
conversion of a security, (iii) pursuant to the power to revoke a trust,
discretionary account or similar arrangement, or (iv) pursuant to the automatic
termination of a trust, discretionary account or similar
arrangement.
Immediate
family. The term “immediate family” includes the
parents, mother-in-law, father-in-law, spouse, brother or sister, brother-in-law
or sister-in-law, son-in-law or daughter-in-law, and children of an employee
or
associated person of a member, except any person other than the spouse and
children who does not live in the same household as, have a business
relationship with, provide material support to, or receive material support
from, the employee or associated person of a member. In addition, the
immediate family includes any other person who either lives in the same
household as, provides material support to, or receives material support from,
an employee or associated person of a member.
Member. The
term “member” means any individual, partnership, corporation, or other legal
entity admitted to membership in the NASD under the provisions of Article I
of
the By-laws of the NASD.
Participating
member. The term “participating member” means any
member that is participating in a public offering, any associated person of
the
member, any members of their immediate family and any affiliate of the
member.
Participation
or participating in a public offering. The terms
“participation or participating in a public offering” means participation in the
preparation of the offering or other documents, participation in the
distribution of the offering on an underwritten, non-underwritten, or any other
basis, furnishing of customer and/or broker lists for solicitation, or
participation in any advisory or consulting capacity to the issuer related
to
the offering,.
Person
associated with a member. The term “person associated
with a member” means every sole proprietor, partner, officer, director or branch
manager of any member, or any natural person occupying a similar status or
performing similar functions, or any natural person engaged in the investment
banking or securities business who is directly or indirectly controlling or
controlled by such member (for example, an employee), whether or not such person
is registered or exempt from registration with the NASD pursuant to its
By-laws.
Investor
Rights Agreement
APPENDIX
B
PLAN
OF DISTRIBUTION
Investor
Rights Agreement
EXECUTION
COPY
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1993 (THE “ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON THE
SAFE HARBOR PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES
MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT.
CHINDEX
INTERNATIONAL, INC.
TRANCHE
B
CONVERTIBLE NOTE DUE 2017
November
7, 2007
No.
001
US$1,000,000
Out
of an
aggregate US$25,000,000 of Tranche B Notes
CHINDEX
INTERNATIONAL, INC., a Delaware corporation (the
“Company”), for value received, promises to pay, subject
to the terms and conditions of this Note, to the order of MAGENTA MAGIC LIMITED, a company
organized and existing under the laws of the British Virgin Islands and wholly
owned, directly or indirectly, by JPMorgan Chase & Co or its
registered assigns (the “Holder”), the principal sum of
TWENTY-FIVE MILLION DOLLARS (US$25,000,000) due on November 6, 2017 (the
“Maturity Date”) in cash. This Note is one of
a series of Tranche B Convertible Notes due November 6, 2017 (the
“Tranche B Notes”) issued pursuant to the Securities
Purchase Agreement, dated as of November 7, 2007 (the “Purchase
Agreement”) between the Company and the Holder as the Purchaser
therein and is entitled to the benefits thereof. This Note is
subject to the terms and conditions of the Purchase Agreement and in the case
of
a perceived conflict or inconsistency between this Note and the Purchase
Agreement, the Purchase Agreement shall govern. Capitalized terms
used herein without definition have the meanings assigned thereto in the
Purchase Agreement.
1. PAYMENTS.
1.1 Subject
to the right of the Holder to convert the principal amount of this Note into
shares of Class A Common Stock of the Company, the principal amount of this
Note
shall be payable in full on the Maturity Date.
1.2 Payment
of the principal of this Note shall be made to Holder at a place to be specified
by the Holder of this Note in a written notice to the Company at least three
(3) Business Days before the payment date.
1.3 Such
payment of principal of this Note shall be made in lawful money of the United
States of America by transferring immediately available funds by wire transfer
to the account of such Holder for receipt by such Holder on the due date of
such
payment.
1.4 If
payment on this Note becomes due and payable on a Saturday, Sunday or other
day
on which commercial banks in New York City or Hong Kong are authorized or
required by law to close, the maturity thereof shall be extended to the next
succeeding Business Day.
1.5 In
no
event shall interest of any kind be paid or payable with respect to this
Note.
2. CONVERSION.
2.1 Conversion
Right. Subject to and upon compliance with the provisions of this
Section 2, at the option of the Holder thereof and subject to the satisfaction
or waiver of all conditions set forth in Section 2.2, any Note or any portion
of
the principal amount thereof that is $1,000,000 or an integral multiple of
$1,000,000 may be converted at a price (the “Conversion
Price”) that shall be initially $27.84 per share of Common
Stock. The Conversion Price shall be adjusted in certain instances as
set forth in Section 2.4.
2.2 Conditions
to Conversion. This Note may be converted at any time at the
option of the Holder, but shall be automatically and mandatorily converted,
in
the manner described in Section 2.1 above, if the following conditions shall
have been satisfied or waived in the sole discretion of the Holder:
(a) (i)
The
International Finance Corporation (“IFC”) and/or other
financial or lending institutions shall have committed to one or more Facilities
(as defined below), as evidenced by one or more executed and legally binding
agreements, making available to the Company and/or any Subsidiary financing
in
an aggregate principal amount of no less than US$50,000,000, and (ii) all
conditions precedent for the initial disbursement specified in such
Facilities (other than those conditions relating to or dependent upon (x) the
commencement of construction, progress or completion of the projects to be
financed by such Facilities or any interest therein, and (y) the respective
joint venture agreements or project documents between the Company and its
prospective joint venture partners for such new projects, to the extent
applicable and (z) equity investment to the extent such condition would be
satisfied by the conversion described in Section 2.1) shall have been satisfied
in all material respects or waived by IFC and/or such other financial
institutions extending such Facilities.
Tranche
B Note
2
(b) At
the
time the condition described in the preceding paragraph (a) is satisfied or
waived, there has been no breach, in any material respect, of any express
covenant or agreement owed by the Company under the Purchase Agreement or other
Transaction Documents.
Notwithstanding
the foregoing paragraphs, this Note is automatically and mandatorily to be
converted, in the manner described in Section 2.1 above if either: (i) twelve
months have elapsed since the commencement of operations of either of the New
JV
Hospitals or (ii) such New JV Hospital has achieved a break-even EBITDA for
any
12-month ending on a date that is the last day of a fiscal quarter, and
condition (b) above has been satisfied.
In
each
case, the Company shall provide in reasonable detail to the Holder evidence
that
the conditions of this Section 2.2 have been satisfied for the Holder’s
review.
For
purpose of this Section 2.2, the term “Facilities” shall
mean one or more facilities (i) with respect to Debt incurred by the Company
and/or any of its Subsidiaries, having a minimum final maturity of no shorter
than 9.25 years from the date of first drawdown and a minimum moratorium on
principal repayment of three (3) years commencing from the date of the first
drawdown, permitting principal repayment in equal amounts (or stepped up amounts
in a manner favorable to the borrower) no more frequently than twice in each
consecutive 12-month period, having no sinking fund obligations and containing
covenants, standard and customary for Debt of similar nature; and/or (ii) with
respect to equity securities issued by the Company, issued at an effective
price
per share (x) equal to or exceeding the Conversion Price and established within
one month following the Closing of the transactions contemplated by the Purchase
Agreement, or (y) is higher than the Conversion Price if after one month
following the Closing.
2.3 Exercise
of Conversion Right. In order to exercise the conversion
privilege with respect to any Note, the Holder of any Note to be converted
shall
surrender such Note, duly endorsed or assigned to the Company or in blank,
at
the principal office maintained by the Company, accompanied by (a) written
notice to the Company stating that the Holder irrevocably elects to convert
such
Note or, if less than the entire principal amount thereof is to be converted,
the portion thereof to be converted in accordance with Section 2.1, (b) the
funds, if any, required by this Section, in immediately available form, and
(c)
if Common Stock or any portion of such Note not to be converted are to be issued
in the name of a Person other than the Holder thereof, in accordance with the
terms hereof, the name of the Person in which to issue such Common Stock or
portion of the Note.
As
promptly as practicable after receipt of such conversion notice, the Company
shall issue and shall deliver to such Holder a certificate or certificates
for
the number of full shares of Common Stock issuable upon the conversion of such
Note or portion thereof in accordance with the provisions of this Section and
a
check or cash in respect of any fractional interest in respect of a share of
Common Stock arising upon such conversion, as provided in Section
2.4. In case any Note of a denomination greater than $1,000,000 shall
be surrendered for partial conversion, the Company shall execute and deliver
to
the Holder of the Note so surrendered, without charge, a new Note or Notes
in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note and otherwise in accordance with
the
terms hereof.
Tranche
B Note
3
Each
conversion shall be deemed to have been effected as to any such Note (or portion
thereof) on the date on which the requirements set forth above in this Section
2.3 have been satisfied as to such Note (or portion thereof), and the Person
in
whose name any certificate or certificates for shares of Common Stock issuable
upon such conversion shall be deemed to have become on said date the holder
of
record of the shares represented thereby; provided however that any
such surrender on any date when the stock transfer books of the Company shall
be
closed shall constitute the Person in whose name the certificates are to be
issued as the record holder thereof for all purposes on the next succeeding
day
on which such stock transfer books are open, but such conversion shall be at
the
Conversion Price in effect on the date upon which such Note shall be
surrendered.
2.4 Fractions
of Shares. No fractional shares of Common Stock shall be issued
upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same Holder, the number of full shares that
shall be issuable upon conversion thereof shall be computed on the basis of
the
aggregate principal amount of the Notes (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock that
would otherwise be issuable upon conversion of any Note (or specified portions
thereof), the Company shall pay a cash adjustment in respect of such fraction
in
an amount equal to the same fraction of the Closing Price per share of the
Common Stock at the close of business on the Trading Day immediately preceding
such day.
“Trading
Day” shall mean each day on which the primary securities exchange
or quotation system that is used to determine the Closing Price is open for
trading or quotation.
“Closing
Price” of a single share of Common Stock on any Trading Day shall
mean the closing sale price per share for the Common Stock (or if no closing
sale price is reported, the average of the bid and ask prices) on such Trading
Day as reported by the National Association of Securities Dealers Automated
Quotation System.
2.5 Adjustment
of Conversion Price.
(a) In
case
the Company shall pay or make a dividend or other distribution on its Common
Stock exclusively in Common Stock, the Conversion Price in effect at the opening
of business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall
be
adjusted by multiplying such Conversion Price by a fraction, (i) the numerator
of which shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination, and (ii) the denominator
of which shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution. Such
reduction becomes effective immediately after the opening of business on the
day
following the date fixed for such determination. If any dividend or
distribution of the type described in this Section 2.5(a) is declared but not
so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.
Tranche
B Note
4
(b) In
case
the Company shall pay or make a dividend or other distribution on its Common
Stock consisting exclusively of, or shall otherwise issue to all holders of
its
Common Stock, rights, warrants or options entitling the holders thereof (for
a
period of not more than 60 days after such issuance) to subscribe for or
purchase shares of Common Stock (or securities convertible into or exchangeable
or exercisable for Common Stock) at a price per share less than the current
market price per share (or having a conversion, exchange or exercise price
per
share) (in each case determined as provided in Section 2.5(d)) of the Common
Stock on the date immediately preceding the date of announcement of such
issuance, the Conversion Price in effect at the opening of business on the
day
following the date of such announcement shall be adjusted by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date of
announcement plus the number of shares of Common Stock so offered for
subscription or purchase and the denominator shall be the number of shares
of
Common Stock outstanding at the close of business on the date of such
announcement plus the number of shares of Common Stock which the aggregate
price
of the total number of shares so offered would purchase at the current market
price per share (determined as provided in Section 2.5(d)), such increase to
become effective immediately after the opening of business on the day following
the date fixed for such determination.
To
the extent that shares of Common
Stock (or securities convertible into or exchangeable or exercisable for shares
of Common Stock) are not delivered pursuant to such rights or warrants, upon
the
expiration or termination of such rights or warrants, the Conversion Price
shall
be readjusted to the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on
the
basis of the delivery of only the number of shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares of Common
Stock) actually effected. In the event that such rights or warrants
are not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if the date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed.
(c) In
case
outstanding shares of Common Stock shall be subdivided into a greater number
of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of shares
of
Common Stock, the Conversion Price in effect at the opening of business on
the
day following the day upon which such combination becomes effective shall be
proportionately increased. In each such case, the Conversion Price
shall be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such subdivision or combination. Such
reduction or increase, as the case may be, shall become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
Tranche
B Note
5
(d) For
the
purpose of any computation under Section 2.5, the current market price per
share
of Common Stock on any date in question shall be deemed to be the average of
the
daily Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question.
(e) No
adjustment in the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Conversion Price;
provided, however, that any adjustments, which by reason of this Section 2.5(e)
are not required to be made, shall be carried forward and taken into account
in
any subsequent adjustment. All calculations under this Section 2.5
shall be made by the Company and shall be made to the nearest cent or the
nearest one-hundredth of a share, as the case may be.
2.6 Notice
of Adjustments of Conversion Price. Whenever the Conversion Price
is adjusted as herein provided, the Company shall compute the adjusted
Conversion Price in accordance with Section 2.5 and shall prepare a certificate
signed by the Chief Financial Officer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed at each
office or agency maintained for the purpose of conversion of Notes; and the
Company shall forthwith cause a notice setting forth the adjusted Conversion
Price (“Conversion Adjustment Notice”) to be mailed,
first class postage prepaid, to each Holder at its address appearing on the
register. The Holder is entitled to dispute the Conversion Price
adjustment as reflected in the Conversion Adjustment Notice within fifteen
(15)
days upon receipt of the Conversion Adjustment Notice. If such
dispute cannot be resolved within thirty (30) days from the date when the
Company receives any Holder’s notice that it disagrees with such adjustment, one
of the “Big-Four” accounting firms shall be appointed by mutual agreement of the
Company and such Holder to determine the proper adjustment of the Conversion
Price.
2.7 Notice
of Certain Corporate Action. In case:
(a) the
Company shall declare a dividend (or any other distribution) on its Common
Stock;
(b) the
Company shall authorize the granting to all holders of its Common Stock of
rights, warrants or options to subscribe for or purchase any shares of capital
stock of any class or of any other rights (excluding rights distributed pursuant
to the Rights Agreement dated June 4, 2007, as amended on November 4,
2007);
(c) of
any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the sale or transfer
of
all or substantially all of the assets of the Company;
(d) of
the
voluntary or involuntary dissolution, liquidation or winding, up of the Company;
or
(e) the
Company or any Subsidiary of the Company shall commence a tender or exchange
offer for all or a portion of the Company’s outstanding shares of Common Stock
(or shall amend any such tender or exchange offer).
Tranche
B Note
6
then
the
Company shall cause to be mailed to all Holders at their last addresses as
shall
have been provided in writing to the Company for inclusion in a register of
Holders, at least 10 days prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (x) the date on which
a
record is to be taken for the purpose of such dividend, distribution or granting
of rights, warrants or options, or, if a record is not to be taken, the date
as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, warrants or options are to be determined, or (y) the
date
on which such consolidation, merger, sale, transfer, dissolution, liquidation
or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such consolidation, merger, sale, transfer, dissolution, liquidation or
winding up, or (z) the date on which such tender offer commenced, the date
on
which such tender offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto).
2.8 Taxes
on Conversions. The Company will pay any and all document and
stamp taxes that may be payable in respect of the issue or delivery of shares
of
Common Stock on conversion of Notes pursuant hereto. The Company
shall not, however, be required to pay any tax that may be payable in respect
of
any transfer involved in the issue and delivery of shares of Common Stock in
a
name other than that of the Holder of the Notes converted, and no such issue
or
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
2.9 Cancellation
of Converted Notes. All Notes delivered for conversion shall be
delivered to the Company to be cancelled upon such conversion.
2.10 Provisions
in Case of Reclassification, Consolidation, Merger or Sale of
Assets. In the event that the Company shall be a party to any
transaction (including (i) any recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (ii) any consolidation of the Company with,
or
merger of the Company into, any other Person, or any merger of another Person
into the Company (other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares
of
Common Stock of the Company), (iii) any sale or transfer of all or substantially
all of the assets of the Company or (iv) any compulsory share exchange) pursuant
to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made as
part
of the terms of such transaction whereby the Holder of each outstanding Tranche
B Notes shall have the right thereafter to convert such Note only into (subject
to funds being legally available for such purpose under applicable law at the
time of such conversion) the kind and amount of securities, cash and other
property receivable upon such transaction by a holder of the number of shares
of
Common Stock into which such Note might have been converted immediately prior
to
such transaction.
2.11 Company’s
Determination. All calculations, adjustments and conversions under
this Section 2 shall be made by the Company and forwarded to the Holder for
its
review.
Tranche
B Note
7
3. CANCELLATION
OF NOTE.
Upon
payment in full of all outstanding obligations under this Note, whether by
receipt by the Holder of the appropriate Conversion Shares upon conversion
of
the Tranche B Notes into shares of Common Stock of the Company pursuant to
Section 2 or cash payment in full, the Company’s obligations in respect of
payment of this Note shall terminate and the Holder shall surrender this Note
to
the Company.
4. EVENTS
OF DEFAULT.
In
the
event that (an “Event of Default”):
(a) the
Company defaults for more than ten (10) Business Days in making the payment
of principal to be made on this Note; or
(b) the
Company or any of the Subsidiaries:
(i) commences
any case, proceeding or other action (x) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, composition or other relief with respect
to
it or its debts or (y) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part
of
its assets, or shall make a general assignment for the benefit of its creditor;
or
(ii) is
the
debtor named in any other case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of ninety (90) days; or (C) takes any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the facts set forth in this clause (ii); or
(D) shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due;
(c) the
Company or the Subsidiary defaults with respect to any existing or future Debt
evidencing an aggregate value of the greater of (i) US$1,000,000 or (ii) 10%
of
the total Debt of the Company at the time of such default and such default
continues unremedied for a period of more than forty-five (45) calendar
days;
(d) any
payment in excess of US$250,000, of principal or of interest on any Debt, is
accelerated under terms of any debt instrument or agreement, including without
limitation by operation of any cross-default provision contained therein;
or
(e) failure
to deliver the Conversion Shares in accordance with the Transaction
Documents.
In
the
case of any Event of Default hereunder, the entire unpaid balance of this Note
shall ipso facto become immediately due and payable upon notice or
demand. The Holder
Tranche
B Note
8
may
waive
any Event of Default on such conditions as it shall determine to impose and
may
rescind any acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration.
5. PAYMENT.
The
Company hereby waives presentment for payment, notice of nonpayment, protest,
notice of protest and all other notices, filing of suit and diligence in
collecting the amounts due under this Note and agrees that the Holder shall
not
be required first to initiate any suit or exhaust its remedies against any
other
person or parties in order to enforce payment of this Note.
6. MISCELLANEOUS.
6.1 Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note and of a letter of indemnity satisfactory
to the Company, and upon reimbursement to the Company of all reasonable expenses
incident thereto, and upon surrender or cancellation of the Note, if mutilated,
the Company will make and deliver a new Note of like tenor in lieu of such
lost,
stolen, destroyed or mutilated Note.
6.2 This
Note
and the rights and obligations of the Company and any Holder hereunder shall
be
construed in accordance with and be governed by the laws of the State of New
York other than such laws as would result in the application of the laws of
a
jurisdiction other than the State of New York.
6.3 The
Holder may freely transfer this Note to any third party, subject to the
provisions of the Purchase Agreement and the terms and conditions
hereof. Except as otherwise provided herein, the terms and conditions
of this Note shall be binding upon, and inure to the benefit of, the respective
representatives, successors and assigns of the parties hereto.
6.4 Upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the Holder
hereof or such Holder’s attorney duly authorized in writing, a new Note of like
tenor will be issued to, and registered in the name of, the
transferee. Prior to the presentment for registration of transfer,
the Company and any paying agent or registrar for the Tranche B Notes may treat
the Person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes, and the Company and
any
paying agent or registrar for the Tranche B Notes will not be affected by any
notice to the contrary.
6.5 Time
is
of the essence of this Note. If any provisions of this Note or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Note and the application
of
such provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
Tranche
B Note
9
[Signature
page follows]
Tranche
B Note
10
IN
WITNESS WHEREOF, the Company and the Holder have executed this Note as of the
day and year first above written.
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CHINDEX
INTERNATIONAL, INC.
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By:
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Name:
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Title:
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Chief
Executive Office and President
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MAGENTA
MAGIC LIMITED
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By:
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Name:
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▇▇▇▇▇▇
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Title:
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Authorized
Signatory
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Signature
Page to Tranche B Note
EXECUTION
COPY
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1993 (THE “ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON THE
SAFE HARBOR PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES
MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT.
CHINDEX
INTERNATIONAL, INC.
TRANCHE
C
CONVERTIBLE NOTE DUE 2017
November
7, 2007
No.
001
US$1,000,000
Out
of an
aggregate US$15,000,000 of Tranche C Notes
CHINDEX
INTERNATIONAL, INC., a Delaware corporation (the
“Company”), for value received, promises to pay, subject
to the terms and conditions of this Note, to the order of MAGENTA MAGIC LIMITED, a company
organized and existing under the laws of the British Virgin Islands and wholly
owned, directly or indirectly, by JPMorgan Chase & Co or its
registered assigns (the “Holder”), the principal sum of
FIFTEEN MILLION DOLLARS (US$15,000,000) due on November 6, 2017 (the
“Maturity Date”) in cash. This Note is one of
a series of Tranche C Convertible Notes due November 6, 2017 (the
“Tranche C Notes”) issued pursuant to the Securities
Purchase Agreement, dated as of November 7, 2007 (the “Purchase
Agreement”) between the Company and the Holder as the Purchaser
therein and is entitled to the benefits thereof. This Note is
subject to the terms and conditions of the Purchase Agreement and in the case
of
a perceived conflict or inconsistency between this Note and the Purchase
Agreement, the Purchase Agreement shall govern. Capitalized terms
used herein without definition have the meanings assigned thereto in the
Purchase Agreement.
1. PAYMENTS.
1.1 Subject
to the right of the Holder to convert the principal amount of this Note into
shares of Class A Common Stock of the Company, the principal amount of this
Note
shall be payable in full on the Maturity Date.
1.2 Payment
of the principal of this Note shall be made to Holder at a place to be specified
by the Holder of this Note in a written notice to the Company at least three
(3) Business Days before the payment date.
1.3 Such
payment of principal of this Note shall be made in lawful money of the United
States of America by transferring immediately available funds by wire transfer
to the account of such Holder for receipt by such Holder on the due date of
such
payment.
1.4 If
payment on this Note becomes due and payable on a Saturday, Sunday or other
day
on which commercial banks in New York City or Hong Kong are authorized or
required by law to close, the maturity thereof shall be extended to the next
succeeding Business Day.
1.5 In
no
event shall interest of any kind be paid or payable with respect to this
Note.
2. CONVERSION.
2.1 Conversion
Right. Subject to and upon compliance with the provisions of this
Section 2, at the option of the Holder thereof and subject to the satisfaction
or waiver of all conditions set forth in Section 2.2, any Note or any portion
of
the principal amount thereof that is $1,000,000 or an integral multiple of
$1,000,000 may be converted at a price (the “Conversion
Price”) that shall be initially $27.84 per share of Common
Stock. The Conversion Price shall be adjusted in certain instances as
set forth in Section 2.4.
2.2 Conditions
to Conversion. This Note may be converted at any time at the
option of the Holder, but shall be automatically and mandatorily converted,
in
the manner described in Section 2.1 above, if the following conditions shall
have been satisfied or waived in the sole discretion of the Holder:
(a) Both
New
JV Hospitals have been completed, received all approvals, consents, permits,
and/or licenses required from any Governmental Authority for the commencement
of
operations, and are ready in all material respects for commencement of
operations and have so commenced operation.
(b) At
the
time the condition described in the preceding paragraph (a) is satisfied or
waived, there has been no breach of any representation, covenant or undertaking
owed by the Company under the Purchase Agreement or the Transaction
Documents.
Notwithstanding
the foregoing paragraphs, this Note is automatically and mandatorily to be
converted, in the manner described in Section 2.1 above if either: (i) twelve
months have elapsed since the commencement of operations of either of the New
JV
Tranche
C Note
2
Hospitals
or (ii) such New JV Hospital has achieved a break-even EBITDA for any 12-month
ending on a date that is the last day of a fiscal quarter, and condition (b)
above has been satisfied.
In
each
case, the Company shall provide in reasonable detail to the Holder evidence
that
the conditions of this Section 2.2 have been satisfied for the Holder’s
review.
2.3 Exercise
of Conversion Right. In order to exercise the conversion
privilege with respect to any Note, the Holder of any Note to be converted
shall
surrender such Note, duly endorsed or assigned to the Company or in blank,
at
the principal office maintained by the Company, accompanied by (a) written
notice to the Company stating that the Holder irrevocably elects to convert
such
Note or, if less than the entire principal amount thereof is to be converted,
the portion thereof to be converted in accordance with Section 2.1, (b) the
funds, if any, required by this Section, in immediately available form, and
(c)
if Common Stock or any portion of such Note not to be converted are to be issued
in the name of a Person other than the Holder thereof, in accordance with the
terms hereof, the name of the Person in which to issue such Common Stock or
portion of the Note.
As
promptly as practicable after receipt of such conversion notice, the Company
shall issue and shall deliver to such Holder a certificate or certificates
for
the number of full shares of Common Stock issuable upon the conversion of such
Note or portion thereof in accordance with the provisions of this Section and
a
check or cash in respect of any fractional interest in respect of a share of
Common Stock arising upon such conversion, as provided in Section
2.4. In case any Note of a denomination greater than $1,000,000 shall
be surrendered for partial conversion, the Company shall execute and deliver
to
the Holder of the Note so surrendered, without charge, a new Note or Notes
in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note and otherwise in accordance with
the
terms hereof.
Each
conversion shall be deemed to have been effected as to any such Note (or portion
thereof) on the date on which the requirements set forth above in this Section
2.3 have been satisfied as to such Note (or portion thereof), and the Person
in
whose name any certificate or certificates for shares of Common Stock issuable
upon such conversion shall be deemed to have become on said date the holder
of
record of the shares represented thereby; provided however that any
such surrender on any date when the stock transfer books of the Company shall
be
closed shall constitute the Person in whose name the certificates are to be
issued as the record holder thereof for all purposes on the next succeeding
day
on which such stock transfer books are open, but such conversion shall be at
the
Conversion Price in effect on the date upon which such Note shall be
surrendered.
Tranche
C Note
3
2.4 Fractions
of Shares. No fractional shares of Common Stock shall be issued
upon conversion of Notes. If more than one Note shall be surrendered
for conversion at one time by the same Holder, the number of full shares that
shall be issuable upon conversion thereof shall be computed on the basis of
the
aggregate principal amount of the Notes (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock that
would otherwise be issuable upon conversion of any Note (or specified portions
thereof), the Company shall pay a cash adjustment in respect of such fraction
in
an amount equal to the same fraction of the Closing Price per share of the
Common Stock at the close of business on the Trading Day immediately preceding
such day.
“Trading
Day” shall mean each day on which the primary securities exchange
or quotation system that is used to determine the Closing Price is open for
trading or quotation.
“Closing
Price” of a single share of Common Stock on any Trading Day shall
mean the closing sale price per share for the Common Stock (or if no closing
sale price is reported, the average of the bid and ask prices) on such Trading
Day as reported by the National Association of Securities Dealers Automated
Quotation System.
2.5 Adjustment
of Conversion Price.
(a) In
case
the Company shall pay or make a dividend or other distribution on its Common
Stock exclusively in Common Stock, the Conversion Price in effect at the opening
of business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall
be
adjusted by multiplying such Conversion Price by a fraction, (i) the numerator
of which shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination, and (ii) the denominator
of which shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution. Such
reduction becomes effective immediately after the opening of business on the
day
following the date fixed for such determination. If any dividend or
distribution of the type described in this Section 2.5(a) is declared but not
so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.
(b) In
case
the Company shall pay or make a dividend or other distribution on its Common
Stock consisting exclusively of, or shall otherwise issue to all holders of
its
Common Stock, rights, warrants or options entitling the holders thereof (for
a
period of not more than 60 days after such issuance) to subscribe for or
purchase shares of Common Stock (or securities convertible into or exchangeable
or exercisable for Common Stock) at a price per share less than the current
market price per share (or having a conversion, exchange or exercise price
per
share) (in each case determined as provided in Section 2.5(d)) of the Common
Stock on the date immediately preceding the date of announcement of such
issuance, the Conversion Price in effect at the opening of business on the
day
following the date of such announcement shall be adjusted by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date of
announcement plus the number of shares of Common Stock so offered for
subscription or purchase and the denominator shall be the number of shares
of
Common Stock outstanding at the close of
Tranche
C Note
4
business
on the date of such announcement plus the number of shares of Common Stock
which
the aggregate price of the total number of shares so offered would purchase
at
the current market price per share (determined as provided in Section 2.5(d)),
such increase to become effective immediately after the opening of business
on
the day following the date fixed for such determination.
To
the extent that shares of Common
Stock (or securities convertible into or exchangeable or exercisable for shares
of Common Stock) are not delivered pursuant to such rights or warrants, upon
the
expiration or termination of such rights or warrants, the Conversion Price
shall
be readjusted to the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on
the
basis of the delivery of only the number of shares of Common Stock (or
securities convertible into or exchangeable or exercisable for shares of Common
Stock) actually effected. In the event that such rights or warrants
are not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if the date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed.
(c) In
case
outstanding shares of Common Stock shall be subdivided into a greater number
of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of shares
of
Common Stock, the Conversion Price in effect at the opening of business on
the
day following the day upon which such combination becomes effective shall be
proportionately increased. In each such case, the Conversion Price
shall be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such subdivision or combination. Such
reduction or increase, as the case may be, shall become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) For
the
purpose of any computation under Section 2.5, the current market price per
share
of Common Stock on any date in question shall be deemed to be the average of
the
daily Closing Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to the date in question.
(e) No
adjustment in the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Conversion Price;
provided, however, that any adjustments, which by reason of this Section 2.5(e)
are not required to be made, shall be carried forward and taken into account
in
any subsequent adjustment. All calculations under this Section 2.5
shall be made by the Company and shall be made to the nearest cent or the
nearest one-hundredth of a share, as the case may be.
2.6 Notice
of Adjustments of Conversion Price. Whenever the Conversion Price
is adjusted as herein provided, the Company shall compute the adjusted
Conversion Price in
Tranche
C Note
5
accordance
with Section 2.5 and shall prepare a certificate signed by the Chief Financial
Officer of the Company setting forth the adjusted Conversion Price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained for
the
purpose of conversion of Notes; and the Company shall forthwith cause a notice
setting forth the adjusted Conversion Price (“Conversion Adjustment
Notice”) to be mailed, first class postage prepaid, to each Holder
at its address appearing on the register. The Holder is entitled to
dispute the Conversion Price adjustment as reflected in the Conversion
Adjustment Notice within fifteen (15) days upon receipt of the Conversion
Adjustment Notice. If such dispute cannot be resolved within thirty
(30) days from the date when the Company receives any Holder’s notice that it
disagrees with such adjustment, one of the “Big-Four” accounting firms shall be
appointed by mutual agreement of the Company and such Holder to determine the
proper adjustment of the Conversion Price.
2.7 Notice
of Certain Corporate Action. In case:
(a) the
Company shall declare a dividend (or any other distribution) on its Common
Stock;
(b) the
Company shall authorize the granting to all holders of its Common Stock of
rights, warrants or options to subscribe for or purchase any shares of capital
stock of any class or of any other rights (excluding rights distributed pursuant
to the Rights Agreement dated June 4, 2007, as amended on November 4,
2007);
(c) of
any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the sale or transfer
of
all or substantially all of the assets of the Company;
(d) of
the
voluntary or involuntary dissolution, liquidation or winding, up of the Company;
or
(e) the
Company or any Subsidiary of the Company shall commence a tender or exchange
offer for all or a portion of the Company’s outstanding shares of Common Stock
(or shall amend any such tender or exchange offer).
then
the
Company shall cause to be mailed to all Holders at their last addresses as
shall
have been provided in writing to the Company for inclusion in a register of
Holders, at least 10 days prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (x) the date on which
a
record is to be taken for the purpose of such dividend, distribution or granting
of rights, warrants or options, or, if a record is not to be taken, the date
as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, warrants or options are to be determined, or (y) the
date
on which such consolidation, merger, sale, transfer, dissolution, liquidation
or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such consolidation, merger, sale, transfer, dissolution, liquidation or
winding up, or (z) the date on which such tender offer commenced, the date
on
which such tender offer is scheduled to expire unless extended, the
consideration offered
Tranche
C Note
6
and
the
other material terms thereof (or the material terms of any amendment
thereto).
2.8 Taxes
on Conversions. The Company will pay any and all document and
stamp taxes that may be payable in respect of the issue or delivery of shares
of
Common Stock on conversion of Notes pursuant hereto. The Company
shall not, however, be required to pay any tax that may be payable in respect
of
any transfer involved in the issue and delivery of shares of Common Stock in
a
name other than that of the Holder of the Notes converted, and no such issue
or
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
2.9 Cancellation
of Converted Notes. All Notes delivered for conversion shall be
delivered to the Company to be cancelled upon such conversion.
2.10 Provisions
in Case of Reclassification, Consolidation, Merger or Sale of
Assets. In the event that the Company shall be a party to any
transaction (including (i) any recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (ii) any consolidation of the Company with,
or
merger of the Company into, any other Person, or any merger of another Person
into the Company (other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares
of
Common Stock of the Company), (iii) any sale or transfer of all or substantially
all of the assets of the Company or (iv) any compulsory share exchange) pursuant
to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made as
part
of the terms of such transaction whereby the Holder of each outstanding Tranche
C Notes shall have the right thereafter to convert such Note only into (subject
to funds being legally available for such purpose under applicable law at the
time of such conversion) the kind and amount of securities, cash and other
property receivable upon such transaction by a holder of the number of shares
of
Common Stock into which such Note might have been converted immediately prior
to
such transaction.
2.11 Company’s
Determination. All calculations, adjustments and conversions under
this Section 2 shall be made by the Company and forwarded to the Holder for
its
review.
3. CANCELLATION
OF NOTE.
Upon
payment in full of all outstanding obligations under this Note, whether by
receipt by the Holder of the appropriate Conversion Shares upon conversion
of
the Tranche C Notes into shares of Common Stock of the Company pursuant to
Section 2 or cash payment in full, the Company’s obligations in respect of
payment of this Note shall terminate and the Holder shall surrender this Note
to
the Company.
4. EVENTS
OF DEFAULT.
In
the
event that (an “Event of Default”):
Tranche
C Note
7
(a) the
Company defaults for more than ten (10) Business Days in making the payment
of principal to be made on this Note; or
(b) the
Company or any of the Subsidiaries:
(i) commences
any case, proceeding or other action (x) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, composition or other relief with respect
to
it or its debts or (y) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part
of
its assets, or shall make a general assignment for the benefit of its creditor;
or
(ii) is
the
debtor named in any other case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of ninety (90) days; or (C) takes any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the facts set forth in this clause (ii); or
(D) shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due;
(c) the
Company or the Subsidiary defaults with respect to any existing and future
Debt
evidencing an aggregate value of the greater of (i) US$1,000,000 or (ii) 10%
of
the total Debt of the Company at the time of such default and such default
continues unremedied for a period of more than forty-five (45) calendar days;
or
(d) any
payment in excess of US$250,000, of principal or of interest on any Debt, is
accelerated under terms of any debt instrument or agreement, including without
limitation by operation of any cross-default provision contained
therein.
(e) failure
to deliver the Conversion Shares in accordance with the Transaction
Documents.
In
the
case of any Event of Default hereunder, the entire unpaid balance of this Note
shall ipso facto become immediately due and payable upon notice or
demand. The Holder may waive any Event of Default on such conditions
as it shall determine to impose and may rescind any acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration.
5. PAYMENT.
The
Company hereby waives presentment for payment, notice of nonpayment, protest,
notice of protest and all other notices, filing of suit and diligence in
collecting the amounts due under this Note and agrees that the Holder shall
not
be required first to initiate any suit or exhaust its remedies against any
other
person or parties in order to enforce payment of this Note.
Tranche
C Note
8
6. MISCELLANEOUS.
6.1 Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note and of a letter of indemnity satisfactory
to the Company, and upon reimbursement to the Company of all reasonable expenses
incident thereto, and upon surrender or cancellation of the Note, if mutilated,
the Company will make and deliver a new Note of like tenor in lieu of such
lost,
stolen, destroyed or mutilated Note.
6.2 This
Note
and the rights and obligations of the Company and any Holder hereunder shall
be
construed in accordance with and be governed by the laws of the State of New
York other than such laws as would result in the application of the laws of
a
jurisdiction other than the State of New York.
6.3 The
Holder may freely transfer this Note to any third party, subject to the
provisions of the Purchase Agreement and the terms and conditions
hereof. Except as otherwise provided herein, the terms and conditions
of this Note shall be binding upon, and inure to the benefit of, the respective
representatives, successors and assigns of the parties hereto.
6.4 Upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the Holder
hereof or such Holder’s attorney duly authorized in writing, a new Note of like
tenor will be issued to, and registered in the name of, the
transferee. Prior to the presentment for registration of transfer,
the Company and any paying agent or registrar for the Tranche C Notes may treat
the Person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes, and the Company and
any
paying agent or registrar for the Tranche C Notes will not be affected by any
notice to the contrary.
6.5 Time
is
of the essence of this Note. If any provisions of this Note or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Note and the application
of
such provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
[Signature
page follows]
Tranche
C Note
9
IN
WITNESS WHEREOF, the Company and the Holder have executed this Note as of the
day and year first above written.
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CHINDEX
INTERNATIONAL, INC.
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By:
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Name:
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▇▇▇▇▇▇▇
▇▇▇▇▇▇
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Title:
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Chief
Executive Office and President
|
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MAGENTA
MAGIC LIMITED
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By:
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Name:
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▇▇▇▇▇▇
▇▇▇▇▇
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Title:
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Authorized
Signatory
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Signature
Page to Tranche C Note