FORM OF SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement, dated on and as of the date set forth
on the signature page hereto (this "AGREEMENT"), is made between Chindex
International, Inc., a Delaware corporation (the "COMPANY"), the undersigned
purchaser(s) (each a "PURCHASER" and collectively, the "PURCHASERS") and each
assignee of a Purchaser who becomes a party hereto.
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT") and Regulation D promulgated thereunder, the Company desires
to offer, issue and sell to the Purchasers (the "OFFERING"), and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares (the
"SHARES") of the Company's common stock, par value $0.01 per share (the "COMMON
STOCK"), and five-year warrants to purchase shares of Common Stock (the
"WARRANTS"), with an exercise price per share equal to 120% of the market price
(which shall be the closing price of the Company's Common Stock on the Nasdaq
SmallCap Market for a one to five trading day period prior to the Pricing Date,
as hereinafter defined), as more fully described in this Agreement. The Shares
and the Warrants are collectively referred to herein as the "SECURITIES".
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration the
receipt and adequacy of which is hereby acknowledged, the Company and each of
the Purchasers agree as follows:
A. SUBSCRIPTION
(1) Subject to the conditions to closing set forth herein, each Purchaser
hereby irrevocably subscribes for and agrees to purchase Securities for the
aggregate purchase price set forth on the signature page of such Purchaser
hereto (the "SUBSCRIPTION AMOUNT"). The Securities to be issued to a Purchaser
hereunder shall consist of (i) Shares in an amount equal to the quotient of (x)
the Subscription Amount, divided by (y) the Offering Price, rounded down to the
nearest whole number, and (ii) a Warrant to purchase such number of shares of
Common Stock to be determined based on a ratio of one (1) share of Common Stock
for every five (5) Shares purchased hereunder. The aggregate amount of
Securities to be issued pursuant to the Offering shall not exceed 1,250,000
Shares and Warrants to purchase 250,000 shares of Common Stock; PROVIDED,
HOWEVER, that in the event the Offering is oversubscribed, the Company may issue
and sell additional Securities comprised of up to 250,000 Shares and Warrants to
purchase 50,000 shares of Common Stock. The Company shall allocate the
Subscription Amount between the Shares and the Warrants prior to the First
Closing (as defined below) and provide notice to the Purchasers of such
allocation.
(2) For purposes of this Agreement, the "OFFERING PRICE" shall be $[ ],
which shall be the price per Share to be paid by the Purchasers.
(3) As soon as possible, but no later than three (3) business days after
the date on which the Offering Price is determined (the "PRICING DATE"), the
Company shall hold an initial closing of the Offering (the "FIRST CLOSING").
Prior to the First Closing, each Purchaser shall deliver a portion of the
applicable Subscription Amount, to be allocated on a pro rata basis by the
Company, by check payable to the escrow account set forth on SCHEDULE A or by
wire transfer to such escrow account in accordance with the wire transfer
instructions set forth on SCHEDULE A, and such amount shall be held in the
manner described in Paragraph (5) below. The aggregate amount of Securities to
be issued at the First Closing shall be up to an amount equal to approximately
19.9% of the shares of the Common Stock outstanding as of the date of the First
Closing, in order for the Company to comply with applicable Nasdaq Marketplace
Rules. There is no minimum aggregate Subscription Amount required for the First
Closing. The Securities subscribed for by the Purchasers but not issued at the
First Closing are referred to herein as the "REMAINING SECURITIES".
(4) Within five (5) business days of the Company's receipt of the
requisite stockholder approval, by written consent or otherwise, relating to the
Proposal (as defined in Section F(4)), the Company shall hold a second closing
of the Offering (the "SECOND CLOSING"), whereby each Purchaser shall purchase
their pro rata amount of the Remaining Securities, based on the amount of
Securities purchased by such Purchaser at the First Closing. Prior to the Second
Closing, each Purchaser shall deliver the remaining portion of the applicable
Subscription Amount by check payable to the escrow account set forth on SCHEDULE
A or by wire transfer to such escrow account in accordance with the wire
transfer instructions set forth on SCHEDULE A, and such amount shall be held in
the manner described in Paragraph (5) below. The First Closing and the Second
Closing are each sometimes referred to herein as a "Closing".
(5) All payments for Securities made by the Purchasers will be deposited
as soon as practicable for the undersigned's benefit in an interest bearing
escrow account. Any interest earned on such payments shall revert back to the
escrow agent and shall be used to offset the escrow account fees. Payments for
Securities made by the Purchasers will be returned promptly, prior to an
applicable Closing, without interest or deduction, if, or to the extent, the
undersigned's subscription is rejected or the Offering is terminated for any
reason.
(6) Upon receipt by the Company of the requisite payment for all
Securities to be purchased by the Purchasers whose subscriptions are accepted,
the Company shall, at each of the First Closing and the Second Closing: (i)
issue to each Purchaser stock certificates representing the shares of Common
Stock purchased at such Closing under this Agreement; (ii) issue to each
Purchaser a Warrant to purchase such number of shares of Common Stock calculated
based on the number of shares of Common Stock issued at such Closing and in
accordance with Paragraph (1) above; (iii) deliver to the Purchasers and to
Xxxxxxxxxxx & Co. Inc., the placement agent for the Offering (the "PLACEMENT
AGENT"), a certificate stating that the representations and warranties made by
the Company in Section C of this Agreement were true and correct in all material
respects when made and are true and correct in all material respects on the date
of each such Closing relating to the Securities subscribed for pursuant to this
Agreement as though made on and as of such Closing date (provided, however, that
representations and warranties that speak as of a specific date shall continue
to be true and correct as of the Closing with respect to such date); (iv) cause
to be delivered to the Placement Agent and the Purchasers an opinion of Xxxxxx
Xxxxxxx & Xxxx LLP substantially in the form of EXHIBIT A hereto and reasonably
acceptable to counsel for the Placement Agent; (v) cause to be delivered to the
Placement Agent and the Purchasers a comfort letter from Ernst & Young LLP in
form and substance reasonably satisfactory to the Placement Agent and (vi) cause
to be delivered to the Placement Agent and the Purchasers a copy of the executed
majority written consent (the "MAJORITY WRITTEN CONSENT") of the holders of such
number of shares of capital stock of the Company as shall represent at least
such number of votes required for approval by the stockholders of the Company
voting together to approve the Offering, which Majority Written Consent shall
not be or have been rescinded or revoked and shall be in full force and effect.
(7) Each Purchaser acknowledges and agrees that this Agreement shall be
binding upon such Purchaser upon the execution and delivery to the Company, in
care of the Placement Agent, of such Purchaser's signed counterpart signature
page to this Agreement unless and until the Company or the Placement Agent shall
reject the subscription being made hereby by such Purchaser.
(8) Each Purchaser agrees that each of the Company and the Placement Agent
may reduce such Purchaser's subscription with respect to the number of Shares
and Warrants to be purchased without any prior notice or further consent by such
Purchaser. If such a reduction occurs, the part of the Subscription Amount
attributable to the reduction shall be promptly returned, without interest or
deduction.
(9) Each Purchaser acknowledges and agrees that the purchase of Shares and
Warrants by such Purchaser pursuant to the Offering is subject to all the terms
and conditions set forth in this Agreement as well as in the Memorandum (as
defined below).
B. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each of the Purchasers, severally and not jointly, hereby represents and
warrants to the Company and the Placement Agent, and agrees with the Company as
follows:
(1) The Purchaser has been furnished with and has carefully read the
Company's Confidential Private Placement Memorandum dated March 3, 2004, as
supplemented or amended (together with all documents and filings attached
thereto or incorporated therein by reference, the "MEMORANDUM"), this Agreement
and the form of Warrant attached hereto as EXHIBIT B (collectively the "OFFERING
DOCUMENTS"), and is familiar with and understands the terms of the Offering.
Specifically, and without limiting in any way the foregoing representation, the
Purchaser has carefully read and considered the Company's financial statements
included in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 2002, as amended on March 2, 2004 (the "2002 FORM 10-K"), the
subsection of the 2002 Form 10-K entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operations," the section of the 2002 Form
10-K entitled "Item 1. Business," the financial results contained in each of the
Company's quarterly and transition reports on Form 10-Q for each of the periods
ending subsequent to December 31, 2002 (each as amended on March 2, 2004) and
the subsection of each such Form 10-Q entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the section of
the Memorandum entitled "Risk Factors," and fully understands all of the risks
related to the purchase of the Securities. The Purchaser has carefully
considered and has discussed with the Purchaser's professional legal, tax,
accounting and financial advisors, to the extent the Purchaser has deemed
necessary, the suitability of an investment in the Securities for the
Purchaser's particular tax and financial situation and has determined that the
Securities being subscribed for by the Purchaser are a suitable investment for
the Purchaser. The Purchaser recognizes that an investment in the Securities
involves substantial risks, including the possible loss of the entire amount of
such investment.
(2) The Purchaser acknowledges that (i) the Purchaser has had the
opportunity to request copies of any documents, records, and books pertaining to
this investment and (ii) any such documents, records and books that the
Purchaser requested have been made available for inspection by the Purchaser,
the Purchaser's attorney, accountant or advisor(s).
(3) The Purchaser and the Purchaser's advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from representatives of the
Company or persons acting on behalf of the Company concerning the Offering and
all such questions have been answered to the full satisfaction of the Purchaser.
(4) The Purchaser is not subscribing for Securities as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar, meeting or conference whose
attendees have been invited by any general solicitation or general advertising.
(5) If the Purchaser is a natural person, the Purchaser has reached the
age of majority in the state in which the Purchaser resides. Each Purchaser has
adequate means of providing for the Purchaser's current financial needs and
contingencies, is able to bear the substantial economic risks of an investment
in the Securities for an indefinite period of time, has no need for liquidity in
such investment and can afford a complete loss of such investment.
(6) 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 Offering, 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 on the terms
described in the Offering Documents.
(7) The Purchaser will not sell or otherwise transfer the Securities
without registration under the Securities Act of 1933, as amended (the
"SECURITIES ACT") and applicable state securities laws or an applicable
exemption therefrom. The Purchaser acknowledges that neither the offer nor sale
of the Securities has been registered under the Securities Act or under the
securities laws of any state. The Purchaser represents and warrants that the
Purchaser is acquiring the Securities for the Purchaser's own account, for
investment and not with a view toward resale or distribution within the meaning
of the Securities Act. The Purchaser has not offered or sold the Securities
being acquired nor does the Purchaser have any present intention of selling,
distributing or otherwise disposing of such Securities either currently or after
the passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstances in violation of the
Securities Act. The Purchaser is aware that (i) the Securities are not currently
eligible for sale in reliance upon Rule 144 promulgated under the Securities Act
and (ii) the Company has no obligation to register the Securities subscribed for
hereunder, except as provided in Section E hereof.
(8) The Purchaser acknowledges that the certificates representing the
Shares, the Warrants and, upon the exercise of the Warrants, the shares of
Common Stock issuable upon exercise of the Warrants (the "WARRANT SHARES"), be
stamped or otherwise imprinted with a legend substantially in the following
form:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or any state
securities laws and neither the securities nor any
interest therein may be offered, sold, transferred,
pledged or otherwise disposed of except pursuant to an
effective registration under such act or an exemption from
registration, which, in the opinion of counsel reasonably
satisfactory to this corporation, is available.
Certificates evidencing the Shares and the Warrant Shares shall not be
required to contain such legend or any other legend (i) following any sale of
such Shares or Warrant Shares pursuant to Rule 144, or (ii) if such Shares or
Warrant Shares are eligible for sale under Rule 144(k) or have been sold
pursuant to the Registration Statement (as hereafter defined) and in compliance
with the obligations set forth in Section E(6), below, or (iii) such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Securities and Exchange Commission), in each such case (i) through (iii) to the
extent reasonably determined by the Company's legal counsel. At such time and to
the extent a legend is no longer required for the Shares or Warrant Shares, the
Company will use its best efforts to no later than five (5) trading days
following the delivery by a Purchaser to the Company or the Company's transfer
agent of a legended certificate representing such Shares or Warrant Shares
(together with such accompanying documentation or representations as reasonably
required by counsel to the Company), deliver or cause to be delivered a
certificate representing such Shares or Warrant Shares that is free from the
foregoing legend.
(9) If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust, estate or other entity: (i) such partnership,
corporation, trust, estate or other entity has the full legal right and power
and all authority and approval required (a) to execute and deliver this
Agreement and all other instruments executed and delivered by or on behalf of
such partnership, corporation, trust, estate or other entity in connection with
the purchase of its Securities, and (b) to purchase and hold such Securities;
(ii) the signature of the party signing on behalf of such partnership,
corporation, trust, estate or other entity is binding upon such partnership,
corporation, trust, estate or other entity; and (iii) such partnership,
corporation, trust or other entity has not been formed for the specific purpose
of acquiring such Securities, unless each beneficial owner of such entity is
qualified as an accredited investor within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act and has submitted information
to the Company substantiating such individual qualification.
(10) If the Purchaser is a retirement plan or is investing on behalf of a
retirement plan, the Purchaser acknowledges that an investment in the Securities
poses additional risks, including the inability to use losses generated by an
investment in the Securities to offset taxable income.
(11) The information contained in the purchaser questionnaire in the form
of EXHIBIT C attached hereto (the "PURCHASER QUESTIONNAIRE") delivered by the
Purchaser in connection with this Agreement is complete and accurate in all
respects, and the Purchaser is an "accredited investor" as defined in Rule 501
of Regulation D under the Securities Act on the basis indicated therein. The
Purchaser shall indemnify and hold harmless the Company and each officer,
director or control person, who is or may be a party or is or may be threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of or arising from any actual or alleged misrepresentation or misstatement of
facts or omission to represent or state facts made or alleged to have been made
by the Purchaser to the Company or omitted or alleged to have been omitted by
the Purchaser, concerning the Purchaser or the Purchaser's authority to invest
or financial position in connection with the Offering, including, without
limitation, any such misrepresentation, misstatement or omission contained in
the Agreement or any other document submitted by the Purchaser, against losses,
liabilities and expenses for which the Company or any officer, director or
control person has not otherwise been reimbursed (including attorney's fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Company or such officer, director or control person in
connection with such action, suit or proceeding. For the avoidance of doubt,
such indemnification shall be the several, and not joint, obligation of each
Purchaser with respect to its own action or inaction as provided above.
(12) The information contained in the selling stockholder questionnaire in
the form of EXHIBIT D attached hereto (the "Selling Stockholder Questionnaire")
delivered by the Purchaser in connection with this Agreement is complete and
accurate in all respects.
C. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the following representations and warranties to
the Purchaser and the Placement Agent, which shall survive the Closing and the
purchase and sale of the Securities.
(1) 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 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 have a material adverse effect on the
business, properties, prospects, financial condition or results of operations of
the Company (a "MATERIAL ADVERSE EFFECT").
(2) CAPITALIZATION. The authorized capital stock of the Company consists
of 8,300,000 shares of stock of all classes. The authorized capital stock is
divided into 6,800,000 shares of Common Stock, $0.01 par value per share,
including 800,000 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
February 18, 2004, there were 3,043,152 shares of 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 February 18, 2004,
the Company had reserved 2,000,000 shares of Common Stock for issuance to
employees, directors and consultants pursuant to the Company's 1994 Stock Option
Plan, of which 948,700 shares of Common Stock are subject to outstanding,
unexercised options as of such date. Other than as set forth above or as
contemplated in this Agreement, there are no other options, warrants, calls,
rights, commitments or agreements of any character to which the Company is a
party or by which either the Company is bound or obligating the 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 the Company or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
(3) ISSUANCE; RESERVATION OF SHARES. The issuance of the Shares has been
duly and validly authorized by all necessary corporate and stockholder action,
and the Shares, when issued and paid for pursuant to this Agreement, will be
validly issued, fully paid and non-assessable shares of Common Stock of the
Company. The issuance of the Warrants has been duly and validly authorized by
all necessary corporate and stockholder action, and the Warrant Shares, when
issued upon the due exercise of the Warrants, will be validly issued, fully paid
and non-assessable shares of Common Stock of the Company. The Company has
reserved, and will reserve, at all times that the Warrants or Placement Agent
Warrants remain outstanding, such number of shares of Common Stock sufficient to
enable the full exercise of the Warrants and the Placement Agent Warrants.
(4) AUTHORIZATION; ENFORCEABILITY. The Company has all corporate right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, the
authorization, sale, issuance and delivery of the Securities contemplated herein
and the performance of the Company's obligations hereunder has been taken.
Specifically, in the event that the subscription for Securities is in excess of
the amount to be sold at the First Closing, the Company represents that a
majority of its stockholders eligible to vote on the Offering have executed a
written consent, authorizing the Company to issue the Securities contemplated by
the Offering. This Agreement 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 and 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. The issuance and
sale of the Securities contemplated hereby will not give rise to any preemptive
rights or rights of first refusal on behalf of any person.
(5) NO CONFLICT; GOVERNMENTAL AND OTHER CONSENTS.
(a) The execution and delivery by the Company 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
Company is bound, or of any provision of the Certificate of Incorporation or
Bylaws of the Company, 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 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 except to the extent that any
such violation, conflict or breach would not be reasonably likely to have a
Material Adverse Effect.
(b) 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, except
such post-Closing filings as may be required to be made with the Securities and
Exchange Commission (the "SEC"), The NASDAQ Stock Market, Inc. ("NASDAQ") and
with any state or foreign blue sky or securities regulatory authority.
(6) 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 on the Company.
(7) 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 Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), have
been filed with the SEC, complied at the time of filing in all material respects
with the requirements of their respective forms and, except to the extent
updated or superseded by any subsequently filed report, including, without
limitation, the amendments to the Company's annual report on Form 10-K for the
year ended December 31, 2002 and the quarterly and transition reports on Form
10-Q for each of the periods subsequent to December 31, 2002, all of which were
filed on March 2, 2004, 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.
(8) FINANCIAL INFORMATION. The Company's financial statements that appear
in the SEC Reports have been prepared in accordance with United States generally
accepted accounting principles ("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 as of the dates
and for the periods indicated therein.
(9) 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.
(10) XXXXXXXX-XXXXX ACT OF 2002. The Company is, and will be, at all times
during the period the Company must maintain effectiveness of the Registration
Statement as provided herein, in compliance, in all material respects, with all
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and all rules and
regulations promulgated thereunder or implementing the provisions thereof that
are in effect and is taking reasonable steps to ensure that it will be in
compliance with other applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002
not currently in effect upon the effectiveness of such provisions.
(11) ABSENCE OF CERTAIN CHANGES. Since the date of the Company's financial
statements in the latest of the SEC Reports, there has not occurred any
undisclosed event that has caused a Material Adverse Effect or any occurrence,
circumstance or combination thereof that reasonably would be likely to result in
such Material Adverse Effect.
(12) 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 SEC thereunder.
(13) SUBSIDIARIES. To the extent required under applicable SEC rules,
Exhibit 21.1 to the 2002 Form 10-K sets forth each subsidiary of the Company,
showing the jurisdiction of its incorporation or organization. For the purposes
of this Agreement, "subsidiary" shall mean any company or other entity of which
at least 50% of the securities or other ownership interest having ordinary
voting power for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company or any of
its other subsidiaries.
(14) INDEBTEDNESS. The financial statements in the SEC Reports reflect, to
the extent required, as of the date thereof all outstanding secured and
unsecured Indebtedness (as defined below) of the Company or any subsidiary, or
for which the Company or any subsidiary has commitments. For purposes of this
Agreement, "Indebtedness" shall mean (a) any liabilities for borrowed money or
amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company
nor any subsidiary is in default with respect to any Indebtedness.
(15) CERTAIN FEES. Other than fees payable to the Placement Agent pursuant
to the Placement Agent Agreement, no brokers', finders' or financial advisory
fees or commissions will be payable by the Company or any subsidiary with
respect to the transactions contemplated by this Agreement.
(16) MATERIAL AGREEMENTS. Except as set forth in the SEC Reports, 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 Agreement
now in effect, the result of which would be reasonably likely to have a Material
Adverse Effect.
(17) TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC Reports,
there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions with
aggregate obligations of any party exceeding $60,000 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 or any company or other entity controlled by such person.
(18) TAXES. The Company and each of the subsidiaries 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, except for tax returns, the failure to file which,
individually or in the aggregate, do not and would not have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole. 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 on the Company and its subsidiaries taken as a whole. 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 on the Company and its subsidiaries, taken as
a whole. 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 on the Company and
the subsidiaries taken as a whole.
(19) 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 and customary in the businesses in
which the Company and its subsidiaries are engaged. 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 significantly greater than general
increases in cost experienced for similar companies in similar industries with
respect to similar coverage.
(20) ENVIRONMENTAL MATTERS. Except as disclosed in the SEC Reports, 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 (as defined below), 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 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, proceedings or litigation
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.
(21) 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 ("INTANGIBLE 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 Intangible Rights, and, to the Company's
knowledge, neither the use of the Intangible 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 Intangible 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 Intangible Right 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
Intangible 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.
(22) LABOR, EMPLOYMENT AND BENEFIT MATTERS.
(a) There are no existing, or to the best of 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 SEC Reports, 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 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.
(b) Except as set forth in the SEC Reports, neither the Company nor
any of its subsidiaries is, or during the five years preceding the date of this
Agreement was, a party to any labor or collective bargaining agreement and there
are no labor or collective bargaining agreements which pertain to employees of
the Company or its subsidiaries.
(c) Each employee benefit plan is in compliance with all applicable
law, except for such noncompliance that would not be reasonably likely to have a
Material Adverse Effect.
(d) Neither the Company nor any of its subsidiaries has any
liabilities, contingent or otherwise, including without limitation, liabilities
for retiree health, retiree life, severance or retirement benefits, which are
not fully reflected, to the extent required by GAAP, on the Balance Sheet or
fully funded. The term "liabilities" used in the preceding sentence shall be
calculated in accordance with reasonable actuarial assumptions.
(e) 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").
(23) COMPLIANCE WITH LAW. The Company is 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. The Company has not
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 entity involving allegations of any violation) of any applicable
law involving or related to the Company which has not been dismissed or
otherwise disposed of that would be reasonably likely to have a Material Adverse
Effect. The Company has not 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. Neither the Company nor any of its subsidiaries nor
any employee or agent of the Company or any subsidiary has made any contribution
or other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law. The Company and its directors, officers,
employees and agents have complied in all material respects with the Foreign
Corrupt Practices Act of 1977, as amended, and any related rules and
regulations.
(24) OWNERSHIP OF PROPERTY. Except as set forth in the Company's financial
statements included in the SEC Reports, 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 which do not individually or in
the aggregate have a Material Adverse Effect; (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 for liens disclosed in the SEC
Reports or which otherwise do not individually or in the aggregate have a
Material Adverse Effect.
(25) 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.
(26) NO INTEGRATED OFFERING. Assuming the accuracy of each Purchaser's
representations and warranties set forth in Section B hereof, neither the
Company, nor any of its affiliates or other 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 security under circumstances that would cause
the Offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act, when integration would cause the
Offering not to be exempt from the requirements of Section 5 of the Securities
Act.
(27) GENERAL SOLICITATION. Neither the Company nor, its knowledge, any
person acting on behalf of the Company, has offered or sold any of the
Securities by any form of "general solicitation" within the meaning of Rule 502
under the Securities Act. To the knowledge of the Company, no person acting on
its behalf has offered the Securities for sale other than to the Purchasers and
certain other "accredited investors" within the meaning of Rule 501 under the
Securities Act.
D. UNDERSTANDINGS
Each of the Purchasers understands, acknowledges and agrees with the
Company as follows:
(1) The Company may terminate this Offering or reject any subscription at
any time in its sole discretion. The execution of this Agreement by the
Purchaser or solicitation of the investment contemplated hereby shall create no
obligation on the part of the Company or the Placement Agent to accept any
subscription or complete the Offering.
(2) The Purchaser hereby acknowledges and agrees that the subscription
hereunder is irrevocable by the Purchaser, and that, except as required by law,
the Purchaser is not entitled to cancel, terminate or revoke this Agreement or
any agreements of the Purchaser hereunder and that if the Purchaser is an
individual this Agreement shall survive the death or disability of the Purchaser
and shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives and
permitted assigns.
(3) No federal or state agency or authority has made any finding or
determination as to the accuracy or adequacy of the Offering Documents or as to
the fairness of the terms of the Offering nor any recommendation or endorsement
of the Securities. Any representation to the contrary is a criminal offense. In
making an investment decision, Purchasers must rely on their own examination of
the Company and the terms of the Offering, including the merits and risks
involved.
(4) The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the Purchaser herein
and in the Purchaser Questionnaire.
(5) Notwithstanding the registration obligations provided herein, there
can be no assurance that the Purchaser will be able to sell or dispose of the
Securities. It is understood that in order not to jeopardize the Offering's
exempt status under Section 4(2) of the Securities Act and Regulation D, any
transferee may, at a minimum, be required to fulfill the investor suitability
requirements thereunder.
(6) The Purchaser acknowledges that the Offering is confidential and
non-public and agrees that all information about the Offering shall be kept in
confidence by the Purchaser until the public announcement of the Offering by the
Company.
(7) The Purchaser acknowledges that the foregoing restrictions on the
Purchaser's use and disclosure of any such confidential, non-public information
contained in the above-described documents restricts the Purchaser from trading
in the Company's securities to the extent such trading is on the basis of
material, non-public information of which the Purchaser is aware. Except for the
terms of the transaction documents and the fact that the Company is considering
consummating the transactions contemplated therein, the Company confirms that
neither the Company nor, to its knowledge, any other person acting on its
behalf, has provided any of the Purchasers or their agents or counsel with any
information that constitutes material, non-public information.
(8) The Purchaser agrees that beginning on the date hereof until the
Offering is publicly announced by the Company (which the Company has represented
to the Placement Agent will occur as soon as practicable following the Company's
acceptance of the subscriptions for Securities in connection with this
Agreement), the Purchaser will not enter into any Short Sales. For purposes of
the foregoing sentence, a "Short Sale" by a Purchaser means a sale of Common
Stock that is marked as a short sale and that is executed at a time when such
Purchaser has no equivalent offsetting long position in the Common Stock,
exclusive of the Shares. For purposes of determining whether a Purchaser has an
equivalent offsetting long position in the Common Stock, all Common Stock that
would be issuable upon exercise in full of all options then held by such
Purchaser (assuming that such options were then fully exercisable,
notwithstanding any provisions to the contrary, and giving effect to any
exercise price adjustments scheduled to take effect in the future) shall be
deemed to be held long by such Purchaser.
E. REGISTRATION RIGHTS
(1) CERTAIN DEFINITIONS. For purposes of this Section E, the following
terms shall have the meanings ascribed to them below.
(a) "PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the Offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
(b) "REGISTRABLE SECURITIES" shall mean any Shares and Warrant
Shares issued or issuable pursuant to the Offering Documents together with any
securities issued or issuable upon any stock split, dividend or other
distribution, adjustment, recapitalization or similar event with respect to the
foregoing.
(c) "REGISTRATION STATEMENT" means the registration statement
required to be filed under this Section E, 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 in such registration
statement.
(2) SHELF REGISTRATION.
(a) The Company shall use its best efforts to cause to prepare and
file with the SEC a "Shelf" Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415 on or prior to the 30th day following the Pricing Date (such date of
actual filing, the "FILING DATE"). The Registration Statement initially shall be
on Form S-1 and shall contain (except if otherwise directed by the Purchasers) a
"Plan of Distribution" substantially in the form attached hereto as EXHIBIT E.
Each Purchaser will furnish to the Company in writing the information specified
in Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for
use in connection with the Registration Statement or prospectus or preliminary
prospectus included therein. Each Purchaser agrees to promptly furnish
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Purchaser not materially misleading.
The Registration Statement shall register the Registrable Securities for resale
by the holders thereof.
(b) The Company shall use its best efforts to cause the Registration
Statement to be declared effective by the SEC on or prior to the 120th day
following the Pricing Date, and shall use its best efforts to keep the
Registration Statement continuously effective under the Securities Act until the
earliest of (i) the second anniversary of the Pricing Date or (ii) the date when
all Registrable Securities covered by such Registration Statement have been sold
(the "EFFECTIVENESS PERIOD").
(c) The Company shall notify each Purchaser in writing promptly (and
in any event within one business day) after receiving notification from the SEC
that the Registration Statement has been declared effective.
(d) Upon the occurrence of any Event (as defined below), as partial
relief for the damages suffered therefrom by the Purchasers (which remedy shall
not be exclusive of any other remedies which are available at law or in equity;
and provided further that the Purchasers shall be entitled to pursue an action
for specific performance of the Company's obligations under Paragraph (2)(b)
above and any such actions at law, in equity, for specific performance or
otherwise shall not require the Purchaser to post a bond), the Company shall pay
to each Purchaser, as liquidated damages and not as a penalty (it being agreed
that it would not be feasible to ascertain the extent of such damages with
precision), such amounts and at such times as shall be determined pursuant to
this Paragraph (2)(d). For such purposes, each of the following shall constitute
an "EVENT":
(i) the Filing Date does not occur on or prior to the later of the
30th day following the Pricing Date and the fifth day following the Second
Closing (such later date is defined herein as the "FILING DEFAULT DATE"),
in which case the Company shall pay to each Purchaser an amount in cash
equal to: (A) for the first 30 days after such Filing Default Date or any
portion thereof, one and one-half percent (1.5%) of the aggregate purchase
price paid by such Purchaser; and (B) for each successive 30-day period
thereafter or any portion thereof until the Filing Date, one percent
(1.0%) of the aggregate purchase price paid by such Purchaser, to be paid
at the end of each 30-day period; provided that in the event the Second
Closing does not occur by the 25th day following the filing by the Company
of the definitive Proxy/Information Statement relating to the Proposal for
any reason, in whole or in part, reasonably attributable to any Purchaser,
then the Filing Date shall be deemed to have occurred when the
Registration Statement is filed, and provided further that the Filing Date
shall not be deemed not to have occurred on the basis that the Securities
sold or to be sold at the Second Closing are not included in the filed
Registration Statement, so long as such Securities are included in such
Registration Statement as promptly as practicable after such Filing Date
and in any event by pre-effective amendment to the Registration Statement
in compliance with clause (ii) below; or
(ii) the Registration Statement is not declared effective on or
prior to the date that is 120 days after the Pricing Date (the "REQUIRED
EFFECTIVENESS DATE"), in which case the Company shall pay to each
Purchaser an amount in cash equal to: (A) for the first 30 days after such
120th day, one and one-half percent (1.5%) of the aggregate purchase price
paid by such Purchaser, on a pro-rata basis over a 30-day period; and (B)
for each successive 30-day period thereafter until the Registration
Statement is deemed effective, one percent (1.0%) of the aggregate
purchase price paid by such Purchaser, on a pro rata basis over a 30-day
period, at the end of each 30-day period.
The payment obligations of the Company under this Section E(2)(d) shall be
cumulative.
(3) REGISTRATION PROCEDURES. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Use its reasonable best efforts to (i) prepare and file with the
SEC such amendments, including post-effective amendments, to the Registration
Statement as may be necessary to keep the Registration Statement continuously
effective as to the Registrable Securities for the Effectiveness Period; (ii)
cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424; and (iii) respond as promptly as reasonably possible, and in any event
within ten (10) trading days, to any comments received from the SEC with respect
to the Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Placement Agent true and complete copies of all
correspondence from and to the SEC relating to the Registration Statement.
(b) Notify the Placement Agent as promptly as reasonably possible,
and (if requested by the Placement Agent) confirm such notice in writing no
later than one (1) trading day thereafter, of any of the following events: (i)
the SEC notifies the Company whether there will be a "review" of the
Registration Statement; (ii) the SEC comments in writing on the Registration
Statement (in which case the Company shall deliver to the Placement Agent a copy
of such comments and of all written responses thereto); (iii) the SEC or any
other Federal or state governmental authority in writing requests any amendment
or supplement to the Registration Statement or Prospectus or requests additional
information related thereto; (iv) if the SEC issues any stop order suspending
the effectiveness of the Registration Statement or initiates any action, claim,
suit, investigation or proceeding (a "PROCEEDING") for that purpose; (v) the
Company receives notice in writing of any suspension of the qualification or
exemption from qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for such purpose; or
(vi) the financial statements included in the Registration Statement become
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference is untrue in any material respect or any
revision to the Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) Use its reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(d) Promptly deliver to each Purchaser, without charge, such
reasonable number of copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Purchasers
may reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Purchasers in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.
(e) (i) In the time and manner required by Nasdaq, prepare and file
with Nasdaq an additional shares listing application covering all of the
Registrable Securities and a notification form regarding the change in the
number of the Company's outstanding Shares; (ii) use its reasonable best
efforts, regardless of listing or similar costs, to take all steps necessary to
cause such Registrable Securities to be approved for listing on Nasdaq as soon
as possible thereafter; (iii) provide to the Purchasers notice of such listing;
and (iv) use its reasonable best efforts, regardless of listing or similar
costs, to maintain the listing of such Registrable Securities on Nasdaq.
(f) Prior to any public offering of Registrable Securities, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Purchasers in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or "blue sky" laws of such
jurisdictions within the United States as any Purchaser requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; PROVIDED, HOWEVER,
that the Company shall not be required for any such purpose to (i) qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
would not be otherwise required to qualify but for the requirements of this
Paragraph (3)(f), or (ii) subject itself to taxation.
(g) Upon the occurrence of any event described in Paragraph
(3)(b)(vi) above, as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an 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 light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that the Company may suspend sales pursuant
to the Registration Statement for a period of up to sixty (60) days (unless the
holders of at least a majority of the then-eligible Registrable Securities
consisting of outstanding shares of Common Stock consent in writing to a longer
delay of up to an additional thirty (30) days) no more than once in any
twelve-month period if the Company furnishes to the holders of the Registrable
Securities a certificate signed by the Company's Chief Executive Officer stating
that in the good faith judgment of the Company's Board of Directors, (i) the
offering could reasonably be expected to interfere in any material respect with
any acquisition, corporate reorganization or other material transaction under
consideration by the Company or (ii) there is some other material development
relating to the operations or condition (financial or other) of the Company that
has not been disclosed to the general public and as to which it is in the
Company's best interests not to disclose such development; provided further,
however, that the Company may not so suspend sales more than once in any
calendar year without the written consent of the holders of at least a majority
of the then-eligible Registrable Securities consisting of outstanding shares of
Common Stock.
(h) Comply with all applicable rules and regulations of the SEC and
Nasdaq in all material respects.
(4) REGISTRATION EXPENSES. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, Nasdaq and in connection with applicable
state securities or "Blue Sky" laws, (b) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing copies of Prospectuses reasonably requested by the Purchasers), (c)
messenger, telephone and delivery expenses, (d) fees and disbursements of
counsel for the Company and fees and disbursements, up to an aggregate of
$15,000, of a single counsel for all the Purchasers, and (e) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. Notwithstanding the
foregoing, each Purchaser shall pay any and all costs, fees, discounts or
commissions attributable to the sale of its respective Registrable Securities.
(5) INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, its officers and directors, partners, members, agents, brokers
and employees of each of them, each Person who controls any such Purchaser
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, and each underwriter of Registrable
Securities, to the fullest extent permitted by applicable law, from and against
any and all losses, claims, damages, liabilities, settlement costs and expenses,
including without limitation costs of preparation and reasonable attorneys' fees
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or form of prospectus or in any amendment or
supplement thereto, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (i) such
untrue statements or omissions are based upon information regarding such
Purchaser furnished in writing to the Company by such Purchaser expressly for
use therein, or to the extent that such information related to such Purchaser or
such Purchaser's proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Purchaser expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto (which shall, however, be deemed to
include disclosure substantially in accordance with the "Plan of Distribution"
attached hereto), or (ii) in the case of an occurrence of an event of the type
specified in Paragraph (3)(b) above, the use by such Purchaser of an outdated or
defective Prospectus after the Company has notified such Purchaser in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in Paragraph (6) below. The Company shall
notify the Purchasers promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) INDEMNIFICATION BY PURCHASERS. Each Purchaser shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, and each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against all
Losses (as determined by a court of competent jurisdiction in a final judgment
not subject to appeal or review) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information furnished in
writing by such Purchaser to the Company specifically for inclusion in such
Registration Statement or Prospectus or to the extent that (i) such untrue
statements or omissions are based upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use therein,
or to the extent that such information related to such Purchaser or such
Purchaser's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Purchaser expressly for use
in the Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto (which shall, however, be deemed to include
disclosure substantially in accordance with the "Plan of Distribution" attached
hereto), or (ii) in the case of an occurrence of an event of the type specified
in Paragraph (3)(b) above, the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing that the
Prospectus is outdated or defective and prior to the receipt by such Purchaser
of the Advice contemplated in Paragraph (6) below. In no event shall the
liability of any selling Purchaser hereunder be greater in amount than the
dollar amount of the net proceeds received by such Purchaser upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof, provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that such failure shall have prejudiced the
Indemnifying Party. An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party; PROVIDED, however, that in the event that the
Indemnifying Party shall be required to pay the fees and expenses of separate
counsel, the Indemnifying Party shall only be required to pay the fees and
expenses of one separate counsel for such Indemnified Party or Parties. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
affected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a 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. All fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten trading days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) CONTRIBUTION. If a claim for indemnification under Paragraph
(5)(a) or (b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or related to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Paragraph (5)(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Paragraph 5(d) was
available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Paragraph (5)(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Paragraph (5)(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. 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.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
(6) DISPOSITIONS. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Paragraphs
(3)(b), such Purchaser will discontinue disposition of such Registrable
Securities under the Registration Statement until such Purchaser's receipt of
the copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Paragraph (3)(g), or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
(7) NO PIGGY-BACK ON REGISTRATIONS. Neither the Company nor any of its
security holders (other than the Purchasers and the Placement Agent, with
respect to the shares of Common Stock issuable upon the exercise of the Warrant
issued to the Placement Agent in connection with the Offering, in such
capacities pursuant hereto) may include securities of the Company in the
Registration Statement other than the Registrable Securities, and the Company
shall not after the date hereof enter into any agreement providing any such
right with respect to the Registration Statement to any of its security holders.
(8) PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness
Period, other than any suspension period referred to in Paragraph (3)(g), there
is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Purchaser written notice of such
determination and if, within fifteen (15) days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities not
already covered by an effective Registration Statement such Purchaser requests
to be registered.
F. COVENANTS OF THE COMPANY
(1) The Company hereby agrees that, for a period of ninety (90) days after
effectiveness of the Registration Statement, it shall not issue or sell any
Common Stock of the Company, any warrants or other rights to acquire Common
Stock or any other securities that are convertible into Common Stock, with the
exception of issuances or sales related to a strategic transaction or to an
employee, director, consultant, supplier, lender or lessor, or any option grant
or issuance.
(2) Until the later of (i) one hundred eighty (180) days following the
First Closing and (ii) forty-five (45) days following effectiveness of the
Registration Statement, the Company shall not cause any registration statement
to become effective, other than the Registration Statement contemplated hereby,
or any registration statement related to securities issued or to be issued
pursuant to any option or other plan for the benefit of the Company's employees,
officers, directors or consultants.
(3) As soon as practicable, and in accordance with applicable rules and
regulations, following the First Closing, the Company shall, by filing a Current
Report on Form 8-K and/or by issuance of a press release, disclose such First
Closing of the Offering and any material, non-public information disclosed to
the Purchasers in connection therewith. Following the Second Closing, the
Company shall file a subsequent Current Report on Form 8-K and/or issue a press
release as necessary to update the disclosure about the Offering.
(4) If and to the extent required by Nasdaq Marketplace Rules, prior to
the consummation of the First Closing, the Company shall cause to be delivered
the Majority Written Consent. The Company will promptly, but in no event later
than five (5) days following the First Closing, prepare and file with the SEC
information statement materials for use in connection with the Majority Written
Consent and, after receiving and promptly responding to any comments of the SEC
thereon, shall promptly mail such information statement materials to the
stockholders of the Company. Each Purchaser shall promptly furnish in writing to
the Company such information relating to such Purchaser and its investment in
the Company as the Company may reasonably request for inclusion in the
information statement materials. The Company will comply with Section 14(c) of
the Exchange Act and the rules promulgated thereunder in relation to any
information statement materials (as amended or supplemented, the "INFORMATION
STATEMENT") and the Information Statement shall not, on the date the Information
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein not
false or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the Majority Written
Consent which has become false or misleading.
(5) As soon as the Company meets the eligibility requirements for the use
of a Registration Statement on Form S-3, the Company agrees to use its best
efforts to prepare and file with the SEC an amendment to the Registration
Statement on Form S-3, covering the resale of all Registrable Securities.
G. MISCELLANEOUS
(1) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, singular or plural, as identity of the person
or persons may require.
(2) Any notice or other document required or permitted to be given or
delivered to the Purchasers shall be in writing and sent (a) by fax if the
sender on the same day sends a confirming copy of such notice by an
internationally recognized overnight delivery service (charges prepaid) or (b)
by an internationally recognized overnight delivery service (with charges
prepaid):
(i) if to the Company, at
Chindex International, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No.: 000-000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx., Executive Vice President
or such other address as it shall have specified to the
Purchaser in writing, with a copy (which shall not constitute
notice) to:
Xxxxxx Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Fax No.: 000-000-0000
Attention: Xxxx X. Xxxxx, Esq.
(ii) if to the Purchaser, at its address set forth on the signature
page to this Agreement, or such other address as it shall have
specified to the Company in writing.
(3) Failure of the Company to exercise any right or remedy under this
Agreement or any other agreement between the Company and the Purchaser, or
otherwise, or delay by the Company in exercising such right or remedy, will not
operate as a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed by the Company.
(4) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws are
applied by the New York courts to agreements entered into and to be performed in
New York by and between residents of New York, and shall be binding upon the
Purchaser, the Purchaser's heirs, estate, legal representatives, successors and
assigns and shall inure to the benefit of the Company, its successors and
assigns.
(5) If any provision of this Agreement is held to be invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provisions hereof.
(6) The parties understand and agree that, unless provided otherwise
herein, money damages would not be a sufficient remedy for any breach of the
Agreement by the Company or the Purchaser and that the party against which such
breach is committed shall be entitled to equitable relief, including injunction
and specific performance, as a remedy for any such breach. Such remedies shall
not, unless provided otherwise herein, be deemed to be the exclusive remedies
for a breach by either party of the Agreement but shall be in addition to all
other remedies available at law or equity to the party against which such breach
is committed.
(7) The obligations of each Purchaser under this Agreement are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder, except as may result from the actions of any such Purchaser
other than through the execution hereof. Nothing contained herein solely by
virtue of being contained herein shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any similar entity, or create
a presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated hereby.
(8) This Agreement, together with the agreements and documents executed
and delivered in connection with this Agreement, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
H. SIGNATURE
The signature page of this Agreement is contained as part of the
applicable subscription package, entitled "Signature Page".
* * * * * * *
SIGNATURE PAGE
The Purchaser hereby subscribes for such number of Shares as shall equal
the Subscription Amount as set forth below, divided by the Offering Price, and
shall also receive a Warrant to purchase such number of shares of Common Stock
calculated as set forth in this Agreement, and agrees to be bound by the terms
and conditions of this Agreement.
PURCHASER
1. Dated: ____________, 2004
2. Total Subscription Amount: $__________
---------------------------------- ----------------------------------
Signature of Subscriber Signature of Joint Purchaser
(and title, if applicable) (if any)
---------------------------------- ----------------------------------
Taxpayer Identification or Social Taxpayer Identification or Social
Security Number Security Number of Joint Purchaser
(if any)
----------------------------------
Name (please print as name will
appear on stock certificate)
----------------------------------
Number and Street
----------------------------------
City, State Zip Code
ACCEPTED BY:
CHINDEX INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
Dated:
---------------------------
SCHEDULE A
ESCROW INSTRUCTIONS
PLEASE SEND WIRE TRANSFERS TO THE ESCROW ACCOUNT AS FOLLOWS:
Bank: Bk of NYC
ABA No. 000000000
General Ledger Account #: 111 565
Customer Account #: 276039
Account Name: Xxxxxxxxxxx & Co./Chindex
International
EXHIBIT A
LEGAL MATTERS
Xxxxxx Xxxxxxx & Xxxx LLP shall deliver an opinion covering the following
matters. The opinion shall be subject to and include customary assumptions,
limitations and qualifications.
1. The Company is a corporation, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority under the laws of the State of Delaware to conduct its business as
it is described in the Memorandum and in the Company's Form 10-Q for the quarter
ended December 31, 2003, Form 10-K for the fiscal year ended December 31, 2002
and Form 10-QT for the quarter ended March 31, 2003, each as amended on March 2,
2004, and the Definitive Proxy Statement dated July 1, 2003, and to enter into
and perform its obligations under the Agreement.
2. The authorized capital stock of the Company consists of 8,300,000
shares of stock of all classes. The authorized capital stock is divided into
6,800,000 shares of Common Stock, $0.01 par value per share (the "COMMON
STOCK"), including 800,000 shares designated as Class B Common Stock, and
500,000 shares of Preferred Stock, $0.01 par value per share (the "PREFERRED
STOCK"), based solely on a certificate from the Company's transfer agent. As of
February 18, 2004, there were 3,043,152 shares of 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.
3. The Shares have been duly authorized or reserved for issuance by all
necessary corporate action on the part of the Company; and the Shares, when
issued and delivered against payment therefor in accordance with the provisions
of the Agreement, will be validly issued, fully paid and non-assessable. The
Warrants have been duly authorized by all necessary corporate action on the part
of the Company, and the Warrant Shares have been duly reserved for issuance and,
when issued and delivered against payment therefor upon the due exercise of the
Warrants in accordance with the provisions thereof, will be validly issued,
fully paid and non-assessable shares of Common Stock.
4. The execution and delivery by the Company of the Agreement, and the
consummation by the Company of the transactions contemplated thereby, have been
duly authorized by all necessary corporate action on the part of the Company.
The Agreement constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnification and contribution thereunder may be limited by applicable law
and except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
5. The execution and delivery by the Company of the Agreement, and the
consummation by the Company of the transactions contemplated thereby, do not (a)
violate the provisions of any federal law of the United States of America or the
General Corporation Law of the State of Delaware applicable to the Company; (b)
violate the provisions of the Company's Certificate of Incorporation or By-laws;
or (c) violate any existing obligation of the Company under any judgment,
decree, order or award of any court, governmental body or arbitrator
specifically naming the Company and of which we are aware, without any inquiry;
or (d) with or without notice and/or the passage of time, conflict with or
result in the material breach or termination of any material term or provision
of, or constitute a material default under, or cause any acceleration of any
material obligation under, or cause the creation of any material lien, charge or
encumbrance upon the material properties or assets of the Company pursuant to
any contract or instrument in the form included as an Exhibit to the Company's
2002 10-K and subsequent SEC filings.
6. Assuming (a) the accuracy of the representations made by each Purchaser
in the Agreement; (b) that neither the Company, the Placement Agent nor any
person acting on behalf of either the Company or the Placement Agent has offered
or sold the Securities by any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D promulgated (the
"REGULATION D") under the Securities Act; (c) that no offerings or sales of
securities of the Company after the date hereof in a transaction can be
"integrated" with any sales of the Securities; and (d) that each person or
entity that purchased securities of the Company directly from the Company or its
agents and without registration between the date six months prior to the First
Closing of the Offering and the date of the Agreement was, as of the date of
such purchase, an "accredited investor" as defined in Rule 501 of Regulation D,
the sale of the Securities to the Purchasers at the Closing under the
circumstances contemplated by this Agreement are exempt from the registration
and prospectus delivery requirements of Section 5 of the Securities Act.
7. To our knowledge, without any inquiry (including, without limitation,
without any docket search or other inquiry), there is no action, proceeding or
litigation pending or threatened against the Company before any court,
governmental or administrative agency or body required to be described in the
Company's Form 10-Q for the quarter ended December 31, 2003, Form 10-K for the
fiscal year ended December 31, 2002 and Form 10-QT for the quarter ended March
31, 2003, each as amended on March 2, 2004, and the Definitive Proxy Statement
dated July 1, 2003, which is not otherwise disclosed therein.
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
CHINDEX INTERNATIONAL, INC.
CONFIDENTIAL PURCHASER QUESTIONNAIRE
Before any sale of securities in the above-captioned Company can be made
to you, this Questionnaire must be completed and returned to XXXXXXXXXXX & CO.
INC., Attn: Investment Banking Dept., 000 Xxxxx Xx., Xxx Xxxx, XX 00000.
The purpose of this Questionnaire is to substantiate that you meet the
standards imposed by Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT").
(1) Name:
-----------------------------------------------
(2) Principal Business Address: -------------------------
-----------------------------------------------------
Telephone: ( )
------------------------------------------
(3) Home Address (for individual investors): ------------
-----------------------------------------------------
Telephone: ( )
------------------------------------------
(4) Social Security Number or Tax ID Number:
------------
(5) Occupation (for individual investors):
--------------
(6) Age (for individual investors):
---------------------
(7) The following information is required to substantiate that you qualify as
an "accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act. Please check which of the following you are:
(a) A bank as defined in Section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended; any insurance company as defined in Section 2(13) of the
Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that act; any Small Business
Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the benefits of its
employees if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such act,
which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000, or, if a
self-directed plan, with investment decisions made solely by persons
that are accredited investors;
Yes No
------ ------
(b) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
Yes No
------ ------
(c) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust
or partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000;
Yes No
------ ------
(d) A director or executive officer of the Company;
Yes No
------ ------
(e) A natural person whose individual net worth, or joint net worth with
your spouse, at the time of your purchase exceeds $1,000,000;
Yes No
------ ------
(f) A natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with your
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the
current year;
Yes No
------ ------
(g) A trust, with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii); or
Yes No
------ ------
(h) Any entity in which all of the equity owners are accredited
investors.
Yes No
------ ------
(8) Investment, business, and educational experience (for individual
investors):
(a) Educational background:
-----------------------------------------------------
-----------------------------------------------------
(b) Principal employment positions held during last five years:
-----------------------------------------------------
-----------------------------------------------------
(c) Frequency of prior investment (check one in each column):
Venture Capital
Stocks & Bonds Investments
Frequently
------------------ ------------------
Occasionally
------------------ ------------------
Never
------------------ ------------------
(9) Please list the name and address of your (for individual investors):
(a) Bank
-------------------------------------------
-----------------------------------------------------
(b) Accountant
-------------------------------------
-----------------------------------------------------
I represent that the foregoing information is true and correct.
Dated: ____________________, 2004
-----------------------------------------
(Name of Investor - Please Print)
-----------------------------------------
(Signature)
-----------------------------------------
(Print Name) (Title)
EXHIBIT D
SELLING STOCKHOLDER QUESTIONNAIRE
To: Chindex International, Inc.
c/o Xxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Reference is made to the Securities Purchase Agreement (the "Agreement"),
made between Chindex International, Inc., a Delaware corporation (the
"Company"), and the Purchasers noted therein.
Pursuant to Section B(12) of the Agreement, the undersigned hereby
furnishes to the Company the following information for use by the Company in
connection with the preparation of the Registration Statement contemplated by
Section E of the Agreement.
(1) NAME AND CONTACT INFORMATION:
Full legal name of record holder:
----------------------------------
Address of record holder:
----------------------------------
Social Security Number or Taxpayer
identification number of record holder:
----------------------------------
Identity of beneficial owner (if
different than record holder):
----------------------------------
Name of contact person:
----------------------------------
Telephone number of contact person:
----------------------------------
Fax number of contact person:
----------------------------------
E-mail address of contact person:
----------------------------------
(2) BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:
(a) Number of Registrable Securities owned by Selling Stockholder:
-----------------------------------------------------
(b) Number of Registrable Securities requested to be registered:
-----------------------------------------------------
(3) BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE
SELLING STOCKHOLDER:
Except as set forth below in this Item (3), the undersigned is not the
beneficial or registered owner of any securities of the Company other than
the Registrable Securities listed above in Item (2)(a).
Type and amount of other securities beneficially owned by the Selling
Stockholder:
-----------------------------------------------------
-----------------------------------------------------
(4) RELATIONSHIPS WITH THE COMPANY:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship
with the Company (or its predecessors or affiliates) during the past three
years.
State any exceptions here:
-----------------------------------------------------
-----------------------------------------------------
(5) PLAN OF DISTRIBUTION:
Except as set forth below, the undersigned intends to distribute pursuant
to the Registration Statement the Registrable Securities listed above in
Item (2) in accordance with the "Plan of Distribution" section set forth
therein:
State any exceptions here:
-----------------------------------------------------
-----------------------------------------------------
(6) SELLING STOCKHOLDER AFFILIATIONS:
(a) Is the Selling Stockholder a registered broker-dealer?
-----------------------------------------------------
(b) Is the Selling Stockholder an affiliate of a registered
broker-dealer(s)? (For purposes of this response, an "affiliate" of,
or person "affiliated" with, a specified person, is a person that
directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person
specified.)
-----------------------------------------------------
(c) If the answer to Item (6)(b) is yes, identify the registered
broker-dealer(s) and describe the nature of the affiliation(s):
-----------------------------------------------------
(d) If the answer to Item (6)(b) is yes, did the Selling Stockholder
acquire the Registrable Securities in the ordinary course of
business (if not, please explain)?
-----------------------------------------------------
(e) If the answer to Item (6)(b) is yes, did the Selling Stockholder, at
the time of purchase of the Registrable Securities, have any
agreements, plans or understandings, directly or indirectly, with
any person to distribute the Registrable Securities (if yes, please
explain)?
-----------------------------------------------------
(7) VOTING OR INVESTMENT CONTROL OVER THE REGISTRABLE SECURITIES:
If the Selling Stockholder is not a natural person, please identify the
natural person or persons who have voting or investment control over the
Registrable Securities listed in Item (2) above:
-----------------------------------------------------
Pursuant to Section E(3) of the Agreement, the undersigned acknowledges
that the Company may, by notice to the Placement Agent and to each Purchaser at
its last known address, suspend or withdraw the Registration Statement and
require that the undersigned immediately cease sales of Registrable Securities
pursuant to the Registration Statement under certain circumstances described in
the Agreement. At any time that such notice has been given, the undersigned may
not sell Registrable Securities pursuant to the Registration Statement.
The undersigned hereby acknowledges receipt of a draft of the Registration
Statement dated [ ], 2004 and confirms that the undersigned has reviewed such
draft including, without limitation, the sections captioned "Selling
Stockholders" and "Plan of Distribution," and confirms that, to the best of the
undersigned's knowledge, the same is true, complete and accurate in every
respect except as indicated in this Questionnaire. The undersigned hereby
further acknowledges that pursuant to Section B(12) of the Agreement, the
undersigned shall indemnify the Company and each of its directors and officers
against, and hold the Company and each of its directors and officers harmless
from, any losses, claims, damages, expenses or liabilities (including reasonable
attorneys fees) to which the Company or its directors and officers may become
subject by reason of any statement or omission in the Registration Statement
made in reliance upon, or in conformity with, a written statement by the
undersigned, including the information furnished in this Questionnaire by the
undersigned.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items (1) through (7) above and
the inclusion of such information in the Registration Statement, any amendments
thereto and the related prospectus. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
The undersigned has reviewed the answers to the above questions and
affirms that the same are true, complete and accurate. THE UNDERSIGNED AGREES TO
NOTIFY THE COMPANY IMMEDIATELY OF ANY CHANGES IN THE FOREGOING INFORMATION.
Dated: _____________, 2004
-----------------------------------------
Signature of Record Holder
(Please sign your name in exactly the
same manner as the certificate(s) for
the shares being registered)
EXHIBIT E
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledges, assignees, donees selling
shares received from such Selling Stockholders as a gift, and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended, if available, rather than under this
prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
To the extent required, the Company will amend or supplement this
prospectus to disclose material arrangements regarding the plan of distribution.
To comply with the securities laws of certain jurisdictions, registered or
licensed brokers or dealers may need to offer or sell the shares offered by this
prospectus. The applicable rules and regulations under the Securities Exchange
Act of 1934, as amended, may limit any person engaged in a distribution of the
shares of common stock covered by this prospectus in its ability to engage in
market activities with respect to such shares. A selling stockholder, for
example, will be subject to applicable provisions of the Exchange Act and the
rules and regulations under it, which provisions may limit the timing of
purchases and sales of any shares of common stock by that selling stockholder.
