INVESTOR RIGHTS AGREEMENT
THIS
INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made and
entered into as of November 7, 2007, by and among CHINDEX INTERNATIONAL, INC.,
a
Delaware corporation (the “Company”), and MAGENTA MAGIC
LIMITED, a company organized and existing under the laws of the British Virgin
Islands and wholly owned, directly or indirectly, by JPMorgan Chase & Co
(the “Holder”). Capitalized terms used herein
but not otherwise defined herein shall have the respective meanings set forth
in
the Securities Purchase Agreement (as defined below) and the Schedule 1
attached to this Agreement.
WITNESSETH:
WHEREAS,
the Company and Holder have entered into that certain Securities Purchase
Agreement dated as of November 7, 2007 (the “Securities Purchase
Agreement”), pursuant to which the Company has agreed to issue to
Holder, and Holder has agreed to purchase from the Company, the Securities
in an
aggregate consideration of US$50,000,000; and
WHEREAS,
it is a condition to the Closing under the Securities Purchase Agreement that
the parties hereto shall have executed this Agreement.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto, intending to be legally bound by this Agreement, agree as
follows:
1. Representations
and Warranties of the Company. The Company (the
“Warrantor”), represents and warrants on its own behalf
and on behalf of each of the other Group Companies that: (i) as of
November 7, 2007, Xxxxxxx
Xxxxxx is a director and the beneficial owner, free and clear of all Liens,
of
161,012 shares of Class A Common Stock and 440,000 shares of Class B Common
Stock, which constitutes in the aggregate approximately 24.8% of the outstanding
voting power of the Company’s capital stock calculated pursuant to Rule 13d-3,
(ii) Xxxxx Xxxx Xxxxxxxxxx is a director and the beneficial owner, free and
clear of all Liens, of 180,972 shares of Class A Common Stock and 260,500 shares
of Class B Common Stock, which constitutes in the aggregate approximately 15.4%
of the outstanding voting power of the Company’s capital stock calculated
pursuant to Rule 13d-3, (iii) Xxxxxxxx Xxxxxx is a director and the beneficial
owner, free and clear of all Liens, of 163,148 shares of Class A Common Stock
and 74,500 shares of Class B Common Stock, which constitutes in the aggregate
approximately 5.4% of the outstanding voting power of the Company’s capital
stock calculated pursuant to Rule 13d-3, and (iv) each of the Ariel Xxxxxxxx
Xxx
Trust, Xxxxxx Xxxxxx Xxxxxxx Trust and Xxxxxxxx Xxxxxx Xxxxxxx Trust, of each
of
which Xx. Xxxxxx is a trustee, beneficially owns, free and clear of all Liens,
20,000 shares of Class B Common Stock, the outstanding voting power of which
is
included for, and retained by, Xx. Xxxxxx as stated above.
1.1 The
Warrantor has full power and authority to make, enter into and carry out the
terms of this Agreement. This Agreement has been duly executed and
delivered by the Warrantor and constitutes the legal, valid and binding
obligations of such Warrantor enforceable against such Warrantor in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
the
enforcement of creditors’ rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability (regardless of whether considered in a Proceeding in equity or
at
law). There are no preemptive rights or rights of first refusal on behalf of
any
Person applicable to the issuance of any of the Securities.
2. Covenants
and Agreements.
The
Company hereby covenants and agrees, and to the extent permitted by Applicable
Law, the Company hereby undertakes and agrees, where applicable, to cause each
Group Company, to do as follows, unless waived by the Holder:
2.1 Financial
Information. As long as the Holder owns 5% or more of the
Company’s voting shares then outstanding on Fully-Diluted basis during the
period commencing from the Closing Date until the earlier of the date after
(i)
in the event that both New JV Hospitals are to be constructed and opened for
operation, then (x) two years have elapsed since the official commencement
of
operation by both of the New JV Hospitals (as defined below), or (y) one year
has elapsed since both New JV Hospitals have respectively achieved a break-even
EBITDA for any 12-month period ending on a date that is the last day of a fiscal
quarter as evidenced by audited Financial Statements for such period, or (z)
the
fifth anniversary of the Closing Date; or (ii) in the event that only one New
JV
Hospital is to be constructed and opened for operation, (x) two years have
elapsed since the official commencement of operation by such New JV Hospital,
or
(y) one year has elapsed since such New JV Hospital has achieved a break-even
EBITDA for any 12-month period ending on a date that is the last day of a fiscal
quarter as evidenced by audited Financial Statements for such period, or (z)
the
fifth anniversary of the Closing Date (in each case, the “Restricted
Period”), the Company shall deliver to the Holder:
(a) as
soon
as practicable, but in any event within forty-five (45) days of the end of
each
quarter the unaudited statements of operations and statements of cash flows
for
such quarter and the unaudited balance sheets as of the end of such quarter
(collectively the “Financial Statements”) in respect of
the Company on a consolidated basis, and the existing operations relating solely
to marketing and selling medical equipment and products (“MPD
Business”), and the existing operations engaged in the healthcare
services business (“UFH Business”);
(b) within
forty-five (45) days of the end of each calendar quarter a project progress
report in respect of each hospital and clinic project then under construction
(each a “New Healthcare Unit”) as generally compared
with the relevant budget for that project; provided that none of the information
contained in such reports shall constitute a representation or warranty as
to
the accuracy or completeness thereof nor be used in connection with any
securities transaction of any kind whatsoever nor be disclosed to any Person
unless such Person has agreed in writing with the Company as a third-party
beneficiary to be bound by the terms of this provision to the same extent it
applies to the Holder; and
(c) upon
reasonable written request, an update on the status of receipt or expected
receipt of material permits, approvals, consents obtained and to be obtained
from any Governmental Authority for the construction, development and operation
of each of such New Healthcare Units; provided that none of the information
contained in such updates shall constitute a representation or warranty as
to
the accuracy or completeness thereof nor be used in connection with any
securities transaction of any kind whatsoever nor be disclosed to any Person
unless such Person has agreed in writing with the Company as a third-party
beneficiary to be bound by the terms of this provision to the same extent it
applies to the Holder.
2.2 Access
to Books and Records. As long as the Holder owns 5% or more of
the Company’s voting shares then outstanding on Fully-Diluted basis during the
Restricted Period, the Company shall permit the Holder the right to visit and
inspect any of its properties upon reasonable notice to the Chief Executive
Officer or Chief Financial Officer of the Company, to seek information relating
to the operating and financial performance and results of any Group Company,
and
discuss the affairs and the operating and financial performance of any Group
Company with the directors and Chief Executive Office or Chief Financial Officer
of the Company all at such reasonable times as may be requested by the
Holder.
2.3 Management
Continuity. As long as the Holder owns 5% or more of the
Company’s voting shares then outstanding on Fully-Diluted basis during the
Restricted Period, the Company shall use its best efforts to ensure, subject
to
Applicable Law, that (x) Xxxxxxx Xxxxxx remains as the Chief Executive Officer
and President of the Company; (y) Xxxxxxx Xxxxxx alone, or together with
Xxxxxxxx Xxxxxx and/or Xxxxx Xxxxxxxxxx (collectively, the “Major
Shareholders”), retain the principal responsibility to appoint
senior management officers of the Company, oversee their performance of the
Company and the Subsidiaries, and develop and implement the business strategy
and the expansion plan of the Company and the Subsidiaries.
2.4 Use
of
Proceeds. The Company shall use the net proceeds from the sale of
any of the Securities in any amount only for funding, directly or indirectly,
the following projects (A) the proposed new 125-bed hospital to be established
by the Company in Guangzhou, Guangdong Province, the PRC (“Guangzhou
Hospital”); (B) the proposed new 150-bed hospital to be established
by the Company or any expansion of the existing hospital in Beijing, the PRC
(“Beijing Hospital,” and together with Guangzhou
Hospital, the “New JV Hospitals”); (C) the proposed new
clinic(s) to be established in Guangzhou, Guangdong Province, the PRC; (D)
the
proposed new clinic to be established in Shanghai, the PRC; (E) the existing
dental service clinic in Shunyi District, Beijing, the PRC; (F) no more than
US$5,000,000 in the MPD Business, and (G) any other new projects with prior
consent of the Holder, such consent not to be unreasonably withheld or
delayed.
2.5 Insurance. As
long as the Holder owns 5% or more of the Company’s voting shares then
outstanding on Fully-Diluted basis during the Restricted Period, the Group
Companies shall use commercially reasonable efforts (i) to maintain all existing
insurance policies, and (ii) in respect of each New Healthcare Unit, to cause
at
least the same or substantially similar such policies to apply in all material
respects.
2.6 No
Pledge of Company’s Shares. During the Restricted Period, the
Company shall provide the Holder with notice, at least fifteen (15) days prior
to effecting the registration of any proposed transfer of shares by any Major
Shareholder, in order to afford the Holder an opportunity to enforce its rights
under the applicable Shareholder Side Letter.
2.7 New
JV
Hospitals. As long as the Holder owns 5% or more of the Company’s
voting shares then outstanding on Fully-Diluted basis during the Restricted
Period, the following conditions must be met in respect of each New JV
Hospital:
(a) The
Company shall own 60% or more of the registered capital of such New JV
Hospital;
(b) The
Company shall obtain effective management and operational control of each New
JV
Hospital in a manner consistent with (if not more favorable than) the current
management and operational control of the Company in Beijing United Family
Hospital and Shanghai United Family Hospital;
(c) the
Company shall make available to the Holder the following information regarding
such New JV Hospital as reasonably requested prior to the finalizing of the
applicable principal joint venture contract: (A) the proposed capital budget,
including proposed working capital and contingency amounts, the proposed plan
for the construction, commencement of operations, staffing, training and
marketing, (B) a proposed general time schedule for the material expenditures
contemplated in such budget and (C) any other information that the Holder may
reasonably request regarding such New JV Hospital; and
(d) Shareholders
and/or partners of the New JV Hospital other than the Company shall receive
dividends or any other distributions on equity only in proportion to their
respective ownership interest in the registered capital of the New JV Hospital
as provided in the applicable formation and/or organizational documents
thereof.
2.8 Information
Technology Plan. The Purchaser shall have received from the
Company within two (2) months of the Closing Date a detailed description of
the
information technology program (the “New IT Program”)
for the Company’s existing and new facilities and shall have had reasonable
opportunity to discuss with the Company on the foregoing.
2.9 No
Default. As long as the Holder owns 5% or more of the Company’s
voting shares then outstanding on Fully-Diluted basis during the Restricted
Period, the Company shall, and the Company shall cause each of the other Group
Companies to, (a) comply with all covenants and undertakings relating to capital
expenditure under the Facilities (as defined in the Tranche B Note); and (b)
cure any event of default that may arise from or in connection with any existing
or future Debt instrument evidencing the greater of (i) US$1,000,000 or (ii)
10%
of the total Debt of the Company at the time of such default (and described
as
such and not waived under the fundamental instruments governing such Debt)
within forty-five (45) days from the occurrence of such event of default or
such
longer period as is contemplated for such cure by such instruments.
2.10 Executive
Employment Terms. The Company shall, immediately after the
Closing and in no event later than fifteen (15) Business Days following the
Closing, cause a board or an appropriate board committee resolution to be duly
entered approving and ratifying the term of each of the employment agreements
between the Company and the each Major Shareholder for a period of no less
than
seven years and ten months commencing from March 1, 2006 through December 31,
2013.
3. New
Issue. Without limiting any remedies otherwise available to the
Holder at law or in equity in any manner, the Company shall not issue any new
equity or equity-linked security if, in the reasonable opinion of the Holder,
such issuance would result in the conditions contained in Section 2.3 (x) or
(y)
no longer being true, unless the intended purchaser(s) of such new issue agrees
and represents in writing to the Company that it does not have any present
intention to remove any of the Major Shareholders from his/her management
position at the Company or change his/her position at the Company.
4. Right
of First Refusal for Future Securities Offerings.
4.1 Issuance
Notice. Subject to the terms and conditions of this Section and
Applicable Laws, if the Company proposes to issue or sell any shares of equity
securities or equity-linked securities (“Shares”) to a
purchaser or purchasers (the “Proposed Third Party
Purchaser”) during the Restricted Period, the Company shall,
provided the Holder at such time holds not less than 7.5% of the total voting
shares of the Company then outstanding on a Fully-Diluted basis, not less than
ten (10) calendar days prior to the consummation of such issuance or sale of
Shares, offer such Shares to the Holder by sending written notice (an
“Issuance Notice”) to the Holder, which shall state (a)
the identity of the Proposed Third Party Purchaser, or if a public offering,
a
description in reasonable detail of the offering, (b) a description of the
securities to be issued or sold, including detailed terms of such securities,
(c) the number of Shares proposed to be issued to the Proposed Third Party
Purchaser, (d) the proposed purchase price for the Shares (the
“Issuance Price”); and (d) a description in reasonable
detail of the material terms and conditions of such proposed
sale. The Issuance Notice shall also state that the Company has
received a proposal from the Proposed Third Party Purchaser and in good faith
believes a binding agreement for the Shares is obtainable on the terms set
forth
in the Issuance Notice.
4.2 Option;
Exercise. By notification to the Company within ten (10) days
after the Issuance Notice is given, the Holder may elect to purchase for cash,
at the price and on the terms and conditions specified in such Issuance Notice,
up to 20% of the Shares by delivering to the Company written notice and
confirmation of its commitment to so purchase, and the number of shares to
be so
purchased, prior to the expiration of such 10-day period, on the same terms
and
conditions as the Proposed Third Party Purchaser. The closing of any sale
pursuant to this Section 4.2 shall occur on a date set by the Company and in
any
event within sixty (60) days after the date on which such notification is given
by the Holder. The Holder shall be entitled, with the prior written
consent of the Company, such consent not to be unreasonably withheld or delayed,
to apportion the rights of first refusal hereby granted to it among itself
and
its Affiliates in such proportions as it deems appropriate.
4.3 Sale
to Third Parties. To the extent that the Shares are not elected
to be purchased or acquired as provided in Section 4.2, the Company may, during
the sixty (60) day period following the expiration of the 10-day period as
set
forth in Section 4.2, offer and sell the remaining unsubscribed portion of
such
securities in the Issuance Notice at a price not less than, and upon terms
no
more favorable to the Proposed Third Party Purchaser than, those specified
in
the Issuance Notice. If the Company does not enter into an agreement
for the sale of such securities within such period, or if such agreement is
not
consummated within sixty (60) days after the execution thereof, the right of
first refusal provided hereunder shall be deemed to be revived and such Shares
shall not be offered to a third party unless first reoffered to the Holder
in
accordance with this Section 4.
4.4 Exceptions. Notwithstanding
any other provision of this Agreement to the contrary, the rights of the Holder
pursuant to this Sections 3 and 4 shall not apply to securities issued: (i)
upon
exercise, exchange or conversion of any securities and all other securities
of
the Company that are as at the date hereof authorized, issued or outstanding
and
that represent any other direct or indirect rights to acquire, or constitute
interests or participations in, Common Stock or rights to acquire securities
that are directly or indirectly exercisable for, convertible into or
exchangeable for Common Stock; (ii) as a stock dividend upon any subdivision
of
shares of Common Stock; (iii) pursuant to subscriptions, warrants, options,
convertible securities, or other rights, issued, or to be issued, under any
stock option or other equity incentive plan or arrangement approved by the
Company’s Board of Directors and in place from time to time for the benefit of
the Company’s directors, employees, consultants or independent contractors,
including without limitation the Company’s 2004 Stock Incentive Plan and 2007
Stock Incentive Plan or (iv) pursuant to a share swap in a strategic merger
or
acquisition transaction.
5. Reserved
Matters.
5.1 Acts
of the Company. As long as the Holder owns 7.5% or more of the
Company’s voting shares then outstanding on Fully-Diluted basis during the
Restricted Period, notwithstanding anything to the contrary in the Certificate
of Incorporation or Articles of the Company or the charter documents of any
Subsidiary, the Company shall not, and shall use its best efforts not to permit
any Subsidiary to, take any action described below without prior written
approval by the Holder, which approval shall not be unreasonably withheld or
delayed:
(a) Incurrence
by the Company or any Subsidiary any Debt unless, after giving effect to the
application of the proceeds thereof, (A) the Consolidated Leverage Ratio (as
defined in Schedule 1) as at the date of determination is not greater
than 3.00 to 1.00; and (B) the Consolidated Interest Coverage Ratio (as defined
in Schedule 1), as at the date of determination is not less than 3.00 to
1.00. For purposes of calculating the Consolidated Leverage Ratio and
the Consolidated Interest Coverage Ratio hereunder, Debt shall not include
the
amount of the Tranche B Notes and the Tranche C Notes;
(b) Issuance
of any new shares of Class B Common Stock (other than in a stock split or any
recapitalization transactions having similar effect);
(c) Issuance
of any new class of equity securities other than the preferred shares under
the
Rights Agreement dated June 4, 2007, as amended on November 4,
2007;
(d) Amend
the
Company’s Charter Documents to change any of the rights, obligations or
privileges of any shares of Class A or Class B Common Stock; and
(e) Increase
in the budget for the New JV Hospitals (a copy of which is attached hereto
as
Exhibit A) in excess of RMB402,230,000 for Guangzhou Hospital or in
excess of RMB440,612,000 for Beijing Hospital; and
5.2 Additional
Rights of the Holder. Notwithstanding anything to the contrary in
the Certificate of Incorporation or Articles of the Company or the charter
documents of any Subsidiary, which the parties hereby agree to amend to be
consistent with this Agreement to the extent permitted by Applicable
Laws:
(a) The
Holder shall be entitled to freely transfer any of the Securities to any third
party provided, that the transferee shall be bound by all obligations,
limitations, restrictions and qualifications (but not the rights) under this
Agreement of the Holder, provided, further, that the Holder
shall not transfer any of the Securities to a third party that, directly or
indirectly through any Affiliate, operates or has indicated its intention to
operate, any hospital or similar healthcare service operation or that provides
or intends to provide healthcare services at the time of, or foreseeably after,
the intended transfer;
(b) As
long
as the Holder owns 5% or more of the Company’s voting shares then outstanding on
Fully-Diluted basis during the Restricted Period, the Holder shall be entitled
to appoint and have act at its own expense a third party consultant approved
in
advance by the Company (which approval not to be unreasonably withheld or
delayed) to review project progress for the New JV Hospitals and the New IT
Program; provided, that prior to any such engagement, such consultant
shall enter into a written and legally binding agreement with the Company
pursuant to which such consultant shall agree to confidentiality provisions
reasonably acceptable to the Company and that the Holder shall share with the
Company a summary of the findings and advice received from such
consultant.
5.3 New
Issuances. Until the first anniversary of the Closing Date, the
Company shall not, and shall use its best efforts not to permit any Subsidiary
to, without the prior written approval of the Holder which approval shall not
be
unreasonably withheld, issue any shares of Class A Common Stock or any
equity-linked securities (other than as contemplated by Section 4.4(i) to (iii)
hereof) unless the price per share in such proposed issuance be at a premium
to
the Purchase Price of at least the greater of (i) twenty-five percent (25%)
per
annum calculated to the date of such proposed issuance or (ii) fifteen percent
(15%).
6. Miscellaneous.
6.1 Termination. Except
for this Section 6, which
shall survive the termination of this Agreement, or as otherwise expressly
provided herein, this Agreement will be automatically terminated with no further
effect at such time that neither the Holder nor any of its Affiliates owns
any
of the Securities.
6.2 Specific
Enforcement. Upon a material breach by the Warrantor of this
Agreement, in addition to any such damages as the Holder is entitled to,
directly or indirectly, by reason of said breach, the Holder shall be entitled
to injunctive relief against such Warrantor if such relief is
applicable
and available, as a remedy at law would be inadequate and
insufficient. Nothing in this Section shall be construed as limiting
the Holder’s remedies in any way.
6.3 Confidentiality. The
information made available to the Holder pursuant to this Agreement shall
constitute confidential information unless it is (i) otherwise known or
available to the public or (ii) disclosed to the Holder by any third party
other
than the Company without violating the confidentiality obligation, if any,
of
such third party or (iii) independently developed or obtained by the Holder,
and
to the extent it is treated as confidential information, it shall not be
disclosed to any Person unless such Person has agreed in writing with the
Company as a third-party beneficiary to be bound by the terms of this provision
to the same extent it applies to the Holder. None of the information
made available under Section 2 shall constitute a representation or warranty
as
to the accuracy or completeness thereof nor shall it be used in
connection with any securities transaction of any kind whatsoever.
6.4 Notices. Notices
given pursuant to any provision of this Agreement shall be addressed as follows:
(i) if to the Company, to: Chindex International, Inc., 0000 Xxxx Xxxx Xxxxxxx,
Xxxxxxxx, Xxxxxxxx 00000, Fax: (000) 000-0000, Attention: Chief Executive
Officer, with a copy to Xxxxxx Xxxxxxx & Xxxx LLP, Xxx Xxxxxxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, Fax: (000) 000-0000, Attention: Xxxx X. Xxxxx; and (ii)
if
to the Purchaser, to: C/O JPMorgan Chase Bank N.A. at 00/X, Xxxxxx Xxxxx, 0 Xxxxxxxxx
Xxxx, Xxxxxxx, Xxxx
Xxxx, Fax: x000 0000-0000, Attention: Xxxxxxxx Xxx / Xxxx Xx, and with a
copy to Milbank, Tweed, Xxxxxx & XxXxxx LLP, at Tower 2, China Central
Place, Suite 1505-1506, 00 Xxxxxxx Xxxx, Xxxx Xxxx Xxxxxxxx, Xxxxxxx, People’x
Xxxxxxxx xx Xxxxx 000000, Fax: x00
(00)
0000-0000, Attention: Mr. Xxxxxx Sun.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be personally delivered or delivered by overnight courier
or
mailed by first-class registered or certified mail, postage prepaid, return
receipt requested, or by facsimile transmission. Every notice
hereunder shall be deemed to have been duly given or served on the date on
which
personally delivered, with receipt acknowledged, upon transmission by facsimile
and confirmed facsimile receipt, or two (2) days after the same shall have
been
deposited with a reputable international overnight courier.
6.5 Amendments
and Waiver. Unless otherwise specifically stated herein, any term
of this Agreement may be amended with the written consent of the party against
whom enforcement may be sought and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the Company, in the case of the Holder’s
obligations, and by the Holder in the case of the obligations of any other
parties hereto. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed
to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
6.6 Entire
Agreement. This Agreement, together with the other Transaction
Documents, embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings relating to the
subject matter hereof.
6.7 Severability. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement
to the extent permitted by law.
6.8 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of law thereof.
The
parties hereto agree that any suit, action or proceeding arising out of or
based
upon this Agreement or the transactions contemplated hereby shall be instituted
in any State or U.S. federal court in The City of New York and County of New
York, and waives any objection which it may now or hereafter have to the laying
of venue of any such proceeding, and irrevocably submits to the exclusive
jurisdiction of such courts in any suit, action or Proceeding.
6.9 Successors
and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall be binding upon, and inure to the benefit
of,
the respective representatives, successors and explicitly permitted assigns
of
the parties hereto. Unless otherwise provided herein, the Holder may
assign, without prior consent of the Company, its rights hereunder to any of
its
Affiliates in the financial service industry excluding One Equity Partners
or
companies invested in by One Equity Partners.
6.10 No
Third Party Beneficiary. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is
not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
6.11 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[Signature
page(s) to follow]
IN
WITNESS WHEREOF, the undersigned have executed this Investor Rights Agreement
as
of the day and year written above.
| THE COMPANY: | |||
| Chindex International, Inc. | |||
|
|
By:
|
/s/ Xxxxxxx Xxxxxx | |
| Name: Xxxxxxx Xxxxxx | |||
| Title: Chief Executive Officer | |||
| Accepted and Agreed to: | ||
|
Magenta
Magic Limited
|
||
|
By:
|
/s/ Xxxxxx Xxxxx | |
|
Name:
Xxxxxx Xxxxx
|
||
|
Title: Authorized
Signatory
|
||
Signature
Page to Investor Rights Agreement
Schedule
1
Definition
of Certain Accounting Terms
“Consolidated
EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of the Company and its Subsidiaries on a consolidated
basis for the most recently completed four fiscal quarters of the Company
plus (a) the following to the extent deducted in calculating
such Consolidated Net Income for such period: (i) Consolidated Interest Expense;
(ii) the provision for federal, state, local and foreign income taxes payable
and tax contingencies; (iii) depreciation and amortization expense; and (iv)
all
other non-cash items decreasing Consolidated Net Income of the Company and
its
Subsidiaries; minus (b) the following to the extent added in
calculating such Consolidated Net Income for such period: (i) federal, state,
local and foreign income tax credits and tax contingency
credits; (ii) all non-cash items increasing Consolidated Net Income
of the Company and its Subsidiaries for such period; (iii) interest or financial
income, (iv) extraordinary profits or losses; and (v) income or expenses from
discontinued operations, and (vi) any other non-operating income or
expense.
"Consolidated
Interest Expense" means, at any date of determination, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including interest
obligations that are capitalized, accrued, accreted, payable in the form of
increased principal) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
and (b) the portion of rent expense, under leases that have been (or should
be,
in accordance with GAAP) recorded as capitalized leases, that is treated as
interest expense in accordance with GAAP, in each case, of or by the Company
and
its Subsidiaries on a consolidated basis for the most recently completed four
fiscal quarters of the Company. For purposes of calculating, as at any date
of
determination, Consolidated Interest Expense in connection with the calculation
of the Consolidated Interest Coverage Ratio (a) Debt of the Company and its
Subsidiaries shall be calculated on a pro forma basis based on the assumption
that such Debt was incurred on the first day of the four most recently completed
fiscal quarters of the Company; and (b) associated gross interest expense,
determined in accordance with GAAP, of such Debt (if it bears interest at a
floating rate) shall be calculated at the current rate (as of the date of such
calculation) under the agreement governing such Debt.
“Consolidated
Interest Coverage Ratio” means, as at any date of determination,
the ratio of
(a)
Consolidated EBITDA, to
(b)
Consolidated Interest Expense.
“Consolidated
Leverage Ratio” means, as at any date of determination, the ratio
of
(a)
Debt
of the Company and its Subsidiaries on a consolidated basis, to
(b)
Consolidated EBITDA.
“Consolidated
Net Income” means, as at any date of
determination, the net income (or loss) of the Company and its Subsidiaries
on a
consolidated basis for the most recently completed four fiscal quarters of
the
Company.
“Debt”
means, with respect to any Person on any date of determination (without
duplication):
(a)
all
obligations of such Person for money borrowed and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;
Schedule
1
Investor
Rights Agreement
(b)
in
respect of any capitalized lease of such Person, the capitalized amount thereof
that would appear on a balance sheet of such Person prepared as of such date
in
accordance with GAAP;
(c)
all
obligations of such Person representing the deferred purchase price of property,
all conditional sale obligations of such person and all obligations of such
person under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business);
(d)
all
obligations of such Person for the reimbursement of any obligor on any letter
of
credit, banker’s acceptance or similar credit;
(e)
all
obligations of such Person to purchase, redeem, retire, defease of otherwise
make a payment in respect of any preferred stock of such Person or any
Subsidiary;
(f)
all
obligations of the type referred to in paragraphs (a) through (f) above of
other
Persons secured by any lien on any property of such Person (whether or not
such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the fair market value of such property and the amount
of the obligation so secured;
(g)
net
obligations of such Person under any hedging agreement; and
(h)
all
guarantees on behalf of such Person in respect of any of the foregoing, or
by
such Person on behalf of any third party for any direct or contingent financial
obligation of such third party.
The
amount of Debt of any Person at any date shall be the outstanding balance, or
the accreted value of such Debt in the case of Debt issued with original issue
discount, at such date of all unconditional obligations as described above
and
the maximum liability, upon the occurrence of the contingency giving rise to
the
obligation, of any contingent obligations at such date. For purposes
of calculating, as at any date of determination, the Consolidated Leverage
Ratio, Debt of the Company and its Subsidiaries shall be calculated on a pro
forma basis based on the assumption that any Debt to be incurred by the Company
or a Subsidiary was incurred on the last day of the most recently completed
quarter of the Company. Notwithstanding the foregoing, neither the
Tranche B Notes nor the Tranche C Notes should be included as Debt for any
purpose or reason hereunder.
“Fully-Diluted”
means, for the purpose of calculating the percentage of the Company’s voting
shares in this Agreement, that such calculation shall assume that all voting
shares issued or issuable pursuant to any exercise, conversion, exchange,
subscription or otherwise in connection with any warrants, options (including
pursuant to the Company’s stock option plan), convertible securities or any
agreement to sell or issue voting shares or securities which may be exercised,
converted or exchanged for voting shares, has been so issued, regardless whether
such securities are subject to future vesting or conditions of any kind or
forfeiture.
Schedule
1
Investor
Rights Agreement
