TRANSACTIONS WITH RELATED PERSONS, PROMOTERS
AND CERTAIN CONTROL PERSONS
Except as set forth below, since January 1, 2013 there has not been any transaction, and there is no currently proposed transaction, involving the Company and any of its directors, executive officers, 5% stockholders or any members of the immediate family of any of the foregoing persons, which transaction would be disclosable pursuant to Item 404 of Regulation S-K as promulgated by the SEC.
On June 14, 2010, the Company entered into a Stock Purchase Agreement (the “
Stock Purchase
Agreement
”) with Shanghai Fosun Pharma (Group) Co., Ltd (“
Fosun Pharma
”) and its subsidiary Fosun
Industrial Co., Limited (“
Fosun Industrial
” and together with Fosun Pharma, the “
Fosun Entities
”), which
is the beneficial owner of more than 5% of the Company’s Common Stock. Depending on the context, references herein to the Company or any Fosun Entity may include respective direct and indirect subsidiaries thereof. Pursuant to the Stock Purchase Agreement, the Company agreed to issue and sell to Fosun Industrial a total of 1,990,447 shares (the “
Shares
”) of the Company’s Common Stock (representing
approximately 10% of all outstanding Common Stock after such sale, based on the number of outstanding shares as of the date of the Stock Purchase Agreement) at a purchase price of $15 per share.
Pursuant to the Stock Purchase Agreement, the sale of the Shares would be completed in two closings. The initial closing occurred on August 27, 2010, at which the Company issued 933,022 Shares to Fosun Industrial for an aggregate purchase price of $13,995,330. At the second closing (the “
Second Closing
”)
under the Stock Purchase Agreement, the Company would sell the remaining 1,057,425 Shares to Fosun Industrial for an aggregate purchase price of $15,861,375. The Second Closing was subject to the consummation of the Chindex Medical Limited joint venture (“
CML
”), which was formed effective
December 31, 2010. CML engages in the businesses of, among other things, (i) the marketing, distribution and servicing of medical equipment in China and Hong Kong and (ii) the manufacturing, marketing, sales and distribution of medical devices and medical equipment and consumables, including our former Medical Products division. CML was initially 51%-owned by Fosun Pharma and 49%-owned by the Company, and is currently 30%-owned by the Company. The Stock Purchase Agreement further provides that in the event that the Second Closing was not consummated within a prescribed period, then the Stock Purchase Agreement could be terminated by either party solely with respect to the Second Closing, provided the absence of such consummation was not principally caused by the terminating party. As a result of the elapse of the prescribed period, the Company terminated the Stock Purchase Agreement on April 11, 2014.
At the initial closing under the Stock Purchase Agreement, the Company, Fosun Pharma and Fosun Industrial also entered into a Stockholder Agreement (the “
Stockholder Agreement
”). Under the
Stockholder Agreement, until the first to occur of (i) Fosun Industrial holds 5% or less of the outstanding shares of common stock, (ii) there shall have been a change of control of the Company as defined in the Stockholder Agreement, and (iii) the seventh anniversary of the initial closing, Fosun Industrial has agreed to vote its shares in accordance with the recommendation of the Company’s Board of Directors on any matters submitted to a vote of the stockholders of the Company relating to the election of directors and compensation matters and with respect to certain proxy or consent solicitations. The Stockholder Agreement also contains standstill restrictions on Fosun Industrial generally prohibiting the purchase of additional securities of the Company. The standstill restrictions terminate on the same basis as does the voting agreement above, except that the 5% standard would increase to 10% upon the Second Closing. In addition, the Stockholder Agreement contains a lock-up restricting sales by Fosun Industrial of its shares of the Company’s common stock for a period of five years following the date of the Stockholder Agreement, subject to certain exceptions.
On December 31, 2010, in connection with the formation of CML, the Company and CML entered into a Trademark License Agreement (the “
License Agreement
”). The License Agreement provides for the
limited worldwide license by the Company to CML of the use of the name “Chindex” and certain related names and marks in connection with the CML business. Subject to various terms and conditions, the Company would be paid a royalty under the License Agreement equal to two percent of gross sales, as defined, from goods manufactured by or for CML and one percent of such gross sales from goods distributed by but not manufactured by or for CML. To date, no amounts have been paid under the License Agreement.