Document:

Exhibit 10.1

                          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 $9.10. 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 seven (7)  shares of Common
Stock for every twenty (20) Shares purchased hereunder.  The aggregate amount of
Securities  to be issued  pursuant to the  Offering  shall not exceed  1,080,397
Shares and  Warrants to purchase  378,137  shares of Common  Stock.  The Company
shall allocate the Subscription Amount between the Shares and the Warrants prior
to the Closing (as defined  below) and provide  notice to the Purchasers of such
allocation.

      (2) For purposes of this Agreement,  the "OFFERING  PRICE" shall be $6.00,
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 "CLOSING").  Prior to
the Closing, each Purchaser shall deliver the applicable Subscription Amount, 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  (4) below.  In the event there is more than one

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closing,  the term "Closing"  shall apply to each such closing unless  otherwise
specified herein.

      (4) All payments for Securities  made by the Purchasers  will be deposited
as soon as practicable for the undersigned's  benefit in a non-interest  bearing
escrow account.  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.

      (5)  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  the  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  Oppenheimer & 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);  and (iv) cause to be
delivered to the Placement Agent and the Purchasers an opinion of Hughes Hubbard
& Reed  LLP  substantially  in the  form of  EXHIBIT  A  hereto  and  reasonably
acceptable to counsel for the Placement Agent.

      (6) 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.

      (7) 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.

      (8) 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.

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:

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      (1) The  Purchaser  has  carefully  read  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 March 31, 2004
(the  "2004  FORM  10-K"),  the  subsection  of  the  2004  Form  10-K  entitled
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  the section of the 2004 Form 10-K entitled "Item 1. Business," the
financial results  contained in each of the Company's  quarterly reports on Form
10-Q  for each of the  periods  ending  subsequent  to  March  31,  2004 and the
subsection of each such Form 10-Q entitled "Management's Discussion and Analysis
of Financial  Condition and Results of Operations," 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.

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      (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

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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

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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 14,100,000  shares of stock of all classes.  The authorized  capital stock is
divided  into  13,600,000  shares of Common  Stock,  $0.01 par value per  share,
including  1,600,000  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 March 15,  2005,  there  were  4,648,046  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 March 15, 2005, 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 approximately 1,400,000 shares of Common Stock are subject to outstanding,
unexercised  options as of such date.  As of March 15,  2005,  the  Company  had
reserved 500,000 shares of Common Stock for issuance to employees, directors and
consultants  pursuant to the Company's  2004 Stock  Incentive  Plan, of which no
shares of Common Stock are subject to outstanding,  unexercised  options,  stock
appreciation  rights,  restricted  stock or stock  unit  grants 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 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

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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.  No holder of any of the securities of the Company or
any of its Subsidiaries has any rights  ("demand,"  "piggyback" or otherwise) to
have such  securities  registered by reason of the intention to file,  filing or
effectiveness of a Registration Statement (as defined in Section E hereof).

            (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.  There  is no  action,  suit,  proceeding,  inquiry  or
investigation  before or by any court, public board or body (including,  without
limitation,  the SEC) pending or, to the  knowledge  of the Company,  threatened
against  or  affecting  the  Company  or  any  of its  Subsidiaries  wherein  an
unfavorable  decision,  ruling or finding could adversely affect the validity or
enforceability  of, or the  authority  or ability of the  Company to perform its
obligations under the Agreements.

      (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
amended,  updated or superseded by any subsequently filed report,  were complete

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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) SARBANES-OXLEY 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  Sarbanes-Oxley  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  Sarbanes-Oxley  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 2004 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.

<PAGE>

      (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

<PAGE>

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.

<PAGE>

      (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

<PAGE>

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.  The
Company's  Common Stock is registered  pursuant to Section 12(g) of the Exchange
Act and is listed on The Nasdaq Stock Market,  Inc. SmallCap Market (the "NASDAQ
SMALLCAP MARKET"),  trading in the Common Stock has not been suspended,  and the
Company  has taken no action  designed  to,  or  likely to have the  effect  of,
terminating  the  registration  of the Common  Stock under the  Exchange  Act or
de-listing  the  Common  Stock  from  the  Nasdaq  SmallCap  Market,  nor to the
Company's  knowledge is the National  Association  of Securities  Dealers,  Inc.
("NASD") currently  contemplating  terminating such listing. The Company and the
Common Stock meet the criteria for  continued  listing and trading on the Nasdaq
SmallCap Market.

<PAGE>

      (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.

      (28) NO MANIPULATION OF STOCK.  The Company has not taken and will not, in
violation  of  applicable  law,  take,  any  action  designed  to or that  might
reasonably be expected to cause or result in  stabilization  or  manipulation of
the  price  of the  Common  Stock  to  facilitate  the  sale  or  resale  of the
Securities.

      (29) NO  REGISTRATION.  Assuming the accuracy of the  representations  and
warranties  made by, and  compliance  with the covenants  of, the  Purchasers in
Section B hereof,  no registration of the Securities under the Securities Act is
required in connection  with the offer and sale of the Securities by the Company
to the Purchasers as contemplated by this Agreement.

      (30) FORM D. The Company  agrees to file one or more Forms D with  respect
to the  Securities  on a timely basis as required  under  Regulation D under the
Securities  Act to claim the exemption  provided by Rule 506 of Regulation D and
to provide a copy thereof to the  Purchasers  and their counsel  promptly  after
such filing.

      (31) CERTAIN FUTURE  FINANCINGS AND RELATED ACTIONS.  The Company will not
sell, offer to sell, solicit offers to buy or otherwise  negotiate in respect of
any "security" (as defined in the Securities Act) that is or could be integrated
with the sale of the Securities in a manner that would require the  registration
of the Securities under the Securities Act.

      (32)  DISCLOSURE.  The Company  understands  and confirms that each of the
Purchasers will rely on the foregoing  representations in effecting transactions
in  securities  of the Company.  All  disclosure  provided by the Company to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby  furnished by or on the behalf of the Company are true and correct in all
material  respects and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the  statements  made
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.  To the Company's  knowledge,  no material event or circumstance has
occurred  or  information  exists  with  respect  to the  Company  or any of its
Subsidiaries  or its or their  business,  properties,  operations  or  financial
conditions,  which,  under  applicable law, rule or regulation,  requires public
disclosure  or  announcement  by the  Company but which has not been so publicly
announced or disclosed.

<PAGE>

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

<PAGE>

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

<PAGE>

actual filing, the "FILING DATE").  The Registration  Statement shall be on Form
S-3 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  90th 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 (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) 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 or any portion thereof until the Filing Date,  one-half percent
      (1.5%)  of the  aggregate  purchase  price  paid by such  Purchaser,  on a
      pro-rata basis over a 30-day period,  to be paid at the end of each 30-day
      period; or

            (ii) the  Registration  Statement  is not  declared  effective on or
      prior to the date that is 90 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
      90th 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)

<PAGE>

      for each  successive  30-day  period  thereafter  until  the  Registration
      Statement  is deemed  effective,  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, 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 and the  Purchasers  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.

<PAGE>

            (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,

<PAGE>

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.  Each  violation of the Company's  obligation not to suspend sales
pursuant to the  Registration  Statement  longer than permitted  pursuant to the
PROVISO of this  Paragraph  3(g)  shall be deemed an  "Event"  and for each such
default,  Purchaser  shall be entitled to the  payment  provisions  set forth in
Paragraph 2(d)(i).

            (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

<PAGE>

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

<PAGE>

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.

<PAGE>

      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

<PAGE>

already covered by an effective  Registration  Statement such Purchaser requests
to be registered.

      (9) RULE 144. For a period of two years  following  the date  hereof,  the
Company agrees with each holder of Registrable Securities to:

            (a) use its best  efforts to comply  with the  requirements  of Rule
144(c) under the Securities Act with respect to current public information about
the Company;

            (b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time it is subject to such reporting requirements); and

            (c) furnish to any holder of Registrable Securities upon request (i)
a written statement by the Company as to its compliance with the requirements of
said Rule 144(c) and the reporting  requirements  of the  Securities Act and the
Exchange Act (at any time it is subject to such reporting requirements),  (ii) a
copy of the most recent  annual or quarterly  report of the  Company,  and (iii)
such other  reports and  documents of the Company as such holder may  reasonably
request to avail itself of any similar rule or regulation of the SEC allowing it
to sell any such securities without registration.

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
Closing or (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  Closing,  the Company  shall,  by filing a Current
Report on Form 8-K and/or by issuance of a press release,  disclose such Closing
of the Offering.

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

<PAGE>

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.
            7201 Wisconsin Avenue, Suite 703
            Bethesda, MD 20814
            Fax No.: 301-215-7777
            Attention: Robert C. Goodwin, Jr., 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:

            Hughes Hubbard & Reed LLP
            One Battery Park Plaza
            New York, NY 10004-1482
            Fax No.: 212-422-4726
            Attention: Gary J. Simon, 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

<PAGE>

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".

                                * * * * * * *

<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: __________, 2005

2.    Total Subscription Amount:  $__________

------------------------------      ------------------------------
Signature of Subscriber             Signature of Joint Purchaser
(and title, if applicable)          (if any)

------------------------------      ------------------------------
Taxpayer Identification or          Taxpayer Identification or Social
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:
      ------------------------
      Name:
      Title:

Dated:
      ------------------------Exhibit 10.2

           THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
                   EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
                 TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT
           -----------------------------------------------------------

Warrant No. [   ]                                Number of Shares: [           ]
                                                         (subject to adjustment)
Date of Issuance: [           ], 2005

Original Issue Date (as defined in
subsection 2(a)): [           ], 2005

                           CHINDEX INTERNATIONAL, INC.

                          COMMON STOCK PURCHASE WARRANT

                             (VOID AFTER [           ], 2010)

      Chindex International,  Inc., a Delaware corporation (the "Company"),  for
value  received,  hereby  certifies  that [ ], or its  registered  assigns  (the
"Registered Holder"), is entitled, subject to the terms and conditions set forth
below,  to  purchase  from the  Company,  at any time or from time to time on or
after the date of issuance  and on or before  5:00 p.m.  (New York time) on [ ],
2010,  [ ] shares of Common  Stock,  $0.01 par value per share,  of the  Company
("Common Stock"), at a purchase price of $9.10 per share. The shares purchasable
upon  exercise  of this  Warrant,  and the  purchase  price per  share,  each as
adjusted  from time to time  pursuant to the  provisions  of this  Warrant,  are
hereinafter  referred  to as the  "Warrant  Shares"  and the  "Purchase  Price,"
respectively.  This Warrant is one of a series of Warrants issued by the Company
in connection with a private placement of Common Stock and of like tenor, except
as to the number of shares of Common Stock subject  thereto  (collectively,  the
"Company Warrants").

      1. EXERCISE.

            (a) EXERCISE  FOR CASH.  The  Registered  Holder may, at its option,
elect to exercise this Warrant, in whole or in part and at any time or from time
to time after the six-month anniversary of the date hereof, by surrendering this
Warrant, with the purchase form appended hereto as EXHIBIT I duly executed by or
on behalf of the Registered  Holder, at the principal office of the Company,  or
at such other  office or agency as the Company  may  designate,  accompanied  by
payment in full,  in lawful money of the United  States,  of the Purchase  Price
payable in respect of the number of Warrant Shares purchased upon such exercise.
A facsimile  signature of the  Registered  Holder on the purchase  form shall be
sufficient  for purposes of exercising  this Warrant,  provided that the Company
receives the Registered Holder's original signature with three (3) business days
thereafter.

<PAGE>

      (1) CASHLESS EXERCISE.

            (a) At any  time  during  a  period  when  the  Warrant  Shares  are
exercisable   hereunder  and  are  not  registered   pursuant  to  an  effective
registration  statement filed with the Securities and Exchange  Commission,  the
Registered Holder may, at its option,  elect to exercise this Warrant,  in whole
or in part, on a cashless basis, by surrendering this Warrant, with the purchase
form  appended  hereto  as  EXHIBIT  I  duly  executed  by or on  behalf  of the
Registered  Holder,  at the  principal  office of the Company,  or at such other
office or agency as the Company may  designate,  by  canceling a portion of this
Warrant  in payment of the  Purchase  Price  payable in respect of the number of
Warrant  Shares  purchased  upon  such  exercise.  In the  event of an  exercise
pursuant to this  subsection  1(b),  the number of Warrant  Shares issued to the
Registered Holder shall be determined according to the following formula:

            X = Y(A-B)
                ------
                  A

Where:  X =             the number of Warrant Shares that shall be issued to
                        the Registered Holder;

       Y =              the number of Warrant Shares for which this Warrant
                        is being exercised (which shall include both the
                        number of Warrant Shares issued to the Registered
                        Holder and the number of Warrant Shares subject to
                        the portion of the Warrant being cancelled in payment
                        of the Purchase Price);

       A =              the Fair Market Value (as defined below) of one share
                        of Common Stock; and

       B =              the Purchase Price then in effect.

            (b) The Fair  Market  Value  per  share  of  Common  Stock  shall be
determined as follows:

            (i) If the Common Stock is listed on a national securities exchange,
      the Nasdaq National Market or another nationally recognized trading system
      as of the Exercise  Date,  the Fair Market Value per share of Common Stock
      shall be deemed to be the average of the high and low reported sale prices
      per share of Common Stock thereon on the trading day immediately preceding
      the Exercise Date  (PROVIDED that if no such price -------- is reported on
      such  day,  the Fair  Market  Value per  share of  Common  Stock  shall be
      determined pursuant to clause (2) below).

            (ii) If the  Common  Stock is not  listed on a  national  securities
      exchange,  the Nasdaq  National  Market or another  nationally  recognized
      trading system as of the Exercise Date, the Fair Market Value per share of
      Common Stock shall be deemed to be the amount most recently  determined by
      the Board of Directors of the Company (the  "Board") to represent the fair
      market value per share of the Common Stock (including without limitation a
      determination  for purposes of granting  Common  Stock  options or issuing

<PAGE>

      Common Stock under any plan,  agreement or  arrangement  with employees of
      the Company);  and, upon request of the Registered Holder, the Board (or a
      representative  thereof) shall, as promptly as reasonably  practicable but
      in any  event  not later  than 10 days  after  such  request,  notify  the
      Registered  Holder of the Fair Market  Value per share of Common Stock and
      furnish the Registered Holder with reasonable documentation of the Board's
      determination of such Fair Market Value. Notwithstanding the foregoing, if
      the Board has not made such a determination  within the three-month period
      prior to the  Exercise  Date,  then (A) the Board  shall  make,  and shall
      provide or cause to be  provided  to the  Registered  Holder  notice of, a
      determination  of the Fair  Market  Value  per share of the  Common  Stock
      within 15 days of a request by the  Registered  Holder  that it do so, and
      (B) the exercise of this Warrant pursuant to this subsection 1(b) shall be
      delayed until such determination is made and notice thereof is provided to
      the Registered Holder.

            (b) EXERCISE DATE.  Each exercise of this Warrant shall be deemed to
have been  effected  immediately  prior to the close of  business  on the day on
which this  Warrant  shall have been  surrendered  to the Company as provided in
subsection 1(a) or 1(b) above (the "Exercise Date"). At such time, the person or
persons in whose name or names any  certificates  for  Warrant  Shares  shall be
issuable upon such exercise as provided in subsection 1(d) below shall be deemed
to have become the holder or holders of record of the Warrant Shares represented
by such certificates.

            (c)  ISSUANCE  OF  CERTIFICATES.  As soon as  practicable  after the
exercise of this  Warrant in whole or in part,  and in any event  within 10 days
thereafter, the Company, at its expense, will cause to be issued in the name of,
and delivered  to, the  Registered  Holder,  or as the  Registered  Holder (upon
payment by the Registered Holder of any applicable transfer taxes) may direct:

                  (i) a  certificate  or  certificates  for the  number  of full
Warrant  Shares to which  the  Registered  Holder  shall be  entitled  upon such
exercise  plus, in lieu of any fractional  share to which the Registered  Holder
would otherwise be entitled,  cash in an amount determined pursuant to Section 3
hereof; and

                  (ii) in case such  exercise is in part only,  a new warrant or
warrants (dated the date hereof) of like tenor,  calling in the aggregate on the
face or faces  thereof for the number of Warrant  Shares equal  (without  giving
effect to any adjustment therein) to the number of such shares called for on the
face of this Warrant  minus the number of Warrant  Shares for which this Warrant
was so exercised (which, in the case of an exercise pursuant to subsection 1(b),
shall include both the number of Warrant Shares issued to the Registered  Holder
pursuant to such partial  exercise and the number of Warrant  Shares  subject to
the portion of the Warrant being cancelled in payment of the Purchase Price).

      2. ADJUSTMENTS.

      (2) ADJUSTMENTS TO PURCHASE PRICE FOR DILUTING ISSUES.

            (a)  SPECIAL  DEFINITIONS.  For  purposes  of this  Section  2,  the
following definitions shall apply:

<PAGE>

            (i)  "OPTION"  shall mean  rights,  options or warrants to subscribe
      for, purchase or otherwise acquire Common Stock or Convertible Securities.

            (ii) "ORIGINAL ISSUE DATE" shall mean the date on which this Warrant
      was first issued (or, if this Warrant was issued upon partial exercise of,
      or in  replacement  of,  another  warrant of like tenor,  then the date on
      which such original warrant was first issued).

            (iii)   "CONVERTIBLE   SECURITIES"   shall  mean  any  evidences  of
      indebtedness,   shares  or  other   securities   directly  or   indirectly
      convertible into or exchangeable for Common Stock, but excluding Options.

            (iv)  "ADDITIONAL  SHARES OF COMMON  STOCK" shall mean all shares of
      Common Stock issued (or, pursuant to subsection  2(c)(i) below,  deemed to
      be issued) by the  Company  after the  Original  Issue  Date,  other than:
      shares of Common Stock issued or issuable  upon  conversion or exchange of
      any Convertible  Securities or exercise of any Options  outstanding on the
      Original  Issue Date;  shares of Common Stock issued or issuable by reason
      of a dividend,  stock split,  split-up or other  distribution on shares of
      Common Stock that is covered by subsection  2(g) or 2(h) below;  or shares
      of Common Stock (or Options with  respect  thereto)  issued or issuable to
      employees or directors  of, or  consultants  to, the Company or any of its
      subsidiaries  pursuant to a plan, agreement or arrangement approved by the
      Board of Directors of the Company (the "Board").

            (b) NO ADJUSTMENT OF PURCHASE  PRICE.  No adjustment to the Purchase
Price shall be made as the result of the issuance of Additional Shares of Common
Stock if the consideration  per share  (determined  pursuant to subsection 2(e))
for such  Additional  Share of Common Stock issued or deemed to be issued by the
Company is equal to or greater  than the  Purchase  Price in effect  immediately
prior to the  issuance or deemed  issuance of such  Additional  Shares of Common
Stock.

            (c) ISSUE OF SECURITIES  DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
Stock.

            (i) If the  Company  at any  time or from  time  to time  after  the
      Original  Issue Date shall  issue any  Options or  Convertible  Securities
      (excluding  Options  or  Convertible   Securities  which,  upon  exercise,
      conversion  or  exchange  thereof,  would  entitle  the holder  thereof to
      receive  shares of Common Stock which are  specifically  excepted from the
      definition  of Additional  Shares of Common Stock by  subsection  2(a)(iv)
      above) or shall fix a record date for the  determination of holders of any
      class of  securities  entitled to receive any such Options or  Convertible
      Securities,  then the  maximum  number of  shares of Common  Stock (as set
      forth in the instrument  relating  thereto without regard to any provision
      contained  therein for a subsequent  adjustment  of such number)  issuable
      upon  the  exercise  of  such  Options  or,  in the  case  of  Convertible
      Securities  and  Options  therefor,  the  conversion  or  exchange of such
      Convertible Securities,  shall be deemed to be Additional Shares of Common
      Stock  issued as of the time of such issue or, in case such a record  date
      shall have been fixed, as of the close of business on such record date.

            (ii)  If the  terms  of any  Option  or  Convertible  Security,  the
      issuance of which resulted in an adjustment to the Purchase Price pursuant

<PAGE>

      to the terms of subsection 2(d) below,  are revised (either  automatically
      pursuant the provisions  contained  therein or as a result of an amendment
      to such  terms) to provide  for either (1) any  increase  in the number of
      shares of Common Stock issuable upon the exercise,  conversion or exchange
      of any such  Option or  Convertible  Security  or (2) any  decrease in the
      consideration  payable to the Company upon such  exercise,  conversion  or
      exchange,   then,  effective  upon  such  increase  or  decrease  becoming
      effective,  the Purchase  Price  computed upon the original  issue of such
      Option or  Convertible  Security (or upon the  occurrence of a record date
      with respect  thereto) shall be readjusted to such Purchase Price as would
      have obtained had such revised terms been in effect upon the original date
      of issuance of such Option or Convertible  Security.  Notwithstanding  the
      foregoing,  no  adjustment  pursuant  to this  clause  (ii) shall have the
      effect of  increasing  the Purchase  Price to an amount which  exceeds the
      lower of (A) the Purchase  Price on the original  adjustment  date, or (B)
      the  Purchase  Price  that  would  have  resulted  from any  issuances  of
      Additional Shares of Common Stock between the original adjustment date and
      such readjustment date.

            (iii) If the terms of any Option or Convertible  Security (excluding
      Options or Convertible  Securities  which,  upon  exercise,  conversion or
      exchange  thereof,  would entitle the holder  thereof to receive shares of
      Common  Stock  which are  specifically  excepted  from the  definition  of
      Additional  Shares of Common  Stock by  subsection  2(a)(iv)  above),  the
      issuance of which did not result in an  adjustment  to the Purchase  Price
      pursuant  to the  terms of  subsection  2(d)  below  (either  because  the
      consideration per share (determined pursuant to subsection  2(e)hereof) of
      the  Additional  Shares of Common  Stock  subject  thereto was equal to or
      greater than the Purchase Price then in effect,  or because such Option or
      Convertible  Security  was issued  before the Original  Issue  Date),  are
      revised after the Original Issue Date (either  automatically  pursuant the
      provisions contained therein or as a result of an amendment to such terms)
      to provide  for either (1) any  increase in the number of shares of Common
      Stock  issuable  upon the  exercise,  conversion  or  exchange of any such
      Option or  Convertible  Security or (2) any decrease in the  consideration
      payable to the Company upon such  exercise,  conversion or exchange,  then
      such Option or  Convertible  Security,  as so amended,  and the Additional
      Shares of Common Stock subject thereto  (determined in the manner provided
      in  subsection  2(c)(ii)  above)  shall  be  deemed  to have  been  issued
      effective upon such increase or decrease becoming effective.

            (iv) Upon the expiration or termination of any unexercised Option or
      unconverted  or unexchanged  (as  applicable)  Convertible  Security which
      resulted  (either  upon its  original  issuance  or upon a revision of its
      terms) in an  adjustment  to the Purchase  Price  pursuant to the terms of
      subsection 2(d) below, the Purchase Price shall not be readjusted.

            (v) No adjustment in the Purchase Price shall be made upon the issue
      of shares of Common Stock or Convertible  Securities  upon the exercise of
      Options  or the issue of shares of Common  Stock  upon the  conversion  or
      exchange of Convertible Securities.

            (d) ADJUSTMENT OF PURCHASE PRICE UPON ISSUANCE OF ADDITIONAL  SHARES
OF COMMON  STOCK.  In the event the Company shall at any time after the Original

<PAGE>

Issue Date issue Additional Shares of Common Stock (including  Additional Shares
of Common Stock deemed to be issued  pursuant to  subsection  2(c)(i)),  without
consideration  or for a consideration  per share less than the Purchase Price in
effect  immediately  prior to such  issue,  then  the  Purchase  Price  shall be
reduced,  concurrently  with such issue,  to a price  (calculated to the nearest
cent)  determined  by  multiplying  such Purchase  Price by a fraction,  (A) the
numerator of which shall be (1) the number of shares of Common Stock outstanding
immediately  prior to such issue  plus (2) the number of shares of Common  Stock
which the aggregate  consideration received or to be received by the Company for
the total number of Additional  Shares of Common Stock so issued would  purchase
at such Purchase Price;  and (B) the denominator of which shall be the number of
shares of Common  Stock  outstanding  immediately  prior to such  issue plus the
number of such Additional  Shares of Common Stock so issued;  PROVIDED that, (i)
for the purpose of this  subsection  2(d),  all shares of Common Stock  issuable
upon conversion or exchange of Convertible  Securities  outstanding  immediately
prior to such issue  shall be deemed to be  outstanding,  and (ii) the number of
shares of Common  Stock  deemed  issuable  upon  conversion  or exchange of such
outstanding  Convertible Securities shall be determined without giving effect to
any  adjustments  to the  conversion or exchange price or conversion or exchange
rate of such  Convertible  Securities  resulting from the issuance of Additional
Shares of Common Stock that is the subject of this calculation.

            (e) DETERMINATION OF CONSIDERATION.  For purposes of this subsection
2(e), the consideration  received by the Company for the issue of any Additional
Shares of Common Stock shall be computed as follows:

            (i) CASH AND  PROPERTY:  Such  consideration  shall:  insofar  as it
      consists of cash,  be computed at the  aggregate  of cash  received by the
      Company,  excluding amounts paid or payable for accrued interest;  insofar
      as it consists of property other than cash, be computed at the fair market
      value  thereof at the time of such issue,  as  determined in good faith by
      the Board; and in the event  Additional  Shares of Common Stock are issued
      together  with other shares or  securities  or other assets of the Company
      for   consideration   which  covers  both,  be  the   proportion  of  such
      consideration so received,  computed as provided herein,  as determined in
      good faith by the Board.

            (ii) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share
      received by the Company for  Additional  Shares of Common  Stock deemed to
      have been issued pursuant to subsection  2(c)(i),  relating to Options and
      Convertible Securities,  shall be determined by dividing the total amount,
      if any,  received or  receivable by the Company as  consideration  for the
      issue  of  such  Options  or  Convertible  Securities,  plus  the  minimum
      aggregate  amount  of  additional  consideration  (as  set  forth  in  the
      instruments  relating thereto,  without regard to any provision  contained
      therein for a subsequent adjustment of such consideration)  payable to the
      Company upon the exercise of such Options or the conversion or exchange of
      such  Convertible  Securities,  or in the case of Options for  Convertible
      Securities,  the exercise of such Options for  Convertible  Securities and
      the conversion or exchange of such Convertible Securities,  by the maximum
      number of shares of Common Stock (as set forth in the instruments relating
      thereto,   without  regard  to  any  provision  contained  therein  for  a
      subsequent  adjustment of such number)  issuable upon the exercise of such
      Options or the conversion or exchange of such Convertible Securities.

<PAGE>

            (f) MULTIPLE  CLOSING DATES. In the event the Company shall issue on
more than one date  Additional  Shares of Common  Stock which are  comprised  of
shares of the same  series or class of Common  Stock,  and such  issuance  dates
occur  within a period  of no more  than 120 days,  then,  upon the  final  such
issuance,  the  Purchase  Price shall be  readjusted  to give effect to all such
issuances  as if they  occurred  on the date of the  final  such  issuance  (and
without  giving effect to any  adjustments  as a result of such prior  issuances
within such period).

            (g)  ADJUSTMENT  FOR STOCK SPLITS AND  COMBINATIONS.  If the Company
shall at any time or from time to time after the  Original  Issue Date  effect a
subdivision of the outstanding  Common Stock,  the Purchase Price then in effect
immediately before that subdivision shall be proportionately  decreased.  If the
Company  shall at any time or from time to time  after the  Original  Issue Date
combine the  outstanding  shares of Common  Stock,  the  Purchase  Price then in
effect immediately  before the combination shall be  proportionately  increased.
Any  adjustment  under this  paragraph  shall  become  effective at the close of
business on the date the subdivision or combination becomes effective.

            (h) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
the  Company  at any time,  or from time to time after the  Original  Issue Date
shall make or issue,  or fix a record date for the  determination  of holders of
Common Stock entitled to receive,  a dividend or other  distribution  payable in
additional  shares of Common  Stock,  then and in each such  event the  Purchase
Price then in effect  immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record  date,  by  multiplying  the Purchase
Price then in effect by a fraction:

                        (1) the  numerator of which shall be the total number of
shares of Common Stock issued and outstanding  immediately  prior to the time of
such issuance or the close of business on such record date, and

                        (2) the  denominator  of which shall be the total number
of shares of Common Stock issued and outstanding  immediately  prior to the time
of such issuance or the close of business on such record date plus the number of
shares of Common  Stock  issuable in payment of such  dividend or  distribution;
PROVIDED,  HOWEVER,  that if such  record  date  shall  have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed  therefor,  the Purchase  Price shall be recomputed  accordingly as of the
close of business on such record date and thereafter the Purchase Price shall be
adjusted  pursuant to this  paragraph  as of the time of actual  payment of such
dividends or distributions.

            (i) ADJUSTMENT IN NUMBER OF WARRANT  SHARES.  When any adjustment is
required to be made in the Purchase Price pursuant to subsections  2(d), 2(g) or
2(h), the number of Warrant Shares purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such  adjustment,  by (ii) the Purchase Price in effect  immediately  after such
adjustment.

<PAGE>

            (j) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS.  In the event
the Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the  determination  of holders of Common
Stock  entitled  to  receive,  a  dividend  or  other  distribution  payable  in
securities  of the Company  (other  than  shares of Common  Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned
surplus,   determined  in  accordance   with   generally   accepted   accounting
principles),  then and in each such  event  provision  shall be made so that the
Registered  Holder shall receive upon exercise hereof, in addition to the number
of shares of Common Stock issuable hereunder,  the kind and amount of securities
of the Company,  cash or other property  which the Registered  Holder would have
been  entitled to receive had this  Warrant  been  exercised on the date of such
event and had the Registered Holder thereafter,  during the period from the date
of such event to and including the Exercise Date,  retained any such  securities
receivable during such period,  giving application to all adjustments called for
during  such  period  under  this  Section 2 with  respect  to the rights of the
Registered Holder.

            (k)  ADJUSTMENT  FOR  REORGANIZATION.   If  there  shall  occur  any
reorganization,  recapitalization,  reclassification,  consolidation  or  merger
involving  the Company in which the Common Stock is converted  into or exchanged
for  securities,  cash or other  property  (other than a transaction  covered by
subsections  2(d),  2(g) or  2(h))  (collectively,  a  "Reorganization"),  then,
following such Reorganization, the Registered Holder shall receive upon exercise
hereof  the kind and  amount of  securities,  cash or other  property  which the
Registered  Holder  would  have  been  entitled  to  receive  pursuant  to  such
Reorganization  if such  exercise  had  taken  place  immediately  prior to such
Reorganization. Notwithstanding the foregoing sentence, if (x) there shall occur
any  Reorganization in which the Common Stock is converted into or exchanged for
anything  other than solely equity  securities,  and (y) the common stock of the
acquiring  or  surviving  company  is  publicly  traded,  then,  as part of such
Reorganization,  (i) the  Registered  Holder shall have the right  thereafter to
receive  upon the  exercise  hereof such number of shares of common stock of the
acquiring or surviving company as is determined by multiplying (A) the number of
shares  of  Common  Stock  subject  to this  Warrant  immediately  prior to such
Reorganization  by (B) a  fraction,  the  numerator  of which is the Fair Market
Value (as defined  below) per share of Common Stock as of the effective  date of
such  Reorganization,  and the denominator of which is the fair market value per
share of common stock of the acquiring or surviving  company as of the effective
date of such  transaction,  as  determined in good faith by the Board (using the
principles set forth in subsections 2(l) and (m) to the extent applicable),  and
(ii) the exercise  price per share of common stock of the acquiring or surviving
company  shall be the  Purchase  Price  divided by the  fraction  referred to in
clause (B) above.  In any such case,  appropriate  adjustment  (as determined in
good faith by the Board) shall be made in the  application of the provisions set
forth  herein  with  respect  to the  rights  and  interests  thereafter  of the
Registered  Holder,  to the end that the  provisions set forth in this Section 2
(including  provisions  with respect to changes in and other  adjustments of the
Purchase Price) shall thereafter be applicable,  as nearly as reasonably may be,
in relation to any  securities,  cash or other property  thereafter  deliverable
upon the exercise of this Warrant.

      The Fair Market  Value per share of Common  Stock shall be  determined  as
follows:

            (l) If the Common Stock is listed on a national securities exchange,
The NASDAQ  Stock  Market,  Inc.  ("Nasdaq")  or another  nationally  recognized

<PAGE>

trading  system as of the  Exercise  Date,  the Fair  Market  Value per share of
Common  Stock  shall be deemed  to be the  reported  closing  price per share of
Common Stock thereon on the trading day immediately  preceding the Exercise Date
(PROVIDED  that if no such price is reported on such day,  the Fair Market Value
per share of Common Stock shall be determined pursuant to clause (ii)).

            (m) If the  Common  Stock is not  listed  on a  national  securities
exchange,  Nasdaq or  another  nationally  recognized  trading  system as of the
Exercise  Date,  the Fair Market Value per share of Common Stock shall be deemed
to be the amount most  recently  determined  by the Board to represent  the fair
market  value per share of the Common  Stock  (including  without  limitation  a
determination  for purposes of granting  Common Stock options or issuing  Common
Stock under any plan,  agreement or arrangement  with employees of the Company);
and,  upon  request of the  Registered  Holder,  the Board (or a  representative
thereof) shall, as promptly as reasonably practicable but in any event not later
than 10 days after such request, notify the Registered Holder of the Fair Market
Value  per  share of  Common  Stock  and  furnish  the  Registered  Holder  with
reasonable documentation of the Board's determination of such Fair Market Value.

            (n)  CERTIFICATE  AS TO  ADJUSTMENTS.  Upon the  occurrence  of each
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall,  as promptly as reasonably  practicable but in any
event not later than 10 days thereafter, compute such adjustment or readjustment
in  accordance  with the terms  hereof and  furnish to the  Registered  Holder a
certificate  setting forth such adjustment or  readjustment  (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable  and the Purchase  Price) and showing in detail the facts upon which
such  adjustment or  readjustment  is based.  The Company shall,  as promptly as
reasonably  practicable  after the written request at any time of the Registered
Holder (but in any event not later than 10 days thereafter), furnish or cause to
be  furnished  to the  Registered  Holder a  certificate  setting  forth (i) the
Purchase  Price then in effect and (ii) the number of shares of Common Stock and
the amount,  if any, of other  securities,  cash or property which then would be
received upon the exercise of this Warrant.

            (o)  LIMITATION  ON  ADJUSTMENTS.  Notwithstanding  anything  to the
contrary  contained herein, in no event may any adjustment to the Purchase Price
pursuant  to the  terms of  subsection  2(d)  result  in the  adjustment  of the
Purchase Price below $7.09, as adjusted for  adjustments  pursuant to subsection
2(g); provided that, for clarification of the foregoing,  the Purchase Price may
be adjusted without limitation based on the provisions of subsection 2(g).

      3. FRACTIONAL  SHARES. The Company shall not be required upon the exercise
of this Warrant to issue any fractional  shares, but shall pay the value thereof
to the Registered Holder in cash on the basis of the Fair Market Value per share
of Common Stock, as determined pursuant to subsection 2(f) above.

      4. TRANSFERS, ETC.

            (a) Notwithstanding  anything to the contrary contained herein, this
Warrant and the Warrant  Shares shall not be sold or  transferred  unless either
(i) they first shall have been  registered  under the Securities Act of 1933, as
amended  (the  "Act"),  or (ii) such sale or  transfer  shall be exempt from the
registration  requirements  of the Act and the Company shall have been furnished

<PAGE>

with an opinion of legal counsel, reasonably satisfactory to the Company, to the
effect that such sale or transfer is exempt from the  registration  requirements
of the Act. Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a  Registered  Holder which is an entity
to a wholly owned subsidiary of such entity,  a transfer by a Registered  Holder
which is a partnership to a partner of such  partnership or a retired partner of
such partnership or to the estate of any such partner or retired  partner,  or a
transfer by a Registered Holder which is a limited liability company to a member
of such limited  liability  company or a retired  member or to the estate of any
such member or retired member,  PROVIDED that the transferee in each case agrees
in writing to be subject to the terms of this Section 4, or (ii) a transfer made
in accordance with Rule 144 under the Act.

            (b) Each certificate representing Warrant Shares shall bear 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 not 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 counsel for this corporation, is available."

      The foregoing legend shall be removed from the  certificates  representing
any Warrant Shares,  at the request of the holder thereof,  at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act or at such time
as  the  Warrant  Shares  are  sold  or  transferred  in  accordance   with  the
requirements  of a  registration  statement  of the Company on Form S-3, or such
other form as may then be in effect.

            (c) The Company  will  maintain a register  containing  the name and
address of the  Registered  Holder of this Warrant.  The  Registered  Holder may
change its  address as shown on the warrant  register  by written  notice to the
Company requesting such change.

            (d) This Warrant and all rights hereunder are transferable, in whole
or in part, upon surrender of this Warrant with a properly  executed  assignment
(in the form of EXHIBIT II hereto) at the  principal  office of the Company (or,
if another office or agency has been designated by the Company for such purpose,
then at such other office or agency).

<PAGE>

      5. NO  IMPAIRMENT.  The Company  will not, by  amendment of its charter or
through  any  reorganization,   transfer  of  assets,   consolidation,   merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Registered Holder against impairment.

      6. NOTICES OF RECORD DATE, ETC. In the event:

            (a) the  Company  shall  take a record of the  holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this  Warrant)  for the purpose of  entitling  or  enabling  them to receive any
dividend  or other  distribution,  or to receive any right to  subscribe  for or
purchase any shares of stock of any class or any other securities, or to receive
any other right; or

            (b)  of   any   capital   reorganization   of   the   Company,   any
reclassification of the Common Stock of the Company, any consolidation or merger
of the  Company  with or into  another  corporation,  or any  transfer of all or
substantially all of the assets of the Company; or

            (c) of the  voluntary or  involuntary  dissolution,  liquidation  or
winding-up of the Company, then, and in each such case, the Company will send or
cause to be sent to the Registered Holder a notice  specifying,  as the case may
be, (i) the record date for such dividend, distribution or right, and the amount
and character of such  dividend,  distribution  or right,  or (ii) the effective
date on which  such  reorganization,  reclassification,  consolidation,  merger,
transfer, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed,  as of which the  holders  of record of Common  Stock (or
such other stock or securities at the time deliverable upon the exercise of this
Warrant)  shall be entitled to exchange  their  shares of Common  Stock (or such
other stock or securities)  for securities or other  property  deliverable  upon
such  reorganization,   reclassification,   consolidation,   merger,   transfer,
dissolution,  liquidation or  winding-up.  Such notice shall be sent at least 10
days prior to the record date or effective date for the event  specified in such
notice.

      7.  RESERVATION  OF STOCK.  The Company will at all times reserve and keep
available,  solely for issuance and delivery  upon the exercise of this Warrant,
such number of Warrant Shares and other  securities,  cash and/or  property,  as
from time to time shall be issuable upon the exercise of this Warrant.

      8. EXCHANGE OR REPLACEMENT OF WARRANTS.

            (a) Upon the surrender by the Registered Holder,  properly endorsed,
to the Company at the  principal  office of the Company,  the Company will issue
and  deliver to or upon the order of the  Registered  Holder,  at the  Company's
expense,  a new Warrant or Warrants of like tenor, in the name of the Registered
Holder or as the Registered Holder (upon payment by the Registered Holder of any
applicable  transfer taxes) may direct,  calling in the aggregate on the face or
faces  thereof  for the number of shares of Common  Stock (or other  securities,
cash and/or property) then issuable upon exercise of this Warrant.

<PAGE>

            (b) Upon receipt of evidence reasonably  satisfactory to the Company
of the loss,  theft,  destruction or mutilation of this Warrant and (in the case
of loss,  theft or  destruction)  upon delivery of an indemnity  agreement (with
surety if  reasonably  required)  in an amount  reasonably  satisfactory  to the
Company,  or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

      9. NOTICES.  All notices and other  communications from the Company to the
Registered  Holder  in  connection  herewith  shall be mailed  by  certified  or
registered mail, postage prepaid, or sent via a reputable  nationwide  overnight
courier  service  guaranteeing  next business day delivery,  to the address last
furnished to the Company in writing by the  Registered  Holder.  All notices and
other  communications  from the  Registered  Holder to the Company in connection
herewith shall be mailed by certified or registered mail,  postage  prepaid,  or
sent via a reputable  nationwide  overnight  courier service  guaranteeing  next
business day delivery,  to the Company at its principal  office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below,  it shall give prompt  written  notice to
the  Registered  Holder and  thereafter  all  references  in this Warrant to the
location of its principal office at the particular time shall be as so specified
in such notice.  All such notices and  communications  shall be deemed delivered
one  business  day after  being  sent via a  reputable  international  overnight
courier service guaranteeing next business day delivery.

      10. NO RIGHTS AS  STOCKHOLDER.  Until the  exercise of this  Warrant,  the
Registered  Holder shall not have or exercise  any rights by virtue  hereof as a
stockholder of the Company.  Notwithstanding the foregoing, in the event (i) the
Company effects a split of the Common Stock by means of a stock dividend and the
Purchase  Price of and the number of Warrant  Shares are adjusted as of the date
of the  distribution of the dividend (rather than as of the record date for such
dividend),  and (ii) the Registered  Holder  exercises this Warrant  between the
record date and the  distribution  date for such stock dividend,  the Registered
Holder  shall be  entitled  to  receive,  on the  distribution  date,  the stock
dividend with respect to the shares of Common Stock acquired upon such exercise,
notwithstanding  the fact that such shares were not  outstanding as of the close
of business on the record date for such stock dividend.

      11. AMENDMENT OR WAIVER. Any term of this Warrant may be amended or waived
(either  generally  or in a  particular  instance  and either  retroactively  or
prospectively)  with the  written  consent  of the  Company  and the  holders of
Company  Warrants  representing  at least  two-thirds of the number of shares of
Common Stock then subject to outstanding  Company Warrants.  Notwithstanding the
foregoing,  (a) this  Warrant  may be  amended  and the  observance  of any term
hereunder may be waived  without the written  consent of the  Registered  Holder
only in a manner which  applies to all Company  Warrants in the same fashion and
(b) the number of Warrant  Shares subject to this Warrant and the Purchase Price
of this Warrant may not be amended,  and the right to exercise  this Warrant may
not be waived,  without the written  consent of the Registered  Holder (it being
agreed that an amendment to or waiver under any of the  provisions  of Section 2
of this Warrant  shall not be  considered  an amendment of the number of Warrant
Shares or the Purchase  Price).  The Company shall give prompt written notice to
the  Registered  Holder of any  amendment  hereof or waiver  hereunder  that was
effected  without the Registered  Holder's  written  consent.  No waivers of any
term,  condition  or provision of this  Warrant,  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.

<PAGE>

      12.  SECTION  HEADINGS.  The section  headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.

      13.  GOVERNING  LAW.  This  Warrant  will be governed by and  construed in
accordance with the internal laws of the State of New York (without reference to
the conflicts of law provisions thereof).

      14.  FACSIMILE  SIGNATURES.  This  Warrant may be  executed  by  facsimile
signature.

                                * * * * * * *

<PAGE>

      EXECUTED as of the Date of Issuance indicated above.

                                    CHINDEX INTERNATIONAL, INC.

                                    By:________________________________
                                       Name:
                                       Title:

            ATTEST:

            ------------------------

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