EXHIBIT 4.1
AIR METHODS CORPORATION
FORM OF COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
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into as of November 26, 2003, by and among Air Methods Corporation, a Delaware
corporation (the "Company"), and the parties listed on the Schedule of Investors
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separately delivered to the Investors (the "Schedule of Investors") (each
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hereinafter, and their permitted assigns, individually referred to as an
"Investor" and collectively referred to as the "Investors").
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1. AGREEMENT TO PURCHASE AND SELL STOCK.
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1.1 Authorization. As of the Closing (as defined below) the
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Company will have authorized the issuance, pursuant to the terms and conditions
of this Agreement, of up to 1,200,000 shares of the Company's Common Stock, $.06
par value (the "Common Stock").
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1.2 Agreement to Purchase and Sell. The Company agrees to sell to
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each Investor at the Closing, and each Investor agrees, severally and not
jointly, to purchase from the Company at the Closing, the number of shares of
Common Stock set forth beside such Investor's name on the Schedule of Investors,
at a price of $8.00 per share, and in the aggregate amount for such Investor as
set forth on the Schedule of Investors. The shares of Common Stock purchased
and sold pursuant to this Agreement will be collectively hereinafter referred to
as the "Purchased Shares."
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2. CLOSING.
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2.1 The Closing. The purchase and sale of the Purchased Shares
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will take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at 8:00 a.m., Mountain Time, on
December 1, 2003, or at such other time and place as the Company and Investors
who have agreed to purchase a majority of the Purchased Shares listed on the
Schedule of Investors mutually agree upon (which time and place are referred to
in this Agreement as the "Closing"), provided that the closing may not be
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delayed for more than five (5) business days without the consent of all
Investors. At the Closing, the Investor will purchase the number of Purchased
Shares shown on the Schedule of Investors against delivery to the Investor (or
its designated custodian) by the Company of a certificate representing such
Purchased Shares and/or a copy of the Company's irrevocable instructions to its
transfer agent to prepare and issue such certificate, with delivery of such
certificate to occur within three (3) business days thereafter. The full
purchase price for such Purchased Shares shall be paid at Closing by wire
transfer of funds to the Company. The date of the Closing is referred to herein
as the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
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represents and warrants to Investor that the statements in the following
paragraphs of this Section 3 are all true and correct:
3.1 Organization, Good Standing and Qualification. Each of the
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Company and its subsidiaries is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction under which it is incorporated, and has all requisite corporate or
limited liability company power and authority to conduct its business as
currently conducted and to execute, deliver and perform all of its obligations
under this Agreement and to consummate the transactions contemplated hereby.
Each of the Company and its subsidiaries is qualified to do business as a
foreign corporation in each jurisdiction where failure to be so qualified could,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on, or material adverse change in the business, assets or
liabilities, prospects, financial condition, results of operations, or assets of
the Company and its subsidiaries, taken as a whole (the "Business") (such effect
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referred to as a "Material Adverse Effect"). For purposes of this Agreement,
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"Material Adverse Effect" shall not include any effect attributable to changes
in the trading prices for the Company's Common Stock or changes in economic
conditions affecting the U.S. economy generally.
3.2 Capitalization. Immediately before the Closing, the
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capitalization of the Company will consist of the following:
(a) Preferred Stock. A total of 5,000,000 authorized shares
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of Preferred Stock, $1.00 par value per share (the "Preferred Stock"), none of
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which are issued and outstanding.
(b) Common Stock. A total of 16,000,000 authorized shares of
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Common Stock, of which approximately 9,637,109 shares were issued and 9,602,248
shares were outstanding as of September 30, 2003.
(c) Options, Warrants, Reserved Shares. Except for, at
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November 6, 2003: (i) 601,003 shares of Common Stock issuable upon exercise of
outstanding options under the employee and director Stock Option Plans, (ii)
options to purchase an additional 695,829 shares of Common Stock available for
grant under these plans, (iii) 150,000 shares of Common Stock available to be
used as compensation of directors under the Company's Nonemployee Director
Equity Compensation Plan, and (iv) 593,224 shares of Common Stock purchasable
upon exercise of outstanding warrants, 576,557 of which are currently
exercisable, there were not outstanding at such time any options, warrants,
rights or agreements for the purchase or acquisition from the Company of any
shares of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the Company's capital stock. An
additional 5,837 shares of Common Stock will become issuable upon completion of
this transaction pursuant to the anti-dilution provisions of outstanding
warrants. All of such outstanding shares of capital stock have been duly
authorized and validly issued and are fully paid and nonassessable and all of
such options, warrants and other rights to acquire Common Stock have been duly
authorized by the Company. None of the outstanding shares of capital stock and
options, warrants and other rights to acquire Common Stock has been issued in
violation of the preemptive rights of any security holder of the Company.
3.3 Subsidiaries. Except for (i) a 100% equity interest in Mercy
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Air Service, Inc., a California corporation ("Mercy"), (ii) a 100% equity
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interest in Arch Air Medical Service, Inc., a Missouri corporation ("Arch")
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(iii) a 100% equity interest in Rocky Mountain Holdings, L.L.C., a Delaware
limited liability company ("RMH," together, Mercy, Arch, and RMH the
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"Subsidiaries"), and (iv) a 50% equity interest in Mercy Air, Tri-County, LLC, a
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California limited liability company ("MATC") the Company does not presently own
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or control, directly or indirectly, any interest in any other corporation,
limited liability company, partnership, trust,
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joint venture, association, or other entity. All of the outstanding shares of
capital stock of the Subsidiaries have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by the Company.
3.4 Due Authorization; No Violation. All corporate action on the
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part of the Company and its officers, directors and stockholders necessary for
the authorization, execution and delivery of, and the performance of all
obligations of the Company under, this Agreement and the transactions
contemplated hereby, and the authorization, issuance, reservation for issuance
and delivery of all of the Purchased Shares being sold under this Agreement, has
been taken or will be taken prior to the Closing, no further consent or
authorization of the Company or the Board of Directors or its stockholders is
required and this Agreement constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies. Neither the
execution, delivery or performance by the Company of this Agreement nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in a breach of any provision of the Certificate of
Incorporation of the Company, as amended to date (the "Charter") or the
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Company's Bylaws or the comparable organizational documents of its Subsidiaries,
(ii) conflict with, result in a violation or breach of, or cause a default (or
give rise to any right of termination, cancellation or acceleration), or result
in the creation or imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or its
Subsidiaries, under any of the terms, conditions or provisions of any agreement,
instrument or obligation to which the Company or its Subsidiaries is a party,
which default could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or (iii) violate any law, statute, rule or
regulation or judgment, order, writ, injunction or decree of any governmental
authority, in each case under this clause (iii) applicable to the Company or its
Subsidiaries or any of their respective properties or assets and which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The business and operations of the Company and its
Subsidiaries have been conducted in accordance with all applicable laws, rules
and regulations of all governmental authorities, except for such violations
which could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
3.5 Valid Issuance of Stock. The Purchased Shares, when issued,
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sold and delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly authorized and validly issued,
fully paid and nonassessable and free and clear of all pledges, taxes, claims,
liens, encumbrances and restrictions (other than those arising under federal or
state securities laws as a result of the private placement of the Purchased
Shares to the Investors) and are not subject to preemptive or other similar
rights of any stockholder of the Company, except that in connection with this
offering, Prudential Capital Partners, L.P. and Prudential Capital Partners
Management Fund, L.P. have a preemptive right to purchase 43,843 shares in the
aggregate in order to maintain their percentage ownership in the Company
represented by their warrants.
3.6 Compliance with Securities Laws. Subject to the accuracy of
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the representations made by the Investors in Section 4 hereof, the Purchased
Shares (assuming no
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change in applicable law and no unlawful distribution of Purchased Shares by the
Investors or other parties) will be issued to the Investors in compliance with
applicable exemptions from (1) the registration and prospectus delivery
requirements of the Securities Act and (2) the registration and qualification
requirements of all applicable securities laws of the states of the United
States.
3.7 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, or notice to, any federal, state or local governmental authority or
self regulatory agency on the part of the Company or its Subsidiaries is
required in connection with the valid execution and delivery of this Agreement,
the offer, sale and issuance of the Purchased Shares, or the consummation of the
transactions contemplated by this Agreement, except for qualifications or
filings under the Securities Act of 1933, as amended (the "Act") and the
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applicable rules and regulations (the "Rules and Regulations") of the Securities
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and Exchange Commission (the "Commission") under the Act, and all other
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applicable securities laws as may be required in connection with the
transactions contemplated by this Agreement. All such qualifications (other
than those required in connection with the registration of the resale of the
Purchased Shares) will be effective on the Closing, and all such filings will be
made within the time prescribed by law.
3.8 Absence of Changes. After the respective dates as of which
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information is given in the Company's Proxy Statement for the annual meeting of
stockholders held on June 11, 2003, the Company's Annual Report on Form 10-K for
the year ended December 31, 2002, the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2003, June 30, 2003 and September 30, 2003, and
the Company's Report on Form 8-K filed on October 31, 2002, as amended by Form
8-K/A-1 filed on December 30, 2002, and the Form 8-K furnished on November 12,
2003 and the description of the Common Stock contained in Registration Statement
on Form 8-A No. 1-11153, which became effective on May 20, 1992, respectively
(such documents, referred to collectively as the "Disclosure Documents"), there
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has not been (i) any Material Adverse Effect on the Business, (ii) any
transaction that is material to the Company and its Subsidiaries, taken as a
whole, (iii) any obligation, direct or contingent, that is material to the
Company and its Subsidiaries, taken as a whole, incurred by the Company or its
Subsidiaries, (iv) any change in the outstanding indebtedness of the Company or
its Subsidiaries that is material, (v) any dividend declared, paid or made on
the capital stock of the Company, (vi) any loss or damage (whether or not
insured) to the property of the Company or its Subsidiaries which has been
sustained which could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect or (vii) any other event which could
reasonably be expected to adversely affect the validity or enforceability of, or
the authority or the ability of the Company to perform its obligations under,
this Agreement.
3.9 Litigation. Except as disclosed in the Disclosure Documents,
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there is no action, suit, proceeding, claim, arbitration or investigation
("Action") pending (or, to the Company's knowledge, currently threatened)
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against or otherwise affecting the Company or its Subsidiaries , or their
respective activities, properties or assets, which (i) is reasonably likely to
prevent the consummation of the transactions contemplated hereby or (ii) if
adversely resolved against the Company or its Subsidiaries could adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement, or
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could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
3.10 NASDAQ Listing. The Company's Common Stock is registered
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pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and is listed on the Nasdaq National Market. The Company
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will use its best efforts to comply with all requirements of the National
Association of Securities Dealers, Inc. with respect to the issuance of the
Purchased Shares and the listing thereof on the Nasdaq National Market;
provided, however, that the Company makes no representations that it will
continue to meet all of the requirements for listing of the Common Stock on the
Nasdaq National Market. The Company shall use its best efforts to take such
actions as may be necessary, and as soon as practicable and in no event later
than thirty (30) days after the Closing Date, to file with Nasdaq any necessary
application or other document required by Nasdaq in order to list the Purchased
Shares on the market on which they are traded and to pay any required listing
fees within the required time.
3.11 Commission Filings. The Company has filed in a timely manner
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all reports and other information required to be filed ("Filings") with the
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Commission pursuant to the Exchange Act during the preceding twelve calendar
months. On their respective dates of filing, to the Company's knowledge the
Filings complied in all material respects with the requirements of the Exchange
Act, and the published rules and regulations of the Commission promulgated
thereunder. To the Company's knowledge, on their respective dates of filing,
the Filings did not include any untrue statement of a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, and all financial
statements contained in the Filings fairly present, in all material respects,
the financial position of the Company on the dates of such statements and the
results of operations for the periods covered thereby in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved and comparable prior periods, except as otherwise indicated in
the notes to such financial statements, subject in the case of unaudited
financial statements, to normal year-end audit adjustments.
3.12 Disclosure. To the Company's knowledge, the representations
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and warranties made by the Company in this Agreement and the Disclosure
Documents when read together do not contain any untrue statement of a material
fact and do not omit to state a material fact necessary to make the statements
herein as a whole not misleading.
3.13 Governmental Permits, Etc. The Company and its Subsidiaries
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possess all licenses, franchises, governmental approvals, permits or other
governmental authorizations (collectively, "Authorizations") relating to the
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operation of the Business, except for those Authorizations the failure of which
to possess could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company and its Subsidiaries are in
compliance with the terms of all Authorizations and all laws, ordinances,
regulations and decrees which are applicable to the Business, except for such
non-compliance which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.14 Insurance. The Company and its Subsidiaries are covered by,
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and will continue to be covered by, insurance with companies the Company
believes to be responsible and in such amounts and covering such risks as it
believes to be adequate for the conduct of the
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Business and the value of the Company's and its Subsidiaries' properties and as
is customary for companies engaged in similar businesses in similar industries,
all of which insurance is in full force and effect. The Company has no knowledge
that any such carrier has grounds or intends to cancel or fail to renew such
policies on terms acceptable to the Company.
3.15 Intellectual Property. The Company or its Subsidiaries own
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or possess the patents, patent rights, licenses, inventions, copyrights, trade
secrets, trademarks, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) and other rights or interests in items of intellectual property that
are material to the Business as operated by the Company and as currently
expected to be operated by the Company and such Subsidiaries (collectively, the
"Patent and Proprietary Rights"); neither the Company nor any of the
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Subsidiaries have received notice of any asserted infringement of or material
conflict with the rights of others with respect to any of the Patent and
Proprietary Rights. To the Company's knowledge, neither the Company nor any of
the Subsidiaries infringes upon the proprietary rights of others in any material
respect. To the Company's knowledge, none of the patent rights owned or
licensed by the Company is unenforceable or invalid.
3.16 Financial Statements. The financial statements of the
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Company and the related notes thereto included in the Disclosure Documents
present fairly, in all material respects and in accordance with generally
accepted accounting principles, the financial position of the Company as of the
dates indicated, and the results of its operations and cash flows for the
periods therein specified (except that the unaudited financial statements do not
contain all notes required by generally accepted accounting principles and are
subject to normal year-end audit adjustments). Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified ("GAAP"), subject in the case of unaudited financial
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statements, to normal year-end audit adjustments. Except as set forth in the
financial statements included in the Disclosure Documents, neither the Company
nor any of the Subsidiaries have any material liabilities of any nature (whether
accrued, absolute, contingent or otherwise) that are required by GAAP to be
included in such financial statements other than liabilities arising after the
date of the most recent balance sheet included in such financial statements
which were incurred in the ordinary course of business consistent with past
practice.
3.17 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act/Internal Controls. The Company is in
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material compliance with the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 and the rules and regulations promulgated in connection therewith (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") that are effective and has no reason to believe that it
will not be in material compliance with other applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act upon the effectiveness of such provisions. The Company has
reviewed and evaluated the effectiveness of the Company's disclosure controls
and procedures, as defined in Rules 240.13a-14 (c) and 15d-14 (c) promulgated
under the Exchange Act. Based on that review and evaluation, the Company has
concluded that the Company's current disclosure controls and procedures, as
designed and implemented, are reasonably adequate to ensure that the Company's
Chief Executive Officer and Chief Financial Officer are provided with material
information relating to the Company required to be disclosed in the reports the
Company files or submits under the Exchange Act. Additionally, the Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that
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(a) transactions are executed in accordance with management's general or
specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (c) access to assets
is permitted only in accordance with management's general or specific
authorization, (d) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, and (e) financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. generally
accepted accounting principles are reliable.
3.18 Title. The Company and each of the Subsidiaries have good
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and marketable title in fee simple to all real property and personal property
owned by them which is material to the business of the Company and the
Subsidiaries, taken as a whole, in each case free and clear of all liens and
encumbrances, except (i) as disclosed in the Disclosure Documents, (ii) for
liens that do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company or its Subsidiaries or (iii) for equipment leases or operating
leases entered into in the ordinary course of the Company's or its Subsidiaries'
businesses. Any real property and facilities held under lease by the Company or
its Subsidiaries is held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company or its
Subsidiaries.
3.19 Form S-3. The Company meets the requirements for the use of
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Form S-3 for the registration of the resale of the Purchased Shares and will use
its best efforts to maintain S-3 status with the Commission during the
Registration Period (as defined in Section 7.2(a)). The Company does not know
of any current facts or circumstances that would prohibit or delay the
preparation and filing of a registration statement on Form S-3 with respect to
the Registrable Securities (as defined in Section 7.1(d)).
3.20 Tax Matters. The Company and its Subsidiaries have filed all
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federal, state and local income and franchise and other tax returns required to
be filed and have paid all taxes due, and no tax deficiency has been determined
adversely to the Company or its Subsidiaries which, individually or in the
aggregate, has had (nor does the Company or its Subsidiaries have any knowledge
of any tax deficiency which, if determined adversely to the Company or its
Subsidiaries, could, individually or in the aggregate, reasonably be expected to
have) a Material Adverse Effect.
3.21 Investment Company. The Company is not an "investment
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company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
3.22 No General Solicitation; No Integration. No form of general
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solicitation or general advertising was used by the Company or, to its
knowledge, any other person acting on behalf of the Company, in respect of the
Purchased Shares or in connection with the offer and sale of the Purchased
Shares. The Company has not sold, offered to sell, solicited offers to buy or
otherwise negotiated in respect of any "security" (as defined in the Act) that
is or could be integrated with the sale of the Purchased Shares in a manner that
would require the registration of the Purchased Shares under the Act.
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3.23 No Registration. Assuming the accuracy of the
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representations and warranties made by, and compliance with the covenants of,
the Investors in Section 4 hereof, no registration of the Purchased Shares under
the Act is required in connection with the sale of the Purchased Shares to the
Investors as contemplated by this Agreement.
3.24 Material Contracts. All material contracts of the Company
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and its Subsidiaries that are required by applicable rules and regulations of
the Commission to be filed as exhibits to the Filings ("Material Contracts")
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have been so filed and, except for the Material Contracts that have been
terminated or are no longer in effect in accordance with their terms, are valid,
subsisting, in full force and effect and binding upon the Company or its
Subsidiaries and, to the Company's knowledge, the other parties thereto, and the
Company or its Subsidiaries have paid in full or accrued all amounts due
thereunder and have satisfied in full or provided for all of its liabilities and
obligations thereunder in all material respects. Neither the Company nor its
Subsidiaries have received notice of a default and is not in default under, or
with respect to, any Material Contract. To the knowledge of the Company, no
other party to any Material Contract is in default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute a
default by such other party thereunder.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS.
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Each Investor hereby severally and not jointly represents and warrants to, and
agrees with, the Company, that:
4.1 Authorization. All action (corporate or otherwise) on the
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part of the Investor and its officers, directors and stockholders necessary for
the authorization, execution and delivery of, and the performance of all
obligations of the Investor under, this Agreement has been taken or will be
taken prior to the Closing, and this Agreement constitutes a valid and legally
binding obligation of the Investor, enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies.
4.2 Purchase for Own Account. The Purchased Shares to be
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purchased by such Investor hereunder will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Act, and such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the Act. If not an individual,
such Investor also represents that such Investor has not been formed for the
specific purpose of acquiring Purchased Shares or, if formed for the specific
purpose of acquiring Purchased Shares, that each equity holder of such Investor
is an "accredited investor" within the meaning of Regulation D promulgated under
the Act.
4.3 Disclosure of Information. The Investor has received and/or
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had full access to a copy of the Disclosure Documents and has received or has
had full access to all the information it considers necessary or appropriate to
make an informed investment decision with respect to the Purchased Shares to be
purchased by the Investor under this Agreement. Investor further has had an
opportunity to ask questions and receive answers from the Company regarding
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the terms and conditions of the offering of the Purchased Shares and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Investor or to which the Investor had access. The
foregoing, however, does not in any way limit or modify the representations and
warranties made by the Company in Section 3. In connection with its decision to
purchase the Purchased Shares, the Investor has relied solely on the Disclosure
Documents, the representations, warranties and agreements of the Company set
forth in this Agreement, as well as any investigation of the Company completed
by the Investor or its advisors; and the Investor has not relied on any oral
statement made by the Company.
4.4 Investment Experience. Such Investor understands that the
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purchase of the Purchased Shares involves substantial risk. Such Investor: (i)
has experience as an investor in securities of companies in the development
stage and acknowledges that such Investor can bear the economic risk of such
Investor's investment in the Purchased Shares and has such knowledge and
experience in financial or business matters that such Investor is capable of
evaluating the merits and risks of this investment in the Purchased Shares and
protecting its own interests in connection with this investment, and/or (ii) has
a preexisting personal or business relationship with the Company or one or more
of its officers or directors.
4.5 Accredited Investor Status. Such Investor is an "accredited
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investor" within the meaning of Regulation D promulgated under the Act.
4.6 Restricted Securities. Such Investor understands that the
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Purchased Shares are characterized as "restricted securities" under the Act
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Act and the Rules and Regulations
such securities may be resold without registration under the Act only in certain
limited circumstances. In this connection, such Investor represents that such
Investor is familiar with Rule 144 of the Commission and understands the resale
limitations imposed thereby and by the Act and understands that the Shelf
Registration Statement (as defined in Section 7.2(a)) and any other registration
statement contemplated by this Agreement to effect the registration of the
Purchased Shares for purposes of resale thereunder may never become effective
under the Act.
4.7 Further Limitations on Disposition. Without in any way
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limiting the representations set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Purchased Shares unless and
until:
(a) there is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement and the provisions of Section 7 of
this Agreement; or
(b) (i) such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (ii) such Investor
shall have furnished the Company, at the expense of such Investor or its
transferee, with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such securities under the
Act.
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Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
routine transfer of any Purchased Shares in compliance with Rule 144 or Rule
144A (except that an opinion of counsel may be required for other than routine
Rule 144 transactions), or (ii) for any transfer of Purchased Shares by an
Investor that is a partnership, limited liability company ("LLC") or a
---
corporation to (A) a partner of such partnership, member of such LLC or
stockholder of such corporation on a basis proportionate to their ownership
interests in such partnership, LLC or corporation, or (B) the estate of any such
partner, member or stockholder, or (iii) for the transfer by gift, will or
intestate succession by any Investor to his or her spouse or lineal descendants
or ancestors or any trust for any of the foregoing; provided, that in each of
the foregoing cases the transferee agrees in writing to be subject to the terms
of this Agreement to the same extent as if the transferee were an original
Investor hereunder.
4.8 Legends. It is understood that the certificates evidencing
-------
the Purchased Shares will bear the legends set forth below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
---
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(b) THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF, AND MAY HAVE CERTAIN REGISTRATION RIGHTS PURSUANT TO, THE
PROVISIONS OF A PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE HOLDER, WHICH MAY
RESTRICT THE TRANSFER OF SUCH SHARES IN CERTAIN CIRCUMSTANCES. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED, WITHOUT CHARGE, AT THE COMPANY'S PRINCIPAL OFFICE.
The legends set forth in (a) and (b) above shall, upon the request of an
Investor, be promptly removed by the Company from any certificate evidencing
Purchased Shares upon delivery to the Company of an opinion of counsel to the
Investor, reasonably satisfactory to the Company, that the legended security can
be freely transferred in a public sale without a registration statement being in
effect under the Act and in compliance with exemption requirements under
applicable state securities laws and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Company issued
the Purchased Shares; provided, however, that no such opinion shall be required
in connection with routine sales of Purchased Shares pursuant to the Shelf
Registration Statement (as defined below) (provided that customary forms of
brokers' and sellers' representation letters are provided in
10
connection with such sales) or routine requests for legend removal where the
Purchased Shares can be sold by an Investor pursuant to the provisions of Rule
144. In connection with any such opinion, the Investor shall provide such
certifications as may be reasonably be deemed necessary for the delivery of such
opinion.
4.9 Resale Restrictions. The Investor will not, in a manner that
--------------------
violates the Act or Section 4.7, prior to the effectiveness of the Shelf
Registration Statement (as defined below), directly or indirectly offer, sell,
contract or grant an option to sell, pledge, encumber, or otherwise dispose of
or otherwise transfer, or enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of (whether any such transaction described above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise) (a
"Disposition") any Purchased Shares, and after the effective date of the Shelf
-----------
Registration Statement the Investor will not make any Disposition of Purchased
Shares in violation of the Act.
4.10 Except as disclosed next to its name on Schedule 4.10 to
-------------
this Agreement, such Investor is a "citizen of the United States" as defined in
49 U.S.C. 40102(a)(15) (2003). "Citizen of the United States" means (A) an
individual who is a citizen of the United States; (B) a partnership each of
whose partners is an individual who is a citizen of the United States; or (C) a
corporation or association organized under the laws of the United States or a
State, the District of Columbia, or a territory or possession of the United
States, of which the president and at least two-thirds of the board of directors
and other managing officers are citizens of the United States, and in which at
least 75 percent of the voting interest is owned or controlled by persons that
are citizens of the United States.
5. CONDITIONS TO INVESTORS' OBLIGATIONS AT CLOSING.
----------------------------------------------------
5.1 Closing. The obligations of each Investor under Section 2 of
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this Agreement to purchase the Purchased Shares at the Closing are subject to
the fulfillment or waiver, on or before the Closing, of each of the following
conditions, and the Company shall use its best efforts to cause such conditions
to be satisfied on or before the Closing:
5.1.1 Representations and Warranties True. Each of the
--------------------------------------
representations and warranties of the Company contained in Section 3 qualified
as to materiality shall be true and correct and those not so qualified shall be
true and correct in all material respects on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
the Closing.
5.1.2 Performance. The Company shall have performed and complied
-----------
in all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing and shall have obtained all approvals, consents
and qualifications necessary to complete the purchase and sale described herein.
5.1.3 Compliance Certificate. The Company shall have delivered to
----------------------
the Investors at the Closing a certificate signed on its behalf by its
President, Chief Executive
11
Officer, or Chief Financial Officer certifying that the conditions specified in
Sections 5.1.1 and 5.1.2 have been fulfilled.
5.1.4 Registration; Securities Exemptions. The offer and sale of
------------------------------------
the Purchased Shares to the Investors pursuant to this Agreement shall be exempt
from the registration requirements under the Act and applicable state securities
laws, and the rules thereunder (the "Law").
---
5.1.5 No Material Change. There shall have been no Material
--------------------
Adverse Effect on the Business from the date of this Agreement.
5.1.6 Opinion of Counsel. The Investors shall have received an
--------------------
opinion of counsel to the Company substantially in the form of Exhibit A
attached hereto.
5.1.7 Agreement. The Company shall have executed and delivered to
---------
the Investors this Agreement.
5.1.8 No Suspension of Trading or Listing of Common Stock. The
------------------------------------------------------
Common Stock of the Company (i) shall be designated for quotation or listed on
the Nasdaq National Market and (ii) shall not have been suspended from trading
on the Nasdaq National Market.
5.1.9 Good Standing Certificates. The Company shall have
----------------------------
delivered to Investors a certificate of the Secretary of State of the State of
Delaware, dated as of a date within five (5) days of the date of the Closing,
with respect to the good standing of the Company.
5.1.10 Secretary's Certificate. The Company shall have delivered
------------------------
to the Investors a certificate of the Company executed by the Company's
Assistant Secretary attaching and certifying to the truth and correctness of (1)
the Company's Certificate of Incorporation, (2) the Company's Bylaws and (3) the
resolutions adopted by the Company's Board of Directors in connection with the
transactions contemplated by this Agreement.
5.1.11 No Statute or Rule Challenging Transaction. No statute,
---------------------------------------------
rule, regulation, executive order, decree, ruling, injunction, action,
proceeding or interpretation shall have been enacted, entered, promulgated,
endorsed or adopted by any court or governmental authority of competent
jurisdiction or any self-regulatory organization or the staff of any of the
foregoing having authority over the matters contemplated hereby which questions
the validity of, or challenges or prohibits the consummation of, any of the
transactions contemplated by this Agreement.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
--------------------------------------------------------
6.1 Closing. The obligations of the Company under this Agreement
-------
to sell the Purchased Shares to the Investors at the Closing are subject to the
fulfillment or waiver, on or before the Closing, of the following conditions,
and each Investor shall use its best efforts to cause such conditions to be
satisfied on or before the Closing:
12
6.1.1 Representations and Warranties. The representations and
--------------------------------
warranties of the Investor contained in Section 4 qualified as to materiality
shall be true and correct and those not so qualified shall be true and correct
in all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
6.1.2 Payment of Purchase Price. The Investor shall have
----------------------------
delivered to the Company the purchase price for the Purchased Shares specified
for such Investor on the Schedule of Investors, in accordance with the
provisions of Section 2, subject to the Company's delivery of certificates for
such shares.
6.1.3 Agreement. The Investors shall have executed and delivered
---------
to the Company this Agreement.
7. REGISTRATION RIGHTS.
--------------------
7.1 Definitions. For purposes of this Agreement:
-----------
(a) Form S-3. The term "Form S-3" means such form under the
--------- --------
Act as is in effect on the date hereof or any successor registration form under
the Act subsequently adopted by the Commission that permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the Commission.
(b) Holder. The term "Holders" shall mean holders of
------ -------
Registrable Securities that have registration rights pursuant to this Agreement.
(c) Registration. The terms "register," "registered," and
------------ -------- ----------
"registration" refer to a registration effected by preparing and filing a
------------
registration statement in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement.
(d) Registrable Securities. The term "Registrable
----------------------- -----------
Securities" means: (1) all of the Purchased Shares, (2) any additional shares
issued pursuant to Section 7.2(a) and (3) any shares of Common Stock of the
Company issued or issuable, from time to time, upon any reclassification, share
combination, share subdivision, stock split, share dividend, or similar
transaction or event, or otherwise as a distribution on, in exchange for or with
respect to any of the foregoing; provided, however, that the term "Registrable
Securities" shall exclude in all events (and such securities shall not
constitute "Registrable Securities") (i) any Registrable Securities sold or
transferred by a person in a transaction in which the registration rights
granted under this Agreement are not assigned in accordance with the provisions
of this Agreement or (ii) any Registrable Securities sold in a public offering
pursuant to a registration statement filed with the Commission or sold pursuant
to Rule 144 promulgated under the Act ("Rule 144").
---------
(e) Prospectus. The term "Prospectus" shall mean the
---------- ----------
prospectus included in any Shelf Registration Statement (including, without
limitation, a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Act), as amended or supplemented by any
prospectus supplement (including, without limitation, any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities
13
covered by such Shelf 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.
(f) Shelf Registration Statement. See Section 7.2(a).
------------------------------
7.2 Form S-3 Shelf Registration.
------------------------------
(a) Registration. The Company shall prepare and file with
------------
the Commission as soon as practicable but in any event within thirty (30) days
following the Closing and use its commercially reasonable efforts (i) to have
declared effective as soon as practicable thereafter (but in any event within
ninety (90) days after the Closing Date), a registration statement on Form S-3
(or, if the Company is not then eligible to use Form S-3, then another
appropriate form) providing for the resale by the Holders of all of the
Registrable Securities (the "Shelf Registration Statement"), and (ii) to provide
----------------------------
a transfer agent and registrar for all securities registered pursuant to the
Shelf Registration Statement. The Shelf Registration Statement may include
securities other than those held by Holders. The Company shall use its best
efforts to keep the Shelf Registration Statement continuously effective (subject
to Section 7.2(b)), pursuant to the Act and the Rules and Regulations
promulgated thereunder, until the earliest to occur of (i) the second
anniversary of the Closing Date and (ii) as to a particular Holder, such time as
all Registrable Securities held by such Holder have been sold (A) pursuant to
the Shelf Registration Statement, (B) to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, and/or
(C) the date on which such Holder can sell all of its Registrable Securities
without registration pursuant to Rule 144(k) (such period, the "Registration
------------
Period"). In the event that the Shelf Registration Statement shall cease to be
------
effective during the Registration Period, the Company shall promptly prepare and
file a new registration statement covering all Registrable Securities and shall
use its best efforts to have such registration statement declared effective as
soon as practicable. Any such registration statement shall be considered a
"Shelf Registration Statement" hereunder.
(b) Liquidated Damages. In the event that the Shelf
-------------------
Registration Statement is not filed within 30 days after the Closing or declared
effective by the date that is ninety (90) days following the Closing Date, the
Company shall pay to each Investor liquidated damages (collectively, the
"Liquidated Damages"), in cash, in an amount equal to one percent (1%) of the
-------------------
total purchase price of the Purchased Shares purchased by such Investor pursuant
to this Agreement (a "Liquidated Damages Payment") for each thirty day period
--------------------------
(or portion thereof) thereafter, until the Shelf Registration Statement is filed
or becomes effective, as the case may be; provided, however that in the case of
any such period of less than thirty days the Liquidated Damages Payment shall be
calculated on a pro rata basis based on the number of days actually elapsed in
such period. Each Liquidated Damages Payment payable in respect of a thirty day
period (or portion thereof) shall be paid at the end of such thirty day period
(or portion thereof).
(c) Lapse and Suspension. Subject to the provisions of this
--------------------
Section 7.2(c), should the Registration Statement's effectiveness lapse for any
reason while the Company has any obligation to maintain such effectiveness and
the Company does not cure such lapse within 10 business days (the "Cure Period")
-----------
by a post-effective amendment or a report filed
14
pursuant to the Exchange Act, the Company shall pay each investor damages at a
rate of 1% per month, payable monthly, of the purchase price paid by each
Investor, for the period of the lapse beyond such cure period, in cash.
Notwithstanding the foregoing, if in the good faith judgment of the Board of
Directors of the Company, following the advice of its counsel, it is determined
that: (i) it would be detrimental to the Company to effect a registration or for
sales to be made from such Registration Statement, or (ii) there exists a
material development that the Company would be obligated to disclose in the
Registration Statement, which disclosure would be premature or inadvisable, then
the Company will be permitted to suspend the use of the Registration Statement
for a period of up to 45 consecutive days in any 180-day period; provided that
such suspension periods shall not exceed 90 days (including any Cure Period) in
the aggregate during the Registration Period (following which 90 day period the
foregoing 1% damages shall begin to accrue). In the event of any suspension of
the effectiveness of the Registration Statement or similar event, the Investors
will immediately discontinue disposition of the securities underlying the
Registration Statement. In such event, the Company will use commercially
reasonable efforts to cause the use of the Registration Statement so suspended
to be resumed as soon as possible.
(d) Liquidated Damages not a Penalty. The Company and the
-----------------------------------
Investor agree that, in the event that under the circumstances described above,
the Shelf Registration Statement is not declared effective within ninety (90)
days of the Closing, as contemplated in Section 7.2(b) or effectiveness is
thereafter suspended as contemplated in Section 7.2(c), it would be
impracticable or extremely difficult to fix or determine the Investor's actual
damages. Therefore, the Company and the Investor each agree that the amount of
the Liquidated Damages has been agreed upon as liquidated damages after
negotiation as to the parties' reasonable estimate of the Investor's damages.
The Company and the Investor agree that the amount of Liquidated Damages is
reasonable in light of the circumstances existing at the execution of this
Agreement. The Company and the Investor each acknowledge that the payment of
such Liquidated Damages is not intended as a forfeiture or penalty. If the
Company fails to immediately pay to the Investor any amounts due under this
Section 7.2, then in addition to any amounts paid or payable pursuant to this
Section, the Company shall also pay all reasonable costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to enforce or collect
payment, together with interest on such payment at the maximum rate permitted by
applicable law, from the date such payment was required to be paid.
(e) Expenses. The registration fees and expenses incurred by
--------
the Company in connection with the Shelf Registration Statement, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, shall be borne by the Company. Each Holder
shall be responsible for any fees and expenses of its counsel or other advisers.
7.3 Obligations of the Company. The Company shall furnish to the
---------------------------
Holder such number of copies of a Prospectus, including a preliminary
Prospectus, in conformity with the requirements of the Act, and such other
documents (including supplements or prospectus amendments) as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by it that are included in such
registration. In
15
addition, whenever required to effect the registration of any Registrable
Securities under this Agreement, the Company shall, as expeditiously as
reasonably possible:
(a) Use commercially reasonable efforts to (i) register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such states as shall be reasonably requested by
the Holder, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions in
which it is not now so qualified or has not so consented and (ii) to keep such
registration or qualification in effect for so long as the Shelf Registration
Statement remains in effect, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where it is not so qualified, or to subject itself to
taxation in any such jurisdiction, or to execute a general consent to service of
process in effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Act or applicable rules or regulations thereunder.
(b) Notify the Holder promptly (and in any event by 4:00 p.m.
Mountain Time, by email, fax or other type of communication) (i) on the same day
that the Shelf Registration Statement becomes effective (unless the Company
receives notice of the effectiveness of the Shelf Registration Statement after
4:00 p.m. Mountain Time, in which case the Company shall notify the Holder by
4:00 p.m. on the next business day), (ii) within one business day after any
request by the Commission or any other federal or state governmental authority
during the period of effectiveness of a registration statement for amendments or
supplements to such registration statement or related prospectus or for
additional information, (iii) on the same day of the issuance by the Commission
or any other federal or state governmental authority of any stop order or
similar action suspending the effectiveness of a registration statement or the
initiation of any proceedings for that purpose (unless the Company receives
notice of the issuance of any stop order or similar action after 4:00 p.m.
Mountain Time, in which case the Company shall notify the Holder by 4:00 p.m. on
the next business day), and (iv) within one business day after the receipt by
the Company from the Commission or any other federal or state governmental
authority of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
(c) Use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Shelf Registration
Statement as soon as practicable.
(d) Promptly file such amendments (including post-effective
amendments) and supplements to the Shelf Registration Statement and the
Prospectus, file such documents as may be required to be incorporated by
reference in any of such documents, and take all other actions as may be
necessary to ensure to the holders of Registrable Securities the ability to
effect the public resale of their Registrable Securities (including, without
limitation, taking any actions necessary to ensure the availability of a
Prospectus meeting the requirements of Section 10(a) of the Act) continuously
throughout the Registration Period; and provide or make available by posting on
its website to each holder of Registrable Securities copies of any documents
prepared pursuant to the foregoing promptly after such preparation.
16
7.4 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Section 7.2 or Section
7.3 that the Holder shall furnish to the Company such information regarding it,
the Registrable Securities held by it, and the intended method of disposition of
such securities (and, when necessary, furnish updated information) as shall be
required to timely effect (and maintain the effectiveness of) the registration
of its Registrable Securities.
7.5 Indemnification. For the purposes of this Section 7.5, the
---------------
term "registration statement" shall include any preliminary or final Prospectus,
exhibit, supplement, amendment or other document included in, filed as part of,
deemed to be a part of, incorporated by reference in, or otherwise relating to
the Shelf Registration Statement referred to in this Section 7.
(a) By the Company. To the fullest extent permitted by law,
---------------
the Company will defend, indemnify and hold harmless the Investor, each Holder,
the officers and directors, trustees, advisors, each person, if any, who
controls any Holder and any underwriter for each (as defined in the Act) (such
persons and entities collectively referred to as "Holder Indemnified Parties"),
--------------------------
against any and all losses, claims, expenses (including, without limitation,
reasonable legal and other fees and expenses), damages or liabilities (including
in settlement of any claim) to which they may become subject under the Act, the
Exchange Act or other federal or state statutory law or regulation, or at common
law or otherwise (a "Loss"), insofar as such Losses (or actions in respect
----
thereof) arise out of any claim, action or proceeding brought by a third party
arising out of or based upon any of the following (collectively, a "Violation"):
---------
(i) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement filed pursuant to
this Section 7;
(ii) the omission or alleged omission to state in a
registration statement filed pursuant to this Section 7 a material
fact required to be stated therein, or necessary to make the
statements therein not misleading;
(iii) any violation or alleged violation by the Company of
the Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Act, the Exchange Act or any
federal or state securities law, in each case in connection with the
offering covered by such registration statement; or
(iv) any failure by the Company to fulfill any undertaking
included in a registration statement;
and, if the Company elects not to assume the defense as permitted by Section 7.5
(c), the Company will reimburse each Holder Indemnified Party for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending or settling, compromising or paying an award granted
in any proceeding relating to any such Violation; provided, however, that the
indemnity agreement contained in this subsection shall not apply to amounts paid
in settlement of any such Loss, if such settlement is effected without the prior
written consent of the Company, nor shall the Company be liable in any such case
17
for any such Loss to the extent that it arises out of or is based upon a
Violation caused by reliance upon and in conformity with written information
furnished expressly for use in connection with such registration statement by a
Holder Indemnified Party; and provided further, that the Company will not be
liable for the reasonable legal fees and expenses of more than one counsel to
all Holder Indemnified Parties unless in the reasonable opinion of counsel a
conflict exists among such Holder Indemnified Parties.
(b) By the Holder. To the fullest extent permitted by law,
---------------
each Holder (severally and not jointly with any other Holder) will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Shelf Registration Statement, and each person, if any, who controls
the Company within the meaning of the Act (such persons and entities
collectively referred to as "Company Indemnified Parties") against any and all
---------------------------
Losses to which such Company Indemnified Parties may become subject under the
Act, the Exchange Act or other federal or state law, insofar as such Losses (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation is caused
by reliance upon and in conformity with written information furnished to the
Company by the Holder expressly for the registration statement; and the Holder
will reimburse any legal or other expenses reasonably incurred by such Company
Indemnified Parties in connection with investigating or defending any such
Violation; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts paid in settlement of any such Loss if
such settlement is effected without the prior written consent of the Holder;
provided further, that the Holder shall not be liable for the reasonable legal
fees and expenses of more than one counsel to the Company Indemnified Parties;
and provided further, that no Holder shall be required to pay amounts pursuant
to this subsection (b) in excess of the net amount of proceeds received by the
Holder from the sale of the Registrable Securities, less the total amount paid
by the Holder for such Registrable Securities.
(c) Notice. Promptly after receipt by an indemnified party
------
under this Section of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section, deliver to the indemnifying party a written notice of the
commencement of such an action and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel selected by the indemnifying party and reasonably
acceptable to a majority in interest of the indemnified parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if the indemnified party shall have reasonably concluded that there may
be a conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that there may
be legal defenses available to it or other indemnified parties that are
different from or additional to those available to the indemnifying party.
(d) Defect Eliminated in Final Prospectus. The foregoing
-----------------------------------------
indemnity agreements of the Company and the Holder are subject to the condition
that, insofar as they relate to any Violation made in a preliminary prospectus
but eliminated or remedied in the amended Prospectus on file with the Commission
at the time the registration statement in question becomes effective or in the
amended Prospectus filed with the Commission pursuant to
18
Rule 424(b) of the Commission (the "Final Prospectus"), such indemnity
-----------------
agreements shall not inure to the benefit of any person if a copy of the Final
Prospectus was furnished in a timely manner to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Act.
(e) Contribution. If the indemnification provided for in
------------
this Section 7.5 is unavailable to or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above with respect of any losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Holder on the other in connection with the
statements or omissions or inaccuracies in the representations or warranties of
this Agreement or other matters which resulted in any such losses, claims,
damages, liabilities or expenses (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the one
hand or a Holder on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investors agree that it would not be just and
equitable if contribution pursuant to this subsection (e) were determined by pro
rata allocation (even if all Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Holder shall be required to contribute any amount in excess
of the net amount of proceeds (i.e., proceeds net of underwriting discounts,
fees and commissions payable by such Holder) received by the Holder from the
sale of the Registrable Securities less the total amount paid by the Holder for
such Registrable Securities. 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 Holders' obligations to contribute pursuant to this
Section 7.5(e) are several and not joint.
(f) Survival. The obligations of the Company and the Holder
--------
under this Section shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
7.6 Rule 144 Reporting. With a view to making available the
--------------------
benefits of certain rules and regulations of the Commission, which may at any
time permit the sale of the Registrable Securities to the public without
registration, the Company agrees to:
(a) Make and keep adequate, current public information
available, as those terms are understood and defined in Rule 144 under the Act,
at all times;
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(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Exchange Act; and
(c) So long as the Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Holder to
sell any such securities without registration.
7.7 Termination of Company's Obligations. The Company shall have
-------------------------------------
no obligation to register, or maintain, a registration statement governing
Registrable Securities and the restrictive legend described in Section 4.8 will
be removed from any certificate representing the Purchased Shares, (i) if all
Registrable Securities have been registered and sold pursuant to registrations
effected pursuant to this Agreement or to or through a broker or dealer or
underwriter in a public distribution or public securities transaction, or (ii)
with respect to any particular Holder at such time as all Registrable Securities
held by such Holder may be sold pursuant to Rule 144(k), as it may be amended
from time to time, including but not limited to amendments that reduce that
period of time that securities must be held before such securities may be sold
pursuant to such rule, as determined by counsel to the Company pursuant to a
written opinion to that effect that is acceptable to the Company's transfer
agent and the affected Holders.
8. ASSIGNMENT. Notwithstanding anything herein to the contrary, the
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registration rights of the Holder under Section 7 hereof shall be automatically
assigned by such Investor to any transferee of all or any portion of such
Investor's Registrable Securities who is a Permitted Transferee (as defined
below); provided, however, that (a) no party may be assigned any of the
foregoing rights until the Company is given written notice by the assigning
party at the time of such assignment stating the name and address of the
assignee and identifying the securities of the Company as to which the rights in
question are being assigned; (b) that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement; and
(c) no such assignment or assignments shall increase the obligations of the
Company hereunder. For purposes of this Agreement, a "Permitted Transferee"
--------------------
shall mean any person who (x) is (i) an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D under the Act; (ii) a partner of such
Holder, an affiliate of such Holder or a partner of an affiliate or any
corporation, partnership, limited liability company or other entity or person
controlling, controlled by, or under common control with, such Holder; or (iii)
any other direct transferee from such Holder of at least 25% of the Registrable
Securities held by such Holder and (y) is a transferee of the Registrable
Securities as permitted under the securities laws of the United States.
9. MISCELLANEOUS.
-------------
9.1 Survival of Warranties. The representations, warranties and
------------------------
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by
20
any investigation of the subject matter thereof made by or on behalf of the
Investors, their counsel or the Company, as the case may be.
9.2 Successors and Assigns. The terms and conditions of this
------------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
9.3 Governing Law; Venue; Waiver Of Jury Trail. ALL QUESTIONS
-----------------------------------------------
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING
IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY
DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH
OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH
RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY
IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE
OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN
EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL
RIGHTS TO A TRIAL BY JURY.
9.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 Headings. The headings and captions used in this Agreement
--------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits, and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
9.6 Notices. Unless otherwise provided, any notice required or
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permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, by
telecopier or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified in the
case of the Company, at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
21
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or in
the case of Investor, at the record address for such Investor as reflected on
the signature pages to this Agreement, or at such other address as any party may
designate by giving ten (10) days advance written notice to the other party.
Notices shall be deemed delivered upon delivery if personally delivered, one
business day after transmission with confirmation of receipt if sent by
telecopier, or three (3) days after deposit in the mails if mailed.
9.7 No Finder's Fees. Each party represents that it neither is
------------------
nor will be obligated for any finder's or broker's fee or commission in
connection with this transaction; each Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finder's or broker's fee (and any asserted liability) for which
such Investor or any of its officers, partners, employees, or representatives is
responsible; and the Company agrees to indemnify and to hold harmless each
Investor from any liability for any commission or compensation in the nature of
a finder's or broker's fee (and any asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
9.8 Costs, Expenses. Each Party's costs in connection with the
----------------
preparation, execution, delivery and performance of this Agreement (including
without limitation legal fees) shall be borne by that party; provided, however
that the Company shall reimburse the Investors in the aggregate for up to
$10,000 for the fees and expenses of counsel to the Investors.
9.9 Amendments and Waivers. Any term of this Agreement may be
------------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors
holding a majority of the Purchased Shares purchased hereunder; provided,
however, that no amendment or waiver of the Company's obligations under Section
7 of this Agreement that materially and adversely affects the rights of a holder
of Purchased Shares shall be binding upon that holder unless that holder has
consented in writing to such amendment or waiver. Subject to the limitations
set forth in the preceding sentence, any amendment or waiver effected in
accordance with this Section shall be binding upon each holder of any Purchased
Shares at the time outstanding (even if such Investor or other holder did not
vote with respect to, or voted against, such amendment or waiver), each future
holder of such securities, and the Company. Subject to the foregoing, the
Investors acknowledge that by virtue of this provision, holders of a majority of
the Purchased Shares may bind other holders to amendment or waivers that such
other holders may have voted to oppose.
9.10 Severability. If one or more provisions of this Agreement
------------
are held to be invalid, illegal or unenforceable under applicable law, such
provision(s) shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.
9.11 Entire Agreement. This Agreement, together with any exhibits
----------------
and schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence,
22
agreements, understandings, duties or obligations between the parties with
respect to the subject matter hereof.
9.12 Further Assurances. From and after the date of this
-------------------
Agreement, upon the request of an Investor or the Company, the Company and the
Investors shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
9.13 Termination.
-----------
(a) By the Investors. Any Investor may terminate this
------------------
Agreement, with respect to the obligations between itself and the Company,
immediately if, at any time prior to the Closing, (i) the Company shall cease
conducting business in the normal course; become insolvent or become unable to
meet its obligations as they become due; make a general assignment for the
benefit of creditors; petition, apply for, suffer or permit with or without its
consent the appointment of a custodian, receiver, trustee in bankruptcy or
similar officer for all or any substantial part of its business or assets; avail
itself or become subject to any proceeding under the Federal Bankruptcy Code or
any similar state, federal or foreign statute relating to bankruptcy,
insolvency, reorganization, receivership, arrangement, adjustment of debts,
dissolutions or liquidation or (ii) the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement, which breach or failure to perform (A) would give rise
to the failure of a condition set forth in Section 5.1.1 or Section 5.1.2 and
(B) is incapable of being cured or has not been cured by the Company within ten
(10) calendar days following receipt of written notice of such breach or failure
to perform from an Investor.
(b) By the Company or the Investors. The Company or any
------------------------------------
Investor, on its own behalf, may terminate this Agreement at any time after
December 5, 2003 if the Closing has not occurred prior to such date, or such
later date as the Company and Investors having a right to purchase a majority of
the Purchased Shares shall have agreed to extend the offering.
(c) By the Company. The Company may terminate this Agreement
--------------
with respect to an Investor if such Investor shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set
forth in this Agreement, which breach or failure to perform (i) would give rise
to the failure of a condition set forth in Section 6.1.1 and (ii) is incapable
of being cured or has not been cured by such Investor within ten (10) calendar
days following receipt of written notice of such breach or failure to perform
from the Company.
9.14 8-K Filing. On or before the second business day following
-----------
the Closing Date, the Company shall file a Current Report on Form 8-K with the
SEC describing the terms of the transactions contemplated by this Agreement and
attaching this Agreement and the press release referred to below as exhibits to
such filing (the "8-K Filing" including all attachments). Until the time of the
----------
8-K Filing, each Investor will treat this offering and this Agreement as
confidential and none of its provisions or terms shall be disclosed to anyone
who is not an officer or director of an Investor's organization or an Investor's
professional advisor.
23
9.15 Public Announcements. The parties agree that the initial
---------------------
press release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties. The
Investors and the Company shall consult with each other before issuing, and give
each other the opportunity to review and comment upon, any subsequent press
release primarily relating to the transactions contemplated by this Agreement,
and shall not issue any such press release prior to such consultation, except as
may be required by applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange or national
securities quotation system.
9.16 Heartland Value Fund. The Company understands and
----------------------
acknowledges that Heartland Group, Inc. is entering into this Agreement solely
on behalf of the Heartland Value Fund and that any claims that the Company may
have against Heartland Group, Inc. under this Agreement or otherwise in
connection with the transactions contemplated hereby shall only be made against
the assets of the Heartland Value Fund.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY: INVESTOR:
----------- --------
Air Methods Corporation, ______________________________________
a Delaware corporation Name of Investor
By: _______________________________ By: _______________________________
Title: _______________________________ Title: _______________________________
Investment Amount: $__________________
Number of Purchased Shares: __________
Address for Notice:
[COUNTERPART SIGNATURE PAGE
COMMON STOCK PURCHASE AGREEMENT]
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SCHEDULE 4.10
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Foreign Ownership
26
EXHIBIT A
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Opinion of Counsel
27