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EXHIBIT 4.5
NEITHER THIS NOTE NOR ANY STOCK ISSUED UPON CONVERSION HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS (THE "STATE LAWS"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE ACT AND STATE LAWS
OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
CONVERTIBLE PROMISSORY NOTE
April 3, 2000 $1,000,000
AER ENERGY RESOURCES, INC., a Georgia corporation (the
"Company"), hereby promises to pay to the order of FW AER II, L.P., a Delaware
limited partnership (together with any subsequent holder of this Note, the
"Holder"), the principal amount of ONE MILLION AND NO/100 DOLLARS
($1,000,000.00), together with interest thereon calculated from the date hereof
in accordance with the provisions of this Note. Capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in Section 7.
1. Payment of Interest.
1.1 Computation and Payment of Interest. Interest on the
unpaid principal amount of this Note outstanding from time to time shall accrue
on a daily basis at a rate per annum equal to the Prime Rate (as defined below)
plus four percent (4.0%) and shall be computed on the basis of a three hundred
sixty (360) day year for the actual number of days elapsed in the period during
which it accrues. On and after the occurrence and during the continuance of an
Event of Default, at the option of the Holder, interest on the unpaid principal
amount of this Note outstanding from time to time shall accrue on a daily basis
at a rate per annum equal to the Prime Rate plus six percent (6.0%) (the
"Default Rate").
Accrued interest shall be due and payable quarterly in arrears
on the first day of January, April, July and October of each year, commencing
July 1, 2000. Accrued interest also shall be due and payable on the date of any
voluntary or mandatory prepayment of this Note, at maturity, whether by
acceleration or otherwise, and on the date of any conversion of this Note
pursuant to Section 5. Interest payable after maturity of this Note (by
acceleration or otherwise) shall be payable upon demand.
As used herein, "Prime Rate" means the rate of interest
publicly announced from time to time by Bank of America, Atlanta, Georgia, as
its "Prime Rate" or "Base Rate" for commercial loans made by such bank. The
interest rate hereunder shall be adjusted on the effective date of any change in
the Prime Rate to reflect the Prime Rate then in effect. In the event that such
bank ceases to publish a "Prime Rate" or "Base Rate" for its commercial loans,
the Holder may specify an alternate source for the Prime Rate by delivering
written notice thereof to the Company.
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1.2 Interest Laws. Notwithstanding any provision to the
contrary contained in this Note, the Company shall not be required to pay, and
the Holder shall not be permitted to collect, any amount of interest in excess
of the maximum amount of interest permitted by law ("Excess Interest"). If any
Excess Interest is provided for or determined by a court of competent
jurisdiction to have been provided for in this Note, then in such event: (a) the
provisions of this Section 1.2 shall govern and control; (b) the Company shall
not be obligated to pay any Excess Interest; (c) any Excess Interest that the
Holder may have received hereunder shall be, at the Holder's option, (i) applied
as a credit against the outstanding principal balance of this Note or accrued
and unpaid interest (not to exceed the maximum amount permitted by law), (ii)
refunded to the Company, or (iii) any combination of the foregoing; (d) the
interest rate provided for herein shall be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the "Maximum Rate"),
and this Note shall be deemed to have been and shall be, reformed and modified
to reflect such reduction; and (e) the Company shall not have any action against
the Holder for any damages arising out of the payment or collection of any
Excess Interest. Notwithstanding the foregoing, if for any period of time
interest on this Note is calculated at the Maximum Rate rather than the
applicable rate under this Note, and thereafter such applicable rate becomes
less than the Maximum Rate, the rate of interest payable on this Note shall
remain at the Maximum Rate until the Holder shall have received the amount of
interest which the Holder would have received during such period on this Note
had the rate of interest not been limited to the Maximum Rate during such
period.
2. Payment of Principal.
2.1 Scheduled Payment. The Company shall pay in full the
outstanding principal amount of this Note to the Holder on March 30, 2002 (the
"Maturity Date").
2.2 Voluntary Prepayments. The Company may prepay the
principal amount of this Note in whole only upon not less than ten (10) days'
prior written notice to the Holder; provided, however, that the Company may not
prepay this Note after the date that the Company receives a notice of conversion
of this Note pursuant to Section 5 notwithstanding that the Company may have
previously delivered a notice of prepayment to the Holder, and upon delivery of
any such notice of conversion, all outstanding notices of prepayment (regardless
of when delivered) shall be deemed automatically rescinded. The Company may not
prepay the principal amount of this Note in part.
2.3 Mandatory Prepayment. Upon the closing of any Equity
Issuance, the Holder may require the Company to apply all or any portion of the
Net Proceeds of such Equity Issuance in prepayment of the outstanding principal
amount of this Note (or portion thereof); provided, however, in the event that
the holder of the Other Note requires the Company to apply all of any portion of
such Net Proceeds in prepayment of the Other Note and the amount of such Net
Proceeds is less than the aggregate principal of this Note and the Other Note to
be prepaid, then such Net Proceeds shall be applied pro rata in prepayment of
this Note and the Other Note based on the relative amounts of principal as to
which the Holder and the holder of the Other Note require prepayment in
connection with such Equity Issuance.
3. Manner and Time of Payment.
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3.1 Payment in Same Day Funds. All payments by the
Company with respect to this Note shall be made without deduction, defense,
setoff or counterclaim and in same day funds and delivered to the Holder by wire
transfer to such account as the Holder may designate from time to time. The
Company shall receive credit for such funds on the date received if such funds
are received by the Holder by 2:00 p.m. (Atlanta, Georgia time) on such day. In
the absence of timely receipt, such funds shall be deemed to have been paid by
the Company on the next succeeding Business Day.
3.2 Payment on Non-Business Days. If any payment on this
Note shall become due on a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall in
such case be included in computing any interest due in connection with such
payment.
4. Events of Default.
4.1 Definition. For purposes of this Note, an "Event
of Default" shall be deemed to have occurred:
(a) if the Company fails to pay any interest then accrued
and payable with respect to this Note (and such failure continues for a
period of five (5) days after notice thereof to the Company);
(b) if the Company fails to pay any principal on this
Note when due (and such failure continues for a period of five (5) days
after notice thereof to the Company);
(c) if the Company breaches or otherwise fails to perform
or observe any covenant or agreement contained in this Note and such
failure to perform or observe is not cured within ten (10) days after
the Company receives notice of the occurrence thereof;
(d) if the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally
as they become due; or an order, judgment or decree is entered
adjudicating the Company bankrupt or insolvent; or any order for relief
with respect to the Company is entered under the United States
Bankruptcy Code; or the Company petitions or applies to any tribunal
for the appointment of a custodian, trustee, receiver or liquidator of
the Company, or of any substantial part of the assets of the Company,
or commences any proceeding relating to the Company under any
bankruptcy reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction; or any such
petition or application is filed, or any such proceeding is commenced,
against the Company and either (i) the Company by any act indicates its
approval thereof, consents thereto or acquiesces therein or (ii) such
petition, application or proceeding is not dismissed within sixty (60)
days;
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(e) if any money judgment, writ or warrant of attachment,
or similar process is entered or filed against the Company or any of
its assets, and remains undischarged, unvacated, unbonded and unstayed
for a period of thirty (30) days; or
(f) if any order, judgment or decree is entered against
the Company decreeing the dissolution or split up of the Company and
such order remains undischarged or unstayed for a period in excess of
twenty (20) days.
4.2 Consequences of Event of Default.
(a) If an Event of Default of the type described in
Section 4.1(d) has occurred, the entire outstanding principal amount of this
Note, plus all accrued interest thereon, shall automatically become immediately
due and payable, without any demand or other action on the part of the Holder.
(b) If any Event of Default other than of the type
described in Section 4.1(d) has occurred, the Holder may declare (by written
notice delivered to the Company) all or any portion of the outstanding principal
amount of this Note, plus all accrued interest thereon, due and payable and
demand immediate payment of all or any portion of the outstanding principal
amount of this Note, plus all accrued interest thereon. The Holder shall also
have any other rights which the Holder may have been afforded under any contract
or agreement at any time and any other rights which the Holder may have pursuant
to applicable law.
5. Conversion.
5.1 Conversion Option. If on or prior to the Maturity
Date, the Company consummates an Equity Issuance, then, provided that the Holder
is at that time an "accredited investor" as defined in Regulation D promulgated
under the Act, the Holder shall have the right, on the effective date of such
Equity Issuance, to convert the outstanding principal amount of this Note, in
whole or in part, to shares of the equity securities issued by the Company in
such Equity Issuance. If more than one class or series of shares of equity
securities are issued in such Equity Issuance, then the Holder may elect to
receive in such conversion any one or more of such classes or series of
securities. Upon any such conversion, the Company shall issue to the Holder the
number of shares of each class or series of such equity securities that the
Holder elects to receive, as determined in accordance with the following
formula:
N = O
-
P
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where:
N = the number of shares of such class or series of equity
securities to be issued to the Holder upon such conversion
O = the outstanding principal amount of this Note to be converted
into such class or series
P = the lowest price per share of such class or series of equity
securities issued to any Person other than the Holder in
connection with such Equity Issuance
5.2 Manner of Conversion. The Holder may exercise the
right to convert this Note pursuant to Section 5.1 by delivering written notice
of such exercise to the Company, which notice shall specify the portion of the
principal balance of this Note as to which the Holder elects such conversion and
the class(es) or series of securities to be received upon such conversion. Such
notice may be delivered to the Company at any time prior to the closing of the
Equity Issuance. In the event that the Holder exercises such conversion option,
then at the closing of the Equity Issuance, the Company shall deliver to the
Holder or to such other Person as the Holder shall designate in its notice of
conversion one or more certificates evidencing the shares of equity securities
into which this Note (or portion) is converted, which certificate(s) shall be in
the name of the Holder or such other Person as the Holder shall designate in its
notice of exercise and, in the case of a partial conversion, a new note in the
amount of the unconverted principal balance hereof. In exchange for such
certificate(s) and any such new note, the Holder shall deliver to the Company
the original of this Note. On the date of any such conversion, the Company shall
pay to the Holder in cash, all accrued but unpaid interest on the portion of the
principal amount of this Note that is so converted.
5.3 Notice of Equity Issuance. Not less than ten (10)
days prior to the expected closing date of any Equity Issuance, the Company
shall deliver to the Holder written notice of such Equity Issuance, which notice
shall set forth the material terms of such Equity Issuance and the expected
closing date thereof.
6. Miscellaneous Provisions.
6.1 Waiver of Demand and Notice. The Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note.
6.2 Governing Law. This Note shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the
laws of the State of Georgia, without giving effect to provisions thereof
regarding conflict of laws.
6.3 Consent to Jurisdiction and Service of Process. The
Company and, by its acceptance hereof, the Holder hereby consent to the
jurisdiction of any state or federal court located in Atlanta, Georgia and
irrevocably agree that subject to the Holder's election, all actions or
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proceedings arising out of or relating to this Note shall be litigated in such
courts. The Company accepts for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts and waives any defense of forum non conveniens, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Note.
6.4 Expenses and Attorneys' Fees. The Company shall
promptly reimburse the Holder for all fees, costs and expenses (including
reasonable attorneys' fees) incurred by the Holder in any action to enforce this
Note or to collect any payments due from the Company under this Note.
6.5 Notices. Unless otherwise specifically provided
herein, any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and may
be personally served, sent by facsimile, telex or overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by telecopy or telex, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. (Atlanta, Georgia
time) or, if not, on the next succeeding Business Day; (c) if delivered by
overnight courier, one (1) Business Day after delivery to such courier properly
addressed; or (d) if by U.S. Mail, four (4) Business Days after depositing in
the United States mail, with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to the Company: AER Energy Resources, Inc.
4600 Highlands Parkway
Suite G
Smyrna, Georgia 30082
Attention: President
Facsimile No.: 770 433-2286
If to the Holder: FW AER II, L.P.
201 Main Street
Suite 2600
Ft. Worth, Texas 76102
Attention: Vice President and
Controller
Facsimile No.: 817 338-2067
with a copy to: David G. Brown
c/o Arbor Investors
2775 Sand Hill Road
Suite 220
Menlo Park, California 94025
Facsimile No.: 650 234-0525
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or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this Section
6.5. A notice not given as provided above shall, if it is in writing, be deemed
given if and when actually received by the party to whom given.
6.6 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of the Holder in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Note are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
6.7 Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation under
this Note shall not affect or impair the validity, legality or enforceability of
the remaining provisions or obligations under this Note or of such provision or
obligation in any other jurisdiction.
6.8 Headings. Section and subsection headings in this
Note are included herein for convenience of reference only and shall not
constitute a part of this Note for any other purpose or be given any substantive
effect.
6.9 Assignments and Participations. Subject to the
requirements of the Act and the State Laws, the Holder may assign its rights
under this Note and further may assign, or sell participations in, all or any
part of this Note to any other Person or Persons. Prior to the effective date of
any assignment of this Note, the Holder shall deliver to the Company written
notice of such assignment, which notice shall specify the identity of the
assignee.
7. Definitions. The following terms used in this Note
shall have the following meanings:
"Business Day" means a day other than Saturday, Sunday or a
bank or legal holiday under the laws of the State of Georgia.
"Conversion Option" means the option of the Holder, pursuant
to Section 5, to convert all or a portion of the unpaid principal and
interest hereunder into equity securities of the Company.
"Equity Issuance" means the public or private issuance by the
Company of equity securities in the Company to any Person.
"Event of Default" means each of the events set forth in
Section 4.1.
"Net Proceeds" means, with respect to any Equity Issuance, the
sale proceeds received by the Company in such Equity Issuance, net of
underwriting fees, commissions and discounts.
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"Other Note" means the Convertible Promissory Note of even
date herewith, in the principal amount of $1,000,000, made and executed
by the Company in favor of The Kindt-Collins Company, as such Note may
be replaced or exchanged from time to time.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, joint ventures, associations, trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
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IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of the date first written above.
AER ENERGY RESOURCES, INC.
By: /s/ R. Dennis Bentz
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Name: R. Dennis Bentz
Title: Vice President, Product and Process Development
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