EXHIBIT 10.8
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM.
AER ENERGY RESOURCES, INC.
REVOLVING CREDIT LOAN NOTE
$1,000,000.00 August 28, 2001
FOR VALUE RECEIVED, the undersigned, AER ENERGY RESOURCES, INC., a
Georgia corporation (the "Maker"), promises to pay to the order of Elmwood
Partners II, an Ohio limited partnership (the "Payee"), at 12651 Elmwood Avenue,
Cleveland, Ohio 44111, or at any such other place as the Payee may designate in
writing, the principal sum of One Million Dollars ($1,000,000.00) (the "Maximum
Amount"), or so much as may be advanced hereunder, on the earlier of December
31, 2001 or the Closing Date (as defined below), and the Maker further promises
to pay interest on the unpaid balance of such principal amount at the rate of
interest and in the manner described below until full and final payment.
Reference is made to that certain Form of Securities Purchase Agreement (the
"Purchase Agreement") attached hereto as Exhibit A. As used herein, the "Closing
Date" shall have the meaning given such term in the fully-executed Purchase
Agreement, if one is executed by the Maker and purchasers of its Series D
Convertible Preferred Stock and the Closing Date thereunder occurs on or before
December 31, 2001. As used herein, "Sub-Unit" shall mean one share of Series D
Convertible Preferred Stock together with a Warrant to purchase Common Stock of
the Maker, such Warrant having the same terms as the Warrants delivered under
the Purchase Agreement and for the same number of shares of Common Stock of
Maker per share of Series D Convertible Preferred Stock as the Warrants
delivered under the Purchase Agreement.
Interest on the unpaid principal balance hereof shall accrue at an
annual rate (computed on the basis of actual days elapsed over a 360-day year)
equal to the Prime Rate (as defined below), plus one percentage point (1.0%).
"Prime Rate" shall mean the rate announced by Bank of America, Atlanta, Georgia,
from time to time as being its prime rate. Any change in the interest rate
hereunder resulting from a change in the Prime Rate shall be effective at the
beginning of the business day on which the Prime Rate changes.
The Maker shall pay all costs of collection, including fifteen percent
(15%) of the principal and interest as attorney's fees, if this Note is
collected by legal action or through an attorney at law. In no event shall the
Payee be entitled to receive, collect, or apply, as interest hereunder, any
amount in excess of the maximum rate of interest permitted to be charged by
applicable law.
Provided that no Event of Default or event that with notice and/or
passage of time would constitute an Event of Default shall have occurred, the
Maker may borrow, repay principal borrowed, and reborrow principal in multiples
of $10,000.00 and in aggregate installments outstanding at any one time up to
the Maximum Amount and until the earlier of December 31, 2001 or the Closing
Date. The Payee shall advance funds to the Maker pursuant to this Note
immediately upon oral or written request therefor from the Maker.
All unpaid principal, together with all accrued and unpaid interest and
all other indebtedness evidenced by this Note, shall be due and payable in full
on the earlier of December 31, 2001 or the Closing Date. If the Closing Date
occurs on or prior to December 31, 2001, the principal balance of this Note, all
accrued but unpaid interest and all other indebtedness evidenced by this Note
shall convert into such number (rounded to the nearest whole number) of
Sub-Units equal to (i) the aggregate amount due under this Note divided by (ii)
the purchase price attributable to a Sub-Unit under the Purchase Agreement.
The Maker shall have the right at any time to prepay the indebtedness
represented by this Note in whole or in part without premium or penalty, but
with accrued interest to the date of such prepayment on the principal amount
prepaid. Amounts borrowed, reborrowed and repaid shall be noted by the Payee on
this Note without the further authorization of the Maker.
Upon the occurrence of an Event of Default (as defined below):
(a) any and all debts, liabilities and obligations of the Maker to
the Payee hereunder, whether principal, interest or otherwise
(the "Obligations") may, at the option of the Payee and
without demand or notice of any kind, be declared and
immediately become due and payable in full, and the Payee may
exercise any rights available to it at law or in equity, or
available under any agreement, relating to the Obligations;
and
(b) subject to limitations imposed by applicable law, interest
accruing under this Note shall accrue from the date of such
occurrence at the higher of (a) the interest rate provided
above plus two additional percentage points (2.0%), or (b)
twelve percent (12%).
The occurrence of any one or more of the following events shall
constitute a default (an "Event of Default") by the Maker:
(a) the Maker fails to pay any Obligation when due and payable or
declared due and payable and such failure shall continue for
five (5) calendar days; or
(b) the Maker fails or neglects to perform, keep or observe any
term, provision, condition, covenant or agreement contained in
this Note (other than those referred to in subparagraph (a) of
this paragraph) or in any other instrument or document
delivered pursuant hereto or in any other instrument, document
or agreement with the Payee, and such failure or neglect shall
have continued for a period of ten (10) calendar days after
receipt of written notice from the Payee of such failure or
neglect; or
(c) the Maker makes or submits any false, untrue, incomplete or
misleading representation, warranty, schedule, report or other
communication to the Payee in connection with this Note or any
transaction relating thereto; or
(d) the Maker becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, its debts as they
mature; or
(e) the Maker makes a general assignment for the benefit of
creditors, convenes or causes to be convened a meeting of its
creditors or its principal creditors, or takes advantage of
the insolvency laws of any State, or a petition in bankruptcy
or an arrangement or reorganization under the Federal
Bankruptcy Code is filed by or against the Maker; or
(f) the Maker shall be dissolved, voluntarily or involuntarily,
shall merge or consolidate with any other person, or shall
sell all or substantially all of its assets to a third party.
The failure or forbearance of the Payee to exercise any right
hereunder, or otherwise granted to it by law or another agreement, shall not
affect or release the liability of the Maker, and shall not constitute a waiver
of such right unless so stated by the Payee in writing.
TIME IS OF THE ESSENCE IN THE PAYMENT AND PERFORMANCE OF THIS NOTE.
This Note shall be governed by and construed in accordance with the substantive
laws of the State of Georgia.
THE MAKER WAIVES PRESENTMENT, DEMAND FOR PAYMENT, NOTICE OF DISHONOR,
NOTICE OF PROTEST, AND PROTEST, AND ALL OTHER NOTICES OR DEMANDS IN CONNECTION
WITH THE DELIVERY, ACCEPTANCE, PERFORMANCE OR DEFAULT OF THIS NOTE.
This Note is executed by the Maker on the date first above written.
AER ENERGY RESOURCES, INC.
By: /s/ David W. Dorheim
--------------------------------------
David W. Dorheim
President and Chief Executive Officer
Accepted and agreed to this 28th day of August, 2001.
ELMWOOD PARTNERS II
By: /s/ Jon A. Lindseth
---------------------------------------
Jon A. Lindseth, Trustee under Jon A.
Lindseth Trust Agreement dated April 25,
1986, as modified, Managing Partner
Borrowings
Amount Date
$
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$
---------------------- --------------------------------
$
---------------------- --------------------------------
$
---------------------- --------------------------------
$
---------------------- --------------------------------
$
---------------------- --------------------------------
$
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FORM OF
SECURITIES PURCHASE AGREEMENT
THIS IS A SECURITIES PURCHASE AGREEMENT (this "Agreement") by and
between the undersigned ("Purchasers"), and AER Energy Resources, Inc., a
Georgia corporation ("AER"), dated as of [______________ ___,] 2001, and by
which Purchasers and AER, in consideration of the agreements set forth below
(the mutuality, adequacy and sufficiency of which are hereby acknowledged),
hereby agree as follows:
1. Agreement to Purchase and Sell. Upon the terms set forth in this Agreement,
each Purchaser hereby agrees to purchase from AER and AER agrees to sell to each
Purchaser (i) (A) such number of shares of AER's no par value Series D
Convertible Preferred Stock (the "Shares") set forth next to such Purchaser's
name on Exhibit A hereto and (ii) a warrant to purchase such number of shares of
AER's no par value Common Stock set forth next to such Purchaser's name on
Exhibit A hereto (collectively, the "Warrants") in the form attached hereto as
Exhibit B. The aggregate purchase price for each Purchaser for its Shares and
Warrants shall be the amount set forth next to such Purchaser's name on Exhibit
A hereto.
2. The Closing. The closing shall occur at 10:00 a.m. on
[______________ ___,] 2001 (the "Closing") at the offices of Sutherland Asbill &
Brennan LLP, 999 Peachtree Street, N.E., Atlanta, Georgia 30309-3996, or as the
parties shall otherwise agree. At the Closing, the following shall occur:
(a) AER shall deliver to each Purchaser (i) a duly completed and
executed share certificate in the name of each Purchaser representing its
Shares, and (ii) a duly completed and executed Warrant.
(b) Each Purchaser shall deliver to AER by wire transfer in
immediately available federal funds the aggregate purchase price of its Shares
and its Warrant.
3. Representations and Warranties.
(a) By AER. AER hereby represents and warrants to each Purchaser
that:
(i) AER is a duly incorporated and organized Georgia corporation
validly existing and in good standing under Georgia law;
(ii) AER has the power and authority to issue the Shares and the
Warrant to Purchaser pursuant to this Agreement and to execute, deliver and
otherwise perform this Agreement, and without limiting the foregoing, the Board
of Directors of AER has authorized and approved the execution, delivery and
performance of this Agreement;
(iii) the Shares, the AER Common Stock ("Common Stock") issuable
upon exercise of the Warrants (the "Warrant Shares") and the Common Stock
issuable upon conversion of the Shares (the "Conversion Shares") when issued
will be validly issued, fully paid
and non-assessable shares of capital stock of AER free and clear of any liens,
encumbrances, adverse rights or claims of any kind whatsoever, and AER will at
all times maintain a number of authorized but unissued shares of Common Stock
for issuance of the Warrant Shares and the Conversion Shares;
(iv) this Agreement and the Warrants each has been duly executed and
delivered by AER, and constitutes the legal, valid and binding obligation of
AER, enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency and other laws and equitable
principles affecting creditors' rights generally and the discretion of the
courts in granting equitable remedies;
(v) the execution, delivery and performance of this Agreement and
the Warrants each is in compliance with, and is not and will not be, after the
giving of notice or the passage of time or both, in violation of (A) the
articles of incorporation or bylaws of AER as amended or restated, (B) any
applicable law, regulation or order to which AER or its assets is subject or
bound, or (C) any agreement to which AER or its assets is subject or bound (and
without limiting the foregoing, will not result in any preemptive rights or
otherwise require the issuance of stock or other securities to satisfy
antidilution or other similar requirements);
(vi) all of the documents (the "SEC Documents") filed by AER within
the last thirty-six months prior to the date of this Agreement with the
Securities and Exchange Commission (the "Commission") in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities Exchange Act of 1934, as amended (collectively the
"Securities Acts"), conformed in all material respects to the requirements of
the Securities Acts and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
(vii) the authorized capital stock of AER consists of 100,000,000
shares of common stock, no par value ("Common Stock") and 10,000,000 shares of
preferred stock, no par value. As of [__________ __, 2001], AER had
[_____________] shares of Common Stock outstanding, [_____________] shares of
preferred stock outstanding and warrants to purchase [_____________] shares of
common stock outstanding. Other than warrants previously issued to FW AER II,
L.P., Elmwood Partners II (or their affiliates) and Rayovac Corporation, stock
options granted to employees, restricted stock issued to directors and AER's
outstanding Series A, Series B and Series C Convertible Preferred Stock, all as
described in the SEC Documents, AER has no outstanding securities convertible
into (or exercisable or exchangeable for) or evidencing the right to purchase or
subscribe for, shares of its capital stock or authorized subscriptions, options,
warrants, calls, rights, commitments or any other agreements or arrangements,
obligating it to issue any shares of its capital stock or securities convertible
into capital stock;
(viii) the financial statements (including any related notes)
included in the SEC Documents (the "Financial Statements"), have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as may be noted therein) and fairly
present, in all material respects, the financial condition, results
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of operations and cash flows of AER as of the dates thereof and for the periods
ended on such dates (in each case subject, as to interim statements, to changes
resulting from year-end adjustments (none of which were or could be expected to
be material in amount or effect)); and
(ix) except as set forth in the Financial Statements, since
December 31, 2000, AER has conducted its business only in the ordinary course in
substantially the same manner as theretofore conducted, and AER has not
undergone or suffered any material adverse change in its condition, financial or
otherwise, business, operations, affairs, properties, assets or prospects.
(b) By Purchasers. Each Purchaser hereby represents and warrants to
AER:
(i) this Agreement has been duly executed and delivered by
Purchaser, and constitutes the legal, valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency and other laws and equitable
principles affecting creditors' rights generally and the discretion of the
courts in granting equitable remedies;
(ii) Purchaser will acquire the Shares, the Conversion Shares,
the Warrant and the Warrant Shares (collectively the "Securities") for its own
account, to hold for investment, and with no present intention of dividing its
participation with others or reselling or otherwise participating, directly or
indirectly, in a distribution of the Securities, and it will not make any sale,
transfer, or other disposition of the Securities in violation of the Securities
Act or any applicable state securities laws (the "State Acts"). There will be
placed on the Warrant and any certificates for the Shares, the Conversion Shares
and the Warrant Shares, a legend stating in substance:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS IN RELIANCE ON ONE OR MORE EXEMPTIONS
THEREUNDER AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT
IN TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT THEREUNDER. THE SECURITIES EVIDENCED HEREBY
ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN
A SECURITIES PURCHASE AGREEMENT TO WHICH THE
CORPORATION IS A PARTY. ANY TRANSFER OF THE
SECURITIES REPRESENTED HEREBY IN VIOLATION OF SAID
AGREEMENT SHALL BE VOID. THE CORPORATION WILL MAIL TO
THE HOLDER OF THESE SECURITIES A COPY OF SUCH
RESTRICTIONS WITHOUT CHARGE WITHIN FIVE (5) DAYS
AFTER RECEIPT OF WRITTEN REQUEST THEREFOR ADDRESSED
TO THE CORPORATION.
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(iii) Purchaser, in offering to subscribe for the Securities
hereunder, has been given access to all material and relevant information
concerning AER, thereby enabling Purchaser to make an informed investment
decision concerning the Securities. Purchaser has relied solely upon an
independent investigation made by it and its representatives, if any, and has,
prior to the date hereof, been given access to and the opportunity to examine
data and information relating to AER. In making its investment decision to
purchase the Securities, Purchaser is not relying on any oral or written
representations or assurances from AER or any other person or any representation
of AER or any other person other than as set forth in this Agreement. Without
limiting the foregoing, Purchaser has reviewed AER's Annual Report on Form 10-K
for the year ended December 31, 2000 and AER's Quarterly Report on Form 10-Q for
the quarter ended [_________ __], 2001. Purchaser is an "accredited investor" as
defined in Rule 501 of Regulation D under the Securities Act.
(iv) Purchaser understands and acknowledges that an investment
in the Securities involves a high degree of risk. Purchaser represents that
Purchaser is able to bear the economic risk of an investment in the Securities,
which Purchaser acknowledges are currently illiquid and may remain illiquid
indefinitely, including a possible total loss of its investment. In making this
statement Purchaser hereby represents and warrants to AER that Purchaser has
adequate means of providing for Purchaser's current needs and contingencies,
that Purchaser is able to afford to hold the Securities for an indefinite period
and that Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks of the
investment in the Securities. Further, Purchaser represents that Purchaser has
no present need for liquidity in the Securities and Purchaser is willing to
accept such investment risks.
(v) Purchaser understands that no United States federal or
state agency, or similar agency of any other country, has reviewed, approved,
passed upon or made any recommendation or endorsement of AER or the Securities.
(vi) This Agreement is made by AER with Purchaser in reliance
upon Purchaser's representations and covenants made in this Section 3(b), which
reliance by its execution of this Agreement Purchaser hereby confirms.
(vii) Purchaser understands that the Securities have not been
registered under the Securities Act or any State Acts and are being offered and
sold pursuant to exemptions therefrom based in part upon the representations of
Purchaser contained herein.
(viii) Purchaser knows of no public solicitation or
advertisement of an offer in connection with the proposed issuance and sale of
the Securities.
(ix) Purchaser has reviewed with its tax advisors the U.S.
federal, state, local and foreign tax consequences of an investment in the
Securities and the transactions
-4-
contemplated by this Agreement. Purchaser is relying solely on such advisors and
not on any statements or representations of AER or any of its agents and
understands that Purchaser (and not AER) shall be responsible for Purchaser's
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
(x) Purchaser's acquisition of the Securities is not a
transaction (or any element of a series of transactions) that is a part of a
plan or scheme to evade the registration provisions of the Securities Act.
4. Registration of Shares.
(a) Demand Registration. If at any time prior to eight (8) years from
the date of the Closing, AER shall receive a written request from a Purchaser or
Purchasers holding Shares, Conversion Shares, Warrants and Warrant Shares
representing at least 25% of the Common Stock issuable upon conversion of the
Shares and exercise of the Warrants that AER file a registration statement under
the Securities Act, covering the registration of at least $2,000,000 of the
Warrant Shares, the Conversion Shares, to the extent such shares of Common Stock
are not then freely tradable under the Securities Act, AER shall first notify in
writing any Purchaser who has not joined in such request of such request. Each
such Purchaser shall have ten (10) days in which to notify AER of its intention
to join in the request to register its shares. Not later than ninety (90) days
after receipt by AER of a written request for a demand registration pursuant to
this Section 4(a), AER shall file a registration statement with the Commission
relating to the shares as to which such request for a demand registration
relates (the "Requested Shares") and AER shall use its best efforts to cause the
registration statement (which may cover, without limitation, an offering on a
delayed or continuous basis open for up to one hundred eighty (180) days
pursuant to Commission Rule 415) for the Requested Shares to become effective
under the Securities Act. AER shall be obligated to effect only three (3)
registrations pursuant to this Section 4(a) for all Purchasers, and only if the
proposed aggregate selling price in any such offering is at least $2,000,000.
(b) Delay of Registration. Notwithstanding anything to the contrary
in Section 4(a), AER shall have the right (i) to defer the initial filing or
request for acceleration of effectiveness of any registration pursuant to
Section 4(a) or (ii) after effectiveness, to suspend effectiveness of any such
registration statement or to require holders to suspend further sales pending
amendment (collectively a "Delay"), if, in the good faith judgment of the Board
of Directors of AER and upon the advice of counsel to AER, such delay in filing
or requesting acceleration of effectiveness or such suspension of effectiveness
or suspension of sales is necessary in light of the existence of material
non-public information (financial or otherwise) concerning AER disclosure of
which at the time is not, in the opinion of the Board of Directors of AER and
upon the advice of counsel, (A) otherwise required and (B) in the best interests
of AER; provided, however that AER will not invoke a Delay for more than three
(3) months, unless the reason for the Delay is that AER is then engaged in an
acquisition, in which case it will use its best efforts to end the Delay as soon
as possible and provided, further that AER will not invoke Delays for more than
an aggregate of six (6) months in any calendar year. The one hundred eighty
(180) day period referred to herein during which the registration statement may
be kept current after its effective date shall be extended for an additional
number of business days equal to the number of business days during which the
right to sell shares was suspended pursuant to the preceding sentence, and, if
and to the extent necessary to effect such extension, the eight (8)-year period
referred to above shall also be extended. In addition, the eight (8)-year period
will also be extended if any registration has been delayed pursuant to the
foregoing and cannot be completed within such period.
-5-
(c) "Piggyback" Registration. If at any time prior to eight (8) years
from the date of the Closing, AER shall determine to proceed with the
preparation and filing of a registration statement under the Securities Act in
connection with the proposed offer and sale for money of any of its equity
securities by it or any of its security holders (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor or similar form), AER
will give written notice of its determination to each Purchaser. Upon the
written request of a Purchaser given to AER within ten (10) days after
Purchaser's receipt of any such notice by AER, AER will cause all the Conversion
Shares and Warrant Shares and other shares of Common Stock which Purchasers have
requested to have registered (the "Piggyback Shares") to be included in such
registration statement; provided, however, that, if the managing underwriter, in
the case of an underwritten public offering, determines and advises in writing
that the inclusion in the registration statement of all the Piggyback Shares
proposed to be included by Purchasers would interfere with the successful
marketing of the securities proposed to be registered by AER, then the number of
such Piggyback Shares to be included in the registration statement shall be
reduced in accordance with the recommendations of the managing underwriter,
except that if the managing underwriter determines and advises that the
inclusion in such registration statement of any Piggyback Shares would so
interfere, then no Piggyback Shares shall be included in such registration
statement; provided that any such reduction shall be made pro rata with respect
to all Purchasers requesting such registration.
(d) Expenses. With respect to each inclusion of shares in a
registration statement pursuant to Section 4(a) or 4(b), AER shall bear the
following fees, costs and expenses: all registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for AER and
all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. Fees and disbursements not expressly
included above shall be borne pro rata by the Purchasers whose shares are
included in such registration statement.
(e) Indemnification, Etc. In the event that shares are registered
pursuant to Section 4(a) or 4(b), AER, Purchasers shall execute reasonable and
customary underwriting, indemnification and lock-up agreements relating to such
registration and shall undertake reasonable and customary registration
procedures.
(f) Termination of Rights. Notwithstanding anything to the contrary in
this Section 4, all registration rights set forth in this Section 4 shall
terminate with respect to each Purchaser at such time as it or he is able to
sell all of its or his Common Stock subject to such registration rights pursuant
to Rule 144 under the Securities Act within a single three (3)-month period.
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5. Survival; Indemnification. The representations, warranties and
agreements made in this Agreement shall survive the Closing. Each party,
acknowledging that each of the others is entitled to rely on its
representations, warranties and agreements in this Agreement in order to
preserve the benefit of the bargain otherwise represented by this Agreement,
agrees that neither the survival of such representations, warranties and
agreements, nor their enforceability nor any remedies for breaches of them shall
be affected by any knowledge of a party regardless of when or how such party
acquired such knowledge.
6. Miscellaneous.
(a) Good Faith Efforts; Further Assurances; Cooperation. The parties
shall in good faith undertake to perform their obligations in this Agreement, to
satisfy all conditions and to cause the transactions contemplated in this
Agreement to be carried out promptly in accordance with the terms of this
Agreement. Upon the execution of this Agreement and thereafter, each party shall
do such things as may be reasonably requested by the others in order more
effectively to consummate or document the transactions contemplated by this
Agreement. The parties shall cooperate with each other and their respective
counsel, accountants or representatives in connection with any actions required
to be taken as part of their respective rights and obligations under this
Agreement.
(b) Notices. Each notice, communication and delivery under this
Agreement (i) shall be made in writing signed by the party making the same, (ii)
shall specify the section of this Agreement pursuant to which it is given, (iii)
shall be given either in person or by a nationally recognized next business day
delivery service or by telecopier, and (iv) if not given in person, shall be
given to a party at the address set forth below such party's signature (or at
such other address as a party may furnish to the other parties to this Agreement
pursuant to this Section 6(b)). If notice is given pursuant to this Section 6(b)
of a permitted successor or assign of a party, then notice shall also thereafter
be given as set forth above to such successor or assign of such party.
(c) Assignment. No assignment or transfer by Purchasers of their
respective rights and obligations under this Agreement shall be made by merger
or other operation of law or otherwise except with the prior written consent of
AER. This Agreement is binding upon the parties and their successors and assigns
and inures to the benefit of the parties and their permitted successors and
assigns and, when appropriate to effect the binding nature of this Agreement for
the benefit of the other parties, of any other successor or assign.
(d) Severability. Any determination by any court of competent
jurisdiction of the invalidity of any provision of this Agreement that is not
essential for accomplishing its purposes shall not affect the validity of any
other provision of this Agreement, which shall remain in full force and effect
and which shall be construed as to be valid under applicable law.
(e) Controlling Law; Integration; Amendment; Waiver. This Agreement
is governed by, and shall be construed and enforced in accordance with, the laws
of the State of Georgia (except the laws of that state that would render such
choice of laws ineffective). This Agreement supersedes all prior negotiations,
agreements and understandings among the parties as to its subject matter,
constitutes the entire agreement among the parties
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as to its subject matter and may not be altered or amended except in writing
signed by the parties. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce the same; and no waiver by any party of any provision or of a
breach of any provision of this Agreement, whether by conduct or otherwise, in
any one of more instances shall be deemed or construed either as a further or
continuing waiver of any such provision or breach or as a waiver of any other
provision or of a breach of any other provision of this Agreement.
(f) Copies. This Agreement may be executed in two or more copies,
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement or its terms to produce or account for more than
one of such copies.
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DULY EXECUTED and delivered by Purchasers and AER, on ___________
__, 2001.
PURCHASERS:
-----------------------------------------
[name of Purchaser - please print]
[By:]
---------------------------------------------
[signature of Purchaser or authorized officer]
Name
-----------------------------------------
Title:
---------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
-----------------------------------------
[name of Purchaser - please print]
[By:]
---------------------------------------------
[signature of Purchaser or authorized officer]
Name
-----------------------------------------
Title:
---------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
-----------------------------------------
[name of Purchaser - please print]
[By:]
---------------------------------------------
[signature of Purchaser or authorized officer]
Name
-----------------------------------------
Title:
---------------------------------------
Address:
----------------------------------------
----------------------------------------
----------------------------------------
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AER: AER ENERGY RESOURCES, INC.
By:
-------------------------------------
J.T. Moore
Vice President and Chief
Financial Officer
Address:
4600 Highlands Parkway, Suite G
Smyrna, Georgia 30082
Phone: (770) 433-2127
Fax Number: (770) 433-2286
* * * * *
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EXHIBIT A
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PURCHASER NO. OF PREFERRED SHARES INITIAL NO. OF WARRANT SHARES PRICE
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EXHIBIT B
WARRANT
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THIS WARRANT AND THE SECURITIES PURCHASED ON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL EITHER (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND ITS COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION THEREWITH.
Warrant to Purchase Warrant No. [2001-3]
[NUMBER] Shares
FORM OF
WARRANT TO PURCHASE COMMON STOCK
OF
AER ENERGY RESOURCES, INC.
THIS CERTIFIES that [NAME OF WARRANT HOLDER], a [TYPE OF LEGAL ENTITY
AND STATE OF RESIDENCE OR ORGANIZATION] ("Holder") or any subsequent holder
hereof, has the right to purchase from AER Energy Resources, Inc., a Georgia
corporation (the "Company"), up to [NUMBER OF SHARES OF COMMON STOCK] fully paid
and nonassessable shares of the Company's Common Stock, no par value ("Common
Stock"), at the Exercise Price (as defined herein), subject to adjustment as
provided below, at any time on or before 5:00 p.m., Atlanta, Georgia time, on
the [FIFTH ANNIVERSARY OF THE CLOSING DATE].
This Warrant is issued and all rights hereunder shall be held subject
to all of the conditions, limitations and provisions set forth herein.
1. Exercise.
This Warrant may be exercised as to all or any lesser number of full
shares of Common Stock covered hereby upon surrender of this Warrant, with the
Subscription Form attached hereto duly executed, together with the full Exercise
Price in cash, or by certified or official bank check payable in New York
Clearing House Funds or wire transfer payable in immediately available federal
funds for each share of Common Stock as to which this Warrant is exercised, at
the office of the Company, AER Energy Resources, Inc., 4600 Highlands Parkway,
Suite G, Smyrna, GA 30082, or at such other office or agency as the Company may
designate in writing (such surrender and payment hereinafter called the
"Exercise of this Warrant"). The "Date of Exercise" of the Warrant shall be
defined as the date that the original Warrant and Subscription Form are received
by the Company. This Warrant shall be canceled upon its Exercise, and, as soon
as practicable thereafter, the Holder hereof shall be entitled to receive a
certificate or certificates for the number of shares of Common Stock purchased
upon such Exercise and a new Warrant or Warrants (containing terms identical to
this Warrant) representing any unexercised portion of this Warrant. Each person
in whose name any certificate for shares of Common Stock is issued shall, for
all purposes, be deemed to have become the Holder of record of such shares on
the Date of Exercise of this Warrant, irrespective of the date of delivery of
such certificate. Nothing in this Warrant shall be construed as conferring upon
the Holder hereof any rights as a shareholder of the Company.
2. Payment of Warrant Exercise Price.
Payment of the Exercise Price may be made by any of the following, or a
combination thereof, at the election of Holder:
(i) cash, certified check or cashier's check or wire transfer payable
in immediately available federal funds; or
(ii) surrender of this Warrant at the principal office of the Company
together with notice of election, in which event the Company shall issue Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder (not to
exceed the number of shares set forth on the cover page of this Warrant, as
adjusted pursuant to the provisions of Section 5 of this Warrant).
Y = the number of shares of Common Stock for which this
Warrant is being exercised.
A = the Market Price of one share of Common Stock (for
purposes of this Section 2(ii), the "Market Price" shall be
defined as the average closing bid price of the Common Stock
for the five trading days prior to the Date of Exercise of
this Warrant (the "Five-Day Average Closing Bid Price"), as
reported on the Nasdaq National Market, or if the Common Stock
is not traded on the Nasdaq National Market, the Five-Day
Average Closing Bid Price in the over-the-counter market;
provided, however, that if the Common Stock is listed on a
stock exchange, the Market Price shall be the Five-Day Average
Closing Bid Price on such exchange).
B = the Exercise Price.
It is intended that the Common stock issuable upon exercise of this Warrant in a
cashless exercise transaction shall be deemed to have been acquired at the time
this Warrant was issued, for purposes of Rule 144(d)(3)(ii).
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3. Exercise Price.
The Exercise Price shall initially be [THE STRIKE PRICE] per share.
However, if 120% of the average closing bid price of a share of Common Stock (as
reported on any tier of The Nasdaq Stock Market, Inc., including the
Over-the-Counter Bulletin Board automated quotation system or on a national
securities exchange) for 20 consecutive trading days ending on [THE DATE
IMMEDIATELY PRECEDING THE FIRST ANNIVERSARY OF THE CLOSING DATE] (the "20-Day
Average Closing Bid Price"), is less than the Exercise Price, then the Exercise
Price shall be adjusted to equal the greater of (i) 120% of the 20-Day Average
Closing Bid Price or (ii) [75% OF THE BASE PRICE]. Notwithstanding the
foregoing, in the event that the Exercise Price is adjusted pursuant to this
Section 3, no such adjustment shall be made to the number of Shares of Common
Stock that may be received upon the Exercise of this Warrant.
4. Transfer and Registration.
Subject to the provisions of Section 8 of this Warrant, this Warrant
may be transferred on the books of the Company, wholly or in part, in person or
by attorney, upon surrender of this Warrant properly endorsed, with signature
guaranteed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
5. Anti-Dilution Adjustments.
(a) If the Company shall at any time declare a dividend payable in
shares of Common Stock, then the Holder hereof, upon Exercise of this Warrant
after the record date for the determination of Holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is Exercised, such additional shares of Common stock as such Holder
would have received had this Warrant been Exercised immediately prior to such
record date.
(b) If the Company shall at any time effect a recapitalization or
reclassification of such character that the shares of Common stock shall be
changed into or become exchangeable for a larger or smaller number of shares,
then upon the effective date thereof, the number of shares of Common Stock which
the Holder hereof shall be entitled to purchase upon Exercise of this Warrant
shall be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization or reclassification, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionately decreased and, in
the case of a decrease in the number of shares, proportionally increased.
(c) If the Company shall at any time distribute to Holders of Common
Stock cash, evidences of indebtedness or other securities or assets (other than
cash dividends or distributions payable out of earned surplus or net profits for
the current or preceding year) then, in any such case, the Holder of this
Warrant shall be entitled to receive, upon Exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
Holder would have been entitled to receive with
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respect to each such share of Common stock as a result of the happening of such
event had this Warrant been Exercised immediately prior to the record date or
other date fixing shareholders to be affected by such event (the "Determination
Date") or, in lieu thereof, if the Board of Directors of the Company should so
determine at the time of such distribution, a reduced Exercise Price determined
by multiplying the Exercise Price on the Determination Date by a fraction, the
numerator of which is the result of such Exercise Price reduced by the value of
such distribution applicable to one share of Common stock (such value to be
determined by the Board in its discretion) and the denominator of which is such
Exercise Price.
(d) If the Company shall at any time consolidate or merge with any
other corporation or transfer all or substantially all of its assets or
dissolve, then the Company shall deliver written notice to the Holder of such
merger, consolidation or sale of assets or dissolution at least thirty (30) days
prior to the closing of such merger, consolidation or sale of assets or
dissolution, and this Warrant shall terminate and expire immediately prior to
the closing of such merger, consolidation or sale of assets or dissolution.
(e) As used in this Warrant, the term "Exercise Price" shall mean the
purchase price per share specified in Section 3 of this Warrant until the
occurrence of an event stated in Section 5(b) or 5(c) and thereafter shall mean
said price as adjusted from time to time in accordance with the provisions of
said sections. No such adjustment pursuant to Section 5(b) or 5(c) shall be made
unless such adjustment would change the Exercise Price at the time by $.01 or
more; provided, however, that all adjustments not so made shall be deferred and
made when the aggregate thereof would change the Exercise Price at the time by
$.01 or more. No adjustment made pursuant to any provision of this Section 5
shall have the effect of increasing the total consideration payable upon
Exercise of this Warrant in respect of all the Common Stock as to which this
Warrant may be exercised.
(f) In the event that at any time, as a result of an adjustment made
pursuant to this Section 5, the Holder of this Warrant shall, upon Exercise of
this Warrant, become entitled to receive shares and/or other securities or
assets (other than Common Stock) then, wherever appropriate, all references
herein to shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to adjustment from
time to time in a manner and upon terms as nearly equivalent as practicable to
the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. The
Company shall make a payment in cash in respect of any fractional shares which
might otherwise be issuable upon Exercise of this Warrant, calculated by
multiplying the fractional share amount by the market price of the Company's
Common Stock on the Date of Exercise as reported on the Nasdaq National Market
or such other exchange or system on which the Company's Common Stock is traded.
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7. Reservation of Shares.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise of this
Warrant. The Company covenants and agrees that upon Exercise of this Warrant,
all shares of Common Stock issuable upon such Exercise shall be duly and validly
issued, fully paid, nonassessable and not subject to preemptive rights of any
shareholders.
8. Restrictions on Transfer.
This Warrant and the Common Stock issuable on Exercise hereof have been
or will be acquired by the Holder hereof for investment for its own account and
not with a view to the distribution thereof, have not been registered under the
Securities Act of 1933, as amended (the "Act"), or under any state securities
laws (the "State Acts") and may not be sold, transferred, pledged, hypothecated
or otherwise disposed of in the absence of registration or the availability of
an exemption from registration under the Act and any applicable State Acts and,
in the event a Holder believes an exemption from the registration requirements
of the Act and any applicable State Acts is available, the Holder must deliver a
legal opinion satisfactory in form and substance to the Company and its counsel,
stating that such exemption is available. All shares of Common Stock issued upon
Exercise of this Warrant shall bear an appropriate legend to such effect. Holder
has represented to the Company that it and any transferee of all or any portion
of this Warrant is and will remain at all times while this Warrant is
outstanding an "accredited investor" as defined in Regulation D promulgated
under the Act.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and the Holder of this Warrant any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and the Holder of this Warrant.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the State of Georgia. Jurisdiction
for any dispute regarding this Warrant lies in Georgia.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft, destruction
or mutilation of this Warrant, and (in the case of loss, theft or destruction)
of indemnity or security reasonably satisfactory to the Company, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
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12. Purchase Agreement.
This Warrant is issued and sold pursuant to that certain Securities
Purchase Agreement dated as of [DATE THE AGREEMENT IS SIGNED] (the "Purchase
Agreement"). The Holder shall be entitled to all of the rights and benefits and
subject to all of the obligations of a Purchaser under the Purchase Agreement,
including without limitation, rights with respect to registration under the Act.
The terms of the Purchase Agreement are hereby incorporated herein for all
purposes and shall be considered a part of this Warrant as if they had been
fully set forth herein.
13. Notice to Company and Holder.
Notices or demands pursuant to this Warrant to be given or
made by the Holder of this Warrant to or on the Company shall be sufficiently
given or made if sent by certified or registered mail, return receipt requested,
postage prepaid, and addressed, until another address is designated in writing
by the Company, AER Energy Resources, Inc., 4600 Highlands Parkway, Suite G,
Smyrna, GA 30082, Attention: Chief Executive Officer. Notices or demands
pursuant to this Warrant to be given or made by the Company to or on the Holder
of this Warrant shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed to the
Holder as follows: [ADDRESS OF THE HOLDER] with a copy to [RECIPIENT OF COPIES
OF NOTICES, IF DESIRED] or another person or address designated in writing by
Holder.
(signature follows on next page.)
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IN WITNESS WHEREOF, this Warrant is hereby executed effective as of the
date set forth below.
Dated as of _______________, __ 2001.
AER ENERGY RESOURCES, INC.
By:
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J.T. Moore
Vice President and Chief
Financial Officer
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SUBSCRIPTION FORM
TO: AER ENERGY RESOURCES, INC.
The undersigned hereby irrevocably exercises the right to purchase
_______________ shares of Common Stock of AER Energy Resources, Inc., a Georgia
corporation, evidenced by the attached Warrant, and herewith makes payment of
the Exercise Price with respect to such shares in full, all in accordance with
the conditions and provisions of said Warrant.
The undersigned represents that it is an "accredited investor" as
defined in Regulation D under the Securities Act of 1933, as amended, agrees not
to offer, sell, transfer or otherwise dispose of any of such Common Stock,
except in accordance with the provisions of Section 8 of the Warrant, and
consents that the following legend may be affixed to the certificates for the
Common Stock hereby subscribed for, if such legend is applicable:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities law, and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of until
either (i) a registration statement under the Securities Act and
applicable state securities laws shall have become effective with
regard thereto, or (ii) the corporation shall have received an opinion
of counsel acceptable to the corporation and its counsel that an
exemption from registration under the Securities Act or applicable
state securities laws is available in connection therewith."
The undersigned requests that certificates for such shares be issued,
and a warrant representing any unexercised portion thereof be issued, pursuant
to the Warrant in the name of the Registered Holder and delivered to the
undersigned at the address set forth below:
The undersigned hereby elects to make payment of the Exercise
Price through a cashless exercise pursuant to Section 2(ii) of
the Warrant.
(Check Box if
applicable)
Dated:
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Signature of Registered Holder
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Name of Registered Holder (Print)
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Address
The attached Warrant and the securities issuable on exercise thereof have not
been registered under the Securities Act of 1933, as amended, or any state
securities law and may not be sold, transferred, pledged, hypothecated or
otherwise disposed of in the absence of registration or the availability of an
exemption from registration under said Act or any state securities law.
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase ____________ shares of the Common Stock of AER ENERGY RESOURCES, INC.
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _____________________________ attorney to transfer the said Warrant on
the books of the Company, with full power of substitution in the premises.
Dated:
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Signature
Fill in for new Registration of Warrant: Signature Guarantee:
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Name Name of Guarantor
By:
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Name:
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Address Title:
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Please print name and address of assignee
(including zip code)
NOTICE
The signature to the foregoing Subscription Form or Assignment must correspond
to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.