AGREEMENT AND FIRST AMENDMENT TO
SECURITIES PURCHASE AGREEMENT AND RELATED DOCUMENTS
THIS AGREEMENT AND FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND
RELATED DOCUMENTS (the "Amendment") dated as of April 21, 1998 among AMERICAN
INTERNATIONAL PETROLEUM CORPORATION, a Nevada corporation (the "Company"),
INFINITY INVESTORS LIMITED and INFINITY EMERGING OPPORTUNITIES LIMITED
(collectively, the "Purchasers").
R E C I T A L S:
A. The Company and the Purchasers have entered into that certain
Securities Purchase Agreement dated as of October 9, 1997 (the "Initial Purchase
Agreement").
B. The Company and the Purchasers have entered into that certain
Securities Purchase Agreement dated as of April 21, 1998 (the "Subsequent
Securities Purchase Agreement").
C. The Company and the Purchasers now desire to amend the Initial
Purchase Agreement and certain of the related Transaction Agreements (as defined
in the Initial Purchase Agreement) executed and delivered in connection
therewith in order to (i) make certain amendments to the Transaction Agreements
and (ii) confirm the continued legality, validity and binding effect of the
Transaction Agreements, as amended by this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE D.
Definitions
Section
0.1 Definitions. Capitalized terms used in this Amendment, to the extent
not otherwise defined herein, shall have the same meanings as in the Initial
Purchase Agreement.
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 1
(American International Petroleum Corporation)
ARTICLE
I.
Agreements
The Company and the Purchasers hereby agree as follows:
Section
1 Purchasers Conversion Restrictions.
(a) Section 4.1 of all Convertible Notes held by the Purchaser
pursuant to the Initial Purchase Agreement (the "October Notes") shall be
amended to add the following:
"(c) The Company shall have the option to require that the
Holder forego its option to convert an amount not to exceed
two-thirds (2/3) of the aggregate outstanding principal amount of
this Convertible Note during the month of April, 1998 (the "April
Lockout Option"). The April Lockout Option may be exercised by
written notice furnished by the Company to the Holder, specifying
the principal amount of this Convertible Note subject to the April
Lockout Option (the "April Lockout Amount"). In the event the
Company exercises its April Lockout Option, the Company will pay the
Holder in cash a fee of one-third of one percent of the April
Lockout Amount at the time the April Lockout Option is exercised.
(d) The Company shall have the option to require that the
Holder forego its option to convert during the month of May, 1998,
an amount not to exceed one-third (1/3) of the aggregate principal
amount of this Convertible Note which remains outstanding as of the
latter to occur of (x) May 1, 1998 or (y) the date of receipt of the
May Notice (as hereafter defined) (the "May Lockout Option"). The
May Lockout Option may be exercised by written notice (the "May
Notice") furnished by the Company to the Holder, specifying the
principal amount of the Convertible Note subject to the May Lockout
Option. In the event that the Company exercises its May Lockout
Option, the Company will pay the Holder in cash a fee of one percent
(1%) of the May Lockout Amount at the time such May Lockout Option
is exercised."
(b) The Company and the Purchasers hereby acknowledge and agree that
(x) the Company has exercised the April Lockout Option for $6,666,666
principal amount of the Convertible Notes and (y) the Company shall pay in
cash to the Purchasers contemporaneous herewith the sum of $22,222
associated therewith (the "April Fee").
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 2
(American International Petroleum Corporation)
Section 2.2 Voluntary Prepayment. Effective as of the date hereof,
Section 3.2 of the Initial Purchase Agreement is amended to read in its entirety
as follows:
"Section 3.2.Voluntary Prepayment. The Company may, at its option,
repay, in whole or in part, the Convertible Notes at the Formula Price
thereof following five (5) Business Days prior written notice to the
Purchasers (the expiration of such five (5) Business Day period being
referred to as the "Prepayment Date"); provided, however, that if such
date is not a Business Day, the Prepayment Date shall be the next Business
Day thereafter. Any partial prepayment shall be in an aggregate principal
amount of at least Five Hundred Thousand Dollars ($500,000) or a multiple
of One Hundred Thousand Dollars ($100,000) thereof."
Section 2.3 Prepayment Procedures. Effective as of the date hereof,
Section 3.4(a)(I) is amended to read in its entirety as follows:
"(I) A prepayment pursuant to Section 3.2, the "prepayment date"
specified therein;"
Section 2.4 October Warrant Registration Rights. The Company acknowledges
that the shares of Common Stock issuable upon exercise of the Common Stock
Purchase Warrants issued to the Purchasers pursuant to the Initial Purchase
Agreement (the "October Warrants") shall be registered for resale pursuant to a
registration statement to be filed with the Commission on the terms set forth in
the Registration Rights Agreement attached as an exhibit to the Subsequent
Securities Purchase Agreement.
Section 2.5 October Warrant Repricing. The October Warrants are hereby
amended by changing the exercise price set forth therein from $6.25 per share to
$3.00 per share.
Section 2.6 Mandatory Prepayments. Effective as of the date hereof,
Section 3.3(a) of the Initial Purchase Agreement is amended to read in its
entirety as follows:
"(a) Upon (i) the occurrence of a Change of Control of the Company,
(ii) a transfer of all or substantially all of the assets of the Company
to any Person in a single transaction or series of related transactions,
(iii) a consolidation, merger or amalgamation of the Company with or into
another Person in which the Company is not the surviving entity (other
than a merger which is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion
or exchange of outstanding shares of Common Stock solely into shares of
Common Stock) (each of items (i), (ii) and (iii) being referred to as a
"Sale Event"), or (iv) the occurrence of a Registration Default which
continues uncured
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 3
(American International Petroleum Corporation)
for a period of thirty (30) days, then, in each case, the Company shall,
upon request of the Majority Holders, redeem this Convertible Note in
cash for the Formula Price."
Section 2.7 Conversion Limit. Effective as of the date hereof, Section
10.3(a) of the Initial Purchase Agreement is amended to read in its entirety as
follows:
"SECTION 10.3 Conversion Limit.
(a) Notwithstanding the conversion rights under the Convertible
Notes and exercise rights under the Warrants, unless the Purchaser
delivers a waiver in accordance with the immediately following sentence,
in no event shall the Purchaser be entitled to convert any portion of the
Convertible Notes or exercise any portion of the Warrants, in excess of
that portion of the Convertible Notes or Warrants upon conversion and
exercise, as applicable, of which the sum of (i) the number of shares of
Common Stock beneficially owned by the Purchaser and its Affiliates (other
than shares of Common Stock which may be deemed beneficially owned through
the ownership of the unconverted portion of the Convertible Note and
unexercised portion of the Warrants, or other Derivative Securities
convertible into or exchangeable for shares of Common Stock which contain
a limitation similar to that set forth in this Section 10.3) and (ii) the
number of shares of Common Stock issuable upon the conversion of the
portion of the Convertible Note or issuable upon exercise the portion of
the Warrants with respect to which this determination is being made, would
result in beneficial ownership by the Purchaser and its Affiliates of more
than nine and nine-tenths percent (9.9%) of the outstanding shares of
Common Stock. For purposes of this Section 10.3(a), (i) beneficial
ownership shall be determined in accordance with Rule 13d-3 and Regulation
13 D-G promulgated under the Exchange Act, except as otherwise provided in
this Section 10.3(a) and (ii) the Holder may waive the limitations set
forth therein by written notice to the Company upon not less than
sixty-one (61) days prior notice (with such waiver taking effect only upon
the expiration of such 61 day notice period). The foregoing limitation
shall not apply and shall be of no further force or effect (i) upon the
occurrence of any voluntary or mandatory redemption or repayment
transaction described herein or in the Convertible Notes, (ii) any Sale
Event, (iii) on the Maturity Date or (iv) following the occurrence of any
Event of Default which is not cured within the greater of the applicable
time period specified in either (A) such written notice of Purchaser or
(B) Section 12.1 hereof."
ARTICLE
I.
Conditions Precedent
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 4
(American International Petroleum Corporation)
Section
0.1 Conditions Precedent. The obligation of the Purchasers to enter into
this Amendment is subject to the conditions precedent that on or before the date
hereof the Purchasers shall have received all of the following in form and
substance acceptable to it and its counsel: (a) this Amendment dated as of the
date hereof duly executed by the Company; (b) a certificate of the secretary of
the Company setting forth resolutions of its board of directors with respect to
the authorization, execution, delivery and performance of this Amendment and the
other transactions contemplated hereby (collectively, the "Amendment
Agreements"), as the case may be, the officers of the Company authorized to sign
such agreements and instruments, and specimen signatures of the officers so
authorized; and (c) payment of the April Fee.
ARTICLE
I.
Ratifications: Representations and Warranties
Section
0.1 Ratifications. The terms and provisions of the Transaction
Agreements, as modified by this Amendment, are ratified and confirmed and shall
continue in full force and effect. The Company acknowledges and agrees that each
of the Transaction Agreements, as amended hereby, is and shall remain in full
force and effect and is and shall continue to be the legal, valid and binding
obligation of the Company, enforceable against it in accordance with their
respective terms.
Section 0.1.0.1 Representations and Warranties. The Company hereby
represents and warrants to the Purchasers that (a) the execution, delivery and
performance of each of the Amendment Agreements and all other documents executed
and/or delivered in connection herewith and all transactions and documents
contemplated hereby and thereby have been authorized by all requisite corporate
action on the part of the Company; (b) each of the Amendment Agreements and all
other documents executed and/or delivered in connection herewith constitute
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms, subject to or limited by liquidation,
bankruptcy, conservatorship, insolvency, reorganization, rearrangement,
moratorium, or other similar laws relating to or affecting the rights of
creditors generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); (c) there is
no provision of law, in the charter or bylaws of the Company, and no provision
of any existing mortgage, contract, lease, indenture or agreement binding on any
of them, which would be contravened by the making or delivery of any of the
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 5
(American International Petroleum Corporation)
Amendment Agreements or any other document executed and/or delivered in
connection herewith, or by the performance or observance of any of the terms
hereof or thereof; and (d) the execution, delivery and performance of the
Amendment Agreements and the transactions contemplated hereby and thereby do not
require any approval or consent of, or filing or registration with, any
governmental or any other agency or authority, of stockholders, or of any other
party or, if such approval or consent is required, the same has been obtained.
ARTICLE
I.
Miscellaneous
Section
0.1 Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants made in this Amendment or any other
document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment, and no investigation by the Purchasers or any
closing shall affect the representations, warranties and covenants or the right
of the Purchasers to rely upon them.
Section 0.1.0.1 References to Transaction Agreements. The Transaction
Agreements and any and all other agreements, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Transaction Agreements, as amended hereby, are hereby amended so
that any reference therein to the Transaction Agreements shall mean a reference
to the Transaction Agreements as amended hereby.
Section 0.1.0.2 Further Assurances. The Company agrees that at any time
and from time to time, upon the written request of the Purchasers, it will
execute and deliver such further documents and do such further acts and things
as the Purchasers may reasonably request in order to fully effect the purposes
of this Amendment and to provide for the continued perfection and priority of
the security interests granted to the Purchasers in the Transaction Agreements.
Section 0.1.0.3 Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 6
(American International Petroleum Corporation)
Section 0.1.0.4 Applicable Law. This Amendment and all other documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule that would cause the application of the laws
of any jurisdiction other than the State of New York.
Section 0.1.0.5 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Purchasers and the Company, and their
respective successors and assigns, except the Company may not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Purchasers.
Section 0.1.0.6 Effect of Waiver. No consent or waiver, express or
implied, by the Purchasers to or for any breach of or deviation from any
covenant, condition or duty by the Company shall be deemed a consent or waiver
to or of any other breach of the same or any other covenant, condition or duty.
Section 0.1.0.7 ENTIRE AGREEMENT. THE PURCHASE AGREEMENT AS AMENDED
HEREBY, THE OTHER TRANSACTION AGREEMENTS AND ALL AGREEMENTS EXECUTED IN
CONNECTION WITH THIS AMENDMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 0.1.0.8 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
[Signature page follows]
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AGREEMENT AND FIRST AMENDMENT TO SECURITIES
PURCHASE AGREEMENT - Page 7
(American International Petroleum Corporation)
EXECUTED as of the date first written above.
AMERICAN INTERNATIONAL
PETROLEUM CORPORATION
By: s/ Denis J. Fitzpatrick
-----------------------------------
Name: Denis J. Fitzpatrick
-----------------------------------
Title: Vice President and
Chief Financial Officer
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INFINITY INVESTORS LIMITED
By: s/ James A. Loughran
-----------------------------------
Name: James A. Loughran
-----------------------------------
Title: Director
-----------------------------------
INFINITY EMERGING OPPORTUNITIES
LIMITED
By: s/ James A. Loughran
-----------------------------------
Name: James A. Loughran
-----------------------------------
Title: Director
-----------------------------------
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(American International Petroleum Corporation)