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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
THIS IS A SECURITIES PURCHASE AGREEMENT (this "Agreement") by and
between the undersigned ("Purchaser"), and AER Energy Resources, Inc., a Georgia
corporation ("AER"), dated as of February 27, 2001, and by which Purchaser 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, Purchaser hereby agrees to purchase from AER and AER agrees to
sell to Purchaser (i) (A) 100,000 shares of AER's no par value Series B
Convertible Preferred Stock (the "Preferred Stock") and (B) 2,250 shares of
Preferred Stock (representing 50% of the transaction fee to be paid by AER to
Purchaser) (collectively, the shares to be issued by AER pursuant to clauses (A)
and (B) above shall be referred to as the "Shares") and (ii) a warrant to
purchase 776,699 shares of AER's no par value Common Stock (the "Warrant") in
the form attached hereto as Exhibit A. The aggregate purchase price for the
Shares and the Warrant shall be $1,000,000. Purchaser acknowledges and agrees
that, within 30 days from the date hereof, AER may (without any obligation to do
so) sell up to an additional $1,000,000 in identical securities to Xxxxx X.
Xxxxx or his affiliate on substantially the same terms and conditions as the
sale of the Shares and Warrant hereunder.
2. The Closing. The closing shall occur at 10:00 a.m. on February
27, 2001 (the "Closing") at the offices of Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP, 000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000, or as the parties shall
otherwise agree. At the Closing, the following shall occur:
(a) AER shall deliver to Purchaser (i) a duly completed
and executed share certificate in the name of Purchaser representing the Shares,
and (ii) a duly completed and executed Warrant.
(b) Purchaser shall deliver to AER by wire transfer in
immediately available federal funds the aggregate purchase price of the Shares
and the Warrant (less $11,250 representing 50% of the transaction fee to be paid
by AER to Purchaser).
3. Representations and Warranties.
(a) By AER. AER hereby represents and warrants to
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
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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 Warrant (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 Warrant 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 Warrant 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;
(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 February 26, 2001, AER
had 24,850,263 shares of Common Stock outstanding, and 404,500 shares of
preferred stock outstanding. Other than warrants previously issued to Purchaser
and FW AER II, L.P. (or their affiliates), stock options granted to employees,
restricted stock issued to directors and AER's outstanding Series A 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
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accepted accounting principles consistently applied throughout the periods
involved (except as may be noted therein) and fairly present the financial
condition, results 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 September 30, 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 Purchaser. 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
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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.
(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, 1999 and AER's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2000. 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; Purchaser is able to afford to hold the Securities for an
indefinite period and Purchaser further represents 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.
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(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 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
Purchaser who is then holding Shares, Conversion Shares, the Warrant and Warrant
Shares representing at least 25% of the Common Stock issuable upon conversion of
the Shares or exercise of the Warrant that AER file a registration statement
under the Securities Act, covering the registration of at least $500,000 of
shares of Common Stock owned by Purchaser or "affiliates" or "associates"
thereof, as such terms are defined in the Securities Act (collectively the
"Third Party Shareholders") to the extent such shares of Common Stock are not
then freely tradable under the Securities Act. Purchaser and any Third Party
Shareholder 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 Purchaser and the Third Party
Shareholders together, and only if the proposed aggregate selling price in any
such offering is at least $500,000.
(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
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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.
(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 Purchaser. Upon the
written request of Purchaser or any Third Party Shareholder 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 Purchaser and any of the Third Party Shareholders 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 Purchaser or the Third Party Shareholders 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 Purchaser and the Third Party Shareholders 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 Purchaser and the Third Party
Shareholders 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, Purchaser and the Third Party
Shareholders shall execute reasonable and customary underwriting,
indemnification and lock-up agreements relating to such registration and shall
undertake reasonable and customary registration procedures.
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(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 Purchaser and each Third Party
Shareholder 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.
5. Survival; Indemnification. The representations, warranties and
agreements made in this Agreement shall survive the Closing. Each party,
acknowledging that the other 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 other 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 party 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 Purchaser or
any Third Party Shareholder 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
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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 between the parties as to its
subject matter, constitutes the entire agreement between the parties 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.
[signatures commence on the following page]
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DULY EXECUTED and delivered by Purchaser and AER, on February 27, 2001.
PURCHASER: ELMWOOD PARTNERS II
By: /s/ Xxx X. Xxxxxxxx
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Xxx X. Xxxxxxxx, Trustee under Xxx X.
Xxxxxxxx Trust Agreement dated April
25, 1986, as modified, Managing
Partner
Address:
00000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Phone: (000) 000-0000
Fax Number: (000) 000-0000
AER: AER ENERGY RESOURCES, INC.
By: /s/ X.X. Xxxxx
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X.X. Xxxxx
Vice President and Chief Financial
Officer
Address:
0000 Xxxxxxxxx Xxxxxxx, Xxxxx X
Xxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax Number: (000) 000-0000
* * * * *
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