Exhibit 10.6
THIS AGREEMENT IS EXECUTED IN RELIANCE UPON THE EXEMPTION PROVIDED BY SECTION
4(2) AND REGULATION D, RULE 506 FOR TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THIS
OFFERING IS BEING MADE ONLY TO ACCREDITED INVESTORS.
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SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") has been executed by the
undersigned in connection with the private placement of 1,500 investment units
(the "Units"), each consisting of (i) a convertible promissory note
(individually, a "Note," and collectively, the "Notes") in the original
principal amount of $1,000, and (ii) a warrant (individually, a "Warrant," and
collectively, the "Warrants") to purchase 500 shares of the common stock, par
value $0.001 per share, of American Energy Services, Inc., a Texas corporation
(the "Company"). The Notes and Warrants being sold pursuant to this Agreement
have not been registered under the Securities Act, are subject to restrictions
on transferability and resale and may not be transferred or resold except as
permitted under the Securities Act and applicable state securities laws pursuant
to registration or an exemption therefrom. The offer of the Units and, if this
Agreement is accepted by the Company, the sale of the Notes and Warrants, is
being made in reliance upon Section 4(2) of the Securities Act.
The Company shall have the right to accept or reject this subscription in whole
or in part. If the subscription is not accepted in whole or in part by the
Company, the full or ratable amount, as the case may be, of any subscription
payment received will be refunded to the undersigned without deduction therefrom
or interest thereon not later than the third business day following the date
hereof. If this subscription is accepted by the Company, in whole or in part,
the Company shall deliver to the undersigned a Note in the form attached hereto
as EXHIBIT A and Warrant Certificate in the form attached hereto as EXHIBIT B
and one manually executed copy of each of the documents required to be delivered
under Section 5.2 of this Agreement.
The undersigned Purchaser,__________________________, a _______________, having
offices at __________________________ (the "Purchaser") hereby represents and
warrants to, and agrees with the Company as follows:
ARTICLE 1
SUBSCRIPTION
SUBSCRIPTION
1.1 The undersigned Purchaser hereby subscribes to purchase ___ Units, having a
purchase price of $1,000 per Unit, at an aggregate purchase price of
$__________________ (the "Subscription Funds").
METHOD OF PAYMENT
1.2 Immediately following satisfaction of the conditions precedent enumerated in
Article 5 hereof are satisfied (the "Closing Date"), the Purchaser shall pay the
Subscription Funds by delivering good funds in United States Dollars by way of
wire transfer of funds to an account designated by the Company not less than two
business days prior to the Closing Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
REPRESENTATIONS AND WARRANTIES
2.1 The Purchaser represents and warrants in all material respects to the
Company, with the intent that the Company will rely thereon in entering into
this Agreement and in completing the transactions contemplated hereby, that:
(a) ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
that term is defined in Regulation D promulgated under the
Securities Act.
(b) EXPERIENCE. The Purchaser is sufficiently experienced in financial
and business matters to be capable of evaluating the merits and
risks of its investments, and to make an informed decision relating
thereto, and to protect its own interests in connection with the
purchase of the Units offered hereby;
(c) OWN ACCOUNT. The Purchaser is purchasing the Units and the shares of
the Company's common stock, par value $0.001 per share, to be issued
upon the conversion of the Notes and upon exercise of the Warrants
(the "Common Shares", and together with the Notes and Warrants, the
"Securities") for its own account. The Purchaser is purchasing the
Securities for investment purposes only and not with an intent or
view towards further sale or distribution (as such term is used in
Section 2(11) of the Securities Act) thereof, and has not
pre-arranged any sale with any other purchaser;
(d) NOT UNDERWRITER. The Purchaser is not an underwriter, or dealer in,
the Securities, and the Purchaser is not participating, pursuant to
a contractual agreement, in a distribution of the Securities;
(e) EXEMPTION. The Purchaser understands that the offer and sale of the
Units is not being registered under the Securities Act based on the
exemption from registration provided by Rule 506 promulgated under
Section 4(2) of the Securities Act and that the Company is relying
on such exemption.
(f) IMPORTANCE OF REPRESENTATIONS. The Purchaser understands that the
Units are being offered and sold to it in reliance on an exemption
from the registration requirements of the Securities Act, and that
the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to
determine the applicability of such safe harbor and the suitability
of the Purchaser to acquire the Units;
(g) NO REGISTRATION. The Securities have not been registered under the
Securities Act and may not be transferred, sold, assigned,
hypothecated or otherwise disposed of, unless such transaction is
the subject of a registration statement filed with and declared
effective by the Securities and Exchange Commission (the "SEC") or
unless an exemption from the registration requirements under the
Securities Act, such as Rule 144, is available. The Purchaser
represents and warrants and hereby agrees that all offers and sales
of the Securities shall be made only pursuant to such registration
or to such exemption from registration;
(h) RISK. The Purchaser acknowledges that the purchase of the Securities
involves a high degree of risk, is aware of the risks and further
acknowledges that it can bear the economic risk of the Securities,
including the total loss of its investment;
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(i) INDEPENDENT INVESTIGATION. The Purchaser, in making the decision to
purchase the Units subscribed for, has relied upon independent
investigations made by it and its purchaser representatives, if any,
and the Purchaser and such representatives, if any, have prior to
any sale to it, been given access and the opportunity to examine all
material contracts and documents relating to this offering and an
opportunity to ask questions of, and to receive answers from, the
Company or any person acting on its behalf concerning the terms and
conditions of this offering. The Purchaser and its advisors, if any,
have been furnished with access to all materials relating to the
business, finances and operation of the Company and materials
relating to the offer and sale of the Securities that have been
requested. The Purchaser and its advisors, if any, have received
complete and satisfactory answers to any such inquiries;
(j) NO RECOMMENDATION OR ENDORSEMENT. The Purchaser understands that no
federal or state agency has passed on or made any recommendation or
endorsement of the Units;
(k) AUTHORITY. The person executing this Agreement is duly authorized to
execute this Agreement and this Agreement constitutes the legal,
valid and binding obligation of the undersigned enforceable against
the undersigned in accordance with its terms.
(l) NON-AFFILIATE STATUS. The Purchaser and any affiliate of the
Purchaser represent, warrant and covenant that they are not
affiliates of the Company; and
(m) NO ADVERTISEMENT OR GENERAL SOLICITATION. The undersigned is not
subscribing for Units as a result of any advertisement, article,
notice or other communication published in any newspaper, magazine,
or similar media or broadcast over television or radio; or through
any seminar or meeting whose attendees were invited by any such
advertising.
NON-MERGER AND SURVIVAL
2.2 The representations and warranties of the Purchaser contained herein will be
true at the date of execution of this Agreement by the Purchaser and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date.
INDEMNITY
2.3 The Purchaser agrees to indemnify and save harmless the Company from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of the Purchaser to
defend any such claim), resulting from the breach of any representation or
warranty of such party under this Agreement. Notwithstanding the provisions of
this Section 2.3, the Purchaser shall not be required to indemnify any party to
the extent the indemnifiable amount exceeds the amount of the Subscription
Funds.
PROHIBITIONS ON CERTAIN SALES BY PURCHASER
2.4 Purchaser shall not, directly or indirectly, effect the sale of any security
issued by the Company that Purchaser does not own nor shall Purchaser effect the
sale of any security which is consummated by delivery of a security borrowed by,
or for the benefit of, the Purchaser. Purchaser shall be deemed to "own" a
security if (a) he or his agent has title to it, or (b) he has purchased, or has
entered into an unconditional contract to purchase it but has not yet received
it.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 The Company hereby represents and warrants to, and agrees with the
Purchaser, with the intent that the Purchaser will rely thereon in entering into
this Agreement and in completing the transactions contemplated hereby, that:
(a) PERIODIC REPORTING. The Company is required to make current filings
with the SEC pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"). Except as set forth in
SCHEDULE 3.1(A), The Company has timely filed all reports,
registrations, proxy or information statements, and all other
documents, together with any amendments required to be made thereto,
required to be filed with the SEC under the Securities Act and the
Exchange Act (the "SEC Reports"). As of their respective dates, the
SEC Reports complied in all material respects with all rules and
regulations promulgated by the SEC and did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(b) TRADING MARKET. The Common Stock is quoted on OTC Bulletin Board of
the Nasdaq Stock Market, Inc. (the "OTCBB"); the Company has
received no notice, either oral or written, with respect to its
continued eligibility for such listing; and the Company shall make
all filings required to keep the quotation of its Common Stock on
the OTCBB, or such other market as the Purchase may approve, in
effect for so long as Purchaser holds any Securities.
(c) CAPITALIZATION. Immediately prior to the issuance of the Units, the
authorized equity securities of the Company consisted of 100,000,000
shares of common stock, par value $0.001 per share, of which
9,335,342 shares are issued and outstanding. All of the Company's
outstanding equity securities have been duly authorized and validly
issued and are fully paid and nonassessable. There are no contracts,
agreements or understandings (whether in oral or written form)
relating to the issuance, sale, or transfer of any equity securities
or other securities of any of the Company or any of its
subsidiaries. To the knowledge of the Company, no person or entity
has any rights of first refusal with respect to the Securities, nor
will the sale of the Notes and Warrants, or the issuance of the
Common Shares on conversion and exercise thereof, result in an
adjustment of the number of shares of the Company's common stock
issuable on conversion or exercise of any security issued by the
Company or the consideration payable upon such exercise or
conversion. None of the Company's outstanding equity securities or
other securities was issued in violation of the Securities Act or
any other legal requirement.
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(d) LEGALITY. The Company has the requisite corporate power and
authority to enter into this Agreement and to issue, sell and
deliver the Securities; this Agreement and the issuance, sale and
delivery of the Securities hereunder and the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action by the Company; this Agreement and the
Securities have been duly and validly executed and delivered by and
on behalf of the Company, and are valid and binding agreements of
the Company, enforceable in accordance with their respective terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws affecting creditors'
rights generally. The Securities will not subject the holders
thereof to personal liability by reason of being such holders;
(e) PROPER ORGANIZATION. The Company and each of its subsidiaries, if
any, is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is
duly qualified as a foreign corporation in all jurisdictions where
the failure to be so qualified would have a materially adverse
effect on its business, taken as whole;
(f) FINANCIAL STATEMENTS. The consolidated balance sheets of the Company
and its subsidiaries as at February 28, 2000 and November 30, 2000,
and the related consolidated statements of income, changes in
stockholders' equity, and cash flow for each of the periods then
ended, together with the report thereon, if any, of the Company's
independent accounts and the notes thereto included in the SEC
Reports fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the
Company and its subsidiaries as at the respective dates of and for
the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of the financial
statements for the period ending November 30, 2000 to normal
recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially
from those included in the Company's consolidated balance sheet at
February 28, 2000); the financial statements referred to in this
Section reflect the consistent application of such accounting
principles throughout the periods involved, except as disclosed in
the notes to such financial statements. No financial statements of
any person other than the Company and its subsidiaries, if any, are
required by GAAP to be included in the consolidated financial
statements of the Company.
(g) BOOKS AND RECORDS. The books of account, minute books, stock record
books, and other records of the Company and its subsidiaries, if
any, all of which have been made available to Purchaser, are
complete and correct and have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of
the Exchange Act (regardless of whether or not the Company and its
subsidiaries were subject to such section at the time of the making
of such records), including the maintenance of an adequate system of
internal controls. The minute books of the Company and its
subsidiaries contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Boards
of Directors, and committees of the Boards of Directors of the
Company and its subsidiaries, and no meeting of any such
stockholders, Board of Directors, or committee has been held for
which minutes have not been prepared and are not contained in such
minute books. All of those books and records will be and remain in
the possession of the Company.
(h) RELATIONSHIPS WITH RELATED PERSONS. No Related Person (as defined
below) of the Company or any of its subsidiaries has, or since
February 28, 2000 has had, any interest in any property (whether
real, personal, or mixed and whether tangible or intangible), used
in or pertaining to the business of the Company or any of its
subsidiaries. No
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Related Person of the Company or any of its subsidiaries is, or
since February 28, 2000 has owned (of record or as a beneficial
owner) an equity interest or any other financial or profit interest
in, a person that has (i) had business dealings or a material
financial interest in any transaction with the Company or any of its
subsidiaries, or (ii) engaged in competition with the Company or any
of its subsidiaries with respect to any line of the products or
services of the Company or any of its subsidiaries in any market
presently served by the Company or any of its subsidiaries. No
Related Person of the Company or any of its subsidiaries is a party
to any contract, agreement or understanding (whether in oral or
written form) with, or has any claim or right against, the Company
or any of its subsidiaries. As used herein the term "Related Person"
means with respect to a particular individual (i) each other member
of such individual's Family; (ii) any person that is directly or
indirectly controlled by such individual or one or more members of
such individual's Family; (iii) any person in which such individual
or members of such individual's Family hold (individually or in the
aggregate) a material interest; and (iv) any person with respect to
which such individual or one or more members of such individual's
Family serves as a director, officer, partner, executor, or trustee
(or in a similar capacity), and with respect to a specified person
other than an individual (A) any person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or
indirectly under common control with such specified person; (B) any
person that holds a material interest in such specified person; (C)
each person that serves as a director, officer, partner, executor,
or trustee of such specified person (or in a similar capacity); (D)
any person in which such specified person holds a material interest;
(E) any person with respect to which such specified person serves as
a general partner or a trustee (or in a similar capacity); and (F)
any Related Person of any individual described in clause (B) or (C).
For purposes of this definition, the "Family" of an individual
includes (I) the individual, (II) the individual's spouse and former
spouses, (III) any other natural person who is related to the
individual or the individual's spouse within the second degree, and
(IV) any other natural person who resides with such individual.
(h) NO LEGAL PROCEEDINGS. There is no arbitration, action, suit,
proceeding or investigation (formal or informal) before or by any
court or any governmental agency or body, domestic or foreign, now
pending or to the knowledge of the Company, threatened, against or
affecting the Company, or any of its properties or assets, which
might result in any material adverse change in the condition
(financial or otherwise) or in the earnings, business affairs of
business prospects of the Company, or which might materially and
adversely affect the properties or assets thereof, and to the
knowledge of the Company no reasonable basis exists therefore;
(j) NON-DEFAULT. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or by
which it or its property may be bound;
(k) NO MISLEADING STATEMENTS. The information provided by the Company to
the Purchaser does not contain any untrue statement of a material
fact or omit to state any material fact;
(l) NO ADVERSE CHANGE. Since February 28, 2000 there has been no
material adverse change in the financial condition, earnings,
business prospects of the Company;
(m) ABSENCE OF NON-DISCLOSED FACTS. There is no fact known to the
Company (other than general economic conditions known to the public
generally) that has not been disclosed in writing to the Purchaser
that (i) could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of the
Company; (ii) could reasonably be
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expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement, or
(iii) or could reasonably be expected to be considered important to
the Purchaser in its determination of whether to purchase the Units;
(h) TRANSFER RESTRICTIONS. Upon the conversion of the Notes or exercise
of the Warrants, provided that a registration statement in respect
of the Common Shares is in effect as required under all applicable
securities laws, such Common Shares shall be freely transferable on
the books and records of the Company. In the event such conversion
or exercise is effected prior to effectiveness of a registration
statement, or in compliance with Rule 144, the Company shall
cooperate to remove from the certificates representing the Common
Shares any restrictive legend (including causing a legal opinion to
be issued in form and substance acceptable to the Company's transfer
agent covering such matters as are required to permit transfer); and
(o) NON-CONTRAVENTION. The execution and delivery of this Agreement, the
issuance of the Securities and the consummation of the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions
of, or constitute a default under the Articles of Incorporation or
By-laws of the Company, or any indenture, mortgage, deed of trust,
or other material agreement or instrument to which the Company is a
party or by which it or any of its properties or assets are bound,
or any existing applicable decrees, judgment or order of any court,
federal or state regulatory body, administrative agency or other
domestic governmental body having jurisdiction over the Company or
any of its properties or assets.
NON-MERGER AND SURVIVAL
3.2 The representations and warranties of the Company contained herein will be
true at the date of execution of this Agreement by the Company and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date.
INDEMNITY
3.3 The Company agrees to indemnify and save harmless the Purchaser from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of the Company to
defend any such claim), resulting from the breach of any representation,
warranty or covenant of such party under this Agreement.
ARTICLE 4
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO SELL
4.1 The Purchaser understands and agrees that the Company's obligation to sell
the Units is conditioned upon the following being satisfied on or before the
Closing Date:
(a) ACCEPTANCE AND DELIVERY OF AGREEMENT. The receipt and acceptance by
the Company of this Agreement, as evidenced by execution of this
Agreement by the President or any Vice President or the Chief
Financial Officer of the Company, and the delivery thereof to the
Purchaser; and
(b) PAYMENT IN FULL. Delivery to the Company by the Purchaser of the
Subscription Funds at the time and in the manner required by Section
1.2 of this Agreement.
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CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO PURCHASE
4.2 The Company understands that the Purchaser's obligation to purchase the
Units is conditioned upon the following being satisfied on or before the Closing
Date:
(a) DELIVERY OF AGREEMENT. The Company shall have accepted and delivered
this Agreement to the Purchaser.
(b) DELIVERY OF NOTE. The Company shall have delivered to Purchaser a
Note representing the indebtedness of the Company to the Purchaser
in a principal amount equal to the number of Units purchased times
$1,000.
(c) DELIVERY OF WARRANT. The Company shall have delivered to Purchaser a
Warrant representing Purchaser's right to purchase a number of
shares of the Company's common stock equal to 500 shares times the
number of Units purchased.
(d) CERTIFICATE OF SECRETARY. The Company shall have delivered a
certificate of the Secretary of the Company attesting to (i) the
incumbency and authority of those persons acting on behalf of the
Company in connection with the purchase and sale of the Units, and
(ii) the resolutions of the Company's Board of Directors authorizing
and empowering the Company to execute, deliver and perform this
Agreement in accordance with its terms.
(e) OFFICER'S CERTIFICATE. The Company shall have delivered a
certificate of the Chief Executive Officer of the Company attesting
to (i) the truth, accuracy and completeness of the representations
and warranties of the Company contained in this Agreement, and (ii)
the full and complete performance by the Company of all covenants
contained in this Agreement to the extent required to be performed
on or before the Closing Date.
(f) EXECUTION AND DELIVERY OF ESCROW AGREEMENT. The Company shall have
executed and delivered to the Purchaser and the Escrow Agent an
Escrow Agreement in the form attached hereto as EXHIBIT C, and in
accordance therewith delivered to the Escrow Agent (i) a certificate
representing not less than 3,500,000 shares of the Company's common
stock, (ii) an opinion of legal counsel addressing those matter set
forth in Exhibit A to the Escrow Agreement and (iii) made payment of
the Escrow Fee as required by Section 6.0 of the Escrow Agreement.
(g) EXECUTION AND DELIVERY OF WARRANT AGREEMENT. The Company shall have
executed and delivered to the Warrant Agent a Warrant Agreement in
the form attached hereto as EXHIBIT D, and in accordance therewith
delivered to the Warrant Agent such number of Warrant Certificates
as may be reasonably requested by the Warrant Agent, each duly
signed on behalf of the Company.
(h) EXECUTION AND DELIVERY OF REGISTRATION RIGHTS AGREEMENT. The Company
shall have executed and delivered to the Purchaser a Registration
Rights Agreement in the form attached hereto as EXHIBIT E.
(i) DELIVERY OF IRREVOCABLE TRANSFER INSTRUCTIONS. The Company shall
have executed and delivered to the transfer agent of its common
stock irrevocable transfer instructions in the form attached hereto
as EXHIBIT F (the "Irrevocable Instructions"), to issue to the
Escrow Agent one or more certificate(s) representing an aggregate of
3,500,000 Common Shares and to transfer such shares on the records
of the Company upon the conversion of the Notes and upon exercise of
the Warrants in accordance with terms thereof, in each case, without
any restrictive legend or stop transfer instructions and without any
further
8
instruction or opinion from the Company, provided that the Escrow
Agent presents the transfer agent with certificates representing the
identical number of Common Shares, and a certificate to the effect
that (i) the Common Shares are the subject of a registration
statement filed under the Securities Act, or (ii) that the Common
Shares have been held by Escrow Agent for at least two years.
(j) PAYMENT OF LEGAL EXPENSES. The Company shall have directed the
Purchaser to withhold a portion of the Subscription Funds necessary
to reimburse Purchaser for legal fees incurred in respect of this
transaction (but in any case not more than $20,000).
ARTICLE 5
GENERAL PROVISIONS
GOVERNING LAW
5.1 This Agreement shall be governed by and construed under the law of the State
of _____ without regard to its choice of law provision. Any disputes arising out
of, in connection with, or with respect to this Agreement, the subject matter
hereof, the performance or non-performance of any obligation hereunder, or any
of the transactions contemplated hereby shall be adjudicated in a Court of
competent civil jurisdiction sitting in either the ___________________________
or ____________________________________________.
SUCCESSORS AND ASSIGNS
5.2 This Agreement shall inure to the benefit of and be binding on the
respective successors and assigns of the parties hereto.
EXECUTION BY COUNTERPARTS AND FACSIMILE
5.3 This Agreement may be executed in counterparts and by facsimile, each of
which when executed by any party will be deemed to be an original and all of
which counterparts will together constitute one and the same Agreement.
[Remainder of page intentionally left blank]
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SIGNATURE PAGE FOR INDIVIDUAL PURCHASER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and that he, she or they have executed this Securities
Purchaser Agreement on this day of ____________, 2001.
------------------------------------
(Insert Name of Purchaser)
BY:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Agreed to this _____ day of ____________, :
AMERICAN ENERGY SERVICES, INC.
BY:
-------------------------------
Title:
----------------------------
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