Contract
EXHIBIT 99.10
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 June 1,
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 C 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 982,891 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.
2. The Closing. The closing shall occur at 10:00 a.m. on June 12, 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 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 (and without limiting the foregoing, will not result in any preemptive rights);
(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 June __, 2001, AER had 25,850,263 shares of Common Stock outstanding, and 506,750 shares of preferred stock outstanding. Other than warrants previously issued to
Purchaser, 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 and Series B 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 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 Xxxxx 00, 0000, XXX 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 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, 2000 and AER's Quarterly Report on Form 10-Q for the quarter ended March 31, 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; 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.
(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, Keystone, Inc., Xxxxx X. Xxxxx, Xxxx X. Xxxxxxx 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 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.
(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 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]
DULY EXECUTED and delivered by Purchaser and AER, on June __, 2001.
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PURCHASER: |
FW AER II, L.P. |
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By: _____________________ |
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Address: |
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000 Xxxx Xxxxxx, Xxxxx 0000 |
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Xxxx Xxxxx, Xxxxx 00000 |
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Phone: (000) 000-0000 |
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Fax Number: (000) 000-0000 |
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AER: |
AER ENERGY RESOURCES, INC. |
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By: /s/ X.X. Xxxxx |
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X.X. Xxxxx |
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Vice President and Chief Financial Officer |
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Address: |
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0000 Xxxxxxxxx Xxxxxxx, Xxxxx X |
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Xxxxxx, Xxxxxxx 00000 |
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Phone:(000) 000-0000 |
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Fax Number:(000) 000-0000 |
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