EXHIBIT P
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 April 22, 2002, 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 (a) 100,000 shares of AER's no par value Series E Convertible
Preferred Stock (the "Shares") and (b) a warrant to purchase 1,851,852 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 April
22, 2002 (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.
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 February 28, 2002, AER had 25,522,121
shares of Common Stock outstanding and 909,000 shares of preferred stock
outstanding. Other than warrants previously issued to Purchaser, FW AER II, L.P.
(or their affiliates) and Rayovac Corporation, the warrants issued in connection
with the Series D Convertible Preferred Stock issuance, stock options granted to
employees, restricted stock issued to directors and AER's outstanding Series A,
Series B, Series C and Series D Convertible Preferred Stock, all as described in
the SEC Documents, AER has no outstanding securities convertible into (or
exercisable or exchangeable for) or evidencing the right to purchase or
subscribe for, shares of its capital stock or authorized subscriptions, options,
warrants, calls, rights, commitments or any other agreements or arrangements,
obligating it to issue any shares of its capital stock or securities convertible
into capital stock;
(viii) the financial statements (including any related notes) included
in the SEC Documents (the "Financial Statements"), have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as may be noted therein) and fairly
present, in all material respects, the financial condition, results 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 and the staffing
reductions of which Purchaser is aware, since December 31, 2001, AER has
conducted its
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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
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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, 2001. Purchaser is an
"accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act.
(iv) Purchaser understands and acknowledges that an investment in
the Securities involves a high degree of risk. Purchaser represents that
Purchaser is able to bear the economic risk of an investment in the Securities,
which Purchaser acknowledges are currently illiquid and may remain illiquid
indefinitely, including a possible total loss of its investment. In making this
statement Purchaser hereby represents and warrants to AER that Purchaser has
adequate means of providing for Purchaser's current needs and contingencies,
that Purchaser is able to afford to hold the Securities for an indefinite period
and that Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks of the
investment in the Securities. Further, Purchaser represents that Purchaser has
no present need for liquidity in the Securities and Purchaser is willing to
accept such investment risks.
(v) Purchaser understands that no United States federal or state
agency, or similar agency of any other country, has reviewed, approved, passed
upon or made any recommendation or endorsement of AER or the Securities.
(vi) This Agreement is made by AER with Purchaser in reliance
upon Purchaser's representations and covenants made in this Section 3(b), which
reliance by its execution of this Agreement Purchaser hereby confirms.
(vii) Purchaser understands that the Securities have not been
registered under the Securities Act or any State Acts and are being offered and
sold pursuant to exemptions therefrom based in part upon the representations of
Purchaser contained herein.
(viii) Purchaser knows of no public solicitation or advertisement
of an offer in connection with the proposed issuance and sale of the Securities.
(ix) Purchaser has reviewed with its tax advisors the U.S.
federal, state, local and foreign tax consequences of an investment in the
Securities and the transactions 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.
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(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
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
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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.
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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
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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 April 22, 2002.
PURCHASER: ELMWOOD PARTNERS II
By: /s/ Xxx X. Xxxxxxxx
----------------------------------------
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
------------------------------------------
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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EXHIBIT A
FORM OF WARRANT
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