THIS WARRANT AND THE SECURITIES PURCHASED ON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL EITHER (i) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND ITS COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION THEREWITH.
Warrant to Purchase
112,994 shares
Warrant to Purchase Common Stock
of
AER ENERGY RESOURCES, INC.
THIS CERTIFIES that FW AER II, L.P., a Delaware limited partnership
("Holder") or any subsequent holder hereof, has the right to purchase from AER
Energy Resources, Inc., a Georgia corporation (the "Company"), up to 112,994
fully paid and nonassessable shares of the Companys Common Stock, no par value
("Common Stock"), at a price of $1.77 per share subject to adjustment as
provided below (the "Exercise Price"), at any time on or before 5:00 p.m.,
Atlanta, Georgia time, on March 30, 2005.
This Warrant is issued and all rights hereunder shall be held subject to
all of the conditions, limitations and provisions set forth herein.
1. Exercise.
This Warrant may be exercised as to all or any lesser number of full shares
of Common Stock covered hereby upon surrender of this Warrant, with the
Subscription Form attached hereto duly executed, together with the full Exercise
Price in cash, or by certified or official bank check payable in New York
Clearing House Funds for each share of Common Stock as to which this Warrant is
exercised, at the office of the Company, AER Energy Resources, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other office or agency
as the Company may designate in writing (such surrender and payment hereinafter
called the "Exercise of this Warrant"). The "Date of Exercise" of the Warrant
shall be defined as the date that the original Warrant and Subscription Form are
received by the Company. This Warrant shall be canceled upon its Exercise, and,
as soon as practicable thereafter, the Holder hereof shall be entitled to
receive a certificate or certificates for the number of shares of Common Stock
purchased upon such Exercise and a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant.
Each person in whose name any certificate for shares of Common Stock is issued
shall, for all purposes, be deemed to have become the Holder of record of such
shares on the Date of Exercise of this Warrant, irrespective of the date of
delivery of such certificate. Nothing in this Warrant shall be construed as
conferring upon the Holder hereof any rights as a shareholder of the Company.
2. Payment of Warrant Exercise Price.
Payment of the Exercise Price may be made by any of the following, or a
combination thereof, at the election of Holder:
(i) cash, certified check or cashiers check or wire transfer; or
(ii) surrender of this Warrant at the principal office of the Company
together with notice of election, in which event the Company shall issue Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder
(not to exceed the number of shares set forth on the cover page of
this Warrant, as adjusted pursuant to the provisions of Section 4 of
this Warrant).
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one share of Common Stock (for purposes of
this Section 2(ii), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five trading days prior
to the Date of Exercise of this Warrant (the "Average Closing Bid
Price"), as reported on the Nasdaq National Market, or if the Common
Stock is not traded on the Nasdaq National Market, the Average Closing
Bid Price in the over-the-counter market; provided, however, that if
the Common Stock is listed on a stock exchange, the Market Price shall
be the Average Closing Bid Price on such exchange).
B = the Exercise Price.
It is intended that the Common stock issuable upon exercise of this Warrant in a
cashless exercise transaction shall be deemed to have been acquired at the time
this Warrant was issued, for purposes of Rule 144(d)(3)(ii).
3. Transfer and Registration.
Subject to the provisions of Section 7 of this Warrant, this Warrant may be
transferred on the books of the Company, wholly or in part, in person or by
attorney, upon surrender of this Warrant properly endorsed, with signature
guaranteed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
4. Anti-Dilution Adjustments.
(a) If the Company shall at any time declare a dividend payable in shares
of Common Stock, then the Holder hereof, upon Exercise of this Warrant after the
record date for the determination of Holders of Common Stock entitled to receive
such dividend, shall be entitled to receive upon Exercise of this Warrant, in
addition to the number of shares of Common Stock as to which this Warrant is
Exercised, such additional shares of Common stock as such Holder would have
received had this Warrant been Exercised immediately prior to such record date.
(b) If the Company shall at any time effect a recapitalization or
reclassification of such character that the shares of Common stock shall be
changed into or become exchangeable for a larger or smaller number of shares,
then upon the effective date thereof, the number of shares of Common Stock which
the Holder hereof shall be entitled to purchase upon Exercise of this Warrant
shall be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization or reclassification, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionately decreased and, in
the case of a decrease in the number of shares, proportionally increased.
(c) If the Company shall at any time distribute to Holders of Common Stock
cash, evidences of indebtedness or other securities or assets (other than cash
dividends or distributions payable out of earned surplus or net profits for the
current or preceding year) then, in any such case, the Holder of this Warrant
shall be entitled to receive, upon Exercise of this Warrant, with respect to
each share of Common Stock issuable upon such Exercise, the amount of cash or
evidences of indebtedness or other securities or assets which such Holder would
have been entitled to receive with respect to each such share of Common stock as
a result of the happening of such event had this Warrant been Exercised
immediately prior to the record date or other date fixing shareholders to be
affected by such event (the "Determination Date") or, in lieu thereof, if the
Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common stock (such value to be determined by the
Board in its discretion) and the denominator of which is such Exercise Price.
(d) If the Company shall at any time consolidate or merge with any other
corporation or transfer all or substantially all of its assets or dissolve, then
the Company shall deliver written notice to the Holder of such merger,
consolidation or sale of assets or dissolution at least thirty (30) days prior
to the closing of such merger, consolidation or sale of assets or dissolution,
and this Warrant shall terminate and expire immediately prior to the closing of
such merger, consolidation or sale of assets or dissolution.
(e) As used in this Warrant, the term "Exercise Price" shall mean the
purchase price per share specified in this Warrant until the occurrence of an
event stated in Section 4 (b) or (c) and thereafter shall mean said price as
adjusted from time to time in accordance with the provisions of said sections.
No such adjustment shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 4 shall have the effect of increasing
the total consideration payable upon Exercise of this Warrant in respect of all
the Common Stock as to which this Warrant may be exercised.
(f) In the event that at any time, as a result of an adjustment made
pursuant to this Section 4, the Holder of this Warrant shall, upon Exercise of
this Warrant, become entitled to receive shares and/or other securities or
assets (other than Common Stock) then, wherever appropriate, all references
herein to shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to adjustment from
time to time in a manner and upon terms as nearly equivalent as practicable to
the provisions of this Section 4.
5. Fractional Interests.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. The
Company shall make a payment in cash in respect of any fractional shares which
might otherwise be issuable upon Exercise of this Warrant, calculated by
multiplying the fractional share amount by the market price of the Companys
Common Stock on the Date of Exercise as reported on the Nasdaq National Market
or such other exchange or system on which the Companys Common Stock is traded.
6. Reservation of Shares.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise of this
Warrant. The Company covenants and agrees that upon Exercise of this Warrant,
all shares of Common Stock issuable upon such Exercise shall be duly and validly
issued, fully paid, nonassessable and not subject to preemptive rights of any
shareholders.
7. Restrictions on Transfer.
This Warrant and the Common Stock issuable on Exercise hereof have
been or will be acquired by the Holder hereof for investment for its own account
and not with a view to the distribution thereof, have not been registered under
the Securities Act of 1933, as amended (the "Act") or under any state securities
laws (the "State Acts"), and may not be sold, transferred, pledged, hypothecated
or otherwise disposed of in the absence of registration or the availability of
an exemption from registration under the Act and any applicable State Acts and,
in the event a Holder believes an exemption from the registration requirements
of the Act and any applicable State Acts is available, the Holder must deliver a
legal opinion satisfactory in form and substance to the Company and its counsel,
stating that such exemption is available. All shares of Common Stock issued
upon Exercise of this Warrant shall bear an appropriate legend to such effect.
Holder has represented to the Company that it and any transferee of all or any
portion of this Warrant is and will remain at all times while this Warrant is
outstanding an "accredited investor" as defined in Regulation D promulgated
under the Act.
8. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and the Holder of this Warrant any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and the Holder of this Warrant.
9. Applicable Law.
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the State of Georgia. Jurisdiction
for any dispute regarding this Warrant lies in Georgia.
10. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
11. Notice to Company and Holder.
Notices or demands pursuant to this Warrant to be given or made by the
Holder of this Warrant to or on the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, AER Energy Resources, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Chief Executive Officer. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on the Holder of this Warrant
shall be sufficiently given or made if sent by certified or registered mail,
return receipt requested, postage prepaid, and addressed to the Holder as
follows: FW AER II, L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attn:. Vice President and Controller, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇, c/o Arbor
Investors, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or
another person or address designated in writing by Holder.
(signature follows on next page)
IN WITNESS WHEREOF, this Warrant is hereby executed effective as of the
date set forth below.
Dated as of April 3, 2000.
AER ENERGY RESOURCES, INC.
By:
Name:___________________________________
Title: __________________________________
SUBSCRIPTION FORM
TO: AER ENERGY RESOURCES, INC.
The undersigned hereby irrevocably exercises the right to purchase
_______________ shares of Common Stock of AER Energy Resources, Inc., a Georgia
corporation, evidenced by the attached Warrant, and herewith makes payment of
the Exercise Price with respect to such shares in full, all in accordance with
the conditions and provisions of said Warrant.
The undersigned represents that it is an "accredited investor" as defined
in Regulation D under the Securities Act of 1933, as amended, agrees not to
offer, sell, transfer or otherwise dispose of any of such Common Stock, except
in accordance with the provisions of Section 7 of the Warrant, and consents that
the following legend may be affixed to the certificates for the Common Stock
hereby subscribed for, if such legend is applicable:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
state securities law, and may not be sold, transferred, pledged,
hypothecated or otherwise disposed of until either (i) a registration
statement under the Securities Act and applicable state securities laws
shall have become effective with regard thereto, or (ii) the corporation
shall have received an opinion of counsel acceptable to the corporation and
its counsel that an exemption from registration under the Securities Act or
applicable state securities laws is available in connection therewith."
The undersigned requests that certificates for such shares be issued, and a
warrant representing any unexercised portion thereof be issued, pursuant to the
Warrant in the name of the Registered Holder and delivered to the undersigned at
the address set forth below:
Dated:
Signature of Registered Holder
Name of Registered Holder (Print)
Address
The attached Warrant and the securities issuable on exercise thereof have not
been registered under the Securities Act of 1933, as amended, or any state
securities law and may not be sold, transferred, pledged, hypothecated or
otherwise disposed of in the absence of registration or the availability of an
exemption from registration under said Act or any state securities law.
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase ____________ shares of the Common Stock of AER ENERGY RESOURCES, INC.
evidence by the attached Warrant and does hereby irrevocably constitute and
appoint _____________________________ attorney to transfer the said Warrant on
the books of the Company, with full power of substitution in the premises.
Dated:
Signature
Fill in for new Registration of Warrant: Signature Guarantee:
Name Name of Guarantor
By:
Name:
Address Title:
Please print name and address of assignee
(including zip code)
NOTICE
The signature to the foregoing Subscription Form or Assignment must correspond
to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.