EXHIBIT 99.11
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THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
AMENDED AND RESTATED WARRANT NO. 1
THIS CERTIFIES THAT, for value received FKA DISTRIBUTING CO., d/b/a
HOMEDICS, INC., a Michigan corporation or its assigns ("HOMEDICS" or "HOLDER")
is entitled to, within the time frame set forth in Section 2 below, but not
thereafter, to subscribe for, purchase and receive up to six million seven
hundred forty-six thousand one hundred seventy-one (6,746,171) fully paid and
non-assessable shares of the common stock (the "COMMON STOCK") of KRONOS
ADVANCED TECHNOLOGIES, INC., a Nevada corporation (the "COMPANY"), at a purchase
price per share (the "EXERCISE PRICE") as set forth in Section 1 below, upon the
terms and subject to the conditions set forth in this Warrant. Such number of
shares, type of security and Exercise Price are subject to adjustment as
provided herein, and all references to "Common Stock" and "Exercise Price"
herein shall be deemed to include any such adjustment or series of adjustments.
This Amended and Restated Warrant No. 1 ("WARRANT") is issued
by the Company pursuant to the terms of the First Amendment to Master Loan and
Investment Agreement between the Company and HoMedics dated October 25, 2004
(the "AMENDED LOAN Agreement"), and it amends and restates Warrant No. 1 that
the Company issued to HoMedics dated May 9, 2003 pursuant to the initial Master
Loan and Investment Agreement between the Company and HoMedics dated May 9, 2003
(the "LOAN AGREEMENT"). This Warrant is being amended and restated solely to:
(i) delete former Section 9(e), which provided for additional warrants to be
issued to HoMedics or the Holder if the Company issued securities at a price
less than $0.20 per share in certain capital-raising transactions; and (ii)
acknowledge HoMedics' agreement not to exercise this Warrant by means of a
cashless exercise or otherwise for a period of one year following the effective
date of a registration statement that the Company plans to file with the
Securities and Exchange Commission ("SEC") for the resale of certain shares that
the Company plans to issue to Cornell Capital Partners, LP. The Company plans to
file this registration statement with the SEC on or about November 25, 2004.
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1. EXERCISE PRICE.
Subject to adjustments as provided herein, the Exercise Price
per share of Common Stock subject to this Warrant shall be equal to $0.10 per
share.
2. EXERCISE OF WARRANT.
(a) EXPIRATION DATE; PROCEDURE FOR EXERCISE. The purchase
rights represented by this Warrant are exercisable by the Holder, in whole or in
part, at any time from the date hereof and up to and including May 9, 2013 (the
"EXPIRATION DATE"), by the surrender of this Warrant and the Notice of Exercise
form attached hereto duly executed to the office of the Company at 000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000-0000 (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company), and upon payment of the
Exercise Price for the shares thereby purchased (by cashier's check or wire
transfer in an amount equal to the purchase price of the shares thereby
purchased or in accordance with the cashless exercise provision set forth in
Section 2(b)); whereupon the Holder shall be entitled to receive from the
Company a stock certificate representing the number of shares of Common Stock so
purchased, and a new Warrant in substantially identical form and dated as of
such exercise for the purchase of that number of shares of Common Stock equal to
the difference, if any, between the number of shares of Common Stock subject
hereto and the number of shares of Common Stock as to which this Warrant has
been exercised.
(b) CASHLESS EXERCISE. Notwithstanding any provisions herein
to the contrary, if the fair market value (as defined in Section 3 hereof) of
one share of the Company's Common Stock is greater than the Exercise Price (at
the date of calculation as set forth below), in lieu of exercising this Warrant
for cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the principal office of the Company (together with
the properly endorsed Notice of Exercise) in which event the Company shall issue
to the 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
the Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being canceled (at the date of such
calculation)
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
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In the Amended Loan Agreement, HoMedics has agreed that it
will not exercise any portion of this Warrant by means of a cashless exercise or
otherwise for one year following the effective date of the registration
statement that the Company plans to file with the SEC for the resale of certain
shares that the Company plans to issue to Cornell Capital Partners, LP. The
Company plans to file this registration statement with the SEC on or about
November 25, 2004.
3. ISSUANCE OF SHARES; NO FRACTIONAL SHARES.
Certificates for shares purchased hereunder shall be delivered
to the Holder hereof within a reasonable time (in no event exceeding ten (10)
business days) after the date on which this Warrant shall have been exercised in
accordance with the terms hereof. The Company agrees that the shares so issued
shall be, and shall for all purposes be deemed to have been, issued to the
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been exercised or converted in accordance
with the terms hereof. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon the exercise of this Warrant, an amount
equal to such fraction multiplied by the fair market value of a share of Common
Stock on the date of exercise shall be paid in cash or check to the holder of
this Warrant (fair market value shall be the average closing price of a share of
Common Stock on the OTC BB, or any other quotation system or stock exchange on
which the Common Stock is quoted or listed at the time of exercise, as reported
in "The Wall Street Journal" over the five consecutive business days immediately
prior to surrender of this Warrant pursuant to Section 2 above).
4. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
(a) NO LIENS. The Company hereby represents and warrants that
all shares of Common Stock which may be issued upon the exercise of this Warrant
will, upon such exercise, be duly and validly authorized and issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of the
issuance thereof (other than liens or charges created by or imposed upon the
Holder) and not subject to preemptive or any similar rights of the stockholders
of the Company.
(b) RESERVATION OF STOCK. As soon as practicable after
execution of this Warrant, the Company will reserve sufficient authorized but
unissued Common Stock to enable it to satisfy its obligations on exercise of
this Warrant and will, if necessary, reserve additional shares of Common Stock
during the period in which this Warrant may be exercised to satisfy its
obligations hereunder. If at any time the Company's authorized Common Stock
shall not be sufficient to allow the exercise of this Warrant, the Company shall
take such corporate action as may be necessary to increase its authorized but
unissued Common Stock to be sufficient for such purpose.
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(c) FURNISH INFORMATION. The Company agrees to promptly
deliver to the Holder copies of all financial statements, reports and proxy
statements which the Company shall have sent to its stockholders generally.
(d) RULE 144. In order to permit the Holder to sell the Common
Stock issuable upon exercise of the Warrant pursuant to Rule 144 under the 1933
Act (or any successors to such rules), the Company will comply with all rules
and regulations of the Commission applicable in connection with use of each of
Rule 144 (or any successor thereto), including the timely filing of all reports
with the Commission in order to enable the Holder, if it so elects, to utilize
Rule 144.
5. NO RIGHTS AS SHAREHOLDERS.
This Warrant does not entitle the Holder to any voting rights
or other rights as a stockholder of the Company prior to the exercise hereof.
6. TRANSFERABILITY.
(a) RESTRICTIONS ON WARRANT. This Warrant shall only be
transferable if the Holder complies with applicable exemptions under the
Securities Act of 1933, as amended (the "1933 ACT") and applicable state
securities laws.
(b) RESTRICTIONS ON COMMON STOCK ISSUABLE UPON EXERCISE. In no
event will the Holder make a disposition of the Common Stock issuable upon
exercise of this Warrant unless and until (i) it shall have notified the Company
of the proposed disposition, and (ii) if requested by the Company, it shall have
furnished the Company with an opinion of counsel satisfactory to the Company and
its counsel to the effect that (A) appropriate action necessary for compliance
with the 1933 Act provisions relating to sale of an unregistered security has
been taken, or (B) an exemption from the registration requirements of the 1933
Act is available. Notwithstanding the foregoing, the restrictions imposed upon
the transferability of the Common Stock issuable on the exercise of this Warrant
shall terminate as to any particular share of Common Stock when (1) such
security shall have been sold without registration in compliance with Rule 144
under the 1933 Act, or (2) a letter shall have been issued to the Holder at its
request by the staff of the Securities and Exchange Commission or a ruling shall
have been issued to the Holder at its request by such Commission stating that no
action shall be recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without registration under the 1933
Act in accordance with the conditions set forth in such letter or ruling and
such letter or ruling specifies that no subsequent restrictions on transfer are
required, or (3) such security shall have been registered under the 1933 Act and
sold by the Holder thereof in accordance with such registration.
(c) RESTRICTIVE LEGEND. The Company may place a legend
describing, in whole or in part, the restrictions imposed by sub-sections (a)
and (b) to this Section 6 on this Warrant, any replacement Warrant and on any
certificate representing the Common Stock issuable upon exercise of this
Warrant. Whenever such restrictions shall terminate, the Holder of a share of
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Common Stock issued upon exercise of this Warrant as to which such restrictions
have terminated shall be entitled to receive from the Company one or more new
certificates for such shares of Common Stock not bearing the restrictive legend.
7. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT.
On receipt by the Company of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant,
the Company will execute and deliver to the Holder, in lieu thereof, a new
warrant in substantially identical form, dated as of the date of such
cancellation and reissuance.
8. SATURDAYS, SUNDAYS AND HOLIDAYS.
If the last or appointed day for the taking of any action or
the expiration of any right required or granted herein shall be a Saturday or a
Sunday or shall be a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding business day.
9. CERTAIN ADJUSTMENTS.
The Exercise Price and number of shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set forth in this
Section 9. Upon each such adjustment of the Exercise Price pursuant to this
Section 9, the Holder shall thereafter prior to the Expiration Date be entitled
to purchase, at the Exercise Price resulting from such adjustment, the number of
shares obtained by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(a) STOCK SPLITS AND DIVIDENDS. If the Company, at any time
while this Warrant is outstanding, (i) shall pay a stock dividend or otherwise
make a distribution or distributions on shares of its Common Stock or on any
other class of capital stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect on
the record date for such event by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding after
such event. Any adjustment made pursuant to this Section 9(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) RECLASSIFICATIONS AND SHARE EXCHANGES. In case of any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is converted into other securities, cash or property,
then the Holder shall have the right thereafter to exercise this Warrant only
into the shares of stock and other securities and property receivable upon or
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deemed to be held by holders of Common Stock following such reclassification or
share exchange, and the Holder shall be entitled upon such event to receive such
amount of securities or property equal to the amount of shares such Holder would
have been entitled to receive had such Holder exercised this Warrant immediately
prior to such reclassification or share exchange. The terms of any such
reclassification or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 9(b) upon any exercise following any such reclassification or share
exchange.
(c) DISTRIBUTIONS OF EVIDENCES OF INDEBTEDNESS, ASSETS OR
RIGHTS. If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to the Holder of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
9(a), (b) and (d)), then in each such case the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Exercise Price determined as of
the record date mentioned above, and of which the numerator shall be such
Exercise Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly audits the
financial statements of the Company (an "APPRAISER").
(d) MERGERS AND CONSOLIDATIONS. In case of any (1) merger or
consolidation of the Company with or into another Person, or (2) sale by the
Company of more than one-half of the assets of the Company (on a book value
basis) in one or a series of related transactions, the Holder shall have the
right thereafter to exercise this Warrant for the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger, consolidation or sale, and the Holder shall
be entitled upon such event or series of related events to receive such amount
of securities, cash and property as the Common Stock for which this Warrant
could have been exercised immediately prior to such merger, consolidation or
sale would have been entitled. The terms of any such merger, sale or
consolidation shall include such terms so as continue to give the Holder the
right to receive the securities, cash and property set forth in this Section
upon any conversion or exercise following such event. This provision shall
similarly apply to successive such events.
(e) RECORD DATE; TREASURY SHARES. For the purposes of this
Section 9, the following clauses shall also be applicable:
(i) RECORD DATE. In case the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock
or in securities convertible or exchangeable into shares of Common
Stock, or (B) to subscribe for or purchase Common Stock or securities
convertible or exchangeable into shares of Common Stock, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
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or the date of the granting of such right of subscription or purchase,
as the case may be.
(ii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.
(f) CALCULATIONS; ROUNDING. All calculations under this
Section 9 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.
(g) NOTICE TO HOLDER OF EVENTS TRIGGERING ADJUSTMENTS OF THE
EXERCISE PRICE. If:
(i) the Company shall declare a stock dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; or
(iv) approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the Company,
or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company;
then the Company shall cause to be mailed to the Holder, at least 20 calendar
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up.
(h) CERTIFICATE AS TO ADJUSTMENTS. In case of any adjustment
in the Exercise Price or number and type of securities issuable on the exercise
of this Warrant, the Company will promptly give written notice thereof to the
Holder in the form of a certificate, certified and confirmed by an officer of
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the Company, setting forth such adjustment and showing in reasonable detail the
facts upon which adjustment is based.
10. REPRESENTATIONS AND COVENANTS OF HOMEDICS.
This Warrant has been granted by the Company in reliance upon
the following representations and covenants of HoMedics:
(a) INVESTMENT PURPOSE. This Warrant and the Common Stock
issuable upon exercise of HoMedics' rights contained herein will be acquired for
investment for HoMedics' own account, and not as a nominee or agent and not with
a view to the distribution of any part thereof. HoMedics further represents that
it does not have any contract, undertaking agreement or arrangement with any
person to sell, transfer or grant participations to such person, or to any third
person, with respect to this Warrant.
(b) PRIVATE ISSUE. HoMedics understands (i) that the Warrant
and the Common Stock issuable upon exercise of this Warrant are not registered
under the 1933 Act, or qualified under applicable state securities laws on the
ground that the issuance of this Warrant will be exempt from the registration
and qualification requirements thereof, and (ii) that the Company's reliance on
such exemption is predicated on the representations set forth in this Section
10.
(c) SALES OF COMMON STOCK. HoMedics acknowledges that in the
event the applicable requirements of Rule 144 are not met, registration under
the 1933 Act or compliance with another exemption from registration will be
required for any disposition of the Common Stock issuable upon exercise of this
Warrant.
(d) FINANCIAL RISK. HoMedics has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) ACCREDITED INVESTOR. HoMedics is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the 1933 Act.
11. REGISTRATION RIGHTS AGREEMENT.
The shares issuable upon exercise of this Warrant are subject
to an Amended and Restated Registration Rights Agreement between the Company and
HoMedics dated October 25, 2004 (the "REGISTRATION RIGHTS AGREEMENT").
12. GOVERNING LAW.
This Warrant shall be governed by and construed in accordance
with the laws of the State of Michigan applicable to contracts made and to be
performed wholly within such state. Any action or proceeding arising under or
pursuant to this Warrant shall be brought in the appropriate court in the State
of Michigan.
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13. COMPLETE AGREEMENT AND MODIFICATIONS.
This Warrant Xx. 0, Xxxxxxx Xx. 0, Xxxxxxx No. 3, the Loan
Agreement, the Amended Loan Agreement, all documents that appear as Exhibits to
the Loan Agreement and the Amended Loan Agreement and the Registration Rights
Agreement constitute the Company's and HoMedics' entire agreement with respect
to the subject matter hereof and supersede all agreements, representations,
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof. This Warrant may not be amended,
altered or modified except by a writing signed by the Company and the Holder.
14. NOTICES.
Except as otherwise provided herein, all notices under this
Warrant shall be in writing and shall be delivered by personal service,
facsimile, courier service promising overnight delivery or certified mail (if
such service is not available, then by first class mail), postage prepaid.
Notices shall be addressed as follows:
If to the Holder
of this Warrant: HoMedics, Inc.
0000 X. Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxxx, XX 00000-0000
Attention: Xxx Xxxxxx
Facsimile: (000) 000-0000
With a copy to: Seyburn, Kahn, Xxxx, Xxxx and Xxxxxx, P.C.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company: Kronos Advanced Technologies, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
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15. WAIVERS STRICTLY CONSTRUED.
With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder (i) no waiver or extension of time
shall be effective unless expressly contained in a writing signed by the waiving
party; and (ii) no alteration, modification or impairment shall be implied by
reason of any previous waiver, extension of time, delay or omission in exercise,
or other indulgence.
16. SEVERABILITY.
The validity, legality or enforceability of the remainder of
this Warrant shall not be affected even if one or more of its provisions shall
be held to be invalid, illegal or unenforceable in any respect.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer.
Dated: October 25, 2004
KRONOS ADVANCED TECHNOLOGIES, INC.
By: _______________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
FKA DISTRIBUTING CO.,
d/b/a HoMedics, Inc.
By: ______________________________
Name:
Title:
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NOTICE OF EXERCISE
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To: KRONOS ADVANCED TECHNOLOGIES, INC.
(1) |_| The undersigned hereby elects to purchase __________ shares of
Common Stock of Kronos Advanced Technologies, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in full.
|_| The undersigned hereby elects to purchase __________ shares of
Common Stock of Kronos Advanced Technologies, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith as a "cashless exercise" the attached
Warrant to purchase _________ shares of Common Stock.
(2) Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
_____________________________________
(Name)
_____________________________________
(Address)
(3) The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
except in compliance with applicable federal and state securities laws.
FKA DISTRIBUTING CO.,
d/b/a HOMEDICS, INC.
__________________________________ ________________________________
(Date) Name:
Title:
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