EXHIBIT 7.1
Exhibit 7.1
Conversion Agreement
This Agreement entered into this 1st day of May 2001 by and between
ERBC Holdings Ltd. ("ERBC") and Advanced Technology Industries, Inc. a Delaware
corporation ("ATI") provides as follows:
RECITALS
A. From time to time ERBC has made various loans to ATI for the
operations of ATI and to provide it with working capital and accrued certain
consulting fees due from ATI, which loans and accrued consulting fees presently
total in excess of $527,873 exclusive of interest.
B. ATI has requested that ERBC convert $527,873 of said previously
contracted debt for $.0001 par value common stock of ATI and ERBC is willing to
accept said stock, in lieu of receiving payment of said debt in cash, in full
satisfaction of $527,873 of said debt.
NOW THEREFORE, in consideration for the mutual covenants and agreements
contained herein and for other good and valuable consideration, it is hereby
agreed as follows:
1. CONVERSION OF DEBT
$527,873 of the debt owed to ERBC by ATI (the "Converted Debt") shall
be converted for 3,336,745 shares of the $.001 par value common stock of ATI
(the "Conversion Shares") in full satisfaction of $527,873 of said debt. The
parties hereto agree that the issuance of said shares to ERBC shall fully
extinguish and satisfy $527,873 of said debt. The interest owing on the
Converted Debt shall not be converted or effected by the Agreement and shall
remain an obligation of ATI.
2. REPRESENTATIONS AND WARRANTIES OF ERBC
ERBC hereby warrants and represents as follows:
1.1 ERBC has good and valid title to the Converted Debt and no
portion of the converted debt has been assigned,
transferred, conveyed, encumbered, or hypothecated and
that ERBC, acting alone, and without the consent or
approval of any third party, has the full right and power
to convert the debt.
1.2 No consent or approval of any third party is needed for
ERBC to enter into this Agreement or consummate the
transactions contemplated hereby nor will said actions
violate or breach any agreement, contract, indenture,
lease, security agreement, mortgage, deed of trust,
promissory note or other obligation of ERBC.
1.3 The person or persons executing this agreement on behalf
of ERBC have the requisite power and authority to do so
and to make, execute, and deliver all the instruments and
documents to be executed in connection herewith.
1.4 ERBC acknowledges that it in turn has had access to all of
said information and has also had access to all of the
securities filings of ATI filed under Section 13 of the
Securities Exchange Act of 1934 (the "ACT") since it
became a reporting entity on January 14, 2000. ERBC
acknowledges that it has had the opportunity to ask
questions and receive answers concerning the terms and
conditions of the transaction and to obtain any additional
information which ATI possess or could acquire without
unreasonable effort or expense that is necessary to verify
the accuracy of the information furnished to ERBC and to
which it has had access.
1.5 ERBC is an accredited investor having net worth in excess
of $1,000,000 as of the date of this Agreement.
1.6 ERBC has such knowledge and experience in business matters
that it is capable of evaluating the merits and risks of
this transaction.
1.7 ERBC is acquiring the Conversion Share for its own account
for purpose of investment and not with a view to the
offer, sale, or distribution of said shares.
3. REPRESENTATIONS AND WARRANTIES OF ATI
2.1 ATI has full corporate power and authority to enter into
this Agreement and to carry out the transactions
contemplated hereby without the consent or approval of any
third party. This agreement is a valid and binding
agreement of ATI and is enforceable in accordance with its
terms.
2.2 The Conversion Shares to be issued hereunder shall be
validly issued, outstanding, and non-assessable, and free
and clear of all liens and encumbrances.
4. INVESTMENT RESTRICTIONS
The shares to be issued to ERBC hereunder have not been
registered under the Securities Act of 1933 ("Securities ACT") or any
state securities laws and are issued in reliance upon certain
exemptions included in federal and state securities laws from such
registration. There are substantial restrictions on the sale of the
shares and the shares may be transferred only in accordance with the
provisions of this paragraph. Each certificate representing the shares
issuable hereunder and any other securities issued in respect of the
shares hereunder and any other securities issued in respect of the
shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted or
unless the shares of ATI stock evidenced by such certificate shall have
been registered under the Securities Act) be stamped or otherwise
imprinted with a legend substantially in the following form (in
addition to any legend required under applicable state securities
laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED."
The shares may be transferred only upon (i) registration under the
Securities Act, (ii) the receipt by ATI of an opinion of counsel
acceptable to ATI (including then counsel to ATI) that such transfer is
exempt from the registration provisions of the Securities Act and state
securities laws, or (iii) the receipt by ATI of a "no- action" letter
from the Securities and Exchange Commission to the effect that any
transfer by such holder of the securities evidenced by such certificate
will not violate the Securities Act and applicable state securities
laws.
5. LOCK-UP AGREEMENT
ERBC agrees that notwithstanding anything to the contrary
contained herein for a period of two years from the date of this
Agreement ERBC shall not sell, transfer, assign, or convey any of the
Conversion Shares or any shares issued in respect to the Conversion
shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event without the prior written consent of
ATI.
6. MISCELLANEOUS
5.01 NOTICES
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail
(return receipt requested) or sent via facsimile (with acknowledgement
of computer transmission) to the parties at the following addresses (or
at another address for a party as shall be specified by like notice):
To Advanced Technology Advanced Technology Industries Inc.
Industries, Inc.: Xxxxxxxxxxxxx 00
Xxxxxx, Xxxxxxx D-10117
Telephone No.: (0000) 000-0000
Facsimile No.: (0000) 000-000-00
With copy to: H. Xxx Xxxxxxx
Law Offices of H. Xxx Xxxxxxx
11900 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
To ERBC: ERBC Holdings
Facsimile No.:
6.02 INTERPRETATION
The words "include", "includes" and "including", when
used herein, shall be deemed in each case to be followed by the words "without
limitation". The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
6.03 COUNTERPARTS AND FACSIMILE SIGNATURES
This Agreement may be executed in one or more
counterparts and by facsimile signature, all which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each party delivered to the other party, it being understood that
all parties need not sign the same counterpart.
6.04 ENTIRE AGREEMENT
This Agreement and the exhibits hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein constitute the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
6.05 SEVERABILITY
In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void, or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provisions to persons or circumstances will be interpreted reasonably so as to
give effect to the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business, and other purposes intended by the void or unenforceable provision.
6.06 OTHER REMEDIES
Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with,
and not exclusive of, any other remedy conferred hereby, or by law or equity,
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
6.07 GOVERNING LAW; VENUE
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
The parties irrevocably consent to the jurisdiction and venue of the state and
federal courts located in Delaware concerning any action related to this
Agreement.
6.08 RULES OF CONSTRUCTION
The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
6.09 SPECIFIC PERFORMANCE
The parties hereto agree that irreparable damages
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court having proper venue hereunder, this
being in addition to any other remedy to which they are entitled at law or in
equity.
6.10 ATTORNEY'S FEES AND COST
In the event of any action or in equity between the
parties hereto to enforce any of the provisions hereof, the unsuccessful party
or parties to such litigation shall pay to the successful party or parties all
costs and expenses, including actual attorneys' fees, incurred therein by such
successful party or parties and if such successful party or parties shall
recover judgment in any such action or proceeding, such costs, expenses and
attorneys' fees shall be included in and as part of such judgment. The
successful party shall be the party who is entitled to recover his or its costs
of suit, whether or not the suit proceeds to final judgment. A party not
entitled to recover his or its costs shall not recover attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written and executed as of July 19, 2001.
Advanced Technology Industries, Inc.
By /s/ Xxxx-Xxxxxxx Xxxxxxxxx
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Xxxx-Xxxxxxx Xxxxxxxxx, President
ERBC Holdings Ltd.
By /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, Chairman
