CONVERSION AGREEMENT
This Agreement entered into this 4th day of December 2000 by and
between ERBC Holdings Limited, a British Virgin Islands company ("ERBC") and
Advanced Technology Industries, Inc. a Delaware corporation ("ATI") provides as
follows:
RECITALS
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A. From time to time ERBC has made various loans to ATI for the
operations of ATI and to provide it with working capital, which loans presently
total in excess of $1,560,000, exclusive of interest.
B. ATI has requested that ERBC convert $1,560,000 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 $1,560,000 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
$1,560,000 of the debt owed to ERBC by ATI (the "Converted Debt") shall
be converted for 13,054,393 shares of the $.0001 par value common stock of ATI
(the "Conversion Shares") in full satisfaction of $1,560,000 of said debt. The
parties hereto agree that the issuance of said shares to ERBC shall fully
extinguish and satisfy $1,560,000 of said debt. The interest owing on the
Converted Debt shall not be converted or effected by this Agreement and shall
remain an obligation of ATI.
2. REPRESENTATIONS AND WARRANTIES OF ERBC
ERBC hereby warrants and represents as follows:
2.1 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.
2.2 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.
2.3 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 instruments and documents to be executed in connection herewith.
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2.4 ERBC is a company wholly owned and controlled by Xxxx
Xxxxxxx ("Seifman") who is a shareholder of ATI beneficially owning 4,309,940
shares of the common stock of ATI as of the date of this Agreement which
constitutes approximately 28.2% of the outstanding stock of ATI. As a result
thereof Seifman is a control person and affiliate of ATI and has access to all
of the necessary and requisite information needed by ERBC to enable it to make
an informed decision concerning this transaction. 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 possesses 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.
2.5 Seifman is an accredited investor having a net worth in
excess of $1,000,000 as of the date of this Agreement.
2.6 ERBC and its employees, officers, directors, and
representatives have such knowledge and experience in business matters that it
is capable of evaluating the merits and risks of this transaction.
2.7 ERBC is acquiring the Conversion Shares for its own
account for purposes of investment and not with a view to the offer, sale, or
distribution of said shares.
3. REPRESENTATIONS AND WARRANTIES OF ATI.
3.1 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.
3.2 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 issuable 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):
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"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
6.01 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 acknowledgment of computer transmission)
to the parties at the following addresses (or at another address for a party as
shall be specified by like notice):
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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: c/o Xxxx Xxxxxxx
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
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.
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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 relating 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.
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6.10 ATTORNEYS' FEES AND COST
In the event of any action at law 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.
Advanced Technology Industries, Inc.
By /S/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx, Vice President and Chief
Financial Officer
ERBC Holdings Limited
By /S/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
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