EXHIBIT 4.11
WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ADVANCED TECHNOLOGY INDUSTRIES, INC.
COMMON STOCK PURCHASE WARRANT
1. ISSUANCE; CERTAIN DEFINITIONS. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by ADVANCED
TECHNOLOGY INDUSTRIES, INC., a Delaware corporation (the "Company"), Chicago
Venture Partners, L.P., or registered assigns (the "Holder") is hereby granted
the right to purchase at any time during the period (the "Exercise Period") from
the date hereof until 5:00 P.M., New York City time, on the second anniversary
of the Effective Date (the "Expiration Date"), 2,857,143 fully paid and
nonassessable shares of the Company's Common Stock (the "Common Stock"), at an
exercise price per share (the "Exercise Price") of $0.10 per share, as such
price may be adjusted as provided herein.
This Warrant is being issued pursuant to the terms of the Securities
Purchase Agreement, dated of even date (the "Securities Purchase Agreement"), to
which the Company and the Holder (or the Holder's predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Securities Purchase Agreement.
2. EXERCISE OF WARRANTS.
2.1 GENERAL.
(a) This Warrant is exercisable in whole or in part at any
time during the Exercise Period. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph and by delivering to the Company this
Warrant Certificate, together with appropriate payment of the Exercise Price for
the shares of Common Stock purchased (the date all such deliveries are
completed, the "Exercise Date"); provided that the Holder will only be able to
exercise this Warrant if such exercise is exempt from the registration
requirements of the Act, as defined below, (and the Company has received such
information as the Company may reasonable request to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Act). The Notice of Exercise shall be
executed by the Holder of this Warrant and shall indicate the number of shares
then being purchased pursuant to such exercise. Upon surrender of this Warrant
Certificate, together with appropriate payment of the Exercise Price for the
shares of Common Stock purchased, the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. This
Warrant shall expire and be of no force or effect from and after the Expiration
Date.
(b) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
(c) The Holder shall pay the Exercise Price in cash; provided
that in the event that the Registration Statement is not effective on any
Exercise Date subsequent to the one year anniversary of the date hereof (other
than during a Permitted Suspension Period), then the Holder may pay the Exercise
Price with respect to the shares of Common Stock set forth in the Notice of
Exercise delivered in connection with such Exercise Date, pursuant to a cashless
exercise by surrendering this Warrant to the Company together with a notice of
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:
X = Y (A-B)/A
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the average of the closing sale prices of the Common
Stock for the five (5) Trading Days immediately prior to
(but not including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have been commenced, on the
issue date. If the Registration Statement has been declared effective on or
before the one year anniversary of the date hereof, and is effective on any
Exercise Date subsequent to the one year anniversary of the date hereof (other
than during a Permitted Suspension Period), the Holder shall not have a right of
cashless exercise, but shall pay the Exercise Price in cash as set forth in
subsection 9(a) above.
(d) If the Average Price is equal to or greater than $0.50
during any period of twenty (20) consecutive Trading Day and the Closing Price
is equal to or greater than $0.50 for a least ten (10) Trading Days during such
period, then on the fifteenth (15th) Trading Day following the end of such
period, and delivery of written notice thereof from Company to Holder, the
Exercise Price shall be adjusted to $0.25 (the "Adjusted Exercise Price"), as
such price may be adjusted as provided herein. For purposes of this Section
2.1(d), (i) Average Price shall be the average closing bid prices of the Common
Stock during the applicable period, as reported by the Reporting Service, or, in
the event the Common Stock is listed on a stock exchange or traded on NASDAQ,
the Average Price shall be such closing prices on such exchange or NASDAQ, as
reported in the Wall Street Journal and (ii) Closing Bid Price shall be the
closing bid price of the Common Stock on the applicable date, as reported by the
Reporting Service, or, in the event the Common Stock is listed on a stock
exchange or traded on NASDAQ, the Closing Bid Price shall be such closing price
on such exchange or NASDAQ, as reported in the Wall Street Journal.
2.2 LIMITATION ON EXERCISE. Notwithstanding the provisions of
this Warrant, the Securities Purchase Agreement or of the other Transaction
Agreements, in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, (ii) while there is outstanding a tender offer
for any or all of the shares of the Common Stock, or (iii) at the Holder's
option, on at least sixty-five (65) days' advance written notice from the
Holder) shall the Holder be entitled to exercise this Warrant, or shall the
Company have the obligation to issue shares upon such exercise of all or any
portion of this Warrant to the extent that, after such exercise the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the Warrants or other
rights to purchase Common Stock or through the ownership of the unconverted
portion of the Debentures or other convertible securities), and (2) the number
of shares of Common Stock issuable upon the exercise of the Warrants with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Holder and its Affiliates of more than 4.99% of
the outstanding shares of Common Stock (after taking into account the shares to
be issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such sentence.
The Holder, by its acceptance of this Warrant, further agrees that if the Holder
transfers or assigns any of the Warrants to a party who or which would not be
considered such an Affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 2.2 as if such transferee or assignee were the original Holder
hereof.
3. RESERVATION OF SHARES. The Company hereby agrees that from the date
hereof to the Expiration Date there shall be reserved for issuance upon exercise
of this Warrant such number of shares of the Common Stock as shall be required
for issuance upon exercise of this Warrant (the "Warrant Shares").
4. MUTILATION OR LOSS OF WARRANT. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. PROTECTION AGAINST XXXXXXXX AND OTHER ADJUSTMENTS.
6.1 ADJUSTMENT MECHANISM. If an adjustment of the Exercise
Price is required pursuant to Section 6.2, the Holder shall be entitled to
purchase such number of additional shares of Common Stock as will cause the
total number of shares of Common Stock the Holder is entitled to purchase
pursuant to this Warrant, multiplied by the adjusted Exercise Price per share,
to equal the dollar amount of the total number of shares of Common Stock Holder
is entitled to purchase before adjustment multiplied by the total Exercise Price
before adjustment.
6.2 CAPITAL ADJUSTMENTS. If, at any time while this Warrant
remains outstanding, the Company effectuates a stock split or reverse stock
split of the Common Stock or issues a dividend on the Common Stock consisting of
shares of Common Stock, the Exercise Price, Adjusted Exercise Price and any
other amounts calculated as contemplated hereby shall be equitably adjusted to
reflect such action. By way of illustration, and not in limitation, of the
foregoing, (i) if the Company effectuates a 2:1 split of the Common Stock,
thereafter, with respect to any exercise for which the Company issues shares
after the record date of such split, the Exercise Price, Adjusted Exercise Price
and any market price from a date prior to such split which was used in the
calculation of the Average Price or Closing Bid Price shall be deemed to be
one-half of what it had been immediately prior to such split; (ii) if the
Company effectuates a 1:10 reverse split of the Common Stock, thereafter, with
respect to any exercise for which the Company issues shares after the record
date of such reverse split, the Exercise Price, Adjusted Exercise Price and any
market price from a date prior to such split which was used in the calculation
of the Average Price or Closing Bid Price shall be deemed to be ten times what
it had been calculated to be immediately prior to such split; and (iii) if the
Company declares a stock dividend of one share of Common Stock for every 10
shares outstanding, thereafter, with respect to any exercise for which the
Company issues shares after the record date of such dividend, the Exercise
Price, Adjusted Exercise Price and any market price from a date prior to such
split which was used in the calculation of the Average Price or Closing Bid
Price shall be deemed to be such amount multiplied by a fraction, of which the
numerator is the number of shares (10 in the example) for which a dividend share
will be issued and the denominator is such number of shares plus the dividend
share(s) issuable or issued thereon (11 in the example).
6.3 MERGER, CONSOLIDATION, ETC. If, for as long as this
Warrant remains outstanding, the Company enters into a merger (other than where
the Company is the surviving entity) or consolidation with another corporation
or other entity or a sale or transfer of all or substantially all of the assets
of the Company to another person (collectively, a "Sale"), and the holders of
the Common Stock are entitled to receive stock, securities or property in
respect of or in exchange for Common Stock, then as a condition of such Sale,
the Company and any such successor, purchaser or transferee will agree that this
Warrant may thereafter be converted on the terms and subject to the conditions
set forth above into the kind and amount of stock, securities or property
receivable upon such merger, consolidation, sale or transfer by a holder of the
number of shares of Common Stock into which this Warrant might have been
converted immediately before such merger, consolidation, sale or transfer,
subject to adjustments which shall be as nearly equivalent as may be
practicable.
6.3 ADJUSTMENT FOR SPIN OFF. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or a part of its
assets in a transaction (the "Spin Off") in which the Company does not receive
compensation for such business, operations or assets, but causes securities of
another entity (the "Spin Off Securities") to be issued to security holders of
the Company, then
(a) the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and
number of Spin Off Securities to be issued to security holders of the
Company (the "Outstanding Warrants") been exercised as of the close of
business on the Trading Day immediately before the Record Date (the
"Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares
multiplied by (y) a fraction, of which (I) the numerator is the amount
of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying
the Exercise Price by a fraction (if, but only if, such fraction is
less than 1.0), the numerator of which is the average closing bid price
of the Common Stock for the five (5) Trading Days immediately following
the fifth Trading Day after the Record Date, and the denominator of
which is the average Closing Bid Price of the Common Stock on the five
(5) Trading Days immediately preceding the Record Date; and such
adjusted Exercise Price shall be deemed to be the Exercise Price with
respect to the Outstanding Warrants after the Record Date.
7. TRANSFER TO COMPLY WITH THE SECURITIES ACT; REGISTRATION RIGHTS.
7.1 TRANSFER. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Except for transfers to officers, employees and
Affiliates of the Holder, neither this Warrant nor any of the Warrant Shares or
any other security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 REGISTRATION RIGHTS. (a) The Holder shall have
registration rights with respect to the Warrant Shares as set forth in the
Securities Purchase Agreement and the Registration Rights Agreement. The
Holder's rights under this Section 7.2 shall expire at such time as the Holder
can sell all of the Warrant Shares held by such Holder under Rule 144 without
volume or other restrictions or limit.
8. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
Advanced Technology Industries, Inc..
000 Xxxxxxx Xxxxxx, #00X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx , Esq.
Ropes & Gray LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
(ii) if to the Holder, to:
Chicago Venture Parthers, L.P.
000 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx, Harrold, Xxxxx & Xxxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
Any party may give notice in accordance with this Section to the other parties
designate to another address or person for receipt of notices hereunder.
9. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This Warrant may be
amended or supplemented only by an instrument in writing signed by the Holder
and the Company. This Warrant contains the full understanding of the Holder and
the Company with respect to the subject matter hereof and thereof and there are
no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
10. GOVERNING LAW. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. The Company and, by its acceptance of this Warrant, the Holder
each consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the state courts of the State of
New York sitting in the City of New York in connection with any dispute arising
under this Warrant and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. To the extent determined
by such court, the Company shall reimburse the Holder for any reasonable legal
fees and disbursements incurred by the Holder in enforcement of or protection of
any of its rights under this Warrant.
11. JURY TRIAL WAIVER. The Company and, by its acceptance of this
Warrant, the Holder hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the Parties hereto against the other in
respect of any matter arising out or in connection with this Warrant.
12. DESCRIPTIVE HEADINGS. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
11th day of October, 2005.
ADVANCED TECHNOLOGY INDUSTRIES, INC.
By:__________________________________
Title: President
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, ____, to
purchase __________________ shares of the Common Stock of ADVANCED TECHNOLOGY
INDUSTRIES, INC., and tenders herewith payment in accordance with Section 1 of
said Common Stock Purchase Warrant.
__ CASH: $________________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
__ enclosed check
__ wire transfer
__ other
__ CASHLESS EXERCISE
Net number of Warrant Shares to be issued to Holder : ______________*
* based on: CURRENT MARKET VALUE - (EXERCISE PRICE X EXERCISE SHARES)
--------------------------------------------------------
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder.
To the extent that, pursuant to the exercise effected hereby, the Holder
would have more shares than permitted under said Section, this notice should be
amended and revised, ab initio, to refer to the exercise which would result in
the issuance of shares consistent with such provision. Any exercise above such
amount is hereby deemed void and revoked.
Please deliver the stock certificate to:
Dated:
[Name of Xxxxxx]
By:____________________________
