NEITHER THIS SPRINGING WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS SPRINGING WARRANT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS SPRINGING WARRANT NOR THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS SPRINGING WARRANT MAY BE TRANSFERRED EXCEPT AS PROVIDED IN
SECTION 3 OF THIS SPRINGING WARRANT.
SPRINGING WARRANT
to Purchase Common Stock of
Advanced Materials Group, Inc.
Subject to the occurrence of the conditions set forth in Section 8 hereof,
this Springing Warrant certifies that Trilon Dominion Partners, L.L.C., a
Delaware limited liability company, or registered assigns (the "Holder"), is
entitled to subscribe for and purchase from Advanced Materials Group, Inc., a
Nevada corporation (the "Company"), all or any part of duly authorized, validly
issued, fully paid and nonassessable shares of the Company's common stock, $.001
par value per share (the common stock, including any stock into which it may be
changed, reclassified, or converted, is herein referred to as the "Common
Stock"), as comprise 30,000 Units (as defined and as adjusted below) at a
purchase price per Unit equal to the closing sales price for the Common Stock on
the date this Springing Warrant becomes exercisable pursuant to Section 8
hereof. (the "Exercise Price"). The Springing Warrant may be exercised only as
provided in Section 8 hereof.
This Springing Warrant is issued pursuant to Amendment No. 2 to Credit
Agreement, dated as of December 15, 1995, by and between the Company and the
Holder (the "Amendment No. 2"). Amendment No. 2 amends a certain Credit
Agreement dated as of September 21, 1994, by and between the Company and
Dominion Capital, Inc., a Virginia corporation, as amended by Amendment No. 1
dated as of January 13, 1995 (the "Credit Agreement"). Pursuant to Amendment
No. 2, the Holder has agreed, among other things, to increase the aggregate
amount of credit available to the Company from $700,000 to $1,000,000.
This Springing Warrant is subject to the following provisions, terms and
conditions:
Section 1. EXERCISE OF SPRINGING WARRANT.
To exercise this Springing Warrant in whole or in part, the Holder shall
deliver to the Company at its principal office in Rancho Xxxxxxxxx,
California, (a) a written notice, in substantially the form of the
Subscription Notice appearing at the end of this Springing Warrant, of the
Holder's election to exercise this Springing Warrant, which notice shall
specify the number of shares of Common Stock to be purchased, (b) cash or a
certified check payable to the Company, or by cancellation of indebtedness of
the Company to the Holder hereof, if any, at the time of exercise, including
any portion of the promissory note, dated as of the date hereof, bearing
interest at the prime rate published in THE WALL STREET JOURNAL (Eastern
Edition) plus 5%, in the aggregate principal amount of $1,000,000 made by the
Company in favor of the Holder, in an amount equal to the aggregate purchase
price of the number of shares of Common Stock being purchased and (c) this
Springing Warrant. The Company shall as promptly as practicable, and in any
event within 15 days thereafter, execute and deliver or cause to be executed
and delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in such
notice. The stock certificate or certificates so delivered shall be in the
denomination of 100 shares each or such lesser or greater denomination as may
be specified in such notice and shall be issued in the name of the Holder or
such other name as shall be designated in such notice. Such certificate or
certificates shall be deemed to have been issued and the Holder or any other
person so designated to be named therein shall be deemed for all purposes to
have become a holder of record of such shares as of the date such notice is
received by the Company as aforesaid. If this Springing Warrant shall have
been exercised only in part, the Company shall, at the time of delivery of
said certificate or certificates, deliver to the Holder a new Springing
Warrant evidencing the rights of the Holder to purchase the remaining shares
of Common Stock called for by this Springing Warrant, which new Springing
Warrant shall in all other respects be identical to this Springing Warrant,
or, at the request of the Holder, appropriate notation may be made on this
Springing Warrant and the same returned to the Holder. The
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Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, issue and delivery of such stock certificates and new
Springing Warrants, except that, in case such stock certificates or new
Springing Warrants shall be registered in a name or names other than the name
of the Holder, funds sufficient to pay all stock transfer taxes that are
payable upon the issuance of such stock certificate or certificates or new
Springing Warrants shall be paid by the Holder at the time of delivering the
notice of exercise mentioned above.
All shares of Common Stock issued upon the exercise of this Springing
Warrant shall be validly issued, fully paid and nonassessable and, if the Common
Stock is then listed on a national securities exchange or quoted on an automated
quotation system, shall be duly listed or quoted thereon.
The Company shall not be required upon any exercise of this Springing
Warrant to issue a certificate representing any fraction of a share of Common
Stock, but, in lieu thereof, shall pay to the Holder cash in an amount equal to
a corresponding fraction (calculated to the nearest 1/100 of a share) of the
purchase price of one share of Common Stock as of the date of receipt by the
Company of notice of exercise of this Springing Warrant.
Section 2. TRANSFER, DIVISION AND COMBINATION.
The Company agrees to maintain at its principal office in Rancho Xxxxxxxxx,
California, books for the registration and transfer of this Springing Warrant,
and, subject to the provisions of Section 3 hereof, this Springing Warrant and
all rights hereunder are transferable, in whole, on such books at such office,
upon surrender of this Springing Warrant at such office, together with a written
assignment of this Springing Warrant duly executed by the Holder or his agent or
attorney and funds sufficient to pay any stock transfer taxes payable upon the
making of such transfer. Upon such surrender and payment, the Company shall
execute and deliver a new Springing Warrant or Springing Warrants in the name of
the assignee or assignees and in the denominations specified in such instrument
of assignment, and this Springing Warrant shall promptly be canceled. A
Springing Warrant may be exercised by a new holder for the
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purchase of shares of Common Stock without having a new Springing Warrant
issued.
This Springing Warrant may be divided or combined with other Springing
Warrants upon presentation hereof at such principal office in Rancho Xxxxxxxxx,
California together with a written notice specifying the names and denominations
in which new Springing Warrants are to be issued, signed by the Holder or his
agent or attorney. Subject to compliance with the preceding paragraph as to any
transfer that may be involved in such division or combination, the Company shall
execute and deliver a new Springing Warrant or Springing Warrants in exchange
for the Springing Warrant or Springing Warrants to be divided or combined in
accordance with such notice.
Section 3. RESTRICTIONS ON EXERCISE AND TRANSFER OF SPRINGING WARRANTS
AND COMMON STOCK.
This Springing Warrant shall be exercisable (a) only under circumstances
such that the issue of Common Stock issuable upon such exercise is exempt from
the requirements of registration under the Securities Act of 1933, as amended
(or any similar statute then in effect) (the "1933 Act") and any applicable
state securities law or (b) upon registration of such Common Stock in compliance
therewith. This Springing Warrant shall be transferable only under
circumstances such that the transfer is exempt from the requirements of
registration under the 1933 Act and any applicable state securities law. By
acceptance hereof, the Holder agrees to comply with such legislation.
Before any transfer or attempted transfer of all or any part of this
Springing Warrant or such Common Stock, the Holder shall give the Company
written notice of its intention so to do describing briefly the manner of any
such proposed transfer. Promptly after receiving such written notice, the
Company shall present copies thereof to Company counsel and, if the Company
requests the Holder to designate special counsel therefor, to any special
counsel designated by the Holder that is reasonably satisfactory to the
Company. If, in the opinion of counsel for the Company and counsel, if any,
for the Holder, the proposed transfer may be effected without registration
under the 1933 Act and any applicable state securities law of any such
securities, the Company, as promptly as practicable, shall notify the Holder
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of such opinion, whereupon the securities proposed to be transferred may be
transferred in accordance with the terms of such notice. The Company shall
not be required to effect any such transfer before the receipt of such
favorable opinion or opinions or the effectiveness of registration.
Section 4. CERTAIN COVENANTS.
The Company covenants and agrees that it will at all times reserve and set
apart and have, free from preemptive rights, a number of shares of authorized
but unissued Common Stock, or other stock or securities deliverable pursuant to
this Springing Warrant, sufficient to enable it at any time to fulfill all its
obligations hereunder.
Section 5. NOTICES.
In the event that:
(a) the Company proposes to pay any dividend payable in stock (of any
class or classes) or in Convertible Securities, as defined below, upon its
Common Stock or make any distribution (other than ordinary cash dividends)
to the holders of its Common Stock,
(b) the Company proposes to grant to the holders of its Common Stock
generally any rights or options,
(c) the Company proposes to effect any capital reorganization or
reclassification of capital stock of the Company,
(d) the Company proposes to consolidate with, or merge into, any
other corporation or to transfer its property as an entirety or
substantially as an entirety, or
(e) the Company proposes to effect the liquidation, dissolution or
winding up of the Company,
then the Company shall cause notice of any such intended action to be given to
all holders of record of outstanding Springing Warrants not less than 30 days
before the date on which the transfer books of the Company shall close or a
record shall be
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taken for such stock dividend, distribution or granting of rights or options,
or the date when such capital reorganization, reclassification,
consolidation, merger, transfer, liquidation, dissolution or winding up shall
be effective, as the case may be.
Any notice or other document required or permitted to be given or delivered
to holders of record of Springing Warrants shall be delivered by facsimile,
reliable courier or first-class mail postage prepaid to each such holder at the
last address shown on the books of the Company maintained for the registry and
transfer of the Springing Warrants. Any notice or other document required or
permitted to be given or delivered to holders of record of Common Stock issued
pursuant to Springing Warrants shall be delivered by facsimile, reliable courier
or first-class mail postage prepaid to each such holder at such holder's address
as the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company shall be
delivered by facsimile, reliable courier or first-class mail postage prepaid to
the principal office of the Company, at Houston, Texas, or delivered to the
office of one of the Company's executive officers at such address, or such other
address as shall have been furnished by the Company to the holders of record of
such Springing Warrants and the holders of record of such Common Stock.
Section 6. LIMITATION OF LIABILITY; NOT SHAREHOLDERS.
No provision of this Springing Warrant shall be construed as conferring
upon the Holder the right to vote or to consent or to receive dividends or to
receive notice as a shareholder in respect of meetings of shareholders for the
election of directors of the Company or any other matter whatsoever as
shareholders of the Company. No provision hereof, in the absence of affirmative
action by the Holder to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the Holder, shall give rise to any
liability of Holder for the purchase price or as a shareholder of the Company,
whether such liability is asserted by the Company, creditors of the Company or
others.
Section 7. LOSS, DESTRUCTION, ETC. OF SPRINGING WARRANT.
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Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Springing Warrant, and in the case of any such
loss, theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Springing Warrants, the
Company will make and deliver a new Springing Warrant, of like tenor, in lieu of
such lost, stolen, destroyed or mutilated Springing Warrant. Any Springing
Warrant issued under the provisions of this Section 7 in lieu of any Springing
Warrant alleged to be lost, destroyed or stolen, or of any mutilated Springing
Warrant, shall constitute an original contractual obligation on the part of the
Company.
Section 8. EXERCISE OF SPRINGING WARRANT; UNITS ISSUABLE UPON EXERCISE;
EXPIRATION OF SPRINGING WARRANT.
(a) This Springing Warrant shall become exercisable only in the event
that the principal amount, plus all accrued and unpaid interest, on that certain
Promissory Note, dated December 15, 1995, issued by the Company to the Holder, a
copy of which is attached hereto as EXHIBIT A (the "Note"), shall not be paid in
full on or before June 30, 1997.
(b) Upon the occurrence of the event described in Section 8(a), this
Springing Warrant shall be exercisable for 30,000 Units, at any time after the
date of such occurrence and on or prior to July 1, 2002. If the principal
amount plus all accrued and unpaid interest on the Note shall not be paid in
full by no later than the first day of the first calendar month following the
Maturity Date, the number of Units for which this Springing Warrant shall be
exercisable shall increase by 30,000 Units, and in respect of such 30,000 Units
shall be exercisable therefor at any time after such first day of such first
calendar month and on or before 5:00 p.m., New York, New York time, on the fifth
anniversary of such day, and for so long as any portion of the principal or
accrued and unpaid interest remains outstanding shall increase by an additional
30,000 Units on the first day of each calendar month thereafter, and, in each
case, in respect of which 30,000 Units shall be exercisable therefor at any time
on or after such first day of such first calendar month and on or
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before 5:00 p.m., New York, New York time, on the fifth anniversary of such
day.
(c) The Holder of this Springing Warrant is hereby authorized by the
Company to record on the grid attached to this Springing Warrant any increase in
the number of Units to be issued upon exercise of this Springing Warrant.
(d) A "Unit" shall as of each day that this Springing Warrant becomes
exercisable for Units in accordance with the provisions of Section 8(b), consist
initially of one share of Common Stock of the Company as such stock is
constituted on such date, subject to adjustment as set forth herein.
(e) The Holder of this Springing Warrant covenants and agrees to
surrender the Springing Warrant to the Company for cancellation in the event the
outstanding principal amount of the Note, plus all accrued and unpaid interest,
is paid in full on or prior to the Maturity Date.
Section 9. ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO THIS
SPRINGING WARRANT
The number of shares of Common Stock comprising a Unit shall be subject to
adjustment from time to time as follows:
(a) EFFECT OF "SPLIT-UPS" AND "SPLIT-DOWNS" STOCK DIVIDENDS. If at
any time or from time to time the Company shall subdivide as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock,
with or without par value, the number of shares of Common Stock comprising a
Unit that may be purchased hereunder shall be increased proportionately as of
the effective or record date of such action. The issuance of such a stock
dividend shall be treated as a subdivision of the whole number of shares of
Common Stock outstanding immediately before the record date for such dividend
into a number of shares equal to such whole number of shares so outstanding plus
the number of shares issued as a stock dividend. In case at any time or from
time to time the Company shall combine as a whole, by reclassification or
otherwise, the number of shares of Common Stock then outstanding into a lesser
number of shares of Common Stock, with or without par value, the number
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of shares of Common Stock comprising a Unit that may be purchased hereunder
shall be reduced proportionately as of the effective date of such action.
(b) EFFECT OF CERTAIN DIVIDENDS. If on any date the Company makes a
distribution to holders of its Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of its indebtedness or assets, the number
of shares of Common Stock theretofore comprising a Unit shall be adjusted as at
the close of business on said date to a number determined by multiplying the
number of shares theretofore comprising a Unit by a fraction, the numerator of
which shall be the Current Price immediately prior to such distribution, and the
denominator of which shall be such Current Price minus the fair market value (as
determined by a single qualified appraiser (which shall be either a national
accounting firm or a national or regional major investment bank) selected by
mutual agreement between the Company and the Holder) of the portion of the
assets or evidences of indebtedness so to be distributed to one share of Common
Stock.
(c) EFFECT OF MERGER OR CONSOLIDATION. If the Company shall, while
this Springing Warrant remains outstanding, enter into any consolidation with or
merge into any other corporation wherein the Company is not the continuing
corporation, or wherein cash or securities of a corporation other than the
Company are distributable to holders of Common Stock of the Company, or sell or
convey its property as an entirety or substantially as an entirety, and in
connection with such consolidation, merger, sale or conveyance, shares of stock
or cash or other securities shall be issuable or deliverable in exchange for the
Common Stock of the Company, the Holder shall thereafter be entitled to purchase
pursuant to this Springing Warrant (in lieu of the number of shares of Common
Stock that the Holder would have been entitled to purchase or acquire
immediately before the effective date of such consolidation, merger, sale or
conveyance) the shares of stock or cash or other securities to which such number
of shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
to that which would have been payable if such number of shares of Common Stock
had been purchased upon exercise of a Springing Warrant immediately prior
thereto. In
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case of any such consolidation, merger, sale or conveyance, appropriate
provision (as determined by a resolution of the Board of Directors of the
Company) shall be made with respect to the rights and interests thereafter of
the Holder, to the end that all the provisions of this Springing Warrant
(including adjustment provisions) shall thereafter be applicable as nearly as
reasonably practicable, in relation to such stock or other securities.
(d) REORGANIZATION AND RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 9(a) hereof) while this Springing Warrant remains
outstanding, the Holder shall thereafter be entitled to purchase pursuant to
this Springing Warrant (in lieu of the number of shares of Common Stock
comprised in the number of Units that the Holder would have been entitled to
purchase immediately before such reorganization or reclassification) the shares
of stock of any class or classes or other securities or cash or property to
which such number of shares of Common Stock comprised in such number of Units
would have been entitled if such shares of Common Stock had been purchased
immediately before such reorganization or reclassification. In case of any such
reorganization or reclassification, appropriate provision (as determined by
resolution of the Board of Directors of the Company) shall be made with respect
to the rights and interests thereafter of the Holder, to the end that all the
provisions of this Springing Warrant (including adjustment provisions) shall
thereafter be applicable, as nearly as reasonably practicable, in relation to
such stock or other securities or property.
(e) ADJUSTMENT OF UNIT AFTER A "DILUTING ISSUE". If on any date on
or after the date of this Springing Warrant any additional shares of Common
Stock (other than shares of Excluded Stock) shall be issued for a consideration
per share (or, in the case of any transactions contemplated in paragraphs (2) or
(3) of this Section 9(e), shall be deemed to be issued for a Presumed
Consideration per share) less than the Current Price on the date such Common
Stock was issued or deemed to have been issued, the number of shares of Common
Stock theretofore comprising a Unit shall be adjusted as at the close of
business on such date to a number equal to the product (computed to the nearest
ten thousandth of a share) resulting from the multiplication of (i)
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the total number of shares of Common Stock comprising a Unit immediately
before such adjustment by (ii) a fraction, the numerator of which is the
Current Price on the date such Common Stock was issued or deemed to have been
issued, and the denominator of which is the consideration received (or,
without duplication, the Presumed Consideration deemed to have been received)
per share for such additional shares so issued.
For the purpose of this Section 9(e), the following provisions shall be
applicable with respect to the issuance of additional shares of Common Stock and
the computation set forth in the immediately preceding paragraph:
(1) STOCK DIVIDENDS, ETC. In case any additional shares of Common
Stock shall be issued as a dividend on Common Stock, the number of shares of
Common Stock comprising a Unit shall be adjusted as provided in Section 9(a)
hereof.
In case any additional shares of Common Stock shall be issued as a
dividend on any class of stock of the Company other than Common Stock, or
in case any obligations or stock convertible into or exchangeable for
shares of Common Stock (such convertible or exchangeable obligations or
stock being hereinafter called "Convertible Securities") shall be issued as
a dividend on any class of stock of the Company, such shares of Common
Stock or Convertible Securities shall be deemed to have been issued without
consideration on the day next succeeding the date for the determination of
stockholders entitled to such dividend.
(2) RIGHTS OR OPTIONS BELOW CURRENT PRICE. In case the Company shall
on or after the date of this Springing Warrant grant any rights or options
(other than those exercisable for Excluded Stock) to subscribe for or to
purchase additional shares of Common Stock or Convertible Securities, and
the Presumed Consideration per share received and receivable by the Company
for such additional shares under such rights or options or pursuant to the
terms of such Convertible Securities shall be less than the Current Price
in effect immediately prior to the time of the granting of such rights or
options, the maximum number of additional shares of Common Stock issuable
pursuant to such rights or options or necessary to effect the conversion or
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exchange of all such Convertible Securities shall be deemed to have been
issued as of the date of the granting of such rights or options, and the
Company shall be deemed to have received the Presumed Consideration
therefor. No adjustment (except as provided in paragraph (4) of this
Section 9(e)) shall be made upon the actual issuance of Common Stock upon
the exercise of rights or options referenced in this paragraph (2) or the
conversion of Convertible Securities referenced in this paragraph (2).
(3) SECURITIES CONVERTIBLE BELOW CURRENT PRICE. In case:
(i) the Company shall issue any Convertible Securities (other
than those convertible into Excluded Stock or pursuant to the exercise
of rights or options therefor in respect of which an adjustment shall
have theretofore been made under the foregoing paragraph (2)), and
(ii) the Presumed Consideration per share for additional shares
of Common Stock issuable pursuant to the terms of such Convertible
Securities shall be less than the Current Price in effect immediately
prior to the time of the issuance of such Convertible Securities,
then the issuance of such Convertible Securities shall be deemed to be an
issuance (as of the date of issuance of such Convertible Securities) of the
maximum number of additional shares of Common Stock necessary to effect the
conversion or exchange of all such Convertible Securities, and the Company shall
be deemed to have received the Presumed Consideration therefor as of the date of
issuance of such Convertible Securities. No further adjustment, except as
provided in paragraph (4) of this Section 9(e), shall be made upon the actual
issuance of Common Stock upon the conversion of Convertible Securities.
(4) SUPERSEDING ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK
COMPRISING A UNIT. If, at any time after any adjustment of the shares of
Common Stock comprising a Unit shall have been made on the basis of shares
of Common Stock deemed to be issued by reason of the provisions of the
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foregoing paragraphs (2) or (3) of this Section 9(e) on the basis of the
granting of certain rights or options or the issuance of certain
Convertible Securities, or after any new adjustments of the shares of
Common Stock comprising a Unit shall have been made on the basis of shares
of Common Stock deemed to be issued by reason of the provisions of this
paragraph (4), such rights or options or the right of conversion or
exchange in any such Convertible Securities (for which, or purchased
pursuant to any rights or options for which, such an adjustment shall
previously have been made) shall expire, and a portion of such rights or
options, or the right of conversion or exchange in respect of a portion of
such Convertible Securities, as the case may be, shall not have been
exercised, then such previous adjustment shall be rescinded and annulled
and the shares of Common Stock that were deemed to have been issued by
virtue of the computation made in connection with the adjustment so
rescinded and annulled, shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a re-computation shall be made of
the effect of such rights or options or such Convertible Securities on the
basis of:
(i) treating the number of additional shares of Common Stock, if
any, theretofore actually issued pursuant to the exercise of such
expired rights or options or such expired right of conversion or
exchange, as having been issued on the date or dates of such exercise
for the consideration actually received therefor (computed as provided
in paragraph (6) of this Section 9(e)); and
(ii) treating the maximum number of additional shares of Common
Stock, if any, thereafter issuable pursuant to the conversion or
exchange of any Convertible Securities actually issued or issuable
pursuant to the previous exercise of such rights or options as having
been issued as of the date of the granting of such rights or options
and treating the Presumed Consideration therefor as received as of
such date;
and, on such basis, such new adjustment, if any, of the number of shares of
Common Stock comprising a Unit shall be made as may be
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required by the first paragraph of this Section 9(e), which new adjustment
shall supersede the previous adjustment so rescinded and annulled for the
Springing Warrant exercised after such new adjustment.
(5) EFFECT OF "SPLIT-UP" OR "SPLIT-DOWN" ON "DEEMED ISSUED" SHARES.
Upon the effective or record date for any subdivision or combination of the
Common Stock of the character described in Section 9(a) hereof, including
the issuance of a stock dividend which is treated as such a subdivision
under paragraph (1) of this Section 9(e), the number of the shares of
Common Stock which are at the time deemed to have been issued by virtue of
paragraphs (2), (3) or (4) of this Section 9(e), but have not actually been
issued, shall be deemed to be increased or decreased proportionately.
(6) COMPUTATION OF CONSIDERATION AND PRESUMED CONSIDERATION. For the
purposes of this Section 9:
(i) The consideration received by the Company upon the actual
issuance of additional shares of Common Stock shall be deemed to be
the sum of the amount of cash and the fair value of property (as
determined by a single qualified appraiser (which shall be either a
national accounting firm or a national or regional major investment
bank) selected by mutual agreement between the Company and the Holder
as at the time of issue or "deemed issue" in the case of the following
paragraph (ii)) received or receivable by the Company as the
consideration or part of the consideration (v) at the time of issuance
of the Common Stock, (w) for the issuance of any rights or options
upon the exercise or conversion of which such Common Stock was issued,
(x) for the issuance of any rights or options to purchase Convertible
Securities upon the conversion of which such Common Stock was issued,
(y) for the issuance of the Convertible Securities upon conversion of
which such Common Stock was issued and (z) at the time of the actual
exercise of such rights, options or conversion privileges upon the
exercise or conversion of which such Common Stock was issued, in each
case without deduction for commissions and expenses incurred
- 14 -
by the Company for any underwriting of, or otherwise in connection
with the issue or sale of, such rights, options, Convertible
Securities or Common Stock, but after deduction of any sums paid by
the Company in cash upon the exercise of, and pursuant to, such
rights, options or conversion privileges in respect of fractional
shares of Common Stock;
(ii) The consideration deemed to have been received by the
Company for additional shares of Common Stock deemed to be issued
pursuant to rights, options and conversion privileges by reason of
transactions of the character described in paragraphs (2), (3) and
(4)(ii) of this Section 9(e) (herein called the "Presumed
Consideration" therefor) shall be the consideration (determined as
provided in the foregoing paragraph (i)) that would be received or
receivable by the Company at or before the actual issue of such shares
of Common Stock so deemed to be issued, if all rights, options and
conversion privileges necessary to effect the actual issue of the
number of shares deemed to have been issued had been exercised
(successively exercised in the case of rights or options to purchase
Convertible Securities), and the minimum consideration received or
receivable by the Company upon such exercise had been received; all
computed without regard to the possible future effect of anti-dilution
provisions on such rights, options and/or conversion privileges.
(f) STATEMENT OF ADJUSTMENT OF UNIT AND CURRENT PRICE. Whenever the
number of shares of Common Stock comprising a Unit is adjusted pursuant to any
of the foregoing provisions of this Section 9, the Company shall promptly
prepare a written statement signed by the chief executive officer of the
Company, setting forth the adjustment in the number of shares comprising a Unit
purchasable hereunder, determined as provided in this Section, and the amount of
the then effective Current Price, and in reasonable detail the facts requiring
such adjustment and the calculation thereof. Such statement shall be filed
among the permanent records of the Company and a copy thereof shall be furnished
to the Holder without request and shall at all reasonable times during business
hours be open to inspection by
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the Holder. The Company shall also promptly cause a notice, stating that
such an adjustment has been effected and setting forth the increased or
decreased number of shares purchasable and the amount of the then effective
Current Price, to be delivered by facsimile, reliable courier or first-class
mail postage prepaid to the Holder.
(g) DETERMINATION BY THE BOARD OF DIRECTORS. All determinations by the
Board of Directors of the Company under the provisions of this Section 9 shall
be made in good faith with due regard to the interests of the Holder and the
other holders of securities of the Company and in accordance with good financial
practice, and all valuations made by the Board of Directors of the Company under
the terms of this Section 9 must be made with due regard to any market
quotations of securities involved in, or related to, the subject of such
valuation.
(h) DEFINITIONS. For all purposes of this Section 9 and this Springing
Warrant, unless the context otherwise requires, the following terms have the
following respective meanings:
"COMMON STOCK": (i) the Company's presently authorized Common Stock
as such class exists on the date of this Springing Warrant; and (ii) stock
of the Company of any class thereafter authorized that ranks, or is
entitled to a participation, as to assets or dividends, substantially on a
parity with Common Stock.
"COMPANY": Advanced Materials Group, Inc., a Nevada corporation, and
any other corporation assuming the Company's obligations with respect to
this Springing Warrant pursuant to this Section 9.
"CONVERTIBLE SECURITIES": the meaning specified in Section 9(e)(1).
"CURRENT PRICE": per share of Common Stock, the amount equal to the
quotient resulting from dividing (i) the Exercise Price per Unit herein
provided by (ii) the number of shares (including any fractional share) of
Common Stock comprising a Unit on such date.
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"EXCLUDED STOCK": shares of Common Stock issued (i) upon exercise of
this Springing Warrant or that certain Warrant to purchase shares of Common
Stock of the Company dated the date hereof issued by the Company to the
initial Holder of this Springing Warrant (the "Warrant"), (ii) in respect
of which an adjustment is required to be made pursuant to Section 9(a),
(b), (c) or (d) hereof, (iii) pursuant to the exercise or conversion of any
options, warrants, convertible securities or other securities issued and
outstanding on the date hereof.
"PRESUMED CONSIDERATION": the meaning specified in Section
9(e)(6)(ii).
Section 10. REGISTRATION RIGHTS.
(a) REGISTRABLE STOCK. As used in this Section 10, the term
"Registrable Stock" shall mean (i) all shares of Common Stock that may be issued
upon exercise of the Springing Warrant (and all shares of Common Stock that may
thereafter be issued in respect of such Springing Warrant) and (ii) all shares
of Common Stock that may be issued upon exercise of the Warrant (and all shares
of Common Stock that may thereafter be issued in respect of such Warrant).
References in this Springing Warrant to rules, regulations and forms
promulgated by the Securities and Exchange Commission shall include rules,
regulations and forms succeeding to the functions thereof, whether or not
bearing the same designation.
The rights and obligations of the Company and the Holder with respect
to the Registrable Stock set forth in this Section 10 shall supersede any
registration rights and obligations of the Company and the Holder existing prior
to the date hereof with respect to the Registrable Stock.
(b) REQUEST FOR REGISTRATION. If the Company shall receive a written
request (specifying that it is being made pursuant to this Section 10(b)) from
the holders of more than 50% of the Registrable Stock that the Company file a
registration statement under the 1933 Act, or a similar document pursuant to any
other statute then in effect corresponding to the 1933 Act
- 17 -
covering the registration of at least 50% of the Registrable Stock, then the
Company shall promptly notify all other holders of Registrable Stock of such
request and shall use its reasonable best efforts to cause all Registrable
Stock that holders have requested be registered to be registered under the
1933 Act.
Notwithstanding the foregoing, (i) the Company shall not be obligated
to effect a registration pursuant to this Section 10(b) during the period
starting with the date 60 days prior to the Company's estimated date of filing
of, and ending on a date 180 days following the effective date of, a
registration statement pertaining to an underwritten public offering of
securities for the account of the Company, provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective and that the Company's estimate of the date of
filing such registration statement is made in good faith; and (ii) if the
Company shall furnish to such holders a certificate signed by the chief
executive officer of the Company stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Company or its
shareholders for a registration statement to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed six months.
The Company shall be obligated to effect only two registrations
pursuant to this Section 10(b). Any request for registration under this Section
10(b) must be for a firmly underwritten public offering to be managed by an
underwriter or underwriters of recognized national standing reasonably
acceptable to the Company.
(c) COMPANY REGISTRATION. Subject to Section 10(g), if at any time
the Company proposes to register any of its Common Stock under the 1933 Act in
connection with the public offering of such securities solely for cash on a form
that would also permit the registration of the Registrable Stock, the Company
shall, each such time, promptly give each holder of Registrable Stock written
notice of such determination. Upon the written request of any holder, given
within 20 days after mailing of any such notice by the Company, the Company
shall use its reasonable best efforts to cause to be registered under the 1933
Act all of
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the Registrable Stock that each such holder has requested be registered.
(d) OBLIGATIONS OF THE COMPANY. Whenever required under Sections
10(b), 10(c) or 10(j) to use its reasonable best efforts to effect the
registration of any Registrable Stock, the Company shall, as expeditiously as
reasonably possible:
(1) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Stock and use its
reasonable best efforts to cause such registration statement to become and
remain effective; PROVIDED, HOWEVER, that in connection with any proposed
registration intended to permit an offering of any securities from time to
time (I.E., a so-called "shelf registration"), the Company shall in no
event be obligated to cause any such registration to remain effective for
more than 90 days;
(2) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration statement;
(3) furnish to the holders of Registrable Stock such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Stock owned by them; and
(4) use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky Laws of such jurisdictions as shall be reasonably
appropriate for the distribution of the securities covered by the
registration statement.
(e) FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action
- 19 -
pursuant to this Section 10 that the holders of Registrable Stock shall
furnish to the Company such information regarding them, the Registrable Stock
held by them and the intended method of disposition of such securities as the
Company shall reasonably request and as shall be required in connection with
the action to be taken by the Company.
(f) EXPENSES OF DEMAND REGISTRATION. All expenses incurred in
connection with a registration pursuant to Sections 10(b) or 10(c) (excluding
underwriters' discounts and commissions),including, without limitation, all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling holders, shall be borne by the
Company; PROVIDED, HOWEVER, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 10(b) if
the registration request is subsequently withdrawn, unless the holders agree to
forfeit their right to demand registration pursuant to Section 10(b).
(g) UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 10(c) to include any of the holders'
Registrable Stock in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it or them, and then only in such quantity as will not, in the written opinion
of the underwriters, jeopardize the success of the offering by the Company. If
the total amount of securities that all holders request to be included in such
offering exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, the Company shall only be
required to include in the offering so many of the securities of the selling
holders as the underwriters believe will not jeopardize the success of the
offering, shall so advise all selling holders of Registrable Stock and the
number of shares of securities that are entitled to be included in the offering
and underwriting shall be allocated first, to the Company for securities being
sold for its own account, second, among all such selling holders of Registrable
Stock and, third, among all other selling stockholders, in each case in
proportion, as nearly as practicable, to the respective total amounts of
securities owned
- 20 -
by said selling holders of Registrable Stock and other selling stockholders.
If any selling holder of Registrable Stock or any other selling stockholder
disapproves of the terms of any such underwriting, he, she or it may elect to
withdraw therefrom by written notice to the Company and the underwriter.
(h) DELAY OF REGISTRATION. No holders of Registrable Stock shall
have any right to take any action to restrain, enjoin or otherwise delay any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 10.
(i) INDEMNIFICATION. In the event any shares of Registrable Stock are
included in the registration statement under this Section 10:
(1) to the extent permitted by law, the Company will indemnify
and hold harmless each holder of Registrable Stock requesting or
joining in a registration, any underwriter (as defined in the 1933
Act) for it and each person, if any, who controls such holder or
underwriter within the meaning of the 1933 Act, against any losses,
claims, damages or liabilities, joint or several, to which they may
become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based on any untrue or alleged untrue statement of
any material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements
therein not misleading or arise out of any violation by the Company of
any rule or regulation promulgated under the 1933 Act applicable to
the Company and relating to action or inaction required of the Company
in connection with any such registration; and will reimburse each such
holder, such underwriter or controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or
- 21 -
action; PROVIDED, HOWEVER, that the indemnity agreement contained in
this Section 10(i)(1) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld) nor shall the Company be
liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by any such holder, underwriter or controlling person;
(2) to the extent permitted by law, each holder requesting or
joining in a registration will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed
the registration statement, each person, if any, who controls the
Company within the meaning of the 1933 Act and each agent and any
underwriter for the Company (within the meaning of the 1933 Act)
against any losses, claims, damages or liabilities to which the
Company or any such director, officer, controlling person, agent or
underwriter may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
such registration statement, preliminary or final
- 22 -
prospectus, or amendments or supplements thereto, in reliance upon
and in conformity with written information furnished by such
holder expressly for use in connection with such registration; and
each such holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer,
controlling person, agent or underwriter in connection with
investigating or defending any such loss, claim, damage, liability
or action; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 10(i)(2) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such holder
(which consent shall not be unreasonably withheld); and
(3) promptly after receipt by an indemnified party under this
paragraph of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this paragraph, notify the
indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any such
action, if prejudicial to his ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified
party under this paragraph, but the omission so to notify the
indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this paragraph.
(j) REGISTRATIONS ON FORM S-3.
(1) If (i) a holder or holders of Registrable Stock request in
writing (specifying that the request is
- 23 -
being made pursuant to this Section 10(j)) that the Company file a
registration statement on Form S-3 under the 1933 Act ("Form S-3") (or
any successor form to Form S-3 regardless of its designation) for a
public offering of shares of the Registrable Stock, the reasonably
anticipated aggregate price to the public of which would exceed
$500,000, and (ii) the Company is a registrant entitled to use Form
S-3 to register such shares, then the Company shall use its reasonable
best efforts to cause such shares to be registered on Form S-3 (or any
successor form to Form S-3); PROVIDED, HOWEVER, that the Company shall
not be obligated to effect any such registration pursuant to this
Section 10(j)) if the Company has, within the 12-month period
preceding the date of such request, already effected two registrations
on Form S-3 for the holders pursuant to this Section 10(j).
(2) All expenses incurred in connection with a registration
requested pursuant to Section 10(j)(1), including, without limitation, all
registration, qualification, printing and accounting fees, and reasonable
fees and disbursements of counsel for the selling holder or holders and
counsel for the Company, shall be borne by the Company.
(3) Holders' rights to registration under this Section 10(j) are
in addition to, and not in lieu of, their rights to registration under
Sections 10(b) and 10(c).
(k) TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have
no obligations pursuant to Sections 10(b), 10(c) or 10(j) as to any holder after
the Company has included Registrable Stock of such holder in two registrations
pursuant to Sections 10(b), 10(c) or 10(j); PROVIDED, HOWEVER, that if such
holder has requested that all of its Registrable Stock be registered under such
sections, but such holders shall be prohibited from selling all of such stock by
virtue of Section 10(g), then such holder's rights shall not be restricted by
the provisions of this Section 10(k) until such time as it has had an
opportunity to sell all of its Registrable Stock.
(l) REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the holders of Registrable
- 24 -
Stock the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the Securities and Exchange Commission that may at any
time permit a holder to sell securities of the Company to the public without
registration, the Company agrees to use its reasonable best efforts to:
(1) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to 90 days
after the effective date of the first registration statement covering an
underwritten public offering filed by the Company;
(2) file with the Securities and Exchange Commission in a timely
manner all reports and other documents required of the Company under the
1933 Act and the Securities Exchange Act of 1934 (the "1934 Act"); and
(3) furnish to any holder so long as such holder owns any of the
Registrable Stock forthwith upon request a written statement by the Company
that it has complied with the reporting requirements of Rule 144 (at any
time after 90 days after the effective date of said first registration
statement filed by the Company), and of the 1933 Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as may be reasonably
requested in availing any holder of any rule or regulation of the
Securities and Exchange Commission permitting the selling of any such
securities without registration.
(m) LOCKUP AGREEMENT. In consideration for the Company's agreeing to
its obligations under this Section 10, the holder of Registrable Stock agrees in
connection with any registration of the Company's securities that, upon the
request of the Company or the underwriters managing any underwritten offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of or otherwise dispose of any Registrable Stock (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time
(not to exceed 90 days) from the effective date of such registration as the
Company or the underwriters may specify.
- 25 -
(n) CERTAIN LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF
REGISTRATION RIGHTS. From and after the date hereof, the Company shall not
enter into any agreement with any holder or prospective holder of any securities
of the Company providing for the granting to such holder of registration rights
unless such agreement:
(1) includes the equivalent of Section 10(m) as a term; and
(2) includes a provision that, in the case of a public offering
involving an underwritten registered offering under Section 10(c),
protects the holders of Registrable Stock if marketing factors require
a limitation on the number of securities to be included in the
underwriting in the manner in which the Company is protected under
Section 10(g).
(o) TRANSFER OF REGISTRATION RIGHTS. The registration rights of the
Holder of the Springing Warrant under this Section 10 may be transferred to any
transferee who acquires at least 20% of the then outstanding shares of
Registrable Stock, or the Springing Warrant; PROVIDED, HOWEVER, that the Company
is given written notice by the Holder at the time of such transfer stating the
name and address of the transferee and identifying the securities with respect
to which the rights under this Section 10 are being assigned.
Section 11. AMENDMENTS.
(a) Other than in respect of Section 10 hereof, neither this
Springing Warrant nor any term hereof may be changed, waived, discharged or
terminated orally or in writing, provided that any term of this Springing
Warrant may be amended or the observance of such term may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the written consent of the Company and the holders of
Springing Warrants that are exercisable for a number of Units that represent in
the aggregate at least a majority of the total number of Units for which all
Springing Warrants are then exercisable (whether or not the holder of this
Springing Warrant consents).
- 26 -
(b) Neither Section 10 of this Springing Warrant nor Section 10 of
the Warrant nor any term of either of such Sections 10 may be changed, waived,
discharged or terminated orally or in writing, provided that any term of Section
10 of this Springing Warrant and any term of Section 10 of the Warrant may be
amended or the observance of such term may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Company and the holders of Springing Warrants
and Warrants that are exercisable for a number of Units that represent in the
aggregate at least a majority of the total number of Units for which all
Springing Warrants and all Warrants are then exercisable (whether or not the
holder of this Springing Warrant consents).
Section 12. GOVERNING LAW.
This Springing Warrant shall be governed by the laws of the State of New
York without regard to its conflict of laws, principles or rules.
IN WITNESS WHEREOF, the Company has caused this Springing Warrant to be
signed in its name by its duly authorized officer.
Dated: December ___, 1995
ADVANCED MATERIALS GROUP, INC.
By:_______________________________
Xxxxxx X. Xxxxx
Chief Financial Officer
- 27 -
- 28 -
SUBSCRIPTION NOTICE
The undersigned, the Holder, hereby elects to exercise purchase rights
represented by such Springing Warrant for, and to purchase thereunder,
_____________________ shares of the Common Stock covered by such Springing
Warrant and herewith makes payment in full therefor of $_________ cash and/or
by cancellation of $___________________ of indebtedness of the Company to the
Holder hereof and requests that certificates for such shares (and any securities
or property deliverable upon such exercise) be issued in the name of and
delivered to _____________ whose address is __________________________
_________________________________.
The undersigned agrees that, in the absence of an effective registration
statement with respect to Common Stock issued upon this exercise, the
undersigned is acquiring such Common Stock for investment and not with a view to
distribution thereof and that the certificate or certificates representing such
Common Stock may bear a legend substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. UNLESS THEY ARE SOLD
PURSUANT TO RULE 144 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION
UNDER SAID ACT, THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN ABSENCE
OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN OPINION OF COUNSEL FOR
THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
Dated:
_________________________________
Signature guaranteed:
- 29 -
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the rights represented by the foregoing
Springing Warrant of _______________________ and appoints
________________________ ________________________ attorney to transfer said
rights on the books of said corporation, with full power of substitution in the
premises.
Dated:
______________________________
Signature guaranteed:
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Springing Warrant in every particular,
without alteration or enlargement or any change whatsoever.
- 30 -
UNITS ISSUED UPON EXERCISE OF SPRINGING WARRANT
This Springing Warrant entitles the holder hereof to purchase the number of
shares of Common Stock as comprise the number of Units set forth below.
Date of Default Increase Total Units Notation
on Note in Units Outstanding Made by
--------------- -------- ----------- --------
- 31 -
TRILON DOMINION PARTNERS, L.L.C.
000 XXXX XXXXXX, XXXXX 0000
XXX XXXX, XXX XXXX 00000
December __, 1995
Advanced Materials Group, Inc.
0000 Xxxx 000xx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Gentlemen:
Reference is made to that certain Credit Agreement dated as of
September 21, 1994, between Trilon Dominion Partners, L.L.C. (the "LLC") and
Advanced Materials Group, Inc. ("Advanced Materials"), as amended as of
January 13, 1995 and as of December __, 1995 (as so amended, the "Credit
Agreement"). Capitalized terms used herein that are defined in the Credit
Agreement are so used as therein defined.
The parties hereby acknowledge and agree that during the term of the
$1,000,000 credit facility (the "Facility") made available by the LLC to
Advanced Materials pursuant to the Credit Agreement (such term is hereinafter
referred to as the "Consultancy Term"), Advanced Materials shall engage the
LLC to provide management consulting services and certain employees of the
LLC (hereinafter, the "Consultant") shall render such consulting services to
Advanced Materials upon the following terms and conditions:
1. In consideration for the consulting services rendered by the
Consultant to Advanced Materials pursuant to this Letter Agreement, Advanced
Materials shall pay the Consultant a fee in the amount of One Thousand Five
Hundred Dollars ($1,500.00) per month (the "Fee"), payable on the first day
of each month during the Consultancy Term; PROVIDED, HOWEVER, that in the
event such Consultancy Term begins prior to December 31, 1995, the pro rata
portion of the Fee for the month of December shall be due and payable at such
time.
Advanced Materials, Inc.
Page 2
December __, 1995
2. Advanced Materials shall promptly reimburse the Consultant for
reasonable travel and other related expenses incurred by the Consultant
pursuant to its engagement hereunder.
3. The parties hereto acknowledge and agree that nothing herein shall
constitute Consultant an employee, officer or agent of Advanced Materials
and, consequently, the payment of the Fee hereunder shall not be subject to
applicable federal or state withholdings.
Please acknowledge your agreement with the forgoing by countersigning this
letter and returning it to the undersigned by facsimile and regular mail.
Sincerely,
TRILON DOMINION PARTNERS, L.L.C.
By: VC Holdings, Inc., its
Managing Member
By: _________________________
Xxxxxx X. Xxxxxxxx
President
ACCEPTED AND AGREED:
ADVANCED MATERIALS, INC.
By: _____________________________
Name:
Title:
