NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE TRANSFERRED EXCEPT AS PROVIDED IN SECTION 3 OF THIS WARRANT.
WARRANT
to Purchase Common Stock of
Advanced Materials Group, Inc.
Expiring December ___, 2000
This 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 60,000 Units (as defined below) at a purchase price per
Unit equal to $_______(1) (the "Exercise Price"). A "Unit" shall consist
initially of one share of Common Stock of the Company as such stock is
constituted on the date of this Warrant, subject to adjustment as set forth
herein. The Warrant may be exercised at any time, and from time to time, during
the period from the date hereof and ending at 5:00 p.m., New York, New York time
on December ___, 2000.
This 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 Warrant is subject to the following provisions, terms and conditions:
----------------------
(1)The purchase price per Unit shall be equal to the closing sales price
for the Common Stock on the date of issuance.
Section 1. EXERCISE OF WARRANT
To exercise this Warrant in whole or in part, the Holder shall deliver
to the Company at its principal office in Rancho ▇▇▇▇▇▇▇▇▇, California, (a) a
written notice, in substantially the form of the Subscription Notice
appearing at the end of this Warrant, of the Holder's election to exercise
this 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 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 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 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 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 Warrant evidencing the rights of the Holder to
purchase the remaining shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical to this Warrant,
or, at the request of the Holder, appropriate notation may be made on this
Warrant and the same returned to the Holder. The Company shall be pay all
expenses, taxes and other charges payable in connection with the preparation,
issue and delivery of such stock certificates and new Warrants, except that,
in case such stock certificates or new 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 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 Warrant shall
be validly issued, fully paid and nonassessable and, if the Common Stock is then
listed on a national securities
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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 Warrant to
issue a certificate representing any fraction of a share of Common Stock,
but, in lieu of 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 Warrant.
Section 2. TRANSFER, DIVISION AND COMBINATION.
The Company agrees to maintain at its principal office in Rancho ▇▇▇▇▇▇▇▇▇,
California, books for the Registration and transfer of this Warrant, and,
subject to the provisions of Section 3 hereof, this Warrant and all rights
hereunder are transferable, in whole, on such books at such office, upon
surrender of this Warrant at such office, together with a written assignment of
this 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 Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled. A Warrant may be exercised by a new holder
for the purchase of shares of Common Stock without having a new Warrant issued.
This Warrant may be divided or combined with other Warrants upon
presentation hereof at such principal office in Rancho ▇▇▇▇▇▇▇▇▇, California,
together with a written notice specifying the names and denominations in which
new 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 Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.
Section 3. RESTRICTIONS ON EXERCISE AND TRANSFER OF
WARRANTS AND COMMON STOCK
This 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 Warrant shall be transferable only under circumstances such
that the transfer is exempt from the
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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
Warrant or such Common Stock, the Holder shall give the Company written notice
of its intention so to do describing briefly the manner of 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 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 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
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(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 Warrants not less than 30 days before the
date on which the transfer books of the Company shall close or a record shall be
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 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 Warrants. Any notice or other document required or permitted to
be given or delivered to holders of record of Common Stock issued pursuant to
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 Rancho ▇▇▇▇▇▇▇▇▇, California 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 Warrants and the holders of record of such Common Stock.
Section 6. LIMITATIONS OF LIABILITY; NOT SHAREHOLDERS.
No provision of this 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 WARRANT.
Upon receipt of evidence satisfactory to the Company of loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a
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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 Warrants, the Company will make and deliver a new Warrant, of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Warrant. Any Warrant
issued under the provisions of this Section 7 in lieu of any Warrant alleged to
be lost, destroyed or stolen, or of any mutilated Warrant, shall constitute an
original contractual obligation on the part of the Company.
Section 8. EXERCISE AND EXPIRATION OF WARRANT.
This Warrant shall become exercisable immediately upon its issuance to the
initial Holder. The expiration time and date of the Warrant shall be 5:00 p.m.
New York, New York time, December ____, 2000.
Section 9. ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO THIS
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, 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 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
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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 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 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 Warrant immediately prior thereto. In cash 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 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 Warrant remains
outstanding, the Holder shall thereafter be entitled to purchase pursuant to
this 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
- 7 -
reclassification, appropriate provision (as determined by resolution of the
Board of Directors of the Company) shall be made with respect to the rights and
in thereafter of the Holder, to the end that all the provisions of this Warrant
(including adjustment provisions) shall thereafter be applicable, as nearly as
reasonably practicable, in relation to such stock or other securities or
property.
(a) ADJUSTMENT OF UNIT AFTER A "DILUTING ISSUE". If on any date
on or after the date of this 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)
the total number of shares 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.
- 8 -
(2) RIGHTS OR OPTIONS BELOW CURRENT PRICE. In case the Company shall
on or after the date of this 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
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.
- 9 -
(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
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 recomputation 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 n;umber of shares
of Common Stock comprising a Unit shall be made as may be required by the
first paragraph of this Section 9(e), which new adjustment shall supersede
the previous adjustment so rescinded and annulled for the Warrant exercised
after such new adjustment.
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(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 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
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"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 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
Warrant, unless the context otherwise requires, the following terms have the
following respective meanings:
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"COMMON STOCK": (i) the Company's presently authorized Common Stock
as such class exists on the date of this 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 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.
"EXCLUDED STOCK": shares of Common Stock issued (i) upon exercise
of this Warrant or that certain Springing Warrant to purchase shares of
Common Stock of the Company dated the date hereof issued by the Company
to the initial Holder of this Warrant (the "Springing 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 Warrant (and all shares of Common Stock that may
thereafter be issued in respect of such Warrant) and (ii) 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).
References in this 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.
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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 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
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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 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 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 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
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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 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
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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 ▇▇▇▇
▇▇▇) 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 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;
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(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 ▇▇▇▇ ▇▇▇)
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 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
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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 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
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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 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
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90 days) from the effective date of such registration as the Company or
the underwriters may specify.
(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 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 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 Warrant nor
any term hereof may be changed, waived, discharged or terminated orally or in
writing, provided that any term of this 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 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 Warrants are then
exercisable (whether or not the holder of this Warrant consents).
(b) Neither Section 10 of this Warrant nor Section 10 of the Springing
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 Warrant and any term of Section 10 of the 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)
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with, but only with, the written consent of the Company and the holders of
Warrants and 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 Warrants and all Springing Warrants are then exercisable
(whether or not the holder of this Warrant consents).
Section 12. GOVERNING LAW.
This Warrant shall be governed by the laws of the State of New York
without regard to its conflict of laws principles or rules.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by its duly authorized officer.
Dated: December __, 1995
ADVANCED MATERIALS GROUP, INC.
By: __________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
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SUBSCRIPTION NOTICE
The undersigned, the Holder, hereby elects to exercise purchase rights
represented by such Warrant for, and to purchase thereunder, __________ shares
of the Common Stock covered by such 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:
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________________________ the rights represented
by the foregoing 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 Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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