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 22, 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 30,000 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 22, 2000.
This Warrant is subject to the following provisions, terms and conditions:
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
---------------------
(1) The purchase price per Unit shall be equal to the closing sales price
for the Common Stock on the date of issurance.
▇▇▇▇▇▇▇▇▇, 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 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 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
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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 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 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
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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 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 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 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
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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
(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
- 5 -
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. LIMITATION 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 the loss, theft,
mutilation or destruction of any 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 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
- 6 -
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 22, 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
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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 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.
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(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
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.
(e) 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 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.
- 9 -
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 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
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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
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
- 11 -
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 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,
- 13 -
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 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
- 14 -
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:
"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, (ii) in respect of which an adjustment is required to be made
pursuant to Section 9(a), (b), (c) or (d) hereof, and (iii) pursuant to the
exercise
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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 this Warrant (and all shares of Common Stock that may
thereafter be issued in respect of this Warrant) and (ii) all shares of Common
Stock that may be issued upon the closing of a private placement involving the
sale of equity securities of the Company in which the aggregate amount sold in
the placement is at least $5,000,000.
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.
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
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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 three 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 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:
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(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 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.
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(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
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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 ▇▇▇▇
▇▇▇) 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
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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 ▇▇▇▇ ▇▇▇)
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
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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 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
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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 Stock the benefits of Rule
144 promulgated under the 1933 Act and any other rule or regulation of the
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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,
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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.
(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
- 25 -
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)
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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